<html><body>American Enterprise Institute December 4, 2008 [Edited transcript from audio tapes] <TABLE cellSpacing=1 cellPadding=1 width="100%" border=0> <TBODY> <TR> <TD> <DIV class=BodyText>8:45 a.m.</DIV></TD> <TD> <DIV class=BodyText>Registration and Breakfast</DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>9:00</DIV></TD> <TD> <DIV class=BodyText>Introduction:</DIV></TD> <TD> <DIV class=BodyText><A target=_blank href="http://www.aei.org/research/nri/subjectAreas/pageID.1061,projectID.22/default.asp" target=_blank>Jon Entine</A>, AEI</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>9:15</DIV></TD> <TD> <DIV class=BodyText>Panel I:</DIV></TD> <TD> <DIV class=BodyText>Sustainability and Corporate Responsibility in a Global Society </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Panelists: </DIV></TD> <TD> <DIV class=BodyText>Adam Greene, United States Council for International Business</DIV> <DIV class=BodyText>Charles Kent, U.S. Environmental Protection Agency</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> <DIV class=BodyText>Fred Smith, Competitive Enterprise Institute</DIV></DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> <DIV class=BodyText>Moderator:</DIV></DIV></TD> <TD> <DIV class=BodyText> <DIV class=BodyText>Josh Gilder, White House Writers Group</DIV></DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>10:45</DIV></TD> <TD> <DIV class=BodyText>Panel II: </DIV></TD> <TD> <DIV class=BodyText>The Brave New World of Global Civil Society </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Panelists:</DIV></TD> <TD> <DIV class=BodyText>Jonathan Doh, Villanova University School of Business</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> <DIV class=BodyText>Don Eberly, author, The Rise of Global Civil Society: Building Communities and Nations from the Bottom Up</DIV></DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Ian Maitland, University of Minnesota Carlson School of Management</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Moderator: </DIV></TD> <TD> <DIV class=BodyText><A target=_blank href="http://www.aei.org/scholars/scholarID.118/scholar.asp" target=_blank>Mauro De Lorenzo</A>, AEI</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>12:00 p.m.</DIV></TD> <TD> <DIV class=BodyText>Luncheon</DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>12:30 </DIV></TD> <TD> <DIV class=BodyText>Keynote Address:</DIV></TD> <TD> <DIV class=BodyText>Thomas Dichter, author, Despite Good Intentions: Why Development Assistance to the Third World Has Failed</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>1:30</DIV></TD> <TD> <DIV class=BodyText>Panel III:</DIV></TD> <TD> <DIV class=BodyText>NGOs and Global Engagement</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Panelists:</DIV></TD> <TD> <DIV class=BodyText> <DIV class=BodyText>Beth Beloff, Golder Associates and Bridges to Sustainability Institute</DIV></DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Anthony O Hear, University of Buckingham</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Elaine Sternberg, author, Just Business: Business Ethics in Action</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText>Moderator: </DIV></TD> <TD> <DIV class=BodyText>Nicholas Capaldi, Loyola University</DIV></TD></TR> <TR> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD> <TD> <DIV class=BodyText> </DIV></TD></TR> <TR> <TD> <DIV class=BodyText>3:00 </DIV></TD> <TD> <DIV class=BodyText>Adjournment</DIV></TD></TR></TBODY></TABLE>   Proceedings: Jon Entine:  I want to welcome everyone here on behalf of the American Enterprise Institute.  Thank you very much for joining us today.  Each of you should have a packet with the bios of all of the participants and other information.  If you don t have it, it s out in the vestibule outside here and you could pick it up during the conference itself.  Before we get started, I did want to particularly thank three key people who have helped in the conception and organization of this conference; David Peyton and Emily Batman of AEI, and Nick Capaldi of Loyola University and the Liberty Fund who is also one of our moderators today.  Thank you, all three of you.  I also want to note that we hope this conference will be one of many programs under the umbrella of Global Governance Watch, which is a joint project of AEI and the Federalist Society.  It s a web-based project now that were reaching out to set up conferences and other kinds of ways to convey the message about global governance issues, and hopefully, stimulate discussions on this, and today s conference hopefully is a step in that direction. Our conference subject today, Corporate Responsibility in an Era of New Internationalism, lots of buzzwords.  Corporate social responsibility is a huge concept, so I wanted to discuss what we mean when we use that term.  In the past decade, we have seen an explosion in interest in what corporations and governments can do, and according to many people what they should do, to confront a host of social and environmental challenges; climate and energy concerns, poverty, medical and drug issues, human rights and dislocations that can result from world trade and financial globalizations, some of the effects we re seeing today.  These pressing issues cry for innovative solutions and that helps spur dramatic increase in the influence of organizations committed to the solution business; nongovernmental organizations, the AEI is an example of an NGO, and IGOs, intergovernmental organizations; the world bank; the U.N., many organizations such as that.  NGOs and IGOs now compete for influence with corporations and governments.  We ve seen emerged literally a market for virtue.  Pleas and demands are being made on companies and governments to adjust the way they go about their business to confront a daunting array of social challenges.  The movement has taken many forms.  We have seen the beginnings of an investment industry focused on using social and environmental principles to guide billions of dollars into certain industries and away from others.  There have been calls for industry to adopt voluntary codes of conduct on labor issues, human rights, the environment and, in some cases, for increased legislative oversight of corporations that some have grown into global behemoth with profits exceeding the GDP of many countries, with an influence on geopolitics and public policy to match.  Environmental issues from climate change to energy policy have also jumped to the front burner, posing complex cost issues and becoming major challenges, not just for governments, but also for business.  The social responsibility movement has even birthed the whole new crop of buzzwords that are now commonly used to discuss these trends, most notably, the word sustainability, a fungible term that loosely defined, means to focus on what s being called the triple bottom line; profits, people, and the planet, or a bit less poetically, economic, social, and environmental factors.  Sustainability is a vague and benign-sounding enough concept to make it possible for literally everyone to embrace it; the mining, oil, and basic materials companies to international retailers like Wal-Mart to governments around the world.  Green and social responsibility initiatives have become almost a mandatory part of doing business for firms with any degree of a public profile.  Many corporate responsibility projects are symbolic, low-impact citizen initiatives that involve modest partnerships with NGOs.  Since the social value of these programs is hard to judge and the cost, however small, are real, many organizations will not commit themselves to going much beyond that.  That is understandable to an extent, businesses, especially public ones, are in the business of maintaining their competitiveness and rewarding their shareholders, which has the corollary benefit of providing jobs and keeping the economy functioning.  With those cost issues in mind over the past years, CR advocates including NGOs have struggled mightily to make a business case for social and environmental responsibility.  How much will these cost?  Will it divert business from its real mission?  What is the real mission and responsibility of business?  One of the key issues we will be exploring today is the societal value of CR and sustainability initiatives especially in the current economic environment.  And in attempt to transform CR from a movement to a strategic imperative, its advocates will need to continue to address a wide-ranging number of concerns; the impact of these initiatives on reputation, markets, social conditions, environmental outcomes, and this is key, revenue and profits.  It is common to say that CR will deliver benefits in the long run, but there are obvious and very real pressures especially during an economic downturn to yield tangible benefits in short and medium terms as well.  Another key issue, the developing political clout of NGOs and IGOs.  We now have corporate responsibility and sustainability industry with its own set of priorities, which both cooperates and competes with corporations and the government.  It s huge and influential.  Corporations, particularly in Europe, have brought NGOs on board as partners, in some cases even giving them seats on the board.  Is this a good trend or dangerous?  Is it a threat to the independence and responsibilities of corporations or even the sovereign nation states that some people believe?  We will be discussing this as well today.  Clearly, in one form or another, corporate responsibility is here to stay.  Government companies and NGOs will, by necessity, need to work cooperatively to address a range of issues.  Each brings specific expertise to the table.  The reality is that we are moving towards a new social globalism, an internationalism driven by a belief that we are all on this together, whether we are talking about the financial situation, the environment, or whatever.  But what form will this recalibration of international influence take? Shortly after the election of Barack Obama, British Prime Minister Gordon Smith called on the President elect to work with him to build a truly global society where nations could work together rather than being frozen by events.   That specific comment referred to the burgeoning financial crisis, but he was asking for far broader and an unprecedented era of cooperation by government and corporations.  Browne himself used the term new internationalism to describe his vision of the future.  He talked of shaping an open free trade flexible globalization and a new global order that is inclusive and sustainable.  That word again.  What we can be certain is that these comments resonate with the President elect who talked along the same lines during the campaign.  Considering the worldwide economic uncertainty, one does not have to go too far on a limb to predict in the upcoming year, we will see a growing influence by NGOs and IGOs.  We can anticipate a flood of new social initiatives particularly in the area of energy, which was a centerpiece of the Obama campaign.  These could have enormous social and economic impact, hopefully, for good, but possibly not, depending on how they are conceived and executed and who is responsible for their implementation.  Transparency among many other things is essential.  To a large degree, these trends are welcome.  There are times, and maybe this is one of them, when it s all hands on deck, but how this new internationalism plays out will put on an indelible stamp on global relations in our economic and environmental future.  We need a healthy discussion, and we need to begin it sooner rather than later, and we hope that today s conference will be a step in that direction.  We certainly have a distinguished group of conference participants, academicians, practitioners, and representatives from government, industry, and NGOs including, of course, some from the American Enterprise Institute itself.  To head up our first panel, I wanted to introduce you to Josh Gilder, founding director of the White House Writers Group and one of the founders of the firm s corporate responsibility practice.  Josh was a senior speechwriter for President Reagan from 1985 88.  He authored and co-authored many of the President s televised speeches, including two State of the Union addresses and the highly regarded 1988 Moscow Summit address.  Mr. Gilder was also the principle deputy assistant secretary of state for human rights and an adviser to numerous presidential primary and general campaigns.  He has been published in many periodicals including, the Wall Street Journal, National Review, and the Washington Times.  And again, what drew me to Josh besides being an admirer of his work is the fact that just a number of months ago, the White House Writers Group did establish a new group focusing on corporate responsibility.  I think this is an issue that is obviously gaining in importance and it is being addressed by wide range of groups across the political spectrum.  I want to welcome Josh and we will get the conference started. [Break] Panel I: Sustainability and Corporate Responsibility in a Global Society Josh Gilder:  Am I on now?  Okay.  Good.  So we come at this from a free market, pro-business perspective.  It was only recently when a private equity firm asked us to advise them, consult with them on corporate responsibility and hired us to do that that we decided we needed to learn something about it.  So we looked into it, and to our surprise actually, found that quite a few of our clients and quite a lot of what we ve been doing over the years was corporate responsibility, across the range of industry.  In fact, one of our first big clients back in the 90s was major agribusiness and I think what we did with them actually highlights both the dark and positive sides of CR.  On the positive side, we worked with them on some very important labor issues and helped them institute reforms.  One of the ways was through -- They re spread out across a very large state, and the management thought that they had good policies, but in fact, there were abuses at the local level, and we instituted an open harvest in which the press could come in and see what was going on.  I mean we first went through with the kinds of reforms that needed to be done.  And then with the pressure of the open harvest actually forced management to put those through and turned the company around from a pariah to, within a year winning an award, as one of the best, having some of the best labor relations in the state.  That was positive because the people involved in pushing for reform had a very real interest in the issues, which was good labor, good treatment of the labor; in this case migrant labor.  On the other side were serious environmental issues where, basically, we had NGOs whose ultimate objective was to close down the company, which they may ultimately succeed in doing, and return large portions of the state to its primal wilderness conditions or at least what they imagined those to be before the invention of agriculture.  In that case, we did secure series of victories, but the issue there was who is deciding the agenda and what their real agenda is.  But after that, we found, also looking into our other clients, that we ve been doing CR across a broad range.  We ve been working with a mining company, helping them negotiate with the NGO and regulatory world in Europe, and if we think it s an issue here, this is nothing compared to what Europe is like.  We even deal with telecom.  We ve been working with a telecom company was able to develop that CR program dealing with issues of the digital divide and particularly old people who couldn t use the technology, it has developed a new profitable business line, others that have dealing with sort of safety and security on the internet.  So what we ve found, in other words, is just that it s really pervasive in everything we do, and I think it s probably going to become more so as we embrace the change of the Obama administration.  So we are going -- let me introduce our first panelist whose actual job it is to help companies deal with and negotiate the world of NGOs and international organizations. Adam Greene is the Vice-President of labor affairs and corporate responsibility at the United States Council for International Business.  As such, he advises many of America s leading corporations on international codes and initiatives, internal management systems, strategic alliances, and corporate reporting.  Adam is also the Vice-Chairman of the Business Technical Advisory Committee on Labour Affairs to the Inter-American Conference of Ministers of Labour.  In the past, he was Associate Director of the global environmental program at the Stem School of Business at New York University.  He is currently working on implementation of the OECD guidelines for multinational enterprises as part of the International Labor Organization Tripartite Declaration on Multinational Enterprises and Social Policy.  Adam? Adam Greene:  Thanks, Josh.  Is there a remote for the -- Male Voice:  Yes. Adam Greene:  While he is putting that up, just as background, first to say good morning and it s a pleasure to be here at the American Enterprise Institute.  If you re not familiar with the U.S. Council, it s a multi-sectoral business association that focuses on international policy, mainly with the membership of Fortune 500 companies.  So my perspective is mainly from global companies operating in a huge number of countries around the world. Our organization is the U.S. affiliate to the three main international business organizations that engage at the international level with the U.N. and other policy groups, the International Chamber of Commerce which works throughout the U.N. system, the WTO, IFC, and others.  The International Organization of Employers which mainly works with the International Labor Organization actually has standing in the ILO as representing business there.  So we have 25 percent voting power in the ILO as does unions.  And the last one is the business in the industry advisory committee to the OECD and we worked with OECD quite extensively.  See if I can get this thing to work. Just as a quick reminder, this sort of sets out the changing nature of the role of business in society and how expectations are rising .  People are looking for companies to do more and it could easily have been written yesterday, but it was actually written in 1976.  And you can find quotes like this going back even further.  So in a larger scheme of things, times are always changing, but these issues have been debated over time, and there s a constant debate about the appropriate role of business in society, what the limit should be where it really takes value.  The immediate context is that corporate responsibility has been developing over a period of relative stability even if you look at the dot com bubble.  Most mainline of Fortune 500 companies weren t entirely affected by that, but what we don t know really is what the impact on corporate responsibility is going to be in this environment.  Corporate responsibility is not a big cost factor for most companies.  There aren t huge departments, but still, there are going to be a lot of cost pressures and we don t really know how a lot of this is going to play out in this kind of environment.  So it s just something that, as economy advances or doesn t, may have an impact on corporate responsibility functions within business. Our concept of corporate responsibility is spelled out here.  The basic factor in this, and I think which is widely held even in NGOs and others, is that corporate responsibility is going beyond legal requirements.  The minimum obligation of any citizen whether it s a corporate citizen or a private citizen is to comply with the law and that is the baseline.  Beyond that, there are a number of things that companies can do or anybody can do to try to be a force for good in their community or wherever they work.  So that is generally the approach that we take.  And as I say it s something that is very hard to argue with from any side. As background, corporate responsibility is evolving constantly and it does cover a whole range of issues.  It varies widely depending on the sector you re in, the type of company you are.  As Josh mentioned, an issue for a global petroleum company is going to be very different from an apparel company or toy company or financial services company.  What they consider a corporate responsibility and their key issues are going to be completely different on any given day, in any given country, and even in the same company operating in different countries will face different issues.  So the list of issues that are considered corporate responsibility: anti-corruption, labor practices, environmental protection, community engagement; those kinds of issues.  Those are relatively stable.  You could list maybe a dozen of them, but the priorities, what needs to be addressed, what is really going to be key for any particular company will vary constantly.  The earlier part of corporate responsibility and still a key part is the internal focus, the kind of work that Josh just outlined, building the internal codes of conduct, setting out values and mission statements that are communicated throughout the organization, and basically getting a handle on what s going on internally.  A lot of companies started with issuing corporate reports, not to communicate, but to force internal departments to work together, to build a single document that outlined everything the company did, and a lot of times at first, the first time going through that process was an eye opener because the corporate group had no idea of what was going on.  That the factory in Boise had started a program with the community doing X, Y, or Z and by simply asking for the information got a lot of new information that they have no idea, but was also not strategic, not coordinated, and that the internal process is to try to create a more coherent strategy.  To my mind that still is where a lot of the benefit comes from.  Jon talked about the business case.  The only hard evidence that people can really point to was employee attraction and retention.  Any effort to really link corporate responsibility to a higher price-earnings ratio or financial return just simply doesn t pan out.  The most you could say is that a company with good corporate responsibility program is just it s another way of measuring good management.  If you have a wider perspective on these issues and sort of ahead of the curve or at least more aware of an issue that may impact your company, then it s an indicator that you re sort of better managed and that s the harder piece you could look at.  Again, this is from a perspective of mainly global companies and that group is, I d say, more advanced in these areas than a lot of others, but the immediate focus now is on external issues, that the internal systems are in place.  It requires constant maintenance and building, and hopefully, is integrated within the company, but the issues now are the world beyond the companies immediate control and it is mainly supply chains.  In almost any sector, you can look at supply chains or immediate external factors as being the priority focus of any corporate responsibility activity, and on the slide, it says lack of implementation or effective enforcement.  What it should have said in addition to that is by national governments of national law.  And it s the fact that U.S. companies that are grounded and has culture of compliance, the U.S. legal culture of compliance and meeting minimum legal obligations, operating in countries all over the world, face environments where compliance is nonexistent mainly in developing countries, but the legal institutions aren t there, corruption is rampant, contracts are easily enforced and a number of different factors where suppliers in particular have no real pressure from local governments to actually comply with the law.  So if you look at a number of different sectors, say apparel, companies that have instituted codes of conduct are basically carrying out private enforcement actions.  They re auditing factories that a government inspector has never stepped foot, and it s those kinds of efforts that are filling a gap that the government should be playing, but isn t.  That external focus has been carried out in company codes of conducts for suppliers, sector codes of conduct for suppliers, and now we re looking at codes of conduct for retail suppliers.  And if you think about Wal-Mart suppliers, they cover everybody.  Anybody that supplies to Wal-Mart, it covers huge array of companies, and huge companies themselves.  We deal with apparel companies that are trying to deal with their own supply chain, but then have to report to Wal-Mart because they re one of our suppliers and it becomes a very wide-ranging effort in terms of what s done, and that wide-ranging effort creates a host of its own issues.  Essentially, each company operating independently trying to audit its factories, its supplier factories which are constantly shifting from different factories that were in production will move from Latin America to Asia to the subcontinent, that system is incredibly expensive and incredibly inefficient and has not resulted in sustained improvements, particularly in labor practices where it s has been a huge effort.  And I d say five years before a labor shortage in Southern China, five years of effort in supply chain management to improve labor standards, was outdone in about six months due to a labor shortage in China where factories suddenly had to improve wages, improve working conditions for workers, just in order to attract workers to those factories in Southern China.  That six-month window did more than improve labor practices than five years of pushing and pushing factories to do better when they didn t perceive it to be in their interest to do so. A key common element of all the supply chain programs in existence, except for the cocoa initiative in C�te d'Ivoire and Ghana, is that there is a complete lack of engagement by the national government.  