The Argument for Global Governance (and why businesses should ecourage it)

Creating World Leading Business

Initially, my goal in putting this blog together was to help business leaders in developing sustainable workplaces, providing tips on how to encourage a change in the culture of the organization that would support such efforts, and sharing concepts of communication and psychology of the work place that would help workers adopt sustainable goals, become more productive and be more passionate about their work. It’s still about that, but in the process of studying the many issues related to creating sustainable businesses in a sustainable world economy, I’ve come to believe that there are other considerations that are perhaps even more important.

All the traditional business arguments still exist that sustainability is really about eliminating waste and reducing expenses and that this is ultimately good for the business and the environment. So keep up the good work if you are deploying LEAN processes, adopting LEED standards for your buildings, using renewable energy sources, developing green teams, encouraging recycling and doing what you can towards water and energy conservation. You’re on the right path.

But let’s look at the bigger picture!

The goal of our economy

We operate in an economy that is designed to promote development and encourage economic growth. You’ve heard the arguments for growth and you also probably know that growth is measured by GDP. Economic forces have elevated the measure of GDP to a measure for overall health of a nation and, in some ways, an overall measure of human progress. Whether this is a valid measure is still not very clear. As business leaders, this appears to be a sound political basis because it allows us to create businesses that strive for growth, productivity and innovation all of which lead to competitiveness and shareholder value. As business leaders, we tend to dislike regulations (i.e. someone else telling us what we need to do), we value freedom of choice, we hold a competitive spirit and somehow this translates to more and bigger is better.

From a resource perspective, most supporters of capitalism believe that the forces of supply and demand will eventually prevail and that any resource shortages will eventually cause the prices of scarce resources to rise thus causing competing alternatives to become more attractive and giving rise to new industries and approaches. Government regulation, it is argued, only interferes with this process.

And let’s be fair, I know of very few people or companies who will voluntarily give the government more tax money than they are required to pay by law just to help them increase services or regulations. Most companies and individuals try to minimize what they give, unbelievably even to their own detriment. We like to argue that less taxes make our businesses better and that we can hire more people, but at some point, we have to acknowledge that lowering taxes causes our public services and infrastructure to crumble. Just ask the government workers in California how excited they are to provide the same services to a demanding public for the minimum wage of just $7.00/hr. How many of the most qualified public servants are likely to stay in such an environment and which ones will be left to serve the public?

The impact of Resources on Business

At the same time, we live in a world which has limited resources, although from a short term perspective, they seem almost unlimited and exploitive industries will make sure that’s the message you get. You’ve heard arguments from environmentalists suggesting that growth is leading us to severe global shortages (e.g. peak oil) and you acknowledge the potential that such claims may have validity. You also agree  that certain shared natural resources, such as sea life, water and air, that have no one owner, are being used without recourse by whoever has access to them. Fish, for example, are being harvested faster than they are being replenished because lack of resource ownership discourages companies from spending money on research for replenishing stocks that might be developed, only be harvested by someone else. Such issues tend to encourage the easier option of finding better and more efficient ways of harvesting the scarce remaining resources.

You also recognized that the limited span of an individual in any one role discourages them from looking 50 or 100 years into the future, in favour of the next 5 years at most (and usually quarter to quarter). We suffer from short sightedness, not due to a fundamental disregard of environmental reality or a lack of care, rather due to day to day pressures and stresses, which as business owners and individuals, we try to eliminate not increase. We don’t want to have to worry about sustainability, an ambiguous issue at best, unless of course it’s profitable. Without being totally neglectful, of course, we spend most of our time trying to deal with today issues and so planning for tomorrow takes second place.

We complain about government interventions, regulations and taxes when they impact us, but when we really think about it, if it weren’t for those same taxes and regulations we wouldn’t live in the great countries we live in that provide us with infrastructure, roads, hospitals, health care, schools for our kids, and so many other benefits that we, our employees and even our shareholders and customers enjoy. Those schools educated our employees helping them become resources for our businesses, and helped other to become productive citizens that become our shareholders and customers. The transportation infrastructure help us to reliably get to work, get raw materials from suppliers and transport goods to our customers. The health care systems keeps our workers healthy and productive. All things we don’t have to worry about other than to follow a few regulations and pay some taxes.

True, many government services could be privatized and possibly done more efficiently, but in the end, someone has to manage the process of looking out for the common good, and someone has to pay for it. It is precisely the vision of our countries that we value and the money spent in implementing that vision that makes our countries so great. Ironically, even though we may have less than perfect governments, we tend to feel better when we live in a well structured world. 

The Downfall of Sovereign Government

While I won’t argue that bigger government is better, I will argue that government appropriate to the needs of the general population is ultimately better for the public and for business than governments which are too small. The question lies in what are the actual needs? Remembering that, as business leaders, we are only a small portion of the population, albeit a portion that has the responsibility of serving the needs of many stakeholders; employees, shareholders and customers. We have a disproportionate influence on society and therefore we need to think carefully about what we represent and what we hold as our values.

The question remains, what do we as business leaders truly need from our governments and what does the public need for their good? The dialogue begins in the form of our activity, what we say, what we encourage, what we market, who we support, what we lobby for, and how we vote.

