A refreshed social contract

It’s a broad topic and I won’t cover it in detail today but I have been thinking lately that we need a new social contract between the business community and government. You will excuse me if I seem a bit incoherent but this is a work in progress in terms of my thinking.

I am in a pretty interesting position in that I get to interact with all sides – government, industry large and small, universities and NGOs in the Atlantic Canadian context and I see a widening gap between them and it is increasing friction.

I’d like the business community to come out strongly and say we don’t mind paying taxes – we realize that we need strong community and social infrastructure for us to have successful businesses so we do not mind paying taxes at all – as long as they are reasonably similar to other similar jursidictions.

I’d also like the business community to be more explicit about corporate social responsibility.  A lot of big companies have CSR policies but I’d like to see it far more pervasive.  Specific to New Brunswick, I’d like to see our companies (and many do) be far more engaged in broader community objectives.  What is the point of having a wildly successful business if the community around it is crumbling? 

There’s more on the business side of the contract – environmental, etc. but any contract has two parties.

On the government side (as the representative of the people as a whole), I would like to see government acknowledge that a strong successful business community is fundamental to strong and successful societies.  Specifically to have a more explicit understanding of how public policy impacts the business environment and the value proposition for investment in a place like New Brunswick.

How about a simple agreement that businesses have a right to make a reasonable return on their invested capital over time?   Companies and people can invest their money just about anywhere these days and we want New Brunswick to be a place where they want to invest and feel they can make a good return on that investment. 

I’m tired of the old cliches – businesses just want to cut taxes and regulation and the role of government is to protect the people from the evils of business.  That sentiment should have run its course by now but it is back with a vengence.

Last weekend I heard a very articulate person on a roundtable discussion talk about the need for government to stand on the side of the people against the corporations and their greed.  By now we should realize that ‘the people’ (and I am not sure who these pundits and experts think the people really are) need to work and unless we follow a communist model – the bulk of them need to work for those corporations.  So let’s set that as a foundational element of society and then figure out how that relationship can work most effectively.

Not that long ago I had a business leader (I hope he doesn’t read this blog) tell me he just wanted the government to get out of the way and let him build his successful business.  He and that lady from the roundtable are the end points of the spectrum and we need to find the middle ground.

Again this is not well formed but I have been thinking in these terms for a while now.  I reject Naomi Klein (although many of her points have some merit) and I reject the notion that businesses can do no wrong.  Government should protect the public against bad corporations as it should against bad people (criminals). 
But the starting point shouldn’t be that government’s main goal is to protect the public against corporations any more than its main goal is to protect citizens from citizens.

If you have a society of murderers – having laws against murder is basically irrelevant.  We assume that the vast vast majority of people in society believe that murder is fundamentally wrong and the laws are there to protect against the few.

Enough rambling for now but you can expect more in the coming weeks on this subject.

5 thoughts on “A refreshed social contract

  1. Dude, nothing personal but if you’ve read Naomi Klein her resources and intellect make this blog look like Charles Leblanc. That point of view is hardly HERS, there is a MASSIVE support group behind it.

    The problem is the ‘details’ of the social contract. Again, we know that among the most successful (depending on how you define it) societies are the nordic ones where 70% of the economy runs directly through government.

    In fact, I’d argue the opposite. Military, police, health, education, all ran FAR better under a government model-and that was a government that was only remotely representative and didn’t really give a rat’s ass about the public that made it up.

    We talked before about how Sweden OWNS the internet backbone-and various companies resource off it. The same USED to be true in Canada, so if you look at the success of the regional Co-op, you can EASILY argue that an ‘ideal social contract’ would have VERY few corporate players. The corporate model is not nearly as successful as propaganda have (some) people thinking.

    But you can’t say a bad word here in Waterloo about RIM and Lazaridis, even though they were sued for stealing the basic technology that started the company and have been involved in stock manipulation similar to what put Conrad Black in jail. But nothing is stopping Irving from doing what is ‘best’ for NBers, in fact, from their point of view what they do IS best for NB.

    The reason people think government should be against big business is because the business sector is NOT the only sector, unless we jump into metaphors and talk about business in some grand way like they did in the middle ages that doesn’t really mean business at all. It’s simply a question of POWER. And like I’ve said, the perfect remedy for what you are talking about is ….democracy. IF, say, the NBPower deal were brought out by an objective government and people were voting on it, then MOST of these problems go away.

    In Maine, we saw referenda on whether a large corporation could set up an LNG terminal. That means the power was in the hands of the people, which means a corporation puts its best deal forward and people vote on it. No one group has more power than the other (its more complex than that, but not necessarily).

    In NB, you have a corporation which essentially RUNS the government, at least in its field. So the province bends over, BOTH parties, to accomodate them. NO public consultation was required or given, no environmental assessments, PLUS a lucrative tax break.