So we ve got a private enforcement action working on one track and there s no connection to what should be there or how to build the capacity of the national government to step in at some point.  So you re filling a gap but there s no plan to actually close the gap or transition the work to the government which is essentially what it should be doing.  And many faced the issue at the bottom the slide.  These are systemic problems in a lot of these countries and factory by factory auditing and capacity building cannot address these systemic problems. So what we re looking at today and I think it s a view that s widely shared even in a lot of trade union groups and NGOs is that business cannot take this over.  Business cannot be a substitute for government.  There s a lot that companies can do, and in the short-term, the supply chain management programs and efforts are not going to go away.  I think even with the financial crisis, these costs are built-in already and the programs will not be cut, but people are recognizing that sector codes cannot address the broader problems that exist primarily because they only reach those factories that sell to international buyers.  If you don t happen to be in the supply chain of a global company and you re in the domestic economy in China or India, you re completely outside any of these activities, which is probably 80 to 90 percent of most of these countries economies.  Frankly, those are where the worst problems are.  So if you re looking at the worst forms of forced labor, it s in brick kilns in China -- or child labor --- it s a very local production for local consumption and not in a global supply chain of a multinational.  So without being engaged in that, you re completely outside of the loop.  So again, it s a reason why there has to be a link to the government in terms of these so that the issues are going to be moving beyond this audit-based approach, that is, inspection and audit-based approach which has been very difficult on all sides, for the factories.  The average Mauritius apparel company gets audited 80 times a year if you happen to sell to -- and they ve had problems, so they sort of brought it on themselves -- but being inspected 80 times a year is not efficient no matter how you categorize it.  But across the board in apparel, the average is about 30 times a year of essentially the same issues; you re being audited for the same issues over and over and over again, so all the efforts are going into auditing and very little of the efforts going into remediation or capacity building or improving what s really there. Three very quick examples before I close in terms of where this dynamic of bringing these responsibilities of governments back into the picture.  There was an early U.N. effort on business and human rights that essentially try to shift all the obligations for human rights of governments onto companies and it included everything that was binding, aspirational, voluntary, anything that was ever said essentially in U.N. human rights document was now going to be binding on companies, and it collapsed under its own weight.  The piece that is now in place and the framework that is now in place being led by Professor John Ruggie at the Kennedy School, Fred s going to go off, we actually think it s at least on the right track because it starts with the responsibilities of the government to protect human rights, and the statement essentially is that corporate responsibility is to respect human rights which is comply, comply with your legal obligations which is as I say is something that we have said is a minimum.  But the key is that it recognizes and differentiates between the role of what a government can do and should do, particularly if it s elected and representative, and what a company can do which is clearly not elected or representative.  Second example is the current state in Uzbekistan where there is essentially sort of going back to the Soviet days forced mobilization of citizens to go out in the cotton fields and harvest cotton.  All the machinery that used to do this has been ditched because it s a lot easier just to empty the schools and send kids out to harvest cotton.  Uzbekistan is the second or third largest cotton exporter.  It s got very high quality cotton.  It s used in high quality -- if you have a Brooks Brothers shirt, it probably has Uzbek cotton in it.  The problem is this is where a model of the supply chain management approach completely fails because there is no ability.  There s no influence over the government of Uzbekistan.  They don t listen to the state department.  They re not going to listen to Levi Strauss.  And so, it s a clear example of where companies, NGOs, trade unions and the government, even working together, are facing problems in terms of changing things, but the end objective is to get something like the ILO to go in there and do an assessment of the situation and to change it.  In the meantime, a lot of companies are taking Uzbek cotton out of their supply chain which results in having to actually track your suppliers to ensure that the cotton that -- it s obviously a commodity and could be moved around -- is tracked from Uzbekistan to weavers in Bangladesh, and that it doesn t end up somewhere in your supply chain. Finally, there s a very good program that we support coming out of the ILO that they entitled, Better Work, which is looking at supply chains and supply chain management, again on the labor issue, but designed country by country to bring in and develop national processes that essentially take, starting with apparel, existing efforts in supply chain management; bring in the national government, bring in the national actors and create the beginnings of a domestic process and foundation that can take over these activities.  So it isn t driven by foreign buyers, it s driven by national process that then can, hopefully, if it takes root, expand to the domestic economy.  So it broadens it out to capture those companies and factories that aren t in global supply chains.  And it leads essentially with the push to increase quality and productivity.  The ILO for years has said if you improve labor standards, you ll improve quality and productivity.  And what this group, without saying it very loudly, is saying it is switching that around.  It s more likely that if you improve quality and productivity, you ll improve labor standards, so lead with quality and productivity and that obviously is a better sell to the factories. A recent U.S. chamber conference on corporate responsibility really, looking at emerging markets, left with some two key lessons.  One is that corporate responsibility, even before the financial crisis, had to be linked to the core business of the organization of the company.  The more you move off into issues that were not linked to what the company made or produced or provided, the more it sort of was not going to be sustainable, I used that word, even within the company.  It had to be linked to the core business.  And the second was that the government, not national governments, and particularly in developing countries, had to produce a conducive operating environment.  Without that, a lot of these issues simply were not going to be addressed or efficiently fixed on any kind of long-term schedule.  So there are a lot of ways that business and government can work together to move that, but there is a real need to keep the role of government, front and center, in creating that framework because it s very easy.  If you look at Latin America, they ve essentially written it off.  Corporate responsibility in Latin America is focused entirely on companies to solve problems because they ve written off the ability of government to tackle these things.  If you re going to any kind of corporate responsibility conference there, there s no discussion on the role of government, and I ve tried to figure out why.  And they said, Well, they can t do anything.  Business can do something.  We want business to do this stuff.   But that piece is just not part of the discussion.  So, thank you and I look forward to your questions. Josh Gilder:  Thanks, Adam.  I think we found in this country too an effort to shift responsibility from government to corporations largely because it appears to people to be a cost-free way to do a thing that otherwise might cause the taxpayer some money.  Now we ll hear from the government side, from the regulatory side.  Chuck Kent is the director of the office of cross media programs in the Office of Policy, Economics, and Innovation at the U.S. Environmental Protection Agency, the EPA.  His office is responsible for performance track program, the sector strategies program, green building coordination, and the smart growth program.  Chuck is also leading work on environmental performance reporting in the financial sector or what still survives of the financial sector.  Mr. Kent has a Masters degree in Science Policy from George Washington University and a BA in Government from the University of California at Santa Cruz where he helped found the environmental studies program.  Thanks, Chuck, over to you. Charles Kent:  Thank you, Josh.  I do have some slides, but I m not going to run through a presentation.  I think I want to build off of your remarks because I found those quite interesting and it s clear that Fred has a lot to say because he is scribbling like mad over here.  So I don t want to run over.  So, I ll use some of my slides to illustrate a few points, but I m not going to run through the whole presentation. Thank you for having me here today.  It s a pleasure to meet with you.  I obviously cannot speak for government.  I can speak from my perspective, from within an agency that focuses on part of what s become known as the corporate social responsibility regime and that s the environmental part of it.  I ll just say briefly that my part of the policy offices focuses on innovative programs where we try to improve the efficiency and effectiveness of government and we try to do a better job of understanding our role in this complex network and finding ways of developing new instruments, new programs, new capabilities in government to do some of the things that Adam was talking about.  Well, it s clear from my work with both multinational corporations and small business and everything in-between that the word from the business community to us in government is that social expectations are in fact changing, and they re changing rapidly.  So this is not a static environment that we re working in.  The social expectations translate into expectations from government and expectations from business as well.  And part of my work is to look at the current array of environmental statutes, regulations, requirements and try to figure out what more can we do or what more should we be doing to really provide the kind of protection that society expects.  Bear in mind that we haven t had a new environmental law at the national level since 1992, and a lot has changed since that time.  So part of our work is to look for ideas that would allow us to encourage to continue improvement in environmental performance across the board without being able to turn to a specific statutory basis.  So how do we do that?  Let me summarize it in sort of three basic categories.  One is that we try to work with leaders.  This is not a new concept.  We ve got a lot of them in this country.  What we find is that some of the multinationals that Adam was talking about and some of the other leaders from the U.S. business world really have ideas about how to not only comply with the laws but how to go well beyond that in ways that make business sense and really do provide a lot of value to society.  So one of the programs we developed, starting in 1999, is called Performance Track, and the idea is to make it more rewarding for these firms to actually go beyond compliance by recognizing what they do and measuring the actual environmental implications of what they re doing and publicizing that.  So this is based on the premise that there is some business value for these companies to go a little bit beyond what the law requires, but we want to reinforce that.  We want to recognize that government thinks that that s a good thing.  And what s interesting about it is that we find companies doing a wide array of activities that you would never want to write a law for; habitat protection ideas, noise reduction, odor reduction, there s a whole array of things that might be valuable in a particular local set of circumstances that a company would do.  Our program is able to recognize and to some degree reward that kind of behavior without having to mess with whether or not it should be a law.  What I would suggest is that while the program is not perfect and it s quite small, it is working in the sense that when a company chooses to go beyond compliance and they make a commitment and they agree to measure what they do and share that with the public, they get some benefit out of that from their own employees, their own shareholders, their public.  But equally important is when times turn tough like right now, those companies have made commitments, they re out there and they re measuring their work in this area, there s a tendency for these companies to stay with those commitments and follow through as opposed to go into the more cyclical kind of behavior that you might expect.  So the program is only about eight years old.  We will see whether it continues to work as well during down cycles, but I think it is making quite a difference.  Another program that we run is called the Sector Strategies Program.  This is quite different. This is not working with leaders but working with whole sectors in the economy, and what we re looking at there is trying to understand what makes each of these major typically industrial sectors tick, what are the opportunities, what are the barriers or the things that EPA should be doing differently so that they might actually perform better environmentally.  And so what we find is, often times, our own rules are holding companies back from doing things better, and we look for opportunities to modify those rules to remove those barriers.  I would say it s been a tough decade for some of this work because of many of these sectors have been sort of sitting on their hands waiting for clear market signals from government, particularly with regard to climate change and some of these broader, you know, the price of carbon.  It s been hard to get companies, especially whole sectors, to kind of move out and make commitments to do major new things.  But there are some examples that have been very successful.  For example, the Mercury switch question in automobiles.  Most American automobiles have several Mercury switches in them like in the trunk and in the hood and few other places.  Those cars were being crushed, sent to electric arc furnaces and as the steel was being processed into new steel, the Mercury was being released to the environment.  Well, what we did is adopt a two pronged approach.  We started to draft a rather strict rule saying the steel mills were going to have to deal with the Mercury.  So that if, in fact, the switches weren t removed, somebody was going to have to bear that cost and it was going to be very expensive to do.  But at the same time, we work with a partnership with NGOs, steel companies, automobile manufacturers, and states to craft a voluntary program whereby these switches will simply be removed while they are being scrapped, which is a very inexpensive thing to do, relatively speaking.  You wouldn t believe how hard it was to get these guys to agree, but after several years of effort, we finally got to that point as that rule was working its way down through the mill.  They finally came to agreement to fund a modest program that will allow the scrappers to pull these switches out, control the flow of that Mercury and deal with it and get it out of the manufacturing chain.  So that s just one example of the success.  We have others as well.  But let me move onto another area that we ve been spending some time in and that is trying to understand more deeply.  What are the incentives that would cause business to do more in terms of going beyond compliance?  And this is a fascinating area for me.  It s probably old hat to many of you because you understand the business world better than I, but I ve been fascinated as we ve looked into the financial sector, we ve looked into sort of what drives corporations to do what they do, to learn that -- well, first of all, I had to understand the difference between socially responsible investing, which is basically groups of investors screening out things that they don t want to invest in and investing in what s left over.  That s a niche marketplace that frankly has a bit of a black eye as I talked to the investment community.  They have not done as well over time as you might wish as groups of investors, but what we were more interested in is the mainstream marketplace, what is Wall Street looking for, what are investors looking for when they re investing in a new enterprise or an existing enterprise, and again, it goes back to a couple of points that Adam was making.  They re looking for -- let me back up.  In this analysis, we did find actually a correlation between environmental performance and financial performance which I found interesting.  It s a positive correlation, it s not causal, but there is a positive correlation in the main marketplace, not just SRI.  That was intriguing to us.  We asked investors, what do you look for?  Is there any aspect of environmental performance that you looked at before you make your investment decision?  And basically, the answer was, not much.  There is not much environmental data, environmental performance data, or any of these other kinds of information that are heavily used in the marketplace to date.  But what we were also told is that s likely to change, and one of the reason is climate change, but there s a broader sense that efficiency with energy, with water, with carbon are going to be much bigger parts of the investment climate in coming years, so that was intriguing as well.  So we haven t really developed a program to deal with this, but what we are doing is looking at the very specific question of if the marketplace is going to make more use in the future of environmental performance information.  What information does EPA have that might be valuable to the marketplace?  Because the general notion here is if we do this right, we can help capital to move more easily towards endeavors that are more environmentally efficient, that they d do a better job in environment protection.  And in terms of leverage, that s far more effective in concept than writing rule or writing a statute.  So it s an exciting prospect but it s still very, very ephemeral in terms of how it might work.  So for example, EPA collects TRI data, the toxic release inventory data.  It s flawed, it s time lagged, it s far from perfect, but it is one of the largest sets of data on emissions that s available anywhere on the world.  And what we found is the way we collect it is by facility, and we don t necessarily keep good track of who owns that facility.  So Wall Street looks at that data and can t do anything with it because they can t tell with certainty what corporation those emissions relate to.  So we ve learned that we can change that and we can make that data far more valuable to the marketplace as a result.  So we have dialogues underway with the New York Society of Securities Analysts with other groups to try to understand better what they need, what we do, and try to modify what we do so that information is more valuable as time goes forward.  So I guess I would, maybe, close -- because I think we want to encourage some discussion here -- with a few key points.  It seems to me that corporate social responsibility and the decisions made by corporations in that regard are really about value.  That may be disputed by some, but, really, from what I understand, the marketplace is looking for surrogates for what will enable these corporations to create the most value in the future.  We have all pretty well licked the idea of where are the legacy problems were, what are the insurance issues, the superfund issues and hazardous ways and all that, but now they re looking for evidence that a particular investment is going to generate future value, and as Adam said, largely they turn to indicators of governance.  Environmental management systems are a system that many of these companies have and that kind of gets a check mark in the governance column, but it doesn t really tell you much about the actual performance of a company.  But I ve become convinced that the environmental performance of companies in the future is going to be directly linked to the value proposition and where you re going to find a good investment in the future.  We are determined, in EPA, to do the best we can to sort of encourage and reinforce that kind of thinking.  That isn t really all I was going to say but I think I ll stop there.  When we get to questions, we can do more. Josh Gilder:  Thanks, Chuck.  Next we re going to hear from one of Washington s leading free-marketeers.  Fred Smith is president and founder of the Competitive Enterprise Institute, which was established during the heyday of Reaganomics in 1984.  He is a prolific writer.  He regularly appears in the Wall Street Journal, National Review, Economic Affairs, The Washington Times, and the Harvard Journal of Law and Economics, among others.  He is co-editor of Environmental Politics, Public Costs, Private Rewards, and the Field Guide through Effective Communication, and the writer and editor of many other books as well.  He is a well-known on talking head on shows as diverse as Diane Rehm, well talking head or voice, on Diane Rehm, Bill Moyers, and G. Gordon Liddy.  He is also one of Washington s leading global warming skeptics, and I also noticed in his bio, very deep at the bottom, that in a previous life, he actually worked as a policy analyst for the EPA.  So I m sure we ll have a lot to talk about here.  Over to you, Fred. Fred Smith:  Thanks a lot.  First let me apologize to Adam.  When he was talking about the World Bank s document by John Ruggie on the business responsibility and the human rights thing, I had the misfortune of surfing that 100-page document a month or so ago, and he is right.  There are three paragraphs in that that discuss how business cannot do everything, government has a role to play, almost immediately refuted in the next statement, and the other 97 pages is all about how if we can only make business moral and good by coercion, we ll have a wonderful world.  If that s the best you can do in human rights in business and the environment, we re in trouble. Now let me go on, we can talk about that later.  My remarks today argue that CSR, corporate social responsibility, is a confused and misguided attempt, indeed an immoral attempt, to promote values that we all agree with; freedom, the elimination of poverty, human rights, environmental improvement, and so forth, that I argue the traditional Milton Friedman Corporation can better advance.  What is the traditional view of the corporation?  The corporation is to maximize profits for its shareholders.  The corporation is a specialized institution.  It is not a general-purpose institution, and its challenge is to organize through incentives and contractual arrangements, one of the most difficult things to organize in the world, you and I, human beings, to create achievements and to specialize in its role.  It does not try to do everything.  It tries to create wealth in its niche.  Yet the firm, in its process of doing that in trying to maximize value, has to reach out certainly to its employees, to its customers, to its immediate suppliers, and indeed even its fence post [sounds like] neighbors.  As Chuck mentioned, there is certainly a tendency you don t want to be a bad neighbor because of other things, your employees are going to be pariahs in the community.  They go to school there, they have friends there, and if everybody thinks they are working for Deaf Limited [sounds like], they re not going to be very popular in the community.  The firm as an institution is one of the most important social inventions in history.  It is done more to resolve the Malthusian dilemma of finding ways of overcoming the increased demands, to have the footprint we would, otherwise, have by mobilizing genius and energies to find ways as we use resources  to replace them with new supplies with more efficiencies and with new technologies that will allow us to do more with less.  None of this satisfies the NGO critics of the firm.  They believe that, in effect, anything that is effective should solve all problems in society.  The business community does what he does well.  Well, let s have it do more things.  Let s have it be a little government.  And in a way, this is a backhanded compliment to capitalism in the market.  At one time status, what if they simply try to advance their social utopian goals by creating an expanded government, by creating new bureaucracies, new agencies, new laws -- Federal Housing Administration for example -- but the disappointing performance of the regulatory welfare state has led them to say, Wait a minute.  Government isn t all that effective, either.  Let s find something that does work and harness that in the cause of social justice.   Essentially, CSR is part of a growing trend to try to blur the line between the political sector and the private sector, between the coercive world of monopolized, use of force [sounds like] government and the private world of voluntary arrangements -- the mixed economy model which is working so well with the Fannie and Freddie example we have before us today.  In effect, CSR would transform the firm into a general small mini-government purposes who would be responsible to the citizenry through its forced democratic reelected NGO legislators, and therefore, move ahead.  The goal is business will row, the NGOs will steer.  This leads to all of these things referred, bandied about -- the triple bottom line requirement and so on.  