Caux Round Table Publishes Important Book on Leadership for These Times

We live now in very trying times, which may continue for some time. Quite timely comes Klaus Leisinger with a book on the art of leadership. The Caux Round Table for Moral Capitalism is very honored to be authorized by Klaus to publish his new book, The Art of Leadership.

There are many trite phrases about the need for leadership in trying times: “When the going gets tough, the tough get going;” American philosopher William James advocated national service to serve the common good as the “moral equivalent of war.” “Be not afraid of greatness. Some are born great, some achieve greatness and some have greatness thrust upon ‘em.”

In his book, Klaus sets forth a practical agenda for every person to put into effect leadership skills. Klaus transposes the personal ideals which Erich Fromm notably articulated in his book, The Art of Loving.

Professor Jeffrey Sachs has written an endorsement and Professor Ulrich Lehner has kindly written a trenchant foreword. Prof. Lehner was Chairman of the Supervisory Boards of Deutsche Telekom and Thyssen-Krupp.

The paperback is available here.

The Kindle version is here.

In addition, Klaus has written a commentary on the requirements of good leadership, which you can read here.

Klaus is one of the best minds I know in business ethics. He is a Professor of sociology at the University of Basel. He worked for Novartis and served for many years as the Director of the Novartis Foundation, where I first met him. Klaus has advised the U.N. Global Compact and Hans Kung on ethical principles for global application.

You can learn more about Klaus here.

I invite you to read Klaus’s book and, if you enjoy it, please return to Amazon and leave a review.

Notice of Dialogue Meeting – October 19, 2020 – Mountain House, Caux, Switzerland

Even though we are all right now caught in the webs of prevention and precaution seeking to stop the transmission of the coronavirus, we should not be so consumed with what is immediate that we forget to plan ahead.

We plan to hold a dialogue at Mountain House in Caux, Switzerland on Monday, October 19, 2020, to mark the 25th anniversary of our Principles for Business and consider what should be done next to hone their efficacy. The dialogue is sponsored by Initiatives of Change, which manages the conference center at Mountain House for most worthy purposes, enhancing the prosperity, sustainability and moral courage of our global community.

Antoine Jaulmes of Initiatives of Change and Brad Anderson and Tunku Abdul Aziz, our Co-Chairmen, and I join in sending you notice now of the proposed dialogue.

You may find the notice here.

The dialogue is subject to cancellation if circumstances do not permit us to convene at Mountain House in October.

We look forward to having you join us then – “The good Lord willin’ and the creek don’t rise,” as they say in the southern Appalachian hills and hollers of my country.

Advice Worthy of Note

In some recent conversations, a question emerged as to the impact in our secular, desire-driven cultures of today of the demands on character being made by fears and restrictions coming upon us as a result of the jump from animals to humans of the coronavirus. Has our culture empowered us as individuals to have inner resilience under these conditions? Or are many of us too prone to passive self-absorption, resentful dependency, ennui or even anomie in response to our social isolation and the stress of coping with disappointments and dissatisfactions?

I happen to be going through old files as we prepare to move our office to find a list of good mental frameworks for making the most of times such as this and of life in general, even in good times. The list is ascribed to the Dalai Lama, but I can’t confirm that.

In any case, I wanted to share his Instructions for Life with you.

The Ethics of Debt? A Statement from the Convention of Independent Financial Advisors

An implication of the ethics of sustainability and concern for stakeholders is to question the reasonableness of having too much debt or fiat currency in the marketplace. The old wisdom of Benjamin Franklin was that “A penny saved is a penny earned.” The ethics of saving and building personal equity – the way to wealth, Franklin said – were once unquestioned in my family and many others.

But when negative interests place the value of money at below zero, who can benefit from saving? Furthermore, cheap money is a market incentive to borrow and incur debt, reducing the safety net provided by equity for companies, families and individuals. Very cheap money expands the scope of moral hazard, does it not?

Please also note this chart, also of some years ago:

There was a story in yesterday’s Wall Street Journal that major American retail companies are struggling to survive under current circumstances due to heavy debt obligations. Boeing was chastised for eating into its cash reserves and leaving itself very vulnerable when losses from the 737 Max 8 debacle arrived.

Equity provides a buffer against fate to protect what has long-term value. Debt is not such a helpful asset; it is accounted for as a liability.

Is very cheap money really in the best interests of all? Over the past 12 years, the provision of liquidity and quantitative easing have gone hand and hand with rising nominal prices for financial instruments. Qui bono? This increase in liquidity and rising market prices have also gone hand in hand with the increasing share of wealth held by the top 1% and 10% of all of us.

