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The Politics of Fortune: A New Agenda for Business Leaders by Jeffrey E. Garten


Rating: (Mildly Recommended)


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Manifesto for CEO Action

Jeffrey Garten calls CEOs to action for public policy collaboration in his new book, The Politics of Fortune: A New Agenda for Business Leaders. You may not have the time or interest to pursue even a quarter of what Garten proposes, and you may disagree with him wholeheartedly. You’re likely to feel uncomfortable with what Garten has to say, and for that reason alone, The Politics of Fortune may be worth reading.

Here’s the agenda list Garten proposes for CEOs:

The administration and business leaders should insure that the homeland security advisory council is accorded the scope and importance it deserves.

The administration and business leaders should conduct a postmortem of recent scandals, with recommendations for strengthening America’s business culture.

CEOs should help restore fiscal soundness.

CEOs should help strengthen the social safety net.

Business leaders should work to keep the world economy open in the face of strong head winds.

Business leaders should redouble efforts to liberalize global trade.

CEOs should support higher levels of investment in global rules and institutions.

CEOs should press for trade policies that benefit poor countries.

CEOs should press for increases in foreign assistance.

Business leaders should help ease the crisis in global health.

CEOs should contribute to the evolution of development strategy.

Business leaders should give added attention to Islamic countries.

CEOs must be proactive and transparent when it comes to issues of corporate citizenship and social responsibility.

Business leaders should expand the work of industry associations.

Business leaders should expand engagement with public and nonprofit institutions.

Business leaders should develop more rigorous strategies toward NGOs that act as antiglobalization protest groups.

CEOs should press governments and international organizations to develop global rules of conduct.

CEOs should press for sustained multilateralism.

CEOs should keep global economic priorities high on the administration’s radar screen.

CEOs should step up support for the protection of human rights and democracy.

CEOs should help Washington with public diplomacy.

CEOs should press for a foreign policy advisory board.

Business leaders should push for the establishment of a national commission to take a fresh look at business education at all levels.

If all those “shoulds” make you a little twitchy, here’s an excerpt (pp. 127-30) from the agenda item, “CEOs should press for increases in foreign assistance”:

The world needs a powerful set of voices outside the U.S. government advocating higher levels of aid and more effective use of the funds. Precisely what is needed can only be estimated in orders of magnitude. A U.N. commission, cochaired by former Mexican president Ernesto Zedillo, and including former U.S. Treasury Secretary Robert Rubin, has indicated that at least an incremental $50 billion per year is required to substantially reduce poverty—twice as much as the aid flowing today. Yet the trend is in the opposite direction: Total aid in 2002 adjusted for inflation was about 10 percent lower than it was a decade before then.

CEOs should press the Congress and the Bush administration to increase the levels of America's foreign aid, and they also need to make the case with the public. The performance of the U.S. government has been dismal by any standard. The United States provides 0.1 percent of its GDP in foreign aid, the lowest percentage of any major industrial country and less than a third of European levels. Over the last decade, American foreign aid has declined by over 30 percent, when inflation is stripped out. There is room to argue about how the aid ought to be used, how to link it to policies in recipient countries, and how to measure its impact—and CEOs can bring a lot to this debate. But if America doesn't step up its performance, other countries won't either.

Foreign aid from the United States and other countries should also include more assistance for debt relief for the poorest nations, in return for their own governments' pursuit of sound policies. A major international initiative on debt relief is under way and deserves the support of the Unred States, not only to implement what is on the table now, but to expand the scope of the plan. Financial help is also needed for the budgets of the U.N.’s specialized agencies. Increased support for the World Health Organization and for those agencies that oversee aid for children, food production in poor countries, refugees services, and the reconstruction of states recovering from civil wars is critical. The budgets of institutions like the World Trade Organization must also provide for essential technical assistance to developing countries, whose officials lack the expertise to negotiate international economic arrangements that will give them a chance to take advantage of what globalization can offer them. For instance, a typical developing country spends $250 million per year just to implement three of the dozens of agreements that constitute membership in the WTO: agreements on customs valuation, intellectual property rights, and technical standards. That’s more than the average country's entire annual budget for roads, communications, and other development projects.

In the spring of 2002, the politics of foreign aid began to change in Washington, although it was not clear by how much. At a global conference on financing for development, held in Monterrey, Mexico, in mid-March 2002, President Bush announced that the United States would increase its annual development aid budget by 50 percent by 2006. Although the funds would be dispensed only after Washington was satisfied that the recipients had followed a host of sound policies, the Bush administrations U-turn generally pleased the international community. Still, what America didn't like about foreign aid was clearer than what it did. "For decades, success of development aid was measured only in resources spent, and not in results achieved," said President Bush. "Pouring money into a status quo does little to help the poor." 12 Three months later, the Bush administration proposed doubling the amount of money it spends on education in Africa and substantially increasing funding for dealing with HIV/AIDS on the continent.

The business community needs now to press Washington to keep up the new momentum. The increases in American aid, while welcome if they in fact materialize, still fall far short of what is necessary. Also, virtually no part of the new plan can be implemented without congressional support, and business pressure on Capitol Hill will be a critical element in getting any new approach off the ground.

Foreign aid to help the poor has been unpopular in the United States ever since the Marshall Plan was completed. Even if and when the new U.S. approach announced by President Bush is combined with new aid pledges from Europe and elsewhere, the total aid would constitute less than 20 percent of the goals supported by the U.N. Given the political realities and the problems that will ensure if poverty continues to spread and deepen, a more radical approach ought to be considered: a global tax on trade, or on carbon emissions, or on sales of military equipment. Most governments and business executives consider such ideas heretical. But if you know that the course you are on is bound to fail – if the problems grow faster than the remedies you have been trying – is it so crazy to think about approaches of a different order of magnitude? In a system of global taxation of some kind, revenues would be funneled into one or more trust funds that would be available, under precise guidelines, for investments in poor countries. Choosing who would manage those funds would be a crucial decision, of course. Many other fundamentals of any plan – the rate of the tax, the collection procedures, the allocation mechanism, etc. – would have to be worked out. However, if business leaders took a serious interest in such plans and participated in thinking them through, it would help to diffuse the objections that the plans are socialist schemes. After all, there are no advanced societies in which taxes do not help fund pressing social investments.

Garten’s tone is preachy throughout The Politics of Fortune, and if the image of a wagging finger bugs you too much, you should take a pass. Otherwise, you may find your thinking stimulated, and your blood pressure raised as you turn the pages of this book.

Steve Hopkins, March 25, 2003


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The recommendation rating for this book appeared in the April 2003 issue of Executive Times

URL for this review: Politics of Fortune.htm


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