And think about the triple bottom line, if there s an organization that certainly was given a social mandate, it was Fannie and Freddie.  They were to go out and create, if you were a liberal, affordable housing, if you were Republican, the ownership society, to basically bring universal home ownership to all Americans.  That welfare mandate which had at one time done the authority of the Federal Housing Administration was shifted to this profit-maximizing firm and in return, they were liberalized.  They had liberalized operating conditions and now the whole world economy is destroyed.  This is what CSR does.  If you want to see what CSR would do for the world, see what they ve done to the world economy already and that s just one part of CSR.  CSR is not feasible.  I mean that s beside everything else we ve heard.  We ve heard elements of that in the two earlier speakers and one of them is profit maximization as a metric, as a way of deciding what to do next, where to invest, skills, capital and managerial talent in a new employee benefit plan, in modernizing a piece of equipment and acquiring a new firm or maybe spinning off of part of your existing operations.  These are extremely complicated questions which management has to deal with every day, and it has one tool at its disposable.  It can -- with a lot of complexity -- try to figure out of all those many, many ways to do good things which ones would actually maximize the profits of the firm.  Hard, but successful firms try to do it and do it better than others.  But what does the CSR firm do?  How does it decide how its scarce management and capital to advance the triple bottom line?  Should it spend the next 10 million dollars on protecting biodiversity in its operations in Malaysia or maybe to reduce or improve educational standards in Brazil or maybe to enhance its air pollution handling equipment in Alabama, we don t know.  They re all good things to do.  There were infinite number of good things to do, and we have no metric to decide how we re going to compare those alternatives to achieve a direction.  What do firms do in that?  When they re cut loose from the metric, from the compass of profitability, they wonder.  They do all kinds of things.  They rush from one cause to another cause, depending on which NGO was most irritating, most persistent, and most annoying.  They take on the PC role of the day.  Today, it s AIDS in Africa.  Yesterday it was something else, and tomorrow, God knows what it would be.  How anyone can manage a company when your operating strategy depends on the headlines in that day s paper or the news headlines on Saturday Night Live is not a very rational way of running a business.  And remember, no matter what you pick, you re going to disappoint almost all the NGOs.  There are myriad numbers of good things to do in the world and there s an NGO, at least one for every one of them and helping one of those groups does nothing to advance the interest of the other.  Wal-Mart went green and pleased some greens, but it did not do much for those labor rights advocates out there.  You can t please all the people and that s not what firms are supposed to do.  They re supposed to play their specialized role of pleasing their immediate constituencies, their customers, workers, suppliers and so forth.  But CSR is also non-democratic in a profound way.  It concentrates the decisions on where society s charitable instincts will best be directed, not incidentally, by dispersing those resources created by the corporation to employees, suppliers, customers, and so forth, but by concentrating in the hands of the CEO, the top CEOs.  So, Lee Scott gets to decide what the Wal-Mart customers are going to do with their largesse and on and on and on.  This is not democratic.  It s not particularly useful because CEOs aren t picked for their philanthropic wisdom or their knowledge of social justice values around the world.  It basically means that we substitute the relatively democratic allocation of resources under the traditional corporate model to this elitist NGO model which of course the NGOs are in favor of; people who benefit are often in favor of policies that benefit them.  And CSR also neglects the fact that the traditional business already achieves many of the goals that CSR advocates would like to see.  There s much to say about this, but the firm operating in a world that is too poor, too non-democratic, too ignorant has done much to advance wealth and knowledge, to open a window on a very, very dark world to a better world that might yet be.  It focuses on meritocracy, helping, not solving, but helping to break down racist and ethnic, religious, and other discriminatory practice.  It costs you money to discriminate in a market economy and that means firms are encouraged to try to find ways of breaking these ranks.  Its efficiencies and its innovative work practices create exemplars for others in those economies in which it operates, and those act as an incubator for entrepreneurial offshoots that stem and go elsewhere.  This does not solve all the problems of the world obviously, that s not its role, but business does do much to essentially -- I m trying to read this part here-- it basically does something.  It does ameliorate the problems of the world.  Business essentially can go out and do what it can do in the ambit that the market institutions exist in, and one of the things I would hope CSR advocates and other groups in society could recognize is, is that in much of the problematic areas of the world, we lack the institutional framework for our market to operate.  Absent property rights, there is no market, and yet fishery firms around the world are trying to find ways of managing the fishing resource in the absence of property rights, a creative effort to extend property rights into these common property areas that tragedies are common, will do much to empower business to begin to play a role that is more in line with what CSR advocates want to see.  You can t do it without a market structure, and you can t have a market structure without the institutions of the market to make it happen.  Okay.  All these sounds like it s a bad idea.  I hope of some of you thinks CSR is a bad idea as we are going out [sounds like].  Every CEO in the Fortune 500 is joining on, jumping into this bandwagon.  Why?  Well part of it is fear.  Business is, after all, under attack everywhere and it thinks maybe this might do some good and it has bad advisors who are telling it that.  NGOs, political leaders, some public affairs firms, I hope no [indiscernible] rush in and say, Don t worry.  Become a responsible corporation and everyone will love you again.   Partly that confuses something that s very important to understand.  Business operates in two worlds.  It operates in the private world of markets and competition and efficiencies and all the things that people understand.  That world includes not only its customers but its suppliers, its employees, its shareholders and its fence post neighbors.  These are groups who are in the potentially positive sum relationship with the firm and with all of those firms you can make mistakes, you can deal, you can negotiate, you can work out a positive sum arrangement, but they also operate in the political world where the people you re dealing with have no link to your corporation.  They don t care whether you exist or not.  You are just a target of opportunity.  You are an obstruction.  You are the black board on which they write their social discontent, and if you let them write them on your black board, you re going to be full of dust.  Besides, it doesn t work.  There is very little evidence, as referred before, that corporations actually get tremendous payoffs by bending, in the end, in favor political correctness.  Certainly, the FRS strategy, a variant of this, this doesn t work at all.  That s one where I guess Lord Browne is the famous one.  Oh Lord, thank God that not all businessmen are corrupt.  There s me for example.   Now BP s Beyond Petroleum campaign did garner John Browne a Lordship, but it did very little to prevent the assault on his company.  And indeed, by diverting resources away from the management and telling the best and the brightest in BP, Screw petroleum.  We re beyond petroleum.  We are all on this other world.   It certainly may have contributed to BP s subsequent problems with [indiscernible] reserves and pipelines and refineries and so forth.  Fannie and Freddie, every paper in the world had Franklin Raines and company on their front page as the leading citizens of the world, but that may be adulation that did not lead to their subsequent fall from grace.  What have businesses have been doing?  Competitive advantage.  One of the many friends [indiscernible], What in the hell are you doing?   He said, Fred you don t understand.  Green Peace runs my company.  I want them to run all the others too.   That idea that the NGOs are powerful influences and we re going to live in a world where they re crippling me, I want them to cripple you too.  But the most important one is the cocktail party incentive.  The firm may not benefit from going PC.  However, the CEOs will, Lord John Browne is a classic one; he was a hero and so on.  He goes now and gets invited to the better cocktail clubs and so on.  CEOs want to be loved too, and they re not loved very much in their business role.  Going green or whatever, it can do that.  And Lee Raymond was never a hero.  He was always a villain, but his company did well.  So there is a challenge here.  How do you get the CEOs to say cocktail party attendance isn t the criteria for successful management?  But most importantly and this is something I think that, really, this whole session is all about, business has failed to mount a moral defense of its own role.  Business does not understand that it is not enough in a world that is highly politicized to be efficient, to be effective, to be seen as a productive instrument of an economic role.  You have to find more legitimacy for your activities.  The business community and corporation have done massive amounts to make the world wealthier and more knowledgeable and more in many ways meritocratist and so on, but business has never been willing to say that.  Business comes across as mea culpa, mea culpa, mea maxima culpa and that old gospel song says it all, If you don t respect yourself, then nobody else can respect you either.   Business has to learn how to do that, and CSR leads it in exactly the wrong way.  CSR is a bad idea.  It s a popular one, yet voices from the developing world are beginning to challenge that moral authority.  The former Mexican President, Ernesto Zedillo in one debate pointed out that the NGOs seem to be saying that their goal is to save the developing world from development.  That point is something that the Third World is beginning to realize and as it realizes it, there s a chance for a counter-strategy.  Mounting that effective defensive capitalism, finding ways of articulating a moral vision of the firm and how to expand the institutions that make it possible for it to play an even more positive role in the future is a challenge for the AEIs and CEIs of the world.  Part of that defense, a small part but an important one, is participating in panels like this, so I m glad to be here.  Thank you. Josh Gilder:  Okay.  I think we have some material to discuss here.  I would like to -- that was interesting.  Going back and looking at the history of this.  It seems to me that the first example of the corporate social responsibility was John D. Rockefeller actually in response to the Ludlow massacre.  John D. Rockefeller s original attitude toward even public relations was that this is a corporation.  This is a private company.  If I don t want to talk to anyone, I don t need to talk to anyone, anymore than I need to talk to anyone on the street.  It s none of their business what I do.  It s the business of my shareholders.  It s the business perhaps of my employees in some ways, although we just have a contractual relationship with them.  Otherwise, I don t need to talk to anybody.  And he didn t.  This changed actually with the Ludlow massacre.  It was a coal mine.  He wasn t even aware that he had it.  He was focused on his oil business.  Some people on Standard Oil had bought it.  Others had bought it as sort of a side show.  When the Wobblies tried to organize it, there was a lot of unrest.  There were riots.  They brought in the National Guard and people were killed and a family that had been in the process, some women and children died in the event.  The firestorm of criticism became so great that Rockefeller realized at that point especially the people around him that he couldn t just continue to be mum in the face of this.  I mean his first attitude was these people had broken the law.  The National Guard represented the law.  Again, he was going to allow them to take care of that business, that it wasn t his role.  However, the criticism continued to mount, and in effect, he brought in the first, I think, genius of public relations, Ivy Lee, who convinced him to hire the ex-Prime Minister of Canada who came in, reformed the labor practices in Ludlow and turned it into a model, really, of a company union and in fact enormously improved the productivity of the Ludlow mines after that, and it became, as I say, a model for the company union and that isn t a model that the Left likes or ever did like and didn t like back then but was extremely effective in its time and was replicated across the country.  That to me is an example of CSR which is in line with the company s core business.  For instance, I think you can see it in the service industries, see somebody like Bill Marriott who says, I treat my employees well because they then will treat my customers well and they ll keep coming back and back.   And he finds that these are labor practices that go beyond - Fred Smith:  But that s the responsible corporation trying to maximize its profits.  It has to work with the groups that have a positive gain relationship with itself. Josh Gilder:  Well I absolutely agree with that and I think that s why I believe, I believe, and the question I would like to throw, who is setting the agenda here?  Isn t it the agenda that perhaps you would agree with or isn t it agenda that perhaps isn t?  It s an agenda that doesn t?  We also worked on social corporate responsibility issues with, as I said, an extraction company.  In Europe, NGOS are just basically trying to close it down where -- in fact this company is promising to clean up the environment, give these people -- this is in Eastern Europe -- a standard of living that they have not enjoyed for a millennia, in fact never.  But the fact is that the NGOs, just like the ones we dealt with this agribusiness in the 90s, just simply do not like mining companies and want to shut them down.  So perhaps, Adam you can speak to that when you have NGOs that are just fundamentally hostile to the businesses that they are dealing with. Adam Greene:  It s constant, it will always be there, but that shouldn t really set the program of what the company should do.  I think part of the challenge here is that CSR can cover a whole range of different things.  We re using the term in many different ways but, as I said, the real focus should be on those things that are core of the business.  And there are examples of companies that have built up fairly large corporate responsibility departments.  They ve used their foundation.  They ve been doing a number of activities, and when times got tough and the new CEO would come in and look around, they would say, What are you guys doing?  That has nothing to do with what we make.   And the justification is simply isn t there and it gets cut and that goes on constantly.  I mean the case you cited with Rockefeller is exactly the case that Chevron was facing in its Alien Tort Statue case that it just won, essentially, it was found not guilty.  But it was Nigerian militia and police coming out and trying to take back an oil platform, and in the process, two of the protesters that had taken control of that and taken hostages were shot.  But it was a police action protecting private property, but it s exactly the same scenario.  So those, particularly in cases where companies operating in sort of a conflict zone like that, those are cases where it s going to be very tricky, but I would say that a lot of these -- the main benefit again is going to be within the company.  It is these kinds of things that attract good employees, keep them there, keep them motivated and help what the company does on a day-to-day basis.  It s not corporate responsibility, it s something separate.  It s the normal business decisions that they take about where they should operate, how they should operate and factor in additional issues and additional variables.  I mean as an example, a few -- I m trying to think of a recent example, let s say BHP looking at different factors.  They have not taken on certain concessions that they bought because they couldn t operate in a way that would protect them from easily foreseeable problems and it s in many ways self-preservation.  This entire supply chain business, every company that s in it does not want to be in it.  They re in it because they have to be.  And again, it s self-preservation.  At the end of the day, Wal-Mart does not want it.  They did something like 17,500 supplier audits in the last year or so, 200 full time staff doing this.  This is a huge cost.  This is not what -- they are perfectionists at saving money and this is expense that does not help them grow their business.  This is not what they want to be doing.  Actually all of these in a perfect world would be gone because the national government in China or India or Vietnam would be inspecting those factories instead of Wal-Mart, but in the short-term, it s self-preservation. Fred Smith:  Yes and no.  This is the kind of what I think is a confusion in this panel and this whole topic.  Corporate social responsibility has to mean going beyond the profit maximizing role of the firm to do other good things.  Otherwise, it s nothing more than a public relations trick.  The ICC has a sensibility of talking about the responsible corporation, not about the socially responsible corporation.  We ve got to make a distinction between the world where your decisions are directly relevant to your bottom line and the world, the NGO world, where you have opponents, you have enemies, you got to address that, but you have no positive sum gain that comes out of negotiating with the NGO world.  And this foolish attempt to rush out and make peace with your enemies is what has led to the kind of, you know, this Lucy and the regulatory football or Lucy and the NGO football.  You keep rushing out hoping that this time you ll do something that will make this hostile world love and then you find the next day you fed a crocodile your leg, and guess what, it wants the other one now.  This is not a strategy that s sensible.  Supply chain is a classic one on this.  Those of you who don t know this terminology, the extended supply chain responsibility, capitalism was about a firm dealing with the people around it.  It looked upstream to the people who were supplying it goods at a price and it looked to the quality, the reliability, and the quality of those products.  It wasn t responsible for whether the guy beat his wife or not or whether he was kind to his dog or whether he did or didn t obey all the rules of the game on pollution and so on because capitalism can t deal with everything.  It tries to deal with something and in fact because it was buying quality goods at affordable prices, it was encouraging some good upstream work.  But it didn t try to manage the whole world.  This extended supply chain responsibility idea blurs the corporation into a government.  Wal-Mart is supposed to reach upstream to its suppliers, it s suppliers suppliers, it s suppliers suppliers suppliers and make sure that all good things are happening.  At very, very best, this creates an elite subgroup in these countries that we treated as special purpose workers who would be working for Western firms that 90 to 95 percent of the people who were in the domestic economy will still be living in abject poverty with none of these privileges.  And who will get to pick the five percent of the Malaysian population or the Bangladesh population who will live in this privileged neo-imperialistic world that we d be creating out there?  It would be the government.  It would be the right ethnic group.  It would the right religious group.  We won the risk of making a world where human rights are already violated all too often, being violated under this moral sanction of CSR. Josh Gilder:  Thanks, Fred.  We want to get to the audience, but I want to give Chuck his chance to respond and then we ll open it up to audience.  Thanks. Charles Kent:  Just a couple quick observations.  Actually it s very tempting to side with Fred and beat up on NGOs because I think a lot agree from them too, but that would miss the point.  There are all kinds of NGOs and actually the speaker whom I m replacing today represents one of the more responsible groups that s worked very, very closely with the business world and has had tremendous success and I only wish you could have heard some of her stories today, and hopefully, you ll have a chance to do that in the future.  But let me just make a couple of points here.  I think there s a danger of oversimplifying the conversation between government, business and NGOs here.  I do think that the picture today is much more complicated than it was years ago, and it will continue to get more complex.  Businesses, I think, are taking these decisions because it s in their best interest to expand deeper into the supply chain.  The Wal-Mart example is a good one.  They are experts at making money, profit, and minimizing cost.  They would not be doing this if it did not make business sense for them.  I m confident of that.  I don t think they re doing it because NGOs have beaten them to do it.  Frankly, they are far more effective at getting their suppliers to do the right thing than EPA ever was on the environmental side.  I have had businesses come up to me and say Wal-Mart is the new office of enforcement as far as they re concern in terms of making them do things the way they want them done, but just one last point.  There s this guy named Bob Willis who is a retired IBM executive, some of you may have heard his presentations; he is going around the world essentially talking about responsible management of business capital.  And one of his key points is that there s been a big transformation in the last 15 years in what constitutes market capitalization for the major firms.  If you look at -- this is right before the most recent crash, I ll grant you-- but if you look at market capitalization for the major firms just a year ago, the average percentage between plant and equipment and the so-called intangibles was the intangibles were about 70 percent of total market capitalization for most major firms.  That s huge.  I mean that s not plant and equipment and stuff you can touch.  That is reputation, brand, and governance, essentially.  So to me, it s small wonder that modern corporate executives are running around spending a lot of time and effort trying to make maximize brand, reputation, and governance because that s where the biggest chunk of their value is and that s also the most volatile part of their value.  It will be interesting to see how those proportions have changed in this most recent crash.  I think it s too soon to probably sort that out, but I would suggest that a major part of modern business; is maintaining reputation, brands, and governance as strong as possible. Josh Gilder: Thanks, okay.  Let s open it up.  Any questions?  Yes, right here. Andrew Martin [phonetic]:  Hi, hello.  Andrew Martin.  I have a question for Fred.  You mentioned -- you spoke to a lack of leadership from business leaders in terms of defending the moral case for avoiding this common understanding of corporate social responsibility.  Can you give a few examples of current business leaders and their full businesses or corporations that you think are actually starting to maybe show some of that leadership or some that you would admire? Fred Smith:  You want positive stories.  I can give you lots of negative.  Is there any business leader in America who has any understanding of the moral value of his activity?  Not many.  John Allison, I think, of BB&T is one example of such.  Okay, let me think.  There must be at least one other.  I m sure there are some small to medium firms who understand it, but most firms are rushing around apologizing.  Lee Scott is not ashamed of Wal-Mart obviously, but he clearly feels that in some way they were creating environmental transgressions and supply chain problems in the world or at least he has acceded to it, I would argue, certainly enough for profit reasons because the profit picture didn t improve when that process happened.  But they did do it and they did it for whatever reason.  I think they did it because Wal-Mart was fearful of his labor antagonists and thought that they ll buy off -- that they ll try to destabilize the Green Brown Coalition, that didn t work.  The difference is -- and this gets to what I think in a way, I think the confusion of language.  In the private world, business has the main reputation.  Our products are quality products at affordable prices, we re reliable.  That s critical and reputation management is very important, but there s another form of gain that has to be played, it s legitimization of your company and its products in the political world.  Business has blurred the confusion between reputation management and legitimacy management and spends almost nothing on legitimacy management.  It assumes that because it sells product, it has moral legitimacy.  Well cocaine dealers sell product and the average businessman runs around acting like he s a cocaine dealer.  I don t know whether any of you have seen the Chevron ads all over the city, but don t use my product.  