Decision Making and Ethical Behaviour in an International Context

In today’s blog, I am going to change a little bit the methodology; I am going to focus on answering the following 5 questions based on the article:

The republic on a banana peel from The Hindu Newspaper. Published: December 3, 2010 by P. Sainath.

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1.    What does the statement “all capitalism is crony capitalism” refer to? First, we have to define crony capitalism: it makes reference to the relationship between the success of corporations and their (when we say their, we refer to CEOs, management, or even shareholders) ties to governments (banks, the media, and other actors could be included). When the author says that “all capitalism is crony capitalism”, it means that every single corporation has in one way or another, some tie, some connection to a governmental official that can, in some way, help that company succeed. 1
Do you agree with this statement or not? Give an example. I totally agree with this statement, not only because of what we learn in college, but of what we see in the news, and what we experience in our personal professional lives. I think that every corporation has some access to benefit from crony capitalism; what we don’t know is to what extent some use it in an ethical manner and some don’t. It is hard to define this in a moral sense.
We can find hundreds, if not thousands of examples of crony capitalism:

·         Chaebols in Korea are huge business conglomerates that take advantage of this type of capitalism. 2

·         The famous scandal about Creekstone Farms with the mad cows is probably one of the greatest examples in crony capitalism. 3

2.    What is a banana republic? It is, according to Christopher Hitchens, “overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts conveniently socialized”. 4

Why is the author comparing India with a banana republic? Because, as he shows us, cronyism in that state is leading corporations to be guilty of many bad things that are later blamed on a few innocent people; because companies get away with anything, taking advantage of political ties they have, but at the end of the day, someone has to pay for the broken dishes; because corporations are in charge of making a few people wealthy and making sure they are safe, while those in charge of making them wealthy are paying all the damage caused.

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3.    Why is it problematic that in the business world “The Media” becomes a corporation?
It is simple. A corporation’s ultimate goal is to make its shareholders wealthy by eventually reducing costs and selling more. If a media becomes a corporation it will DEFINITELY have the same goal. How will it achieve it? By posting, saying and/or stating whatever, that is, of course, according to who pays more for it? 

4.    In this situation, what behaviors are considered unethical for corporations, journalist and the state?
Corporations: for them, taking advantage of family ties, friend ties, and so on, with political officers, for their personal interests. Some examples could be begging for lesser taxes, tax evasion, privileged information, etc.
Journalism: taking advantage of the capability of broadcasting public information, that is, according to what they analyze. They could defect easily if offered a great deal of money, twisting delicate information into what the sponsor wants them to say.
State: lacking transparency and equality to everyone and every corporation; by levering some corporations, others are being left behind, and it eventually damages the entire system.

5.    What can The Media, Corporations and the States do in order to behave ethically and in the benefit of the people and not their own interest. Give at least 5 good ideas.

·         Increase democracy in the states. By making decision making more segmented, the chances that corruption will arise are less. This will eventually avoid crony capitalism because more people would have to be convinced (this would work based upon that at least one person in that group plays as an ethical character).

·         To not concentrate the media in only a few people; if diversification exists in media, controversy could avoid false and misleading statements.

·         Companies that are transparent are more honest; making a company transparent to society (that is, in certain ranges. Not everything can be transparent) makes it harder for them to do bad things. By showing society what they are doing, they will create a barrier for themselves to not use crony capitalism.

·         Making a company based on low power distance creates participation and democracy: if many levels of the company can participate, decisions could be narrower and much more ethical, given that people will have to decide on a collective and legal goal.

·         More power should be given to a Medias stakeholders (that is, all society); a transparent media is a clean media.

Bibliography 

           1. Sanger, David 2002. The world; the global cost of crony capitalism. The New York Times. Accessed 06/03/2011. http://www.nytimes.com/2002/07/21/weekinreview/21SANG.html?todaysheadlines  

2.      2003. Unfinished business. The Economist. Accessed 06/03/2011. http://www.economist.com/node/1697767?story_id=1697767

3.      2006. Mad cow watch goes blind. USA Today. Accessed 06/03/2011. http://www.usatoday.com/news/opinion/editorials/2006-08-03-our-view_x.htm

4.                   4.  Hitchens, Christopher 2008. America the banana republic. Vanityfair. Accessed 06/03/2011. http://www.vanityfair.com/politics/features/2008/10/hitchens200810

      Pictures

      1. Accessed 06/03/2011. http://www.hermes-press.com/enron_ken.jpg

      2. Accessed 06/03/2011. http://www.veteranstoday.com/wp-content/uploads/2010/01/Corporate-News.jpg