To be fair, governments are far from perfect. They suffer, to some degree, from the same shortsightedness that businesses suffer from due to the fact that no one holds office long enough to pay for serious mistakes such as failing to set policies which prevent degradation of the global environment. They are also limited in a global environment from creating conditions which favour growth in a direction that considers a global vision. For example, independantly, a government can’t regulate air pollution because, while they can set mandatory standards in their own country, other countries will simply violate those regulations and cause polution anyway. The G8 and G20 try to deal with some of these issues but ultimately have no teeth. With weak and unfairly distributed regulation comes unfair competition. And while countries fundamentally agree about many of the issues, their governments, in the hope to increase their own GDP while preserving good relationships and free trade agreements with other countries, are reluctant to impose regulations on businesses which make them less competative in a global environment. And from a country’s perspective, they are correct. However, from a global perspective we need to take a different view.

The Evolution of Government

No business leader, from the perspective of their day to day business, would voluntarily advocate for more government. But business leaders also need to think strategically and long term. What will be good for the global business environment and global competition over the long run?

Historically, we can think of businesses as local enterprises that met the needs of very limited forms of society. As populations grew, it became necessary to settle arguments between nearby villages and slowly local, regional and national governments evolved. Each level of government assumed certain responsibilities and with each there was an improvement and expansion of the economy. The infrastructure and services provided to business leaders and  individuals in the society helped the society to progress. In the same way that invading forces, at the hands of wealth hungry tyrants,caused much pain to both friend and foe in former times, unregulated global businesses have the potential to cause problems not only for others but also for themselves. Just ask the President of Enron or BP. Eventually, we all have to pay the piper.

It is the organization of government and the regulations they impose that ultimately serve the betterment of the society. The fact that they force business to follow guidelines which are beneficial to the society as a whole actually helps good, ethical and relavent businesses to progress and become more competative. Some of the rights of local and regional governments were sacrificed in favour of national governments because it was appropriate at that time to legislate at the national level. And while economies functioned primarily on a national level, that approach worked reasonably well. But whether we like it or not, successful businesses are those which continue to provide products and services within the framework that is imposed, be it through national, provincial, regional or local regulations. Besides the regulation they may occasionally struggle with, they also benefit from the services provided from these various levels of government.

We happily give up certain freedoms to ensure our comfort, safety and security.

But what of the long term view of global issues?

The question is not whether a global government is appropriate at this stage in our planet’s evolution, the need for regulation of the planet’s resources and for serving the needs of all it’s inhabitants is clear. The question is, what role should a global government play, what powers should they have, and what powers and rights should sovereign national governments sacrifice to ultimately enhance life for all of us?

How would a global government impact business for the forseeable future? How do we encourage and support a transition that will create, not just better nations and a better global infrastructure, but also better businesses and a better world?

We may still argue that government slows the pace of business. But consider how businesses may have operated before national or regional governments existed. It is true that businesses were subject to less regulation, but it would be hard to argue that the world was a better place or that businesses were better off.  Businesses had to provide for their own protection from thugs and highwaymen, had to suffer from inadequate infrastructure, and had many challenges in addressing the needs of workers just as they do now in the developing world where mortality rates are much higher and finding skilled workers more challenging. There is little doubt that everyone had a more difficult life including the business owners.

But now, in addition to national issues, we have global issues. Global resources are being consumed at unmanaged rates and, while some companies are benefiting from short term profits, the long term benefits for other businesses is not so clear.

It is true that a global government would ad a layer of complexity to our current situation, but just as having local, regional, provincial and national governments takes away certain concerns from our businesses, a global government would also serve a specific role. We pay taxes now for needed services from other levels of government and a global government could be expected to share in these taxes to take care of the needs which are common to all just as national governments did in their time. And we wouldn’t necessarily pay higher taxes, but we would pay a tax which is more appropriate to the needs of the world we live in. Any world government would, no doubt, take into consideration the need to keep the world economy rolling and would therefore be mindful of excess taxation.

In the same way that we now have pride in our countries and how they function, isn’t it time that we begin taking pride in our world and how it functions? And just as some businesses were likely unable to make the transition when national governments evolved, it is equally true that some businesses will likely fail within a truly global economy.

For example, exploitive companies are mismanaging resources and, as a result, fail to make the transition to a more appropriately regulated approach, wouldn’t it be better for them to fail? In the end, what’s good for the world is also good for all the businesses that continue to exist, those that can compete and survive in a global environment.  Will such a change not provide the long term security that we now lack and the oversight of global development? Will a globally oriented infrastructure not benefit our globally workforce and our customer base and enable us to function more effectively as a human race, to compete without the worry of unfair or damaging practices, and without daily concern of how our future needs will be met?

Global government doesn’t necessarily mean bigger government, just more appropriate government for the time in which we live.

What can we do as Business Leaders?

We need to step back, look at things from a long term strategic perspective, decide what’s best for our world, for our children and their future, from the perspective of employment, food supplies, resources, research, innovation, infrastructure, security and, ultimately, the world that we will leave behind for them.

We need to adjust our values and make our voices heard to our national governments. Just as in the past when national governments became relevant and necessary, people spoke out. Now the time of global government and global regulation has become appropriate. Rather than resisting it, we should welcome and encourage it. As with every evolution, there are some rough patches, but every change starts somewhere.

Just as we now voice our concerns about current government issues, we need to voice our concerns with a view to the future. We voice our concerns through our votes, our participation, what we communicate to our governments, our workers and our friends and our families.

I’d love to hear your feedback even if you have other ideas. If you agree with these ideas or at least think them worthy of consideration, please feel free to spread them widely by sharing this link and letting others read them. You can share this link by clicking on the share button and choosing you favorite or by an e-mail link to this site.

All the best,

Garth Schmalenberg

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