For God s sake, unplug your appliance.  We re trying everyday.  I mean if they re ashamed of producing energy, then why in the name of God are they producing it?  I mean there s something shameful when business runs around saying, For God s sake, don t use our product. Josh Gilder:  Just a couple of examples of really strong corporate leadership.  We actually have a program that tries to identify major corporate leaders; J&J, Baxter Pharmaceutical, Rockwell Collins, Xerox, I would say, are all exceptional examples of companies that from the top down have a corporate ethic to build certain values into the value of their enterprise and its not fluff.  J&J takes care to educate every single employee around the world about their impact on the environment.  They don t do that just for fun.  That s part of their values.  That s part of what that company brings to the customers. Fred Smith:  There s also [indiscernible] has as part of the pharmaceutical industry which of course is viewed as now [indiscernible] of the American people.  They might also teach their employees about what they re doing to make the world a healthier place. Adam Greene:  Very briefly before we take the next question.  I m not a public relations person but there is a distinct danger in some parts of the world of putting yourself out there as the best.  I mean there s a reason business doesn t come out in many cases and say, I m the best thing since sliced bread.   Because you just paint a huge bull s eye in yourself and everyone comes after you.  So there s much effort to put things into action than talk about it to some extent. Josh Gilder:  I just also want to add.  I mean we work with a lot of pharmaceutical companies and I think the management is very well aware of the good they do in the world.  I mean they re curing people of horrible diseases that were incurable five years ago and saving millions of lives every day.  They are incredibly beleaguered and I just think the train has left the station on this.  I mean if you don t -- we re talking about public legitimacy or political legitimacy in fighting that game.  I do wish the companies were better at promoting free enterprise as a model.  They are not always good at that, but if they don t acknowledge that the issue of corporate responsibility is out there and they don t actually grapple with it or play the game, even Milton Friedman acknowledged that this was something.  I think if you go back to his famous essay in 1970, he acknowledged that this is a legitimate cost of business if it was in the self-interest of the business, and I think today it is in the self-interest of most businesses.  Let s go to the back here. John Jacobi [phonetic]:  Morning.  John Jacobi.  I work at Oxfam America that s one of the big bad NGOs that we ve been hearing about.  We fight global poverty in about 120 countries.  So I work on the private sector team, which is a relatively new team.  In the sense, we re taking a broad and anyone s view on engagement with the private sector, and I do mean engagement, not just sticks but carrots.  My question actually goes to something that Mr. Greene was talking about which is the piecemeal approach through the audits it does.  I think you made a very persuasive case.  It s inefficient and expensive for companies to take on these responsibilities.  So then we look towards the systemic solutions that would involve helping governments have the capacity to do this work themselves.  To me, that sort of begs the question then.  Are those same apparel companies, toy companies, electronics companies thinking through the policy questions related to the headaches they re having in doing this audits?  Then how can they push the U.S. government to take on to scale up a better work program?  For example, the ILO and the ISC run to take on the ILO s decent work agenda or in other realm besides labor rights.  You have climate change.  The companies are already figuring out the carbon footprint.  They re already figuring out whether the supply chains are affected by climate change in the coffee and cotton realm or even sort of meta issues that will affect whether companies have growing markets in the developing world in the next 20 or 30 years such as development policy and whether that is building a middle class of customers for major global brands.  Any of those questions are CSR public policy questions.  A lot of times the government relations offices haven t gotten the memo.  The headquarters is working on this projects with NGOs but it s not embedded necessarily in what, you know, the lobbyist are going up to the hill to talk about or to talk to a new administration about.  So I wanted to pose that question to the panel.  It could be Mr. Greene to take it up or anyone else.  Where are those opportunities for companies to start those conversations with NGOs like ourselves to say that maybe there is some more systemic solution and if we can present that strange bedfellow combination of an Oxfam and a company saying maybe there s more that can be done through U.S. government taking this on, pushing the Bangladeshi government on capacity building or pushing the Chinese government so that we have something more efficient than the piecemeal approach. Adam Greene:  That s a good question.  I will leave to James [phonetic] to talk a little bit about the policy implications.  But I guess my immediate answer is that a lot of these issues don t need public policy responses per se in the U.S.  And one of the lessons from a lot of the supply chain management program is that pushing behavior on a non-receptive audience is a lot of heartache with very little reward.  So in the case of Uzbekistan, pushing Uzbekistan to do something is not getting us very far, but the issue is how do we get them to want to change?  And it s the same thing with the supplier.  How do you get them to want to do things?  A lot of the issues that we talked about in corporate responsibility are already regulated.  Environmental protection is regulated.  Labor practices are regulated.  Anti-corruptions, illegal everywhere and even in Russia, but it exist everywhere, the legal regimes are there.  The issue is the institution building that would make it effective.  And so, public policy about -- U.S. policy to push institution building I m not sure really gets you to where you need to be.  I mean for one thing, if the country of Bangladesh does not want to improve labor practices, it s going to be awfully hard.  Some countries get bad advice.  Cambodia got bad advice from the ILO in some of the work it did with a very, very loose regulatory system of establishing unions.  And now there are thousands of unions in Cambodia, hundreds in each factory, and it s become a serious problem because they were given the perfect regulatory framework for creating unions and it has made collective bargaining completely impossible because the unions are fighting with each other over who should control any certain number of employees in a factory.  So there are regulatory issues in these countries, but more often than not, it stems from the fact that they ve adopted a regulatory framework that is beyond the capacity of the country in question.  If 80 percent of their economy is informal and they have labor standards in particular that -- social security protections, paid leave, a year of paid time with dismissal, people simply go around it.  So there has to be-- yes, there s a public policy realm to this, but a lot of it is fitting the public policy of that country to the economy of that country so that you can actually take compliance seriously.  You can t really lead with a rule of law and compliance mindset if the legal framework is beyond the reach of 90 percent of the enterprises, self-employed and otherwise, in that country. Fred Smith:  You know, the Oxfam is a good example because I think you are all opposed to the U.S. sugar subsidy program, and those are [indiscernible] working with sugar users is a tremendous place to try to move America more towards the ideals we expressed of free trade and so forth.  The Oceania has been doing that with eliminating fishing subsidies and working with some groups.  There are tremendous opportunities for those kind of areas where we re trying to pull away some of the distortions that have made companies act irresponsibly.  The other hand, though, there are plenty of cases where rent seekers [sounds like] come to Washington with or without NGO support to seek special favors.  We re doing this.  We can afford to do it.  We want to do it, make it mandatory for our smaller less wealthy competitors and that rent seeking role is a very powerful element of Washington -- in my view, a bad one -- but one that is certainly dominant in areas like global climate change and so forth. Josh Gilder:  I m afraid that we need -- we want to take a break and allow people to have a break before the next session.  So thank you all very much and thank you, our panelists.  Five minutes.  We have a five-minute and then we reconvene here. [Break] Jon Entine:  If everyone could settle down, please.  We will wait for our panelists to come out of the restroom and then we ll start.  We certainly had a lively discussion in our first panel and I think an informative one as well and I expect nothing less in our second panel.  The moderator for our second panel is Mauro De Lorenzo who is a resident fellow in Foreign and Defense Policy studies here at AEI.  Mauro is a valued colleague.  He has been involved in a number of conferences for me and is always willing to pitch in, in these situations and I m very grateful for that.  He studies private sector-based approaches to development in post-conflict and post-Socialist countries; Chinese investment and political influence outside the Pacific region, particularly in Africa; and democratic accountability in aid-receiving countries.  In 2005, Mauro worked as a consultant to the Afghan construction companies in Kabul and prior to that he was a research associate at both the American University in Cairo and the Makerere Institute of Social Research in Kampala, Uganda, focusing on refugee policy and the wars in the Democratic Republic of the Congo, Rwanda, and Burundi.  In 2002, he researched and was associate producer of The Price of Aid, a BBC documentary about U.S. food aid to Africa.  Mauro?   Panel II: The Brave New World of Global Civil Society Mauro De Lorenzo:  Thank you.  I don t think you needed to know that much about me or anything at all.  I m going to retreat very quickly into the background and help us stay on schedule.  I m mainly here to be the traffic cop and introduce our panelists.  We have an extremely strong panel for a topic that s rarely discussed in quite the way it s been composed today.  But the ways in which different kinds of NGOs or nongovernmental actors, which may or may not call themselves NGOs, are increasingly at the center and getting closer to the center of international politics, of regulatory affairs on a global scale.  And in different ways, our three panelists today are going to tell us some more about how the world is going to look, start to look over the next few years. I think I m going to introduce you one by one just before you speak.  We re going to start off with Jonathan Doh, furthest to my right.  He s an associate professor of management at the Villanova School of Business, where he founded the Center for Global Leadership.  He was a trade official at the Department of Commerce for some time and he s here to talk to us a little bit about the activities of these groups in international trade policy.  I ve seen some of it myself and heard more and so I m very curious to hear what you have to say about it.  Thank you very much. Jonathan Doh:  Thank you so much.  Thanks to Jon and AEI, and Mauro, for chairing our panel.  I m delighted to be part of this very interactive and dynamic discussion.  I had a chance, I was taking the train down from Philly this morning but I did get here for most of that last panel and I thought there were a lot of interesting ideas and comments and perspectives kind of thrown out and I d like to maybe begin by building on a few of the references and discussion points of that panel. I think the first is we need to be a little careful about what we mean when we talk about NGOs or civil society.  I think a very broad and comprehensive definition, to me, the people sitting in this room are civil society.  I think in our everyday lives, we are part of civil society.  AEI is an NGO, by some definitions.  CI is an NGO, by some definitions. And so when I think of NGO or civil society organizations, I think of everything that s not government and business.  So when we make references about NGOs this and NGOs do that, I think we need to be very, very careful about what we re talking about.  And in reality, I think those who are critical of NGOs are really talking about a relatively narrow sector, those that perhaps grab the headlines, those that perhaps are known to be harassing corporations. But by and large, I don t think that s what most of us are doing as members of civil society.  In fact, I think what we re doing is engaging in participatory democracy.  And one of the ways that we engage in participatory democracy, in addition to going to the voting booth, is to do other things in our civil lives: participate in PTA, participate in charitable organizations, participate in all of the clubs, in religious, in other types of institutions that comprise civil society.  So let s be very, very careful about not making blanket statements about NGOs or civil society or activists or whatever. Now I think if we had time, we could begin to separate and define different sectors within civil society.  We don t have time to do that.  But suffices to say, it s a broad comprehensive and inclusive set of actors.  But pertinent to this panel, those actors have been and continue to be involved in very many aspects of policy and polity, including international trade policy. But let s also remember that civil society, civil society activists have been at it for decades, if not, centuries.  De Tocqueville, in his famous travels across the United States, made the following remark.  He said, Those Americans, they re forever forming associations.   What did he mean?  NGOs.  NGOs.  So again, I think we need to be a little careful about one, what we mean by NGOs, and two, that this is somehow a new phenomenon that civil society had not been active for decades or centuries, both with regard to their political leaders but also with regard to corporate and other institutions and organizations. So having said that, let me talk a little bit more specifically about some of the phenomenon that I see emerging in the realm of NGOs and the international trade arena and I m going to talk about three things.  I m talking about NGOs participation and an influence in foreign economic policy generally but more particularly, international trade policy and development. Two, I m going to talk about those NGOs that I think have been especially effective at confronting the governance challenges that were alluded to in the previous panel.  And I m talking about NGOs like Transparency International, which has its annual corruption index and some others. And then three, I m going to talk a little bit about what was alluded to in the previous panel but I think may also come up in the next one, and that is direct corporation NGO engagement.  The gentleman from Oxfam touched on this in his question and I think a number of the previous panelists did as well. Well, as Mauro mentioned, in my previous life, I was a trade official with the U.S. government and I was involved in the U.S.-Canada Free Trade negotiations and NAFTA.  And I was involved as a career official both in the late part of the Bush Sr. Administration and then the Clinton Administration.  And those of us who were pro-free trade advocates were a little skeptical about the notion of attaching labor in environmental obligations.  And indeed, NGOs, civil society were largely the instigators, if you will, of beginning to incorporate labor, environmental and other non-trade issues in the trade agenda.  And as a free trade true believer at the time, I was very skeptical and I think many of us were concerned about what that might do to the trade policy agenda. Well, it s a very liberating experience when you leave an official position, like a government job, and you have a chance to reflect and think a little bit about what you did in that job and how your perspectives may have evolved.  And I have come to take a little bit more of a benign view.  I don t see any particular reason why trade policy has to be limited to commercial affairs.  Indeed, the trade policy agenda has itself been expanding to touch on subsidies and services and intellectual property and all kinds of things, standards that we didn t use to think of as trade. So to try to delimit and constrain trade policy and say, Well, it s only about these things.  It ll never be about all these other things , I think is an artificial separation.  And so the notion of at least considering or being open-minded about the potential, what economists would call externalities of trade , I think is logical and I think is rational. Now it does create a much more complex world.  When you bring more actors into the room, when you have more transparency and openness and you re consulting with different members of civil society, it does create a more complex agenda.  And I think one of the reasons that trade policy agenda has slowed a bit is because of that.  It is because of that.  So I m not na�ve about that potential outcome. One of the things that Jon did ask us to kind of think about and touch on in the remarks is what does this mean for the new administration , for the Obama administration?  And as you may know, President-elect Obama has expressed some skepticism, at least about the bilateral trade policy initiatives that have been really begun back in the Reagan administration, actually, but advanced especially under Clinton and now under Bush. But what I do hope and what I do expect is that the Obama administration will try to restart the global trade negotiations, the so-called Doha Round , which did have as an explicit goal, development.  And indeed, Dan Tarullo, who has been advising the Obama transition team on trade issues, is a big advocate.  So while it may be the case that some of these bilateral trade agreements may not come to fruition, and notably, the ones with Korea and Columbia, I do think the Obama administration will try to jumpstart, at least get out of its doldrums, the global trade agenda. But just to repeat the point, I think civil society belongs in international trade negotiations.  I think it s an artificial separation to say, This is about business and commercial affairs , because by definition, business and commercial affairs spill over into civil society.  We are civil society.  We re part of that discussion. Let me move on to point two, international development.  Here, I think we re going to have a very interesting and provocative luncheon discussion.  But suffices to say, and as was reflected in the previous panel, business government NGOs all have a role in international development.  And indeed, the role of business and NGOs in international development has been growing. And I m also here to hawk a couple of books, if I didn t mention that already.  This is my most recent one, Multinationals and Development.  And in this book, my co-author and I explore, really rather particularly, the development impact of multinationals, both its direct impact, the impacts that I think Fred Smith would be very proud of and calls attention to, which we completely endorse, but also some of the indirect impacts and some of the other ways that multinationals actually help to strengthen those institutions and those governance mechanisms in developing countries. And indeed, if you look at U.S. foreign aid, which the Obama administration has said it will double from $25 billion a year to $50 billion a year, although if you watched the vice presidential debate closely, when asked what budget items might the Obama-Biden administration have to cut back on in light of the financial crisis, Vice President-elect Biden did say, Well, maybe doubling foreign aid is a little ambitious.  Maybe we can just slow that down a little bit. But nonetheless, $25 billion today comes from the U.S. government; $80 billion comes from foundations in the private sector.  So even today, the bulk of U.S. foreign aid is coming from nongovernmental entities: business, charitable foundations, NGOs, and others. And so once again, NGOs, governments, and businesses all have a role.  I don t think that it is productive to try to separate those roles so precisely in a way that does not allow for collaboration because I think there are very many very productive collaborations that come out of business, government, and NGO cooperation.  And the government can t do it alone.  The government can t do it alone. So whether it s The Global Fund, whether it s Bill Gates Foundation, whether it s Clinton Foundation, whatever it may be, these nongovernmental civil society funds and foundations, I think, have a strong role to play.  And as government coffers continue to be challenged, I think they will continue to have a strong role to play going forward. Next topic, the NGOs that have been helpful in at least shining a light on the governance and institutional voids and deficits that we know are problematic around the world, in terms of impeding development, and here, I m talking about organizations like Transparency International.  I think Peter Eigen is a brilliant, brilliant man, who came up with the idea that we don t seem to be able to do much about corruption by relying on governments to try to negotiate.  There have been all these corruption codes and the OECD code and on and on and on.  Let s instead shine a light.  Let s say, Let s rank and rate countries around the world according to how corrupt they are and let s make a big deal out about it.   Let s publish a book every year and let s shame them.  Let s shame them.  And I think that s a very positive role for NGOs to play. Now, some of you may not like the idea of NGOs shaming anybody, whether it be corporations or governments or others.  But I think this was a really brilliant, brilliant step.  Peter Eigen has now moved on to the Extractive Industries Transparency Initiative.  There are a lot of concerns about contracts between extractive industries and governments and the fact that there are a lot of embedded payments and a lot of monies that are being stuffed away and used to build castles and all kinds of things.  And I see a lot of promise and a lot of opportunity here. I am sympathetic to the concerns that were raised in the previous panel about the privatization of public policy, about private actors taking on the roles that public policy should be taking.  But as Adam mentioned in the previous panel, governments aren t doing it.  Somebody has got to.  And I think, in many instances, NGOs can step in there and do things that governments aren t doing and I think this notion of urging governments to improve their governance, to improve their transparency, to build institutions, to be more effective, to be responsible, to be less corrupt, I think NGOs have a very important role to play here. Finally, let me say a word or two about direct corporate NGO collaborations.  And I think this is the area where some are very skeptical and I m a little bit skeptical as well.  But I want to point to one collaboration that I learned about in the course of doing this book, oh, and my other book as well, which, maybe it s coming up here in a moment.  And that is Unilever and Oxfam were interested in exploring the developmental impacts of Unilever s activities in Indonesia. And just kind of cutting to the chase, what was really fascinating that came out this study -- it was a very in depth empirical analysis of all of Unilever s activities in Indonesia, through its supply chain, customers, et cetera -- was that absent any corporate responsibility activities, Unilever was having a profoundly positive impact on this country.  And indeed, by some measure, something like 20 percent of Indonesia s economy was tied, in one way, to Unilever.  Now the report also did make some recommendations for other things that Unilever might do to further improve its imprint perhaps beyond its core business and activities. But when I look out and I see NGOs in the environmental area, like World Wildlife Fund, Conservation International, The Nature Conservancy, when I look at human rights and poverty alleviation organizations like Oxfam, Save the Children, Doctors without Borders, these are really first-rate, I think, very effective, efficient, and productive organizations that have a lot to contribute in the global commerce [sounds like].  And I, for one, am open to the notion of them working with governments, hopefully not supplanting what governments could or should be doing, and working with companies to advance broader social and economic goals. So just to sum up, civil society organizations, civil society generally, all of us, have been active in our political lives, in our personal live, in our social lives for decades, for hundreds of years really.  This has been part of the modern social enterprise of man, of mankind.  And the fact that we use the term NGOs, I think, should not cause us to forget that this is part of our obligations.  It's part of political democracy.  This is part of being active in our social-political lives. Some NGOs, maybe, give the civil society sector a bad rap.  Greenpeace, some people may not like the way that they are very confrontational.  I m sympathetic to that.  But I do think that the civil society sector has always been important and will continue to be important and has a right, indeed, an obligation to participate in a lot of the activities that we ve been discussing here today, international trade, development, and the like.  So thanks for your time and attention.  I look forward to the other comments and the discussion. Mauro Lorenzo:  Thanks very much.  