If the purpose of capitalism is to provide for the well-being of humanity, might we ask what is the well-being calculus which so favors debt over equity and savings?

The concept of equity in financial accounts derives, I believe, from the commitment to equity in the old courts of England. Equity was added to the law by courts to recognize the moral claim of a person to fairness under the law. In protecting a person’s equitable interests, the courts were protecting not only his or her moral dignity, but also his or her material empowerment.

Fairness in economic arrangements should not overly favor debt and so undermine the advantages provided by equity.

Our affiliate, the Convention of Independent Financial Advisors, has just released this statement calling into question public policies which seem risky and hostile to sound ethical principles.

I recommend it to your consideration.

The Book of Job: Why Bad Things Happen to Good People

The global affliction caused by the coronavirus is, as some would say, of Biblical proportions. Does something so natural, but so consequential carry any moral meaning for us?

That question directed me back to the Book of Job, one of the wisdom books of the Judeo-Christian Old Testament.

The story of Job and his God was, to me, always somehow out of sync with the rest of that scripture, but, even so, it gave one grounds to ponder.

With the help of some friends, I have reflected some on how to benefit intellectually and perhaps spiritually from this old text. My own take on the story – and how it ends – can be found here.

I welcome your thoughts on this small essay.

Thoughtful Response to Professor Togo

John Buettner, an engineer now retired from the Donaldson Company here in Minnesota (but not from the esprit d’corps of the Marines), had a thoughtful response to the policy recommendations of Professor Togo, previously posted here.

John’s response can be found here:

Dear Steve:

I thought Professor Togo’s rather short article was exceptional. Japan is the land of judo and having been into judo in my younger years, it’s about balance and using your adversary’s weight in your favor. I see this possibility in the coronavirus pandemic. Professor Togo writes, “COVID-19 may be opening up a critically important opportunity.” This opportunity might very well take hold. It is in everyone’s interest to have policies that are simultaneously best for the home country and the rest of the world. This is revolutionary. It’s a far cry from the win/lose strategy of doing what’s best for oneself at the expense of others. A change will come, but what will change?

Capitalism will change. The current model of laissez-faire capitalism doesn’t work well, at least in terms of a pandemic. While many businesses are moral, all are self-serving to varying degrees. Worrying about the status of one’s competition is seldom, if ever, an issue. Worrying about the status of “non-customers” is also not an issue. These concepts will have to change. Rewards systems inside a company will have to change. Individuals who cannot buy one’s products or services are indeed important to the well-being of a company. That’s new. Just ask any firm whose value has been decimated and whose markets are, at best, suspended for a while and might never recover.

Health care will change. The health care system in the U.S. is particularly worth looking at. In a country with the highest worldwide GDP and with the highest worldwide percentage of GDP in health care, health care during this pandemic is abysmal. This should not be surprising. Health care focuses on expensive and unique treatments of predictable sicknesses and health care problems. The U.S. generally does this quite well. However, it gives only lip service to prevention. The result is that “the world’s best health care in the world” is not working. To address unpredictable and intermittent health care problems such as the coronavirus doesn’t make business sense if prevention is ignored. While there certainly is some work done in the area of prevention, research in this area is dwarfed when compared with research on treatment of existing health problems. Focusing on expensive drugs, treatments and specialists is more about money and power than it is about health care. We need a prevention-focused model. The coronavirus pandemic has clearly demanded it. In addition, the rich and powerful countries of the world had better be watchful and helpful to the large segments of the world population who have little, especially in health care.

By the way, the “prevention” focused model has been in manufacturing for many, many decades. It has yet to genuinely take hold in health care. Having spent most of my profession in process development in manufacturing, absolutely no one could compete if their primary focus was not in prevention. Health care is a very complex system. Pandemics are even more perplexing because they are intermittent, largely unpredictable and don’t believe in borders. They also come and go with a vengeance, well outside of the timing abilities of for-profit pharmaceutical companies. The current model of health care doesn’t work and will have to change.

Attitudes towards other countries and other peoples will change. Does MAGA (Making America Great Again) make sense when most of our manufacturing is offshore and the health care systems of many other countries are notably better? If we are not willing to help others, others will not help us. Attitudes toward money, the stock market and our leaders will also have to change. While we tend to think that paying a lot gets a lot, our health care system says otherwise. Similarly, the quality of our senior leadership says otherwise. Money doesn’t necessarily buy quality. The stock market, once touted as a very stable place to fund start-up companies, is little more than a roulette table. The gig is up. Our financial leaders have made it very emotionally driven and self-serving. Everyone knows this in spades and we can thank the coronavirus pandemic for that. Leadership will no longer be about being glib, well connected and pedigreed. It will move towards being competent, honorable and doing what is right.

