Transcripts For CSPAN Business Society The Lorax 20130310 :

Transcripts For CSPAN Business Society The Lorax 20130310

Wonderful opportunity for those of us in the political arena to learn more about what is going on in terms of political research. I am a republican that ran for the first time in 1980, very much an anomaly. What i want to say about that is that i made friends and acquaintances, other people i have known for 30 years, they have been people i can call on i wanted to say thank you to everyone here. [applause] [inaudible] sorry to bring it up. There is a session following lunch. [inaudible] there is a session following lunch primarily for the students in the audience, but if you are desperate to talk to one of us [indiscernible] thank you very much. [captioning performed by national captioning institute] [captions Copyright National cable satellite corp. 2013] earlier this evening guests arrive for the annual Gridiron Club dinner. For the first time in history they allowed for a print reporter to attend and provide a description of the nights festivities. On the next washington journal, the president s attempts to reach out to congress and president rand pauls filibuster. Our guests are peter cook and rachel smolkin. States with the highest and lowest [indiscernible] rates. Later, secretary of state john kerry, announcing last week that the u. S. Would provide aid to the serious syrian opposition. Live, tomorrow morning with your calls, tweaks, and emails. One of the things an early american wife was taught to do, she supported her husbands career, usually through entertaining. Dolly was socially adept and politically savvy, structuring entertainments in such a way that she lobbied for her husband under the guise of entertaining. She thought it was very important to create a setting in the white house like a stage for the 44 for the performance of her husband and the the kind of of diplomacy. Dolly madison, we will follow her journey into the wife of the fourth u. S. President. We will include your phone calls, facebook comments, and tweets. On cspan, cspan 3, cspan radio, and cspan. Org. Next, a talk on concepts from the lorax, by dr. Seuss and how it relates to popular culture. This is about one hour. I guess, let me first start introducing the panel. My panel came the other to discuss this book. I will give you a brief synopsis, tell you the themes that we have spoken about, and instead of doing a presentation we will probably do more of an interactive q a. Miguel padro in aspen manages a portfolio of work around Critical Issues for the intersection of business, Capital Markets, and the public good. He has a series of current projects, including a factory work out with corporate value strategy groups. We will talk later on about this term corporate values. Ryan walsh overseas liquidnet, an institutional trading network. I first met him about one and a half years ago and i had to get to know this guy, he had to be my friend. He spoke about philanthropic ecosystems. I did not know that term, but i love it, and anyone who used that term i had to get to know. He is the executive director and his mandate is to leverage the breath of their resources to generate local, global, and systemic impact. In this role he manages Employee Services with a youth village for orphans in rwanda and markets for good to upgrade the information infrastructure of the social sectors. And then alice cargo is sitting here to my right. President of cargo llc, providing strategy will services to fortune and hundred companies, firms, foundations, universities, health care institutions, and the boards of directors of corporate governance, forprofit and nonprofit partnerships, corporate responsibility, sustainability, strategic philanthropy, and profit revenue models. And finally, the lorax. We think that he works on ngos, we are not sure. We think he works on ngos, but for now lets say that he speaks for the trees. So, the book, what does it do . It tells the story of this mossy creature who tells it tends to stop the onceler from chopping down the trees. He is somewhat onceler side of that business is business and business must grow. He chops chops down all of these things, these trees, making a seemingly pointless government that according to the onceler seemingly everyone needs. At this point lorax and his friends are forced to go elsewhere, leaving behind the onceler, his dirty factory and useless environment. The story is about a young boy who passes through the recruit through the town. The onceler has pondered over a message left behind by the lorax. In talking to the boy, the onceler seuss realize that on less someone cares about the situation, things work things will not improve. So, onceler is in the last tree seed. He tells him that the lorax and his friends may come back. The lorax, is often thought about as being a story about the environment, but today we will frame a story about business, society, and business within society. I see links into several aspects of the debate about the role of corporation and business. Lots of questions about what are corporations . What should they be about . If we think that corporations are should be are or should be more than profit generating machines, how do we balance the needs of profits and returns to shareholders with the needs of society . There are a lot of terms that seek to link the two. The need for profits and for society. Terms like conscious capitalism, sustainable capitalism, like corporate social responsibility, created shared value and longterm Value Creation. We are going to take a stab at exploring all of this through the lorax. Let me begin with miguel. What is the view of the onceler of the view of business . It seems clear in the book that his view is to enbigger business and grow, because that is what they do. I notice that as a quick historical fact, the lorax, was published in 1971. I think the view refracted reflected Milton Friedman. On some timbre 13th of 1970 there was an article the the posted about increasing profits. It seems to me that for democrats, 2025853880. Dr. Seuss was setting up Milton