That raises a number of questions from me.  I m going to hold my tongue and see if maybe the moderator calls on me at the end.  Let s turn straight to Don Eberly, who is also no foe of civil society in principle, in general, and just wrote a whole book talking about ways in which civil society can, should, in any way is taking on greater roles in providing, in various sectors, formerly thought to be the purview of government.  So I ll let him talk a little bit more.  He has worked in Congress and the White House and the State Department and USAID and has become a real thought leader on a lot of the questions facing us in this panel and in the whole event today.  Thank you very much for coming. Don Eberly:  Yes, thank you.  There is so much on the table here today and wonderful topics.  We could have breakaway sessions and focus for hours on any number of them.  Corporate social responsibility is actually a work in progress.  I ve been working in that space for the last couple of years and it s actually changing.  And maybe we ll have some time to talk about that in certain ways that I think are very helpful. I wrote the book and thanks for plugging that.  I should have brought a PowerPoint presentation because I could have put it up there.  I do have a copy and I have brochures with me as well on it.  But I wrote the book, in part, because I ve been a lifelong civil society guy, both because I was raised in the tradition of it and I discovered Tocqueville and I realized how, if you want a central piece of literature on unique liberal political structure of the American democratic experiment, you almost have to start with him.  And it helps that he was a non-American because he appreciated how unique the genius was. And over many years and a variety of tours of duty in government, including five years in the current administration, I happened to have been in the frontlines of witnessing what is the rise of a dramatic new era and worked on some of the domestic policy initiatives having to do with community building and civil society.  And after 9/11, I went to USAID and worked on international development policy reforms, predominantly in the Muslim world and civil society and education policies and then spent a couple of years on Iraq, institution building.  And then I think probably, by far, the most fascinating I did was to coordinate the private sector response to the tsunami disaster out of the State Department.  And what I would hope, in the few minutes I have, is to capture what is real, what is upon us, the new world. And since globalization wasn t invoked, I m going to start with comments on that because whenever we think about this whole space that we re talking about, you have to appreciate it s here to stay.  It s not going anywhere.  And we all have our opinions of it.  We have our favorite pieces of civil society or NGOs but it is here to stay and it will be having a major factor in world affairs for years and decades to come. I found, by the way, the best definition of the forces of globalization offered by Richard Haass in foreign affairs when he recently said, Globalization has increased the volume, velocity, and importance of cross-border flows of just about everything, from drugs, e-mails, greenhouse gases, manufactured goods, and people to television and radio signals, viruses, both virtual and real, and weapons.  Globalization reinforces non-polarity and two fundamental ways.  First, many cross-border flows take place outside the control of governments and without their knowledge.  As a result, globalization dilutes the influence of the major powers.  These same flows often strengthen the capacities of non-state actors. Another term that wasn t used much this morning but is fairly popular in foreign policy circles, to help understand a variety of new actors, which predominantly are non -- I m hesitant often to use even the word nonprofit because as I ll explain, civil society is a lot more than incorporated organizations.  I m not sure that Al-Qaeda, for example, which is a non-state actor, is incorporated under sovereign state or -- and I m sure it received donations but they re not tax deductible. The point is non-state actors are major contributors to the development or destruction, as it turns out, of communities and nations in the 21st century.  I m going to the Pentagon this afternoon because, as you may or may not know, of all the foreign aid that we re now spending $23 billion a year, 20 percent is now being spent by our Pentagon, in large part because the nature of warfare has changed, from classical warfare to very, very unconventional.  And even unconventional doesn t capture the concept when you re talking about having to win hearts and minds where narco-terrorism is taking root in South America and elsewhere. So a lot of these boundaries are collapsing, the sectors are blending, and I don t see us going anywhere but more or less in the same direction that we re going in, with having to figure out how to deal with a rising, a proliferation of non-state actors. And one of the things I observed in government, which happens to be a great, great deal more broken than most people -- whatever your political ideology, government is very broken.  And a lot of it has to do with the confusion that surrounds having to figure out how to adapt to a changing world in which government agencies are stovepipe institutions in the midst of a horizontal, socially networked world. If you want to reflect on that, that is yet another seminar on how the government can begin to cope with this.  But that, to me, captures the environment that we re moving in.  And I see the heads of 35-year-olds and younger nodding in understanding of that because we now have 50 million Americans, for example, who profess to be socially networked globally , meaning engaged continuously with a person or community somewhere outside of the U.S. So I wanted to start with some reflections on globalization because to a very, very large extent, the new actors, the new powers, the new voices are a direct extension of the forces of globalization which are fueled by communications technology and technology generally, which is not going away.  It s going to continue to bring about a greater global awareness of a greater integration and a greater blending of cultures and cuisines and styles and ideologies and you name it.  And if we are not prepared to work in that kind of environment, whether you re looking narrowly at corporate social responsibility and how business wants to navigate in this environment or whether you re looking at it through government or any number of other positions, we have to come to terms with the world as it is. So should NGOs, for example, be in a business of shaming?  One of the points that I would want to make is that when we talk about civil society, and I want to identify myself with Jonathan s remarks in the strongest terms, we re talking about a lot of different things.  And what we think about civil society, I m here to tell you, has a lot to do with what you want civil society to do.  I mean some people want to see civil society mostly as social service delivery.  Others see civil society as mostly local, Norman Rockwell-esque kinds of community-based organizations and some people see civil society as mostly advocacy-oriented, that is, that they should be doing more advocacy.  And I kind of put my cards in the table, there are a lot of NGOs that I kind of wish would be doing more advocacy.  They re promoting rule of law and human rights and so forth.  So let s not kind of assume that civil society is just this large undifferentiated mass.  It involves a lot of various pieces and parts. And one of the things that I attempted to address in the book is that there has been a proliferation of civil society at all levels.  So it s another thing we ought to appreciate, International, national, regional, local.  In Tocqueville s day, there were 27 so-called NGOs.  He didn t use that term.  They were voluntary associations, an important distinction in itself, voluntary association comprised mostly of volunteers.  There were 27 with an international focus.  Today, there are 40,000. And what I wanted to identify as strongly as I could in the book was to differentiate between what it is we re talking about, between saying an incorporated nonprofit of which there are, I believe, 1.6 million in America now with an average of nine employees.  But nevertheless, when we think of the nonprofit sector in America, we re still thinking roughly in terms of small-scale limited numbers of employees.  But truthfully, it actually, if you want to use the term NGO , it does include both AEI and some of the big beltway bandit firms as they re referred to that happen to be nonprofits but which do a lot of good around the world.  Are they included in my definition of civil society? Well, for me, scale, location and what exactly it does is kind of important, from a definitional standpoint, because the reason I got into civil society is because of all the wonderful things that Tocqueville had to say, and many of you have your own quotes, I m sure, from Tocqueville, he said, Of all these things that -- he s observing the tendency to join or create associations of a thousand kind, and there were associations of a thousand kind, he said, The thing that s most important is that this is the step on which progress toward all the rest depends. And my starting point in all of this is that these are the seedbeds of democratic character, confidence, skills.  I come at it, my starting point is from the standpoint of liberal political theory.  You can t have democracies around the world without the democratic citizen.  Where does the democratic citizen come from?  It comes from the small-scale civic associations where people learn the habits of practicing citizenship.  So one of the criteria that I introduce in this whole discussion is to what extent is corporate social responsibility?  To what extent is the government?  To what extent is any other major actor introducing capacities at the community level to cultivate democratic citizenship?  What s it actually all about? So civil society actually involves a certain notion of space, where voluntary joining happens to take place, as Tocqueville talked about it, a surrey of uncoursed human association and you have to include the choral societies, the bridge clubs and the book study groups and all the rest in that because they re generating vibrant important social capital, whereby, democratic societies, and ultimately, the democratic states take shape. So what really is our concern?  Maybe we can introduce a whole new -- and I was telling Fred Smith at the break, that why not just look for common ground in this area of corporate social responsibility?  And let me just identify a couple of trends that I think are actually heartening in this area, one of which is that I see corporate social responsibility actually as a movement that s kind of up for grabs.  But there are a large number of people who are saying, Listen, we re not just interested in appeasing stakeholders.  We re not just interested in whatever you understand the politically correct agenda to be.  We re actually interested in building communities. And so a lot of the, if you read the literature on the emergence of global capitalism, there s this [indiscernible] Hyde s book, for example, chief among the options would be figuring out how global corporate interest increasingly can t be served without strengthening communities, without partnering with the poorest of the poor, reaching down to an ever lower level to recruit more participants into the process.  And I see corporate philanthropy changing along those lines very much.  And we can come back to that, if necessary. I will take just two minutes to cover a couple of trends that I think are very, very important.  One is the remarkable growth in the private sector.  And here, I m using the private sector to include all nongovernmental institutions, the remarkable outflows, and what it means for the world.  The sub-theme of my book is compassion as America s most consequential export.  I mentioned the tsunami reconstruction effort.  To witness, for the first time in the human race, a response to this calamity, whereby, thanks to global technology, there was the first unfolding of e-philanthropy, meaning just about every planet on earth where people had some access to the media and to technology, there was an immediate outpouring and an immediate rise of donations worldwide, which, by the hundreds of millions of dollars, if you want to talk about globalization, flowed into like U.S. NGOs, like Red Cross and World Vision, and then to the frontlines. But the point is that within months, not years, $2.5 billion in private sector resources, $600 million alone just from American business, flowed into this private enterprise that we called Post-Tsunami Reconstruction.   Our government dickered for about five or six months and came up with $657 million.  So when you talk about the ratio of 80 to 20, 30 years ago, 80 percent of all the outflows were governmental.  Today, 80 percent of the outflows are private.  And I saw that firsthand, just the extraordinary outpouring, and that, of course, had to be coordinated. And business -- this is not Norman Rockwell America.  Even ten years ago, people kind of ridiculed civil society or private initiative and so forth as something that s kind of out of fashion and has probably outgrown its usefulness.  Today, you will find, in many of the major actors that respond to need, a level of sophistication.  In the case of tsunami, it was mind boggling what business did.  They weren t interested in just doing good for the sake of doing good.  They brought expert personnel to bear, who had some understanding of IT and communications restoration and supplies chain restoration.  They knew how to put the pieces of a functioning society and an economy back together, along with doing humanitarian things, so very, very valuable interventions by the private sector. The premise is, and I m not going to get into the lunch address territory, but the premises under which aid is increasingly being delivered and understood, even, are changing rapidly to think more in terms of enterprise.  And the only alternative to, the only answer to poverty I ve ever known of is actually prosperity.  And the extent of growing interest in promoting entrepreneurship in grassroots, enterprise grassroots opportunity and growth, I think, is something that represents a huge area of potential interest. But let me just mention, I talked about the rise of local civil society.  We now have global data sets.  And you ll find in places, the Ford Foundation has assembled and others have assembled data sets on local civil society, which is what interest me greatly and I think it should interest our large nonprofits and it should interest our government and it should interest corporate social responsibility actors.  But in places like India, you now have a million local civil society groups, 200,000 in Brazil, 16,000 in places like Egypt. And you have to include in this some understanding of what voluntary associations, when hardwired with the technology, can do in places like Burma.  September, a year ago, when Burmese priests or monks joined together and suddenly got real-time images of what was going on in the street out to a watching world.  Or voluntary aid societies that have formed in the wake of the earthquake in China because the government s response is inadequate.  Or all these daring publications and citizen journalists that are forming throughout the Middle East, empowering people in a way. I started with Richard Haass quote for a very reason, for a very specific reason.  I think whatever else you think about civil society, you have to accept that the civil society movements joined together, as I ve described them, are prying open closed societies in a way that our government, with all of its best intentions, is unable to do.  And I think that represents a tremendous potential for ongoing social economic and political progress.  Thank you. Mauro De Lorenzo:  Thank you.  If you could turn off your microphone, it causes problems for the technicians.  We re going to return now, in fact, to the firm, in some ways.  To my right is Professor Ian Maitland, professor of management at the University Of Minnesota School Of Business.  He s going to talk about ways in which corporations, both in their business practices and in their ethical codes, are taking account, more and more, of some of the NGOs and civil society, features we ve been talking about.  I ll just add in brief that many of the people who are the executives of corporations have a dual life, if you will, that they re leading corporations in the daytime and they re philanthropists and members of civil society in their free time. And certainly, one of the most interesting features that I found in my work is a group of private executives, who, very much under the radar, without a formal name, have gotten very involved in Africa in being advisers, stimulating investment, a great cost to themselves and zero profit even.  They haven t stopped being executives for the sake of that.  But thank you very much for joining us. Ian Maitland:  Thank you.  Let me see here.  My focus is more on corporate social responsibility.  And okay, good.  And I call it global corporate social responsibility to distinguish it from some earlier homegrown varieties.  And I call it global too because it s driven, in large part, by globalization. After languishing in obscurity for a number of years, around 1990 I think, CSR became front page news.  The EU issued a Green Paper on the subject.  The concept s renewed appeal has been driven by globalization.  And the new global CSR is seen by its advocates as an important counterweight to the ravages of globalization. And this is a comment of an enemy of corporate social responsibility.  Even according to Clive Crook of The Economist, global corporate social responsibility has won the battle of ideas.  Today, he says, Corporate social responsibility, if it is nothing else, is a tribute that capitalism everywhere pays to virtue.   And NGOs are the main force that pushed for CSR in the first place. I should note another difference between the old and the new corporate social responsibilities.  The new corporate social responsibility, what I call global, is not adopted simply out of noblesse oblige by corporations.  Rather, it s negotiated by what its advocates call civil society against a background of pressure and threats to corporations reputations and brands. It s not just of course the enemies of global corporate social responsibility who think it s triumphed.  Its friends do as well.  John Ruggie has been mentioned already.  He s at the Harvard Kennedy School and he s a former UN Assistant Secretary General for Global Compact and really, I think, largely the architect of the UN Global Compact. So Ruggie, too, has declared victory for global corporate social responsibility.  And he claims that NGOs have been a major force in inducing greater social responsibility by creating transparence in the overseas behavior of companies.  They ve also implemented transnational norms.  Maybe premature to declare victory, Clive Crook has a codicil or qualification.  He says CSR is actually only skin deep.  It s cosmetic.  The human face that CSR applies to capitalism goes on each morning but gets increasingly smeared by day and washes off at night.  He says that by and large, CSR is, at best, a gloss on capitalism, not the deep systemic reform that its champions deem to be desirable. To understand global CSR, it s necessary that you start with the growth of what David Vogel, no stranger to AEI, has called the global private or civil regulation.   Global CSR doesn t simply replace public regulation with private regulation.  It is far more.  It s actually a positive program for conscripting or leveraging corporate power for the solution of social problems.  It represents an escalation of NGO demands on corporations that would actually radically redefine the relationship between corporations and society. The scale and scope of global CSR are quite breathtaking.  A recent account gives a flavor.  This is an NGOs dream, and it s Fred Smith s nightmare, companies with its humorous government responsibility for governmental functions, for citizens rights.  They take care of feeding the homeless, managing school budgets, improving deprived neighborhoods, of course, working conditions in sweatshops, ensuring living wages, providing schools, medical centers and roads, and so on.  So truly, the Nanny Corporation is fast replacing the Nanny State. But I m getting ahead of myself.  I want to tell a story.  It s how we got here in the view of the advocates of CSR.  Their story reports the chronicle rise of global CSR.  But more importantly, it consciously or otherwise provides a legitimating myth for that role for corporations.  It s a case both for the global civil society regulation of business and for global CSR, which it sees as a next step. So briefly, the actors, very simple cast of characters here, nation states, NGOs, and really, I think, I m talking only about that narrow subset of NGOs that Jonathan mentioned, I think he refers to as activist NGOs in some of his work, those that seek to influence economic outcomes.  This covers some grownup NGOs , to use Sebastian Mallaby s phrase, but not all. And lastly, of course, transnational corporations, my account is necessarily going to be schematic and leave a lot of material on the floor, on the cutting room floor.  But basically, I am going to cast a critical eye on the supposed empirical foundations of the case for global corporate social responsibility. So to begin, over the past several decades, so the story goes, the power of the nation state, especially over economic and social policy, has retreated under pressure from globalization.  This claim is based on a voluminous literature.  One influential statement is Jessica Matthews well known article, Power Shift in Foreign Affairs.   Some scholars have gone so far as to claim that globalization is making the nation state model anachronistic in a borderless world.  I ve seen this facetiously referred to as the end of geography thesis , or even more felicitously referred to as the claim that Geography is history. Nation states are territorially bounded but economic activity increasingly transcends national boundaries.  As a result, the nation states are no longer a match for mobile transnational actors like corporations nor are they a match for agile NGOs either, but that s another story, well, for later, anyway.  This power shift, from nation state to transnational corporations, has mainly resulted from the mobility of capital.  Globalization has enhanced the bargaining leverage of corporation vis-�-vis countries, primarily because capital is mobile but labor and communities are not. Globalization has freed corporations to exploit their mobility, to play off countries against one another, and to extract terms that are favorable to themselves.  Supporters of global civil regulation allege that corporations use the threat of withdrawal or withholding of investment to pressure governments and workers to grant concessions.  Put another way, firms have the ability to engage in so-called regulatory arbitrage , i.e. to locate their operations where rules are weakest and/or in whatever jurisdiction has the most favorable regime. As a consequence, instead of being able to exercise some degree of control over companies operating within their borders, governments find themselves locked in a bidding war with one another to attract and retain the business of large transnational corporations.  In this bidding war for foreign investment, governments are being forced to dismantle regulations that protect labor, human and environmental policies and also programs that have protected vulnerable populations. The resulting regulatory vacuum has created a race to the bottom, in which the societies have been left exposed to the ravages of unchecked global capitalism.  Governments have stripped themselves of the capacity to manage the adverse consequences of globalization.   That s from Ruggie.  One result is what Ruggie refers to as a business and human rights predicament.   He says that the regulatory vacuum creates a permissive environment for wrongful acts by companies of all kinds, without adequate sanctioning or reparation.  In addition, he alleges, There has been a fraying of social safety nets, easing of the tax and regulatory burden on business, and a weakening or slowing of rules intended to promote labor standards, human rights, environmental quality, or poverty reduction.   Other critics of, other NGOs and other academics have other charges.  The race to the bottom is alleged to have contributed to social ills, including global warming, ecological problems, corruption, poverty, the list goes on.  It has been alleged that child labor and slave labor have reappeared in modern sweatshops of supply chains of many multinational corporations. As a result of the growing of this, there also had been a growing democratic deficit or governance gap.  David Vogel has noted -- thank you.  This is a nice summary.  He says, Underlying virtually every scholarly unpopular discussion of global civil regulation, is the claim that the global economy suffers from a democratic governance deficit, often attributed to the constraints posed by global competitive pressures on the willingness and capacity of states to effectively regulate both global and domestic firms. However, the race to the bottom, this is the good news in the story, has provoked a backlash.  Globalization itself has facilitated the rise of a global counterweight to corporations.  The regulatory vacuum left by the retreat of the nation states has been partially filled by networks of NGOs or global civil society.  As a result of pressure from NGOs, corporations have been forced to voluntarily adopt self-regulation that protects labor, human, and environmental rights.  