Sam Cooke said it best, “It’s been a long time coming, but I know a change is gonna come.” The fact that an inanimate virus is the impetus behind it, rather than our intellect and compassion, is somewhat disconcerting, but a change is going to come.

Semper Fi,

John

We Have Been Here Before…

As a boy, I contracted the polio virus and was hospitalized. I was lucky the infection did not lead to paralysis and so I was not put in an iron lung, as were two other children in my hospital ward.

Thus, when I read the short essay below written by my colleague Richard Broderick on his friend who had polio about the same time I did, I thought Rich’s words captured an important reality, which I want to share with you:

End Times at Play

by Richard Broderick

His name was, ironically enough, Jimmy Walker – ironic in that at an early age he’d been inflicted with polio during one of the waves of contagion that spread across the country – and world – from time to time.

Polio’s most famous American victim was FDR, but Jimmy was the polio survivor I knew best. He lived a few doors down from my house on Rainbow Trail. And while he had not suffered a case of the disease severe enough to doom him to life in an iron lung, his right leg was withered from the knee on down and he was hobbled with a limp that was impossible to overlook. It’s an ill-wind, of course, that blows no good and with Jimmy, that good was the tremendous upper body strength he’d acquired from years of walking on crutches and canes. By the time we got to know each other, the crutches and canes had disappeared, but his formidable musculature remained.

He and I played on the same baseball team in the Hub Lakes League and it was always remarkable to watch this limping 12-year old drive a ball 400 feet into the woods beyond left center field, then trot awkwardly around the bases as members of the opposing team scrambled through the trees in search of the ball. They rarely found it and the one time they did retrieve it in time to relay the ball to home plate, Jimmy simply charged through the catcher causing him to drop the ball and earn Jimmy another round-tripper.

Though friends, he and I still enjoyed bouts of pre-teen male rivalry. When off the field, we’d spend hours sitting on the bed in his room arguing about such profound topics as which was better, the American League or the National League. Living 35 miles outside of New York City, we both were avid fans, he of the Brooklyn Dodgers, I of the New York Yankees, where the die-casting company that employed my father had season tickets just behind the first base dugout. This, during the Golden Years of the Yankees, when Maris, Mantle, Elton Howard and Yogi Berra stepped to the plate and Whitey Ford and reliever Juan Gonzales took the mound.

But Yankee prowess was not the crux of my argument on behalf of the American League. In one of the most clever, yet absurd rejoinders imaginable in answer to Jimmy’s passionate fandom, I would remark, with shrewd bravura, “Yeah, well at least we know what country the American Leagues is from. The National League could be from anywhere.”

Game and match to Mr. Broderick!

It’s been a lifetime since Jonas Salk created a vaccine against polio, but those days feel eerily similar to the COVID-19 pandemic sweeping the world today. I remember one truly lamentable occasion when my family happened to be on vacation in Quebec City and a sudden polio outbreak led officials to ban swimming in public pools. Today, owing to COVID-19, I would not even be able to cross the Canadian border, let alone dip a toe in one of the country’s public pools, but the apocalyptic feeling was very similar, magnified by the equally terrifying prospect of the nuclear war we were guaranteed would wipe out half the American population – about the same mortality rate as the Black Death – and schools like mine held weekly air raid drills in which we students had to crouch beneath our desks as the nuns (members of the aptly named Sisters of the Sorrowful Mother) lovingly described how when the shock wave that shattered the wall of windows, we would all be slivered into bite-sized pieces before being burned to a crisp by the ensuing waves of intense heat. It was many years before I stopped waking in the middle of the night at the sound of a fire siren, my heart pounding, my breath caught in my throat.

The lessons we should have learned then are the same as the lessons we should apply today. Don’t panic. Take reasonable precautions. Remember – as in 1918 and then in subsequent epidemics of polio – we are, for better or worse depending upon how we conduct ourselves, all in this together, including not just political and business leaders, but also those rare individuals like Jimmy Walker, who turned what seemed like a curse into a costly, though lifelong advantage.

A View from Japan on Moral International Relations After the Pandemic

Our Japanese colleague, Professor and former Ambassador Kazuhiko Togo, has written me with his thoughts from an East Asian perspective on implications of the coronavirus pandemic for international, state-to-state relations.

Professor Togo has convened several workshops in Japan on ethical principles from China and Japan which could contribute constructively to a shared global understanding of moral obligations. From Japan, he is suggesting use of yawaragi or seeking harmony through moderation and mediation of different interests for mutual collaboration. Professor Togo has just co-authored a book in Japanese on res-assessing conventional norms for evaluation of public policies.

I would be very interested in your thoughts and feedback.