Friedman in that historical moment. But i will say that the onceler s point of view was radical and contentious at that time. In the 1970s there was a lot of push back against this, where they headed up the Business Roundtable and as late as 1981 the Business Roundtable still formally adopted the view that shareholder return needed to be balanced against other considerations. The view of the onceler in 1971 was not actually the commonly or universally held view. I think that is worth noting. People like Reginald Jones and others at the time certainly saw role as ceos as the ceo states men and saw the role as qualifiedpolitical. That has been be attached overtime. That is extremely, extra in interesting. How did this convergence, about . Where now it seems like the dominant view of the average person on the street, what to businesses do . They would probably tell you something about making profits are maximizing profits. That is absolutely accurate. Especially if you walk down the street in United States. I would say it is not necessarily true in other parts of the world, but without a doubt they are tuned as maximizing reviewed as maximizing profits for shareholders. They were viewed as maximizing profits for shareholders. Maximizing property and ownership, things like that. One of the fallacies that underpins this notion, that corporations are actually required to maximize profits for shareholders is this notion that shareholders own the corporation. It is demonstrably false. Shareholders do not own corporations, corporations are not property. What makes them a corporation is how their assets are controlled and various things are separated. A corporation owns its own assets. The notion of corporate personhood and Everything Else is what makes a corporation unique, separating it from Something Like a partnership. I think that maybe one of the strongest cornerstones of the ideology of wealth maximization is this notion of ownership. I think that the other thing that taps into something unique in the United States is this notion of shareholder democracy , our kind of natural skepticism or reticence around ceos and corporate leadership to concentrate power. There is a feeling around this notion that shareholders can be is democratic bulwark against corporate greed and Corporate Power and reckless management and it makes more sense to us now, kind of instinctively, because probably everyone in this room is in some way invested in the stock market and we all think we are the shareholders, the ones that you think of as wanting to control the corporation. But we all, most of us, invest through intermediaries, giving our money to fidelity or someone else. When in fact i think in practice what the whole notion of shareholder privacy is is it has not democratized some much as it has made these corporations more plutocratic. So, rather than spreading out our voice amongst shareholders, it has concentrated them into a very few large investment firms. So, in practice this idea of shareholder privacy starts to look less attractive. So, behind this norm the shareholder wields maximization. What are some of the limits and dangers that you see in having this view where business can maximize well for the shareholders . I think that in practice it has kind of evolved that way. There is evidence for us to be worried about it. I see a least two levels of danger. In my position at the aspen institute, generally we are not on the podium speaking, we are listening to experts. So these ideas, while i may have adopted them, they are not my own and i cannot take credit for them. But the first idea is maximizing returns for shareholders. I get it, we are the United States. We love our superlatives. But this idea of maximizing returns is very dangerous because the minute that you accept this notion that a board of directors must maximize share price, you are leaving very little room to consider the means then that end, which are very important. It is their job to maximize share price and that is what we celebrate, creating incentives that start to become again perhaps distorted. It can also very easily translate into this notion of maximum extraction of value. If we do not care about the means to the end, we do not need to create real new value, you just need to do the best out there and claim it for your own and turned it into some sort of profit for your shareholders. That really starts to become cannibalistic. It can lead to shortterm decision making. UnSustainable Business practices. And it can also, being the flawed beings that we are, pushed our natural tendencies to overlydiscount the future and not live in the present enough. I suspect that this is why we see companies over the last 30 years really cutting back on r d and labor costs as much as possible. Externalizing more and more costs, because of this more shorterterm mentality. The other danger, i think, is related to shareholders themselves. I think that this is one we are starting to do a little work on and it is troubling to me, this realization that shareholders amongst the corporate constituencies, shareholders hold the most risk. Shareholders are protected by limited liability, legally protected by limited liability that is defined to encourage a certain level of risk taking. That is how innovation happens. But when you start to put them in that risk preferring constituent, you elevate them to the top and you get riskier and riskier behavior. So, one thing the said to me in your discussion about this panel, miguel, one of the things that was interesting to me about the lorax, you said that i said the perhaps the onceler was not a bad person. He shows empathy. He says things like i felt sad to see them all go, but business is business and business must grow. And other points he will say this is a business, regardless of tummies. He acknowledges the destruction but still continues his business practices. To me this book is about being a bad business model, which i found really powerful. He had the wrong aspiration. To grow and grow and grow without thinking about the possibility of grow yourself out of business. If you destroy