And the result has been, in David Vogel s words, the growth of private regulation of corporate conduct. Ruggie refers to how governance failures have created an organizational niche that civil society actors have begun to occupy and from which they ve been engaging the global business community in the attempt to balance its newly acquired rights with new social responsibilities.  Soft law is replacing hard law.  And the claim of the advocates is that civil regulation, jointly managed by corporations and NGOs, has succeeded in tempering the harshness of globalization by giving globalization a human face.  Advocates also claim that civil regulation ameliorates the democratic deficit that I referred to.  Marina Ottaway has noted that NGO networks claim to represent the true voice of the people against those of indifferent or repressive governing institutions and greedy private businesses.  Ruggie says they provide indispensable roles in the defense of human and labor and other rights. However, as I described a moment ago, there s a lot more to the new global governance.  It s about radically redefining expectations about the global public role of private enterprise.  The argument is that corporations have got to fill the vacuum that s created by the retreat of the nation state.  So it s more than just self-policing.  It means the corporations have got to assume responsibilities that have traditionally been the function of government.  They have a duty to do so because globalization has given the power to do so and because no other institution can perform that role. Well, in my remaining time, I want to give a very brief critique of this story.  And basically, my thesis is that virtually all of these claims are unsupported by the evidence.  Obviously, this is too large and complex a topic to do more than sketch my findings but I hope you won t mind if I skim them in a few PowerPoint slides. So where are we here?  Okay, so the claim that the nation state is retreating is disputed by the more careful scholars in the field.  As you see, I have placed a lot of reliance on David Vogel s work.  David Vogel says the power of global firms doesn t dwarf that of national governments.  Sovereignty is not at bay and the power of states is neither declining or in retreat.  And I have a quotation from the Wall Street Journal.  Okay, it s anecdotal evidence but I think this confirms the evidence of all of our own eyes.  Nation states, if they were in retreat, are staging a comeback.  National boundaries are going up on the Internet and they re going up in other places as well.  Balkanization is back. Next, regulatory vacuum, is there a regulatory vacuum?  Apparently not.  Globalization has actually, in some ways, intensified regulation or increased its scope.  Governments haven t abdicated or weakened.  Indeed, rather than being able to arbitrage regulations, corporations have found themselves increasingly subject to both home and host country regulations.  The EU is a new global regulatory power, a super power, as many American companies have the bruises to show. Is there a race to the bottom?  As David Vogel, again, and Kagan say, the political influence of the race to the bottom imagery has been considerable.  It s very popular among public intellectuals and politicians but I don t think it s so well viewed by academics.  There is no evidence that economic globalization has produced a regulatory race to the bottom.  Daniel Drezner says these assertions are flatly wrong.  And if you wade through it, Braithwaite and Drahos have a very large overview, say, Look, this used to be the conventional wisdom, namely that corporations which shop around for the lowest standards.  Until the 1980 s, the dominant way of thinking was that there d be this shift of companies.  They d locate their business to pollution havens.  He says that today, this is contested, they say, by considerable empirical evidence. Other claims, has there been a fraying of social safety nets?  As far as I can tell, no.  Have corporate taxes declined?  No.  Does government fiscal policy significantly determine FDI inflows that are restricting the fiscal freedom of nation states?  No.  Are corporations attracted by countries in which democratic rights are curtailed?  No.  Have labor standards been weakened in order to attract foreign investment?  Again, no.  Do transnational corporations pay less or treat their workers less well than local companies do?  No.  Child labor has always been with us.  Apparently, five percent of child labor may be involved in production for the global markets but that s always been the case.  That the evidence suggests if it weren t -- for domestic purposes, if it were not for global markets.  Is there a business and human rights predicament?  I don t know if Fred is here but I ve looked through Ruggie s work on this subject and as far as I can tell, he outsources to anti-corporate activists all of the evidence gathering on the subject of alleged corporate abuses.  He has not validated any of these charges.  Of course, there are going to be abuses.  Are they the norm?  Have they been growing?  There is no evidence so far as I can tell to support that. Maybe I could spend a little bit more time on the democratic deficit because I don t think that the new corporate social responsibility is a cure for the worldwide, alleged worldwide democratic deficit.  You might ask who elected, what Gary Gereffi has called the NGO industrial complex , which, of course, legislates these new standards, the soft law that now regulates businesses, global operations.  And as these quotations suggest, the NGOs are located in developing countries -- in developed countries, not developing countries.  The citizens of underdeveloped countries remain largely silent.  Developing countries are not participating in shaping ISO 14001 standards.  Many labor codes essentially empower NGOs rather than developing country workers and the two s priorities can often conflict. If NGOs are accountable, are they accountable to Western consumers?  David Vogel pours cold water on that idea too.  He says most consumers continue to make purchasing decisions primarily on other -- on price, quality, and so forth.  In other words, if NGOs are a voice for the voiceless, that voice has an elite Western accent.  Indeed, in many ways, NGOs exist expressly to circumvent the democratic will of people.  NGOs, as you ll see in this quote here from Ruggie, they protect various values where the normal political process impedes or opposes progress in those areas.  That may add to democracy if we are talking about an undemocratic state.  But if this circumvents democratic outcomes, it s anti-democratic. Another name for those normal political processes is of course democracy.  David Vogel, again, An important advantage of civil regulations is they essentially bypass ongoing conflicts about state sovereignty.   David Vogel has described how they help to avoid or get around WTO restrictions.  WTO restrictions apply to governments but they don t apply to corporations and NGOs.  So victories that have not been attained through the democratic process can be obtained by lobbying corporations.  And David Vogel says, Many NGOs have been repeatedly frustrated by their inability to strengthen national and international regulations so they do it for themselves.   But of course, just because NGOs failed to get their way at the ballot box hardly justifies circumventing the democratic process and going to the street.  Voters could have picked Ralph Nader, Pat Buchanan, or Jean-Marie Le Pen, but they chose not to do so. So I got a note here to wind up.  Let me just say that I believe also a lot of the substantive policies are wrong.  I have a particular interest in the issue of living wages.  And I think these policies are wrong-headed and destructive of jobs in developing countries but they do represent one of the goals of the NGO movement.  And there has been some discussion about the process of naming and shaming that is used by NGOs in order to enforce standards.  It supposedly sanctions miscreants but also, it serves NGOs organizational needs for self-reproduction by generating the revenues, which allows them to continue to operate. A question I put to you to think about is whether or not the second, in many cases, dominates the first goal and whether we don t have a very arbitrary hit and miss system of civil regulation which doesn t afford due process to corporations operating in the global arena.  I question whether corporations are constituted to take on these additional obligations without injuring their ability to perform their basic mission. So in conclusion, I think the empirical foundation of the case for global corporate social responsibility just isn t there.  The best cure for the ills of globalization is more globalization, freeing globalization to do its thing.  Adam Green supplied an example.  Five years of trying to bring pressure on Chinese companies to improve their practices got nowhere.  Six months of labor shortages changed their tune.  If we, a dynamic economy that creates jobs is also going to be raising our living standards and I think that there was also another example along the same lines -- excuse me, I thought it was rather striking, from our earlier discussion.  I do have it somewhere here.  Well, maybe not.  I thought I had marked it.  In any case, I think we should -- my concern is that overregulating globalization, of course, not only curbs its excesses and its abuses.  It also will curb the benefits that we can derive from it.  And I m not sure that we ve got the balance right.  Thank you for your patience. Marco De Lorenzo:  Thanks to all of you.  I have to a quick comment and then before you even respond to it, I m going to try and take one or two questions and maybe we can bundle them together and think.  So my comment briefly is that there was one thing that nobody talked about, which creates, in my mind, a slight sense of time warp and the time warp is circa August of 2008. So we ve had, since then, one of the most dramatic and consequential reassertions of state power on a global scale.  I think that has been noticed, witnessed by anyone in history.  And so I wonder how that -- that wasn t -- how does that affect the way we ve been talking about these regulatory issues between companies, governments, and so forth? I know there are -- I see a hand there.  I see one there.  Why don t we take those two and then -- Will Trimble:  Hello, my name is Will Trimble, and I m with Zurich Financial Services.  My question is fairly specific.  Have financial market indices, such as the FTSE4Good and the Dow Jones s sustainability indices, been good vehicles for incentivizing financial services companies to adopt serious CR practices? Jonathan Doh:  I think that s a big topic and the last panel kind of alluded to it.  And I can t remember if it was, your name -- Charles Kent:  Chuck.   Jonathan Doh:  Chuck remarked, I think, that on balance, the empirical evidence about the relationship between corporate social performance and corporate financial performance is mixed, at best.  And the extent that SRI is a primary vehicle through which corporate social performance influences financial performance, I think, is a big question mark.  I mean one reality about SRI portfolios or social indices is that they tend to skew [sounds like] towards certain sectors, like financial services, because some industries and companies just inherently do better in terms of these social ratings.  And this is a problem.  It s an opportunity and a problem. In the late 90s, it was great because these industries also were heavy on tech and so they were performing wonderfully.  Well, after 2000, 2001, they went through the tubes.  And similarly, I think we re seeing the same thing with financial service.  I do think companies compete to get on them.  That there is some evidence that companies are interested in being listed either for reputation benefits or perhaps to access larger pools of capital.  The empirical evidence that I ve seen does not suggest that there is a significant impact on their practices.  That is, that being listed on these indices causes them to change a whole host of things and do things differently than they might otherwise. I ll tell you, though, something that I think might help a little bit more and that s something like the Equator Principles, which is a much more specific code, and again, some of you are very suspicious about these things, but a specific code that governs or urges banks to consider social and environmental practices in their lending and specifically, in their project finance lending.  And from what I understand, there have been many deals that have been unfunded or not funded by some actors and by others and other deals that have restructured as a result of those principles.  So there s a quick answer, at least my opinion. Male Voice:  [indiscernible] Don Eberly:  Well, I was just going to react to your point, Mauro, about the nation state and that might actually be something to invite a little further conversation on because I think it s a mixed, new set of circumstances that both call for a strengthening of the nation state in which represent new pressures on it.  When I get into civil society as a global force, I mean, there are terms that describe the rise.  One observer described it as an associational revolution or a global fifth estate or the first global electorate. Literally, when you think in terms of how globalization works at the level of technology and communications, we all find each other by one way or another.  I mean, whether you re a birdwatcher or a member or sympathetic to Al-Qaeda and you re operating in a third world country somewhere, you re going to find people of like mind and like opinion and like intentions.  And I think that represents something.  And you can look at how that plays out here even in Washington and elsewhere in Western capitals.  Many of the movements, democratic or anti-democratic, mostly democratic, but around the developing world have large diaspora communities who are now highly organized and exert an enormous amount of political pressure by one means or another back home. Some nation states are going to manage this very, very well and some won t.  I mean you can look at 50 or 60 countries that are largely dysfunctional and ungovernable.  And I think that the key to managing the nation state in the 21st century, if you re actually in an ethnically and religiously diverse society, is in fact managing Balkanization.  It s managing from within the country the process of a more pluralistic civil society that yield multi-ethnic and multi-sector and kinds of political parties and the like.  It s going to take, and we can spend a lot more time on this but a whole new model of leadership, in my opinion. Mauro De Lorenzo:  But I still want to know sometime whether it s going to result in the sort of slackening of the power, this growing power that you see of civil society organizations, what s happened over the past few months in the different domains where you specialize. Nick Apalte [phonetic]:  I m Nick Apalte.  We ve been talking so far about corporate responsibility.  Should we also be talking about NGO responsibility?  This is a question for the entire panel.  Let me add two additional questions to that.  If we re going to talk about NGO responsibility, are there any mechanisms or institutions in place now that would help us to see the transparency and accountability of NGOs?  And thirdly, if you were going to provide such mechanisms, what specific criteria or parameters should be used in assessing NGOs? Don Eberly:  Well, I ll take a stab at that and I do -- I m sorry for making a repeated plug for my book but I have a whole section in there on accountability and transparency because obviously, if you ve got the rise of a whole new sector of global actors that are extremely important to the direction of politics and society, it s important to know.  And especially if you re a powerful international advocacy organization, transparency is key.  But how do you go about this in the kind of global environment that I ve described? I mean at the end of the day, I think the best approach is to imagine, in fact, a global electorate where whose agenda is it?  It s everybody s.  If you don t like somebody else s agenda, form your own NGO.  If you don t like a particular NGO s approach to transparency, call attention to it.  But I think there is the rise, increasingly worldwide, and I don t want to be too Pollyannaish about it but a certain democratic principle that is grounded in the notion of voluntary spontaneous self-organization that s somewhat self-correcting. I m not really hard on NGOs because at the end of the day, we have to ask ourselves, are they a net plus?  Depending on whatever you want, again, I started out saying NGOs and civil society probably mean to you what you want them to do.  And if you re really a corporation and concerned about NGOs that are on the march in regard to certain corporate objectives, then of course, you re going to have a strong concern about NGOs. If you re like me, a civil society guy, who sees the civil society movements of the world increasingly the mechanism whereby social and economic and political development is taking place bottom up from the grassroots movements, you re going to be a lot more accommodating of them.  So at the end of the day, I d say their net contribution is really quite positive because whatever their -- hear me.  Whatever their ideology, the truth is the extension from Western capitals and especially America of NGOs and civil society movements, they are going to have very, very positive attitudes about these very issues, about advancing transparency, advancing governance and rule of law and enterprise and human rights.  So I m pro civil society and pro NGOs.  And my view is that ambition should check ambition.  Faction should check faction.  If you don t like what you see out there, form an NGO and challenge them. Mauro De Lorenzo:  If you re like me, you re not against NGOs.  In principle, you re just against NGOs you don t like, just like you re against governments you don t like and companies you don t like.  Do we have -- I don t know if anyone else said anything else.  So maybe this side of the room, is there, was someone here?  Otherwise, I m going to -- the gentleman in the back.  A microphone will come.  If you could also just state your name [indiscernible]. Charles Chen [phonetic]:  Yes, Charles Chen, freelance correspondent.  And this question is for Dr. Doh.  And this also somewhat follows the last question.  It s about NGO.  And there are lots of criticisms about NGO.  First is they don t have an expertise and second is they only see the very small part of the whole thing.  And then just some is just as the gentlemen have said.  And also, you have said the new administration maybe increase the foreign aid from $25 billion to $50 billion.  And this seems much.  But if you consider all the bailout can be more than $2 trillion, so this really is a small amount.  Thank you. Jonathan Doh:  Yes, let me make a comment -- and again, Don may have something to say about this in terms of his own recent experience -- but in terms of this issue of NGO expertise, knowledge, sort of window on the world, it s true.  I mean some NGOs are very specialized and they look at a problem or a particular situation from their narrow perspective. But others, I think, are quite holistic in their outlook.  And I m sorry that our colleague from Oxfam has left us this morning because Oxfam is a good example of an organization that really has increasingly taken quite a holistic perspective on the problems that it addresses.  And Fred Smith mentioned this morning, for example, that on the issue of subsidies, whether they be sugar or fisheries or otherwise, we have this odd coupling of kind of the free marketers who don t like subsidies because it distorts trade, and environmentalists and others who don t like them because they create environmental, social and labor problems. What I see, and this may scare some of you, are a group of NGOs that are very large, they re very sophisticated, and they re very professional.  And in some of my writings, I ve likened these NGOs to multinational corporations because they have subsidiaries in different countries.  They have R&D operations in which they re generating new knowledge and new insights.  They have lawyers and doctors and business people and others, media types who have the same kinds of training and background that we might find in the corporate sector.  And I m not afraid by that.  In fact, I think the professionalization of NGOs, of these large global NGOs, is not a bad thing.  I m also quite supportive though of Don s interest, which is more on sort of the grassroots, the sort of the bottom up. In terms of the aid issue, I think you re right.  And Don and I both mentioned that in the big scheme of the size of any economy or even international private capital flows, government to government development aid is a drop in the bucket.  However, the issue is how can governments leverage the few pennies they have to activate and motivate other investment, right?  And we ve been kind of dancing around this a little bit.  And I do think that when we take a collaborative approach and we use government aid to leverage private aid and private foundation donor aid, then there s the possibility for something real to be happening. If, however, we, for ideological reasons or whatever reasons, are uncomfortable with collaboration among government business and NGOs, I think we missed that opportunity.  And one of the things that s happened to AID, and I suspect will continue to happen going forward, is using those scarce public dollars as a catalyst for private aid, including creating the conditions for private capital flows unrelated to aid by creating good governance and intellectual property rights and all the things that Fred Smith cares about.  Thank you. Don Eberly:  I need to jump in and I think our lunch speaker is probably going to be addressing this to some extent, as well.  But what we need -- I m really, really bothered by any discussion of foreign aid that s trapped in a conversation that s easily a decade old.  Whether you prefer more or less, and my view of foreign aid is that foreign aid, again, I m sort of interested in understanding what is.  Foreign aid is here, and to some extent, here to stay.  So foreign aid is fine.  Not needing it is a lot better. And what you do with foreign aid matters greatly.  If there is a revolution to be had in this whole field, it s an attitudinal one.  And I m sorry but stories sometimes are the most compelling.  I took a very senior friend from our government along to one of my many trips to Rwanda where there is an extremely important experiment underway; where an entire people were coming to realize that the only way their nation and their society has any kind of future is if that they come to terms with political realities but also the need for bottom up social and economic development.  And I told this friend, You re going to be revolutionized by this because everything, as far as outside actors, NGOs in this country come in and work under the direction of a nationwide council of religious and community leaders. And my friend made his long pitch about his strategy for malaria reduction.  And long story short, the gentleman said, Well, that s fine.  But here s what we re doing, and he went through a whole list of things that were his priority.  But he said, At the end of the day, here s what s more important.  Malaria is really a problem of poverty and we want to solve poverty and we look forward to the time when you don t need to come back as a caregiver.  You don t need to come back and solve our problems.  You can come back as a friend. I think we lose an awful lot when we fail to appreciate that people want to be empowered, to take charge of their own affairs.  So a traditional debate about foreign aid that doesn t include that, and that is -- and by the way, foreign aid doubled under this President, let s just set the record straight, okay?  It went from I think $12 or $13 to about $23 billion.  So this sort of hushed sense of expectation that a new era is upon us that we re going to be doubling foreign aid, doing away presumably with a stingy era, is really misguided. But finally, and I m not trying to be partisan.  In fact, what I m suggesting is if we really do care about the poor, we adopt a policy of humility, which says the following: there are an awful lot of incredibly important policy reforms that were adopted over the last eight years at USAID that leverages, that are geared to leverage the private sector.  For whatever $1.00 of public resources you have, try to leverage $3.00 or $4.00 in private sector resources to promote economic development.  The Global Development Alliance, the Millennium Challenge Corporation really should be preserved because it s based upon this principle of results and effectiveness. So it s not so much just a question of whether we should have aid or not have aid.  Let s imagine a time when we need less of it because we re delivering a far more effective kind of result. Mauro De Lorenzo:  That sets us up perfectly for the topic of our keynote speech.  So that we have time to get lunch and get back in here and start eating, I m going to bring this panel to a close.  I want to thank all of the panelists and thank you. [Applause] [Break] Keynote Address Jon Entine:  I d like to have everyone s attention please.  We re going to begin the luncheon talk.  I hope everyone had a great meal.  And you can munch away during the introduction and talk, so continue. Male voice:  Josh will be very quiet. Jon Entine:  Oh, okay.  Cookies can be very loud.  You have to watch it.  If you want to understand the new internationalism in the world of NGOs and IGOs, there is no better way than to sit down with someone who has spent his or her life on the frontlines.  And today, we welcome just such a person, Thomas Dichter. Tom holds a PhD in Anthropology from the University of Chicago that helped him prepare for his chosen career in the field of international development.  