    Now, in that kind of scenario how can you really be surprised that people want government to ‘protect’ their interests from big business? Change the system, give the people the power, and big business no longer ‘runs’ the system and that no longer becomes true. Simple as that.

    So if you want a different social contract, you have to involve PEOPLE in it, not, as you say, business, government,etc. It’s interesting that you mention that you see this from ‘all sides’. Well, actually, you DON”T. Government and business, particularly in Canada, and most particularly in NB, are virtually identical. The group you DON”T interact with, and which I’d argue is most important-are PEOPLE. Those without an agenda or a systematic way of thinking.

    This was rambling as well, but for a new ‘social contract’, its simple. Like any constitutional change, you need a REFERENDUM on it. So by all means put your best one forward.

  2. OK, if you give me:
    – corporations are OK with paying taxes, and
    – corporations accept that they have social responsibilities
    – like environmental responsibilities, and
    – strong community and social infrastructure
    and add
    – corporations have to respect human rights
    then I can come around to talking about the other side of the equation.

    But you have a long row to hoe. From where I sit, corporations are far from such an enlightened perspective.

    I’m tired of the old cliches too – but I’m not the one propagating them. Corporations are! Just today we see from CATA a call for (you guessed it) lower taxes, government grants, and less regulation. http://www.downes.ca/post/51425

    This not even two years after corporations took the same public policy and turned it into a global recession.

    Yes, ‘the people’ need to work, and the sad fact about their existence is that many of them need to work for corporations. Which means they face stresses not only from public policy, over which corporations have unreasonable influence, but also in the areas of wages, benefits, and their retirement funds (and the dwindling hope that these same corporations won’t simply abscond with the money before they get to see it).

    Yes – we have to in some way rethink the social contract. Right now, the society we have is one in which corporations mine society – the people, the resources, the ideas – and move on when they’re done. New Brunswick has in particular been the victim of large corporations that have spent generations taking from the province while putting very little back into it in return. Slowly, surely, gradually, the life ebbs out of the province, not because it is in some basic way deficient, but because it is being mined and left as tailings.

    So, yes, talk about this.

  3. Thought provoking post in the midst of a power deal that sees all NBers, regardless of income, subsidizing industry.

    I have no problem with helping industry but it should be transparent, and the company should have commitments for job creation and retention.

    A flat power rate that saw qualifying industry receive their power subsidy via a rebate would be more socially responsible (in consideration of low income earners). It would also encourage industry to invest in conservation and productivity improvement. I recognize prosperous industry is good for all of us but I have a problem with families below the poverty line subsidizing industry, especially when they are already paying such low taxes.

  4. As the former Executive Director of the New Brunswick Business Council, I would suggest that the Council has adhered to the standard you advocate for business. Since it’s inception, it has supported the provincial government’s developmental thrusts whether it be the Conservatives Prosperity Plan or the Liberals’ Self Sufficiency thrust. In it’s response to self sufficiency, the Council proposed four building blocks. The first two building blocks directly reflect the corporate social responsibility theme by the emphasis on business’ role in promoting education and wellness as social priorities. In this, the Council recognized that the furtherance of these social goals also make us more competitive. The third and fourth building blocks were identified as entrepreneurship and ‘investing in ourselves’ – meaning getting more of the money earned in New Brunswick invested in new and expanded enterprises here.
    As for the tax agenda, the Council in its brief to the Special Legislative Committee studying the government’s tax reduction proposals, stated it had never asked for broad tax reductions and instead emphasized the need to develop our social infrastructure.

  5. When a corporation’s balance sheet fails to capture the actual costs and risks of its business activities and when that company is “too big to fail”, we end up with corporations privatizing their gains and socializing their losses. Under these conditions, everyone gets to recognize their private profits today and pay them out in current bonuses and dividends but losses and liabilities get socialized and paid off by taxpayers. This phenomenon reflects a much deeper and ongoing transformation taking place in business where we are witnessing an accelerating erosion of communitarian values. One of the reasons for this ironically is that shareholders increasingly are represented by funds – pension funds, sovereign funds, etc. where fund managers are compensated only for strictly fiscal returns, and are measured on monthly results. The irony rests in the fact that the funds themselves include ownership by ordinary citizens.

    Increasingly, we have legitimatized the practice of maximizing profits in the shortest time possible with the aim of maximizing shareholder value, while externalizing all other costs, including social ones. These social costs include unemployment, pollution, health and safety violations among the most obvious. For us to engage in discussions about a new social contract will require that we examine some cardinal assumptions about capital in today’s global financial environment. This will take all the will we can muster because the consequences of these discussions will not be without potentially enormous cost.

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