By: Karen Newman, JA Board member and Professor, Daniels College of Business
Bruce Hutton, Interim Dean, Daniels College of Business
The premise of this blog is a bold assertion: through fair, market-based competition, business is the most effective way to address some of the world’s most difficult problems. Junior Achievement is the place to start.
Take sustainability. For how many years have politicians fought about issues such as carbon emissions, greenhouse gasses, and deforestation, among others? With how much progress? Not much, we fear. Now that we are at a tipping point, corporations are creating practices and products to drastically reduce greenhouse gasses, work with renewable resources, and not pollute the water or the air.
Companies do this – not out of the goodness of their hearts – but because they can make money at it. Business can be a solution to many of the world’s most vexing problems if three requirements are met-markets that work, ethical action, and courageous leadership. First, markets must be fair, open, and robust. This means equal access to accurate information and many competitors. It means a level playing field globally. Markets drive quality and innovation up and costs down – if they function properly. Corruption, low quality, and obsolescence thrive in planned, regulated, non-market economies.
Economic activity must be guided by an ethical framework. Without a common understanding of the ethical rules of engagement, markets do not work. What is the ethical underpinning of economic activity in the US today? Surely, we have the rule of law. We respect property rights. But we also “get it in writing”, we sue if we don’t get what we want, and our mantra is “buyer beware.” What if we had a different ethical framework? What if we believed that fair market activity was the most efficient way to conduct business and we did everything we could to make markets work? Insider trading would disappear. Industries would have multiple competitors. We would align our legal and regulatory frameworks to support competition, not protectionism. What if one of our most deeply held values was to leave the planet healthier than when we found it? Carbon neutral activity would be the norm, not the exception. Car manufacturers would compete with each other on the basis of lower emissions and greater fuel economy rather than lobby Congress against these things.
Examples of actions that make a new ethical framework a reality are all around us. Take micro finance. The pioneer, Grameen Bank, has loaned over $6 billion since its founding in 1976. With these loans countless businesses have been started, 650,000 homes have been built, and 50,000 students have received scholarships for their education. Over 7.3 million people have received a loan from Grameen since 1976, 97% of them women.
In our own Colorado backyard, Xcel is devising ways to align incentives and investments so consumers can pay less for energy through conservation and Xcel can save money by not having to build new power plants, yet successfully meet our needs for energy.
Colorado State University has used some of its own faculty’s inventions to solve social problems. Through an organization called ENVIROFIT, CSU makes retrofit kits for two stroke motorbike engines for sale in countries like the Philippines. These retrofitted engines cut carbon monoxide emissions by 76%.
It is up to us to lead with courage. Junior Achievement is the perfect venue for helping young people understand that good ethics and good economics go hand-in-hand – that the best competition is fair competition, and that business can and will solve some of our most pressing social problems. Judith Samuelson of the Aspen Institute said it best. “The fact is that ultimately business — big, audacious, profit-hungry, globetrotting business — will unlock the solutions to our most complex problems as a society…It is business that has the resources, the talent, the problem-solving skill, the distribution systems, and increasingly, the motivation to act. “ Let’s make it a priority to make the world a better place through business.