He spent 35 to 40 years managing and evaluating projects for nongovernmental organizations.  He directed a Peace Corps program.  He served as consultant for such agencies as USAID, UNDP and the World Bank, among many projects he worked on.  He has lectured around the world and taught at many distinguished universities, including Tufts, the University of Massachusetts, Clark University, and Princeton University s Woodrow Wilson School. In 2003, Tom wrote a remarkable and controversial book about what he called the international poverty alleviation industry.   He was ahead of the curb when Despite Good Intentions: Why Development Assistance to the Third World Has Failed was published.  An unprecedented era of prosperity has led to strong global growth but also exacerbated huge disparities in wealth between the West and other parts of the world.  IGOs and NGOs had multiplied to address these issues.  With growth comes complexity and problems, and, as Tom has argued, a good deal of ineffectiveness and waste. Many development organizations evolved into what amounted to entrepreneurial businesses in their own right, certainly well intentioned, but committed to their own survival and expansion as much as to their mission.  Transparency often took a backseat.  Tom even posed the heretical idea that in international development, less can sometimes be more, that the bureaucracies and sponsored time-bound projects that were common to many of the traditional aid programs sometimes fostered a dependency among aid recipients that just didn t address the systemic problems. The book helped launch a period of self-reflection by many international NGOs and IGOs and opened the door, at least a crack, to more innovation in a field always in search of new paradigms. Today, our era of world prosperity has been derailed, at least temporarily and in a radically short time that doesn t mean an end to our commitment to reaching out to those less fortunate.  It does mean, once again, that many NGOs, IGOs, governments and corporations deeply involved in a developing world have yet a new series of challenges to confront.  There could be no more appropriate time to bring on someone who has demonstrated an ability to think deeply and thoughtfully about the new challenges in social responsibility.  Let s welcome Thomas Dichter. Thomas Dichter:  Thank you, Jon.  Thank you especially for giving my speech in a way that I don t think I can match.  But also, I thank you for inviting me.  I come from a part of the private and public sector that would seem, by definition, to be about social responsibility.  The work of poverty alleviation or, at its most ambitious, poverty reduction, undertaken by the multilateral, bilateral, and nongovernmental organizations referred to as international development, unlike the corporate sector where social responsibility, at its best, an adjunct to commerce or in my view, at worst, an oxymoron, the fundamental premise of the international development endeavor is social responsibility.  That is its end-all and be-all.  That s its reason for being.  So if there is a field that is or should be anything but commercial, it is the field I ve been in for the better part of 44 years now. But I will argue here, international development has increasingly caught up in the same core culture as the corporate sector, and that is a culture of commerce.  And as a result, its capacity for genuine social responsibility, effective social responsibility -- and I m not talking here about responses to tsunamis or other kinds of disaster relief.  I m talking about development in the deepest and most meaningful sense of the term, poverty reduction -- I think that the underlying culture of commerce is and has been diminishing the possibilities for the international development industry to achieve lasting rigorous social responsibility. And in that culture, a culture like all others, with its own idiom, with its own forms of social capital, its own habits, and its own values, we ve all become, I d say, we and the international development industry or when I m being cynical, I call it the dev biz, we are all in one and in one way or another, in sales.  We are seeing more and more of our endeavors -- and I ve been in this business since the mid- 60s -- more and more of our endeavors competing not just for funds, that s an old story, but for a piece of a fragmented and increasingly fragmented public attention span for members.  And in a world where social responsibility is our currency, where doing good is our value, we compete increasingly for image, for reputation, for brand, and if you like, for moral market share. Of course, at the base of this culture of commerce is money.  There s nothing new about that.  That s what makes the world go round.  But in international development, oddly enough, money and the associated culture of commerce, I think, gets in the way of being genuinely socially responsible.  And again, what I mean by that is doing things in a rigorous manner, doing things that will be sustainable, in the fullest sense of the terms, having effects that will last. Now things are much more clear in the corporate sector.  And having been in this amorphous international development world for so many years, I ve often envied the bottom line aspect of the corporate world.  And the best thing about the corporate world is we know when we re being fooled. I m recently noticing that the Boeing Company s current ad campaign has a very avuncular voice in front of a series of pictures suggesting all the socially responsible things they re doing.  And the voice says, We know why we re here, and to suggest that the Boeing Company is not here to produce airplanes and make money.  Well, the great thing about the corporate sector is none of us is fooled by that.  We get it.  We understand what they re doing.  We even forgive them for doing it and we even encourage them to do it.  But we re not fooled.  It s in my field where we have a growing tendency to be fooled. Let me just give you some images and pictures from many years of collecting them.  Let me take you back to Uganda in 1997 or 1998.  I m going down a road.  And on that road, there are long series of signs; one kilometer, a new sign, another kilometer, a new sign.  What have we got?  This irrigation project, a project of the XYZ NGO.   This dam, a project of the XYZ bilateral organization.   This project being developed by the such and such foundation, and on and on we go.  Those signs can be seen in many countries, Kenya, Malawi, Pakistan, India, on and on.  And as my experience grew and my years in this business grew, the more I started seeing those signs.  Twenty-five years ago, go back to an NGO I worked for in this country, we needed to raise more money.  We thought if we raised more money, we could do more good.  But our efforts were not producing very much, not the kind of funding that we thought we needed to make a difference. So one board member from the private sector said, Look, you guys, you ve got to hire a professional.  You need a marketing person.  You can t just take some ex-Peace Corps volunteer and make him a marketing person.  But you ve got to start to pay for somebody and that s got to come from the private sector.   We had a very wrenching series of meetings because the person we were looking at wanted a salary that was twice the salary of our CEO.  We knew we couldn t match her salary and match our CEO s salary with hers so it inevitably meant we d be hiring a vice president who made twice as much as the president.  What did we do?  We did that, of course. The budget grew.  The funding grew.  The annual report got sleeker.  Did we make more of a difference?  Very hard to say.  Any insider in that organization would admit today that we really don t know whether we did or not. Let s go back to the collapse of the Soviet Union and the emergence of the newly independent states and the satellite countries of Eastern Europe and the Peace Corps in the early 1990 s where I had, in those days, lots of friends.  There was a lot of debate, Should Peace Corps go into Hungary?  Should Peace Corps go into Poland?  Did Poland need the Peace Corps?  Did Hungary need the Peace Corps?   Those questions got pushed under the rug.  The Peace Corps motto, if you will recall, was to work ourselves out of a job.  But in the end, the need for territorial expansion prevailed.  Peace Corps went into those two countries, where it is no longer, but it went into those countries because it needed to continue to exist and to be seen as relevant.  And where is the action today?  In the newly independent states and the satellite countries.  So we ve got to be there too. Same thing in post-Taliban Kabul in 2003, 2004.  You couldn t get hotel and office space because so many NGOs and international agencies were fighting for it.  Everybody wanted in.  Why?  Because they all thought they could do good?  Yes.  But they also wanted a piece of the action.  They knew, correctly, that funding would flow in big time amounts, and it did, and they wanted a piece of the pie.  And how can you, if you re CARE or Save the Children or whatever, not say in your annual report what the other organizations are saying in their annual report? So what have we got?  A culture of commerce.  Branding, first of all.  Everybody has an ego.  Corporations have egos.  NGOs have huge egos.  And corporate donors and individual donors have egos.  No longer is anybody willing to put money up for overhead.  No longer is anybody willing to put money up for unrestricted use by an NGO.  That s to say, You guys are good.  You figure out what to do with it.   It doesn t happen.  People want product.  People want to buy a piece of something on which they can put their name.  That has had, and will continue to have, negative consequences because it forces good organizations with good thinking and innovative ideas to put those ideas aside because those ideas often don t lend themselves to being productivized. Marketing.  Fundraising is driving a great deal of the development effort more than ever.  The numbers that are being thrown out today are, by the way, enormous numbers, 40,000 NGOs.  The truth is nobody really knows how many NGOs there are out there.  No matter how we define or parse the term, there are many, many, many and they re growing by leaps and bounds.  And their growth is not simply a function of a new desire to do more good but it is also a function of the marketplace.  In many developing countries, the only good respectable job you can get is with an NGO.  It s the only suit-and-tie job there is in certain countries.  And if there s a shot at getting connections with government money or foundation money or private sector money, that enhances the desire of people to want to connect with that sector.  So the competition grows intensely. I did an assessment in 1999 for a child sponsorship organization, one of the largest in the world.  They were terribly caught, morally, in the dilemma of knowing that their business model was incredibly successful.  They had a cash cow in the fact that everybody in this room might have been a donor, with a �20 or $20 a month automatic takeout from your bank account to sponsor little Pablo or little Jose or little Maria or whoever it was.  And what kept that cash cow going?  The myth that the sponsor had a direct real relationship with a human being, a child.  The number of staff involved in collecting drawings and writing letters on behalf of these donors and keeping the connections going reached the point where there was a manual this thick developed by hundreds of people to suggest what to do in the case that little Pablo died. And there was a letter that was sent out saying, Dear Mr. So-and-So, Dear Mr. and Mrs. So-and-So, we regret to inform you that little Pablo has died.  However, while he lived, he benefited enormously from your contributions.   But, subtext, We don t want to lose you so here s a picture of another child.  We assume that if we don t hear from you, it s okay for us to continue taking those $20 bucks out of your account every month.   And that s how it goes. They knew, the people running this organization understood because there have been some lessons learned in this field.  They understood that you don t create development by handing money to a child and/or her or his family.  You do it through larger efforts, more holistic efforts, efforts that can, in the long run, make a difference.  But they knew they couldn t sell that.  If they did, they would go from $100 million to $20 million and they would not and could not take that risk. Advertising and PR.  Look at the annual reports of Christian Children s Fund, CARE, World Vision, Save the Children, on and on and on.  The big giants that were referred to here, very positively, they all show a smiling poor person s face and they all pat themselves on the back.  They all claim to be making a difference and they all promise to make even more of a difference if only you will give them more money.  Is their public relations inflated, slightly exaggerated?  Obviously, of course.  Do they invest money, a more serious question, in trying to prove that what they do is effective?  Very little.  In short, a culture of commerce. So what else is new?  What s wrong here?  Am I just being a na�ve older man with a head of a 14-year-old?  Yes and no.  In one sense, it s reality.  The reality is that we live in a competitive world.  If you want to survive, you ve got to compete.  You ve got to raise funding.  You ve got to have market share.  The lines between corporate and private and third sector are blurring, et cetera, et cetera, et cetera.  There often appears to be little choice. And of course, I would have really no objection to any of this if there was any strong evidence that after 60 years, 64 if you want to go back to Bretton Woods as a starting point, and thousands of billions of dollars spent on official development assistance, we had anything of consequence to show for it.  But we don t.  We just plain, simply do not. The statistics, and of course, statistics can lie but they happen to work in my favor so I ll use them, the statistics are clear.  We do not have any evidence of a reduction in poverty that can be attributed to development assistance.  We have the case of China in the 90s where we saw the largest drop in poverty in world history.  Did that have anything to do with World Bank loans?  No.  Did it have anything to do with Save the Children?  No.  But you go to countries in Africa where foreign aid is not a drop in the bucket but where it is the whole bucket and there, things are worse and things are, despite some small signs here and there, in my view, things will continue to get worse. So yes, there is something wrong with all of this.  There are consequences inadvertent, some of them unintended, but I think they re significant.  I think this culture of commerce, with its mindsets and tendencies, works against the long term betterment of society and especially the prospects for sustainable development. Again, I want to make the distinction between Band-Aids and cures.  I want to make the distinction between tsunami relief, which is by the way, a piece of cake compared to development, and development.  And I think we all intuitively know what we mean by development.  We want to see a Haiti going from being a basket case to looking at least something like even modern Italy. So the first consequence of this link between a culture of commerce and its short-term thinking is that we have development increasingly based on the project.  Virtually all of the now hundred billion plus dollars that is spent on official development assistance to the Third World by the OECD member nations is spent in the form of projects.  USAID, Britain s DFID, Norway s NORAD, Australia s AusAID, everything is divided up into projects.  NGOs, especially those which are the handmaidens of government, Save the Children, 39 percent government, World Vision, 23 percent government.  And World Vision, by the way, doesn t need that money.  World Vision s budget last year was close to a billion dollars.  They don t need the 23 percent from the U.S. government.  CARE, 57 percent.  Two billion dollars, in those three NGOs alone, how do they operate?  Projects.  Everything is divided up into projects.  Yes, there s an R&D door and yes, there s this door and then that door.  But mainly, they are portfolio and project doors. So public and private, foundation or otherwise, including the new philanthropies, the Gates , the Omidyar s, the Google boys, Michael and Susan Dell, it s projects.  What is a project?  Project is, first of all, time limited.  There is not -- maybe there are a handful, but I haven t seen many, there are a very few projects around the development world that go beyond five years in the first phase.  Many projects are two and a half to three to four years long.  Still, after learning for 60 years that that timeframe is ridiculous, we continue to operate within it.  Budgeting and staffing is done according to that timeframe.  And of course, one of the great gifts of the corporate sector to the international development idea has been the log frame or the logical framework, essentially an extension of management by objectives. Now, we have terms like deliverables.   Think about it, deliverables in the development business, as if we were FedEx.  And ultimately, what the project is about, it is based on things.  It s a thing-based entity in a world where things are what we want to be the result of development.  Things are not the basic ingredient of development.  They should be what come out at the other end. So a CARE project, a USAID project, a Deutsche Bank-assisted project, Save the Children project, the World Bank project, what do we end up with?  Inoculate X number of children, build X number of schools, improve X miles of road, train X numbers of paramedical personnel, village pharmacists, lend X number of micro-loans, et cetera, et cetera.  And at the end of the project pipeline, we have things or we have elements that stand for things, not just wheelbarrows, hoes, tractor seeds but also human resource units, human resource inputs.  Everything is subdivided so it can be quantified.  It has to be quantified and quantifiable, no matter what it is.  Even if it s an institution-building project, it ends up being constructed in such a way that things can be counted because accountability and responsibility have entered into the mix in such a way that it is said, We want you to show us what you did between Monday and Friday.  We re not interested in how this might look seven, nine, ten years ago.  We ve got to see things now and soon. Let me go to rural India, 2006.  I visited a village community development project, the first stop of which is a small hand pump in a village that had had no accessible water.  I lift the handle and I pump no water.  I turn to the villagers, and I say, Well, what s the story here, guys?   Well, the well is dry, they say.  I said, Well, I could see that.  But was it always dry?   Yes, it was.   You mean from the beginning it was dry?   Yes.   Did you know that the well would be dry when the well drillers started drilling?   Yes, we knew that.  There s never been any water around here.   Did you say something about that to the folks who offered to build the well?   No.   Well, why didn t you?   Well, you can t say no to a gift, was the answer.  So okay, I said, But maybe the drillers had some inkling of this.  Why do you think they built it here?   And the guy said to me, Well, honestly, I think it was because it was very close to the road and they wouldn t have to drive too far.   Okay. Now I didn t get a chance to see the annual report of that NGO but I m pretty sure that it accurately and honestly said that they had completed 174 new wells in 16 poor villages.  They re not lying.  They re simply measuring inputs and being quantitative, and therefore, accountable. Okay, so again, the culture of commerce, again, I have nothing against the culture of commerce in the corporate world.  If I m in the widget business, I embrace and breathe and live the culture of commerce.  But development as FedEx, development as the selling of product, development as the quick fix short-term project, I can t quite get behind that. More important, the irony here is that this way of doing development is disconnected from the lessons we ve learned, hard lessons learned the hard way, disconnected from the reality of the social world, disconnected from things even like human nature and history.  What they re connected to is increasingly the needs of the organization, the institution, the NGO, or the other actors behind it.  It s good for Save the Children to do business this way.  It s good for USAID to do business this way.  But it is not good for our hoped for end result, which is development. Human nature.  The man who said in India, You don t say no to a gift, had it right.  Well, we ve known this for 60 years, if not, 6,000 years.  But development agencies often mistake gratitude for effectiveness and assent for participation.  They ought, instead, to consider that it s human nature to tell the giver what he thinks the giver might want to hear, not to take seriously something he or she does not have to pay for, and so on. But more important, as Jon mentioned in mentioning my book, I think the real negative consequence here is that it creates a tremendous dependency and leaves behind more and more failures.  But far more important, the reality that the project approach and the culture of commerce, which is partly behind it, a far more important aspect of this is complexity.  Development is far more complex than anything else we might want to attempt to do.  The notion that it can be engineered is false.  It cannot be about things. In the end, it is not about irrigation ditches or pumps or roads or inoculations.  It s about the intricate relationships between people and their systems of government, their systems of governance, social structure, local culture, history, psychology, not to mention the other many, many variables of topography, climate, proximity to the sea, proximity to roads, rivers, et cetera.  These interrelations are so complex that no computer could model them and they are there for, at the least, we can say, is there can be, there should not be any cookie cutter approach nor can there be any easily predictable timeframe against which we can quantify things since it s the intangibles about development where the whole story is. It brings us to the final major factor that the project approach and the culture of commerce misses, and that s the value of time itself.  Any look at our own history or the history of the so-called developed nations will tell us that development cannot be engineered.  It cannot be undertaken overnight.  It doesn t happen overnight.  It doesn t happen smoothly and it isn t something you can rely on to be there forever.  The United States has aspects today that are going in the opposite way and they are becoming less developed, underdeveloped, the same in many other countries. So framing development, putting it within a timeframe, making it fit a matrix makes it easy to quantify things.  But more important, it provides the illusion that progress is being made when in fact, there is no evidence that progress is being made.  But it makes things digestible.  It makes things digestible to funders.  It seems to answer the question of accountability.  It makes it easy for new folks to get onboard.  So we get instant celebrity experts like Brad Pitt or Angelina Jolie or name me a bunch of others who get out on a platform, or better yet, all the 30-something billionaires out there who are kind of what I call embody of social Darwinists sort of effect.  They are so smart to have made all those billions.  Therefore, ipso facto, they must also be smart when it comes to giving their money away for doing good.  The project approach, the thing-based approach makes it easy for folks with money or visibility to think they know something.  But in fact, they don t. So we re now at the point where instead of development, and here, I m maybe going out a bit too much on a melodramatic limb.  We have more and more of what I would call development theater.   We have image, we have illusion, and less and less concrete reality.  To me, the finest, and most egregious example of this, is the microfinance movement. You will remember 2005 is the UN s Year of Micro-credit.  You will remember the Nobel Prize of 2006 going to Muhammad Yunus.  Thousands of hours of television, thousands of newspaper editorials, scads of praise, tremendous funding, the interest of banks all over the world, donors all over the world, politicians all over the world, from Hillary Clinton to Bill Clinton to Robert Rubin to the President of this to the Queen of that, everybody onboard.  For what?  One of the most popular and long lasting development fads of all time, so much so that no one could come out to be against it.  Yet, no evidence, not a shred.  And believe me, I know what I m talking about here, not a shred of rigorously collected evidence to suggest that micro-credit and its larger brother and sister microfinance can make even a dent in poverty.  No long-term difference and no evidence to suggest it.  So we have really an amazing phenomenon here, driven by imagery, driven by public relations, driven by, underneath it all, a culture of commerce. Okay, I can t leave you here in this doom and gloom mode.  So what ought we be doing instead?  I ll tell you what I think we ought to be doing and I will tell you that it s never going to happen.  But this is what I think we should be doing.  As counterintuitive as it sounds and as dull as dishwater as it sounds and un-sexy as it sounds, we need more thought and less action.  In a country where action is taken for the only value, I m calling for less action and more thought.  We need fewer projects and probably far less money.  The only area where I disagree with Barack Obama is his asking for a doubling of foreign aid.  Why double something that, for 64 years, has done nothing when we ve seen the amounts contributed and going for it, go up and down and up and down?  