all the commodities and resources that you need to run your business, that is a really stupid business plan. I think that he was blinded by the ideology. So, if we think of success in business as maximizing wealth, he was kind of successful in the sense that enron was successful. Their share price peaked four months before they went out of business. To most reasonable people that would not be a good business. He had the wrong business model. How do we help people like the onceler . At the end of the book he has remorse. He is telling a retrospective tale. What if we were to catch him in the middle and get him to listen . I guess the question is what would a more Sustainable Business model have look like . What are companies beginning to do . What are you guys beginning to see . The thing about the lorax, and other dr. Seuss books, there are no outside forces on the onceler. In civil society, think about what makes it durable and resilience . There is none of that. He exists in this alternative universe where there is no government, no ngos. The consumers do not seem to live anywhere nearby either. He does not seem to exist within the community either. In some ways if there were more mechanisms to provide him with feedback and a check, i am sure that alice will talk about boards in this regard, she has written books about boards. We should not be viewing businesses as single models of productivity. They are part of the system. To the extent that we separate themselves and Business Leaders separate themselves from that system, they are doing a disservice to everyone, including themselves. Providing more feedback to the onceler would have been useful. The lorax, if he were lorax, if you were able to rally constituencies and get feedback to the onceler, it would have at least delayed what had happened and given time for competitors to come in and do things more efficiently or better, for the health of the entire society. Thank you. Byron ryan, one section that you hear a lot of when you begin to talk about business, society, business being responsible is why do we want business doing this . The power business is to generate wealth and money. People become part of a business for investment. The question is, why business . What is so powerful about business to tackle social issues . I think that corporations are perhaps the lowest consequential entities we have in society. They have enormous resources, enormous capabilities, enormous asset sectors that they can put to use. Their primary purpose has been to generate financial returns, but it is also about creating jobs, as well as goods and services for a people. If we expand the lens with which weve looked at businesses, if we say as a society we have chosen to have this organizational form that has been wonderfully successful at accomplishing financial value, Innovative Products and service services, wealth generation of a largescale, if we could take that form and expand what it is capable of doing and the issues it can take on, we would see transformational change across society. The problems we have in society are too great to be dealt with by any one sector alone. Forthright we need a thriving public sector, a thriving social sector, sorry, thriving social sector, public sector, and private sector. If we look at those sectors, far and away the resources are available in the private sector. Instead of demonizing corporations, i think we can inspire and encourage corporations to recognize the capabilities and capacities that have to have an enormous potential and impact. It is not a matter of saying that corporations do a lot of wrong, so lets penalize them. It is instead saying that corporations have enormous potential to do good, lets help them get there. Lets create the right alignment of incentives. One of the things i see in the book, be lorax the lorax did not attend to inspire the onceler, all he did was be rate him, which is why part of the reason why the onceler did not change his business model. But what do you do with a business like the sneed business . What do you do . It is about encouraging and celebrating the Companies Making an impact. We need leadership and vision. We need case studies in how the apply it their challenges. Corporate impact is really about not make not just making grants and dealing with the corporate fumes of a constant of the company, it is applying the engine to social challenges. How do we get companies to write a few more checks and charities . How do we inspire corporations to use their capacity to take on big challenges . That brings me to my next question, which is another thing from the book is the lorax in his request is not simply asking the onceler and his thneeds business to engage in Corporate Philanthropy, he wants the onceler to integrate these sustainable principles into the core of his operas into the core of his business. What is the difference between your between Corporate Philanthropy and something integrated . In my opinion it gets to an outdated and bifurcated view of business and society, that the Company Makes as much money as possible at all costs, right . Without understanding the impact on communities where they operate, the product environment. It has a few feel good Marketing Campaigns and philanthropic grants that it makes a really in the nature of pr or risk mitigation, but that it does not we need to get beyond that outdated mentality, make as much money but as long as you give a little bit away, we will forget about all of the danger the to create a long way. That you created a long way. We need to go to the heart of what a company has the capacity to do. In the lorax, as you said, it is not about he was not asking the onceler to fund an afterschool treat club for use in the community. Tree club for youth in the community, he was asking him to revise his fundamental Business Strategy and purpose. That is the kind of conversation in need. Not Encouraging Companies to give, but their impact. Alice, what do we do with this . Miguel mentioned increasing a system of feedback. One of the ways we get t

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