The money was never the issue. At the least, we need to pause and do more rigorous homework before we take any action.  Is that a lot to ask?  In 2004, Pierre Omidyar, one of these young hotshot billionaires -- I have nothing against young people, by the way, just young hotshot billionaires -- he gave $100 million to Tufts University and said, Hey, micro-credit, that s the thing.  Here s $100 million.  Go do it.   At that point, and I know someone who was involved in the Tuft s negotiations with Omidyar, he had not read a line about micro-credit and had never visited a micro-credit project.  But social Darwinism at work, I m smart and everything.  I must be smart in this, got to be good. Okay, 1996, I m sent to the Philippines by the World Bank, as it happened often, to look at an enormous project that the bank was thinking was so good that it was ready to put $100 million into its phase two.  Somebody noticed phase one had never been evaluated.  Get out there, Tom.  Do a quick-and-dirty and come back.  But you got to do this right away. I went out and I did the evaluation and I found that, in fact, the project had accomplished very little.  I submitted my report.  I went to a meeting and I said to the task manager, You ve read my report?   I m really sorry, Tom.  The deadline for the new project is on me.  I just didn t have the time and honestly, I m not going to have the time.   Okay.  This happens a lot, by the way.  It is not just a minor case. So still, there was an effort under Wolfensohn in 2000, 2001, 2002 to try to create an approach at the bank, which would be homework-based.  He tried to produce a set of guidelines and essentially doing much more intelligent, much more thoughtful, much more deep homework before writing up projects.  A bunch of us anthropologists and other soft-headed types got together and we put together a manual in which we said, Look, you really want to know before you start.  You want to know something about the culture.  You want to know who s in charge, where the real levers of power are, what the real rules of the game are, not the rules that the folks in the ministry tell you are the rules, but the rules that, in fact, are the rules that make things happen, and where the cultural and social barriers are in this particular society, how they relate to what happened in the past and where things were -- it just didn t fly. Doing this kind of homework frightens people.  It takes time and the results are almost inevitably unwelcome because the results mess things up.  They screw up the project planning process.  More important, they don t lend themselves well to numbers.  And numbers are always reassuring and the people at the bank who win are the people who can do numbers.  So the manual exists.  It s never used.  Still, it s this kind of homework which is needed. Let me give you the last example of a case that I think is probably an extreme one but therefore it has some value.  I worked in Yemen almost 30 years ago when the country was newly independent.  It was an extraordinarily tribal society, highly complex, where the government s writ extended 12 to 13 kilometers outside the capital city and not beyond, where tribes held up drivers of projects and kidnapped people, where local development was essentially in the hands of tribal money that came from remittance income, tribes who would pick up a satellite phone and call Ingersoll-Rand in Brussels and say, Send me down a crew.  I want to drill for some water.   Ingersoll-Rand would come in with a rig and 15 people and they would drill down 800, 900, 1,200, 1,300 feet into ancient aquifers, the very lifeblood of Yemen s agricultural future.  No government, no regulation, tribes with money.  So what do you get? Okay, where is Yemen today?  Pretty much in the same place.  A little bit of oil added to the mix but it is still a highly tribal, very complex, politically opaque country in which the government s writ might today extend not 12 but 27 kilometers beyond the capital city.  It is not a place where you can do aid the way you do aid in every other place.  But aid continues to be done in Yemen in the same way that it s always been done, with or without any recognition that it has made no genuine difference. So homework isn t sexy.  Can you imagine Brad Pitt getting up there and saying, I m for knowledge management.   I don t think it would sell.  It does not lend itself to branding.  You cannot market homework easily and it is often not politically correct because it digs up details and intricacies and interrelationships that make your head spin sometimes.  But if we don t begin to see that investments of this kind will put us on the road to being effective in the future, despite all its messiness, we will not, and I say we, the field I ve been in, in any way, be able to be genuinely socially responsible.  Thank you. Jon Entine:  Are you willing to take a few questions? Thomas Dichter:  Sure. Jon Entine:  Okay, Tom will be willing to take a few questions.  Mr. is that Fred?  Right, yes.  We re waiting for the microphone. Fred Smith:  May I ask the moderator for some assistance to the speaker so that the ends of his sentences can be caught by the audience?  Sometimes the endings of your sentences are lost to us. Thomas Dichter:  Oh really?  Okay. Fred Smith:  -- excellent in hearing an end view. Thomas Dichter:  I m very sorry about that. Fred Smith:  [indiscernible] my proponent is that. Thomas Dichter:  Shall I turn the microphone off here? Male voice:  [indiscernible] Thomas Dichter:  No, I mean, does that interrupt with the question?  Okay. Jon Entine:  Just keep it on but you should move the microphone slightly [indiscernible] Thomas Dichter:  Okay, now you tell me. Fred Smith:  I m Fred Smith.  And frankly, I was shocked because I think all of us are real Rogers [sounds like].  We only never read the papers and always, we always want something to work over the rainbow and I thought microfinance worked.  And I m about as cynical, as some of you noticed earlier, [indiscernible].  And I think part of the reason was that we ve read about its success.  We ve seen movies about its success.  But also, in a way, in a world that does have data, the United States, our equivalent in microfinance, the finance that is offered to high risk individuals at the periphery, pawnshops, loan sharks, or payday lending, there s a vast amount of data that, in fact, that does work.  It s very considerate and it actually carries over.  The interest rates are high but where -- I mean, I loved your data on this because this is amazing.  But why do think it s been so successful when we are condemning payday, we re putting people in payday lending in jail in America and we have Yunus in Nobel Prize?  There s something weird here. Thomas Dichter:  There is.  And it s interesting that the Association of Payday Lenders contacted me a year ago and said, By the way, we ve just discovered that we re doing microfinance.   And I said, No, you guys are not doing microfinance.   And I said, But what do you want?   They said, Well, we want to get in on the publicity.   I said, Well, I m sorry.  I do have a moral bottom line and I can t go that far and I m not going to talk to you guys. But yes, I mean, if you compare the payday lenders to the Third World, the equivalent there are the villainized, demonized moneylenders.  Now the moneylenders have, just as the payday lenders have, performed a valuable service.  In fact, in many microcredit programs, borrowers never give up their relationship with their moneylender.  Borrowers are very clever.  They will maximize whatever chance they can to get more money and to increase the volume of money.  So they ll borrow from Save the Children or Accion or Opportunity International on Monday.  But on Wednesday night, at three a.m. when they need something or their daughter is sick and they ve got to get medicine, who do they call?  They call the moneylender because the moneylender has a service that nobody else has.  He s there right away.  And he ll break your legs if you don t pay back but we ll take that risk. So I mean, the discussion on microfinance is too long and too complex to waste your time with here.  But there are five or six people out there with real experience, of which I m one, and who will tell you that if your expectation is that microfinance is a serious tool for poverty reduction, A), and B), that microfinance is about the growing of tiny businesses into big businesses, those two premises are utterly false and have no -- nothing behind them.  If you think microfinance is a nice Band-Aid, then you re on the right track.  Yes, sir?  Right behind you, Don, the man behind you, sorry. Don Eberly:  Me? Thomas Dichter:  No, the man behind, yes. Charlie Chen (sounds like):  Hi, Charlie Chen.  Yes, from your work, the local culture, local history, and the reality, so this is where I derive my comment.  I think we use the World Bank as an example.  When they go and have a program on a country, they just think about here and the wider program and then they go there and implement and they do it.  I think the importance is this.  You ve got to have a local participation.  You ve got to ask the country, Do you need this?   And also make, grab the problem together and imprint there together.  Oh, what happened?  [indiscernible] they don t need it and NW is no good.  And what happened?  The World Bank gets richer and local country gets poor.  They have a debt. And also, when we talk about the environment, we only talk about a common environment.  Well, you build this, build that and you will say, Put a sign here.  This was done by [indiscernible].   I think in doing this, you also most important, you need to think about the social environment and poverty [indiscernible] environment.  Thank you. Thomas Dichter:  Okay, thanks for your comment.  I essentially agree with what I think you re going and I just want to add that the first example you mentioned, it s well to keep in mind that it s a two-way street.  You got to see the nonverbal signals that come with a World Bank mission.  The Jeep arrives -- I m sorry, not one Jeep -- five Jeeps arrive and the villagers -- the community -- already understands what s going on.  And when you then think you got popular participation because the villagers said, We need this, this, and this, you ve missed something very important, which is the villagers saw you coming.  Okay, yes sir? Male voice:  Good afternoon, Mr. Dichter.  I just want to, first of all, applaud you on your storytelling abilities, especially when it comes to stories about marketing.  That s something that s very interesting to me.  But I wanted to ask you if you agree with -- I have once heard from someone that during the Bush administrations, that aid to Africa increased at least, perhaps, three to four times but yet, very few Washingtonians could tell you what the World Bank has done in Africa.  In fact, I had the opportunity to ask Mr. Zelig this question and he went on about 15 minutes about all the things the World Bank has done, but yet, the World Bank doesn t do a very effective job to market itself to people who live right in the district and couldn t tell you what the World Bank has accomplished. Thomas Dichter:  I think that s true.  I m not advocating helping the World Bank do better at communicating what it does.  I think the World Bank ought to be on its way out.  That won t happen, of course.  Institutions don t die.  But it s a moribund institution, in many ways, and I had the opportunity some years back of doing an internal study of what was, in essence, bank staff morale and it was very, very illuminating for me.  Many bank people feel very unhappy and they are there because the salary is good.  It s got a great cafeteria.  No, really, it does.  And it s nice to fly first class.  Excuse me for being cynical.  Okay. Jon Entine:  I think we ll wrap it up for now.  Thank you very much. Male voice:  Could I just say one thing?  And I m not a protagonist of the bank but it s not an institution that was a plan.  But the Marshall Plan died once it did its job.  Do you have any comments with regard to the efficacy of claims that the design that s implemented or conducted didn t succeed? Thomas Dichter:  Well, the Marshall Plan is a very interesting example because you have to remember who the clients were of the Marshall Plan.  They were not Burundi and they were not Haiti.  They were the countries of Europe.  That makes a difference right there.  These were countries who had collapsed.  They had gone from being the avant-garde of development to having been ravaged by war.  And to build them back was essentially the goal of the Marshall Plan and it succeeded in doing that.  But that s not the same as doing development. Jon Entine:  Thank you very much, Tom.  I appreciate it.  That was a great talk.  We re going to move in to the third panel of the day.  If we could have our panelists, Beth Beloff, Anthony O Hear, and Elaine Sternberg come up.  Do you need a five-minute break?  Actually, I ve been asked to give a five-minute potty break or break of any kind.  So why don t we convene in five minutes? [Break] Panel III: NGOs and Global Engagement Jon Entine:  If everyone could please take their seat, we re going to get started with the rest of the program.  Our third and final panel of the day will focus on NGOs and global engagement, address, among other things, the legitimacy of NGOs.  We ll have some I think very provocative discussions, both from a representative of an NGO and some academic philosophers and critics of NGOs so it should be quite interesting. The moderator of the program is Nicholas Capaldi.  Nicholas Capaldi is the, to show you my butcher of the French language, Legendre-Soule, is that correct? Nicholas Capaldi:  No. Jon Entine:  No?  See, how embarrassing can I get. Nicholas Capaldi:  Just forget it. Jon Entine:  Okay.  The Distinguished Chair in Business Ethics at Loyola University, a Hume Scholar, and a domestic public policy specialist.  He s also affiliated with the Liberty Fund.  Nick had come to me, oh, many months ago or early in the year to invite me to work with him in a Liberty Fund private conference discussing the issues of NGO and that is actually beginning tonight that we re going to be working on with a number of scholars from around the world. And as part of that, we thought it might be an interesting opportunity to also bring some of those scholars along with others who I would bring in to a conference on NGO and corporate responsibility, which is what really led to the conference here at AEI today.  So it s been wonderful having worked with him over the past year.  I ve really gotten to appreciate both him personally and his sharp intellectual mind as well. A little bit about Nick, his research focuses on public policy and its interaction with political science, philosophy, law, religion, and economics.  He s a member of the editorial board of six journals, including Public Affairs Quarterly.  He s the author of six books, at least 50 articles, and the editor of six anthropological works.  Previously, he was a professor at the University of Tulsa, Queens College, the National University of Singapore, the State University of Potsdam in New York as well.  He wrote a biography on John Stuart Mill for the Cambridge University Press in 2005 and he s currently working on a book on America s spiritual capital.  Nick? Nicholas Capaldi:  Thank you very much, Jon.  We very much appreciate all of your efforts in putting this conference together.  We have three speakers.  Our first speaker is Beth Beloff, who is the director of sustainability at Golder Associates, which is a global geotechnical, engineering, and environmental services company.  She wears a number of other hats, including being the founding president of the Bridges to Sustainability Institute and, at a great cost to her health, has managed to rally and to be here today.  Beth. Beth Beloff:  Thank you very much.  Thank you, Nick.  I d like to very briefly overview sustainability; you heard some of this, this morning, another term for CSR; and talk about how it s become a business issue, meaningful engagement of NGOs, the what and why very briefly.  This is a short talk and then conclusion. I m starting with the premise that for corporations, it s really not just, for many of them, about the financial bottom line but they re also recognizing the value of the environmental and social bottom lines.  And NGOs, at the same time, are recognizing the value of corporations in the marketplace to make significant change that they re promoting.  As we heard this morning, governments are recognizing the value of voluntary programs in promoting change.  And increasingly, these diverse set of stakeholders are joining forces to facilitate socially responsible ends. Let me frame the issue.  This is the framework that I think works.  The definition of sustainability, the definition of CSR has many.  There are many.  But one thing -- and there are also many terms, sustainable development, social responsibility, et cetera -- but one thing that they all have in common is that they have the three elements, environment, social, and economic.  And sustainability does tend to push the issues along more than just the supply chain to the value chain.  And with that, the inclusion of stakeholders who are impacted from upstream resource extraction to end of life, fate or rebirth, as the case may be.  That always sits on a platform of corporate culture in a corporation of corporate governance, of the structures that are unique from company to company or organization to organization, and the definitions or the places where focus is paid are usually seen through the contextual lenses of time.  Are we looking short term, long term?  Place, where in the world, where in the world will determine, in many cases, where to focus.  What are the values of the people in that part of the world?  What are the resource issues, whether it s human or natural resources?  Are they available?  Are they scarce?  So that will help determine how that definition plays out in reality.  And often, in companies, there is a movement from just simply looking in that left-hand column of reducing the negative impacts that happen that corporations produce environmentally in terms of social impacts and economic growth in terms of externalities, but to also what good can be created. The learning curve for industry has moved, if you look at the bottom, from being very internally organized around the fence line of the company, being exclusive, decisions are made inside, little transparency, to really linking up, recognizing that the linkages along that value chain have influence on the company and the company has influence on it, to the far right, than a more external, a more open position.  And along with that has been a recognition that this, as was described this morning, this chaordic, self-organized, ever increasingly growing group of civil society individuals and organizations have some role to play in that. Another trend for corporate sustainability has been a movement from simply working in silos.  Sustainability, corporate social responsibility demands really thinking more broadly, thinking in a systems way, thinking across functional boundaries, across disciplinary boundaries, so going from the function, sustainability started typically in the environmental group to looking cross-functionally at the system.  And that means involving R&D, involving engineering and operations, involving communications and public relations and governmental affairs and supply chain management. It has moved from companies looking simply at risk, how do we reduce our risk and reduce our negative impacts but to what is the opportunity side?  How can we innovate?  How can we learn from this area to come up with new products and services that meet the new demands of society?  And time frame, from short term thinking to longer term thinking, the next generation is typically a term used in the sustainability world and there are many NGOs organized around giving a voice to those, the next generations that aren t yet here. And so that s sort of been the path line, from meeting minimum standards, absolute baseline for being in business, to improving the floor by becoming more efficient, to expanding that vision to move from just reducing the bad to increasing the good, to innovation, innovation in every regard, and to a leadership position, and then ideally, competitive advantage from all of that. And what are the advantages?  What are the advantages to business in doing this, advantages that can even weather an economic downturn because there are real bottom and top line benefits?  So these are some of the advantages that companies have, in fact, found.  Clearly, license to operate is minimum standard.  But eco-efficiency, reducing environmental impacts per unit of output does in fact reduce cost and does in fact reduce risk and does improve operational efficiencies.  And reducing those risks increases the access to capital and preferential rates and perhaps even reward by socially responsible investors.  Expanding the vision, thinking differently about what the company is doing, and how to incorporate environmental, let s say, and social responsibility into the DNA of the company, which we re at least seeing in the marketing world, a lot of companies talking about doing. With that, there has been a growing acceptance of stakeholders and a growing reach outward toward stakeholder engagement in helping expand that vision.  And we heard very, very well this morning about the interest too in moving into supply chain, forming alliances there.  New products and services, innovating around not only those alliances but technology, new markets and all of that leads to that brand equity, reputational enhancement that the companies are always looking for, hard to quantify but it s there nonetheless, and recruitment and retention.  How do you attract the best and the brightest to come to your firm?  They have found -- companies are finding that CSR is one of those factors; customer loyalty, what company doesn t want that; and at the end of the day, competitive advantage. Sustainability, so how do companies move up this curve?  Companies are evolving in terms of how they address the myriad of issues.  As we ve heard, the potential stakeholders, the actual stakeholders have multiplied.  They re better connected.  They certainly are becoming better organized and they re more diverse.  And it s difficult for any company to address all of the issues, all of the aspects to the same degree of depth at the same time.  And so choices are being made all of the time.  Strategic directions are set. Where I play in this space, I really like asking the question in helping companies figure out where to focus.  And then at the end of the day, how do you really measure your performance?  How do you reinforce the business case?  How do you determine if you ve actually made progress along that triple bottom line? So where do you focus in a world that is increasingly complex from CSR-related NGOs like these and their codes of conduct, their new standards, their voluntary codes, like AccountAbility AA1000 or the Global Reporting Initiative, GRI, that has a myriad of metrics that companies should report against or the U.S. Green Building Council and its lead standards and so on.  We heard about the Equator Principles earlier this morning.  But this is an ever-growing list of many very good codes and standards but it s dizzying to companies. So again, the question is where to focus and how to assess which stakeholders to listen to, which NGOs to pay attention to, to sit at the table with, and which of their issues to address.  Stakeholders are myriad.  They re all of us.  They re from inside the company, the management and employees, to the people to whom the company has responsibility, legal, financial, like stockholders, like suppliers and customers.  And then it s stakeholders who are affected by the organization s operations, whether they re in the adjoining community or whether they re across the ocean, people who are likely to influence the organization s performance, and that s a growing list.  But the last two of those are often organized by NGOs. And so the question is how do you navigate that?  How do you determine which issues to focus on?  We worked on a project with the Global Environmental Management Initiative, GEMI, a collection of companies you ll hear about in another minute called the Metrics Navigator.  But one of the steps of the six-step planning process around sustainability is to determine how to plot significance of stakeholder concern against relevance to business.  After all, the business is in the business of business. And so in this analysis that this is just a snapshot of the outcome, level of concern to key stakeholders is plotted together with the organization s ability to control or influence those issues that the stakeholders are most interested in.  And then that gets plotted against significance of impacts around those issues by the organization and the importance to the business success factors, which are determined by the business. And the upper right hand corner then is where one would expect high on both significance and stakeholder concern and high on relevance to that particular business to fall and that would be the logical starting place. Why are companies concerned about these issues?  Why be concerned about them?  I worked on a study to look at a very simple case of harmless odors in the community emanating from paper manufacturing facilities, chemical plants, and to trace those harmless odors back to the company to see if those externalities really do get back into the company.  They re costs that the company doesn t bear today.  Society does. And what we found was common sense but we collected a lot of data to show this.  And it was that when people in the community were heavily impacted and they felt that they were bearing a cost from those harmless odors, they didn t really want to go out onto their patios because of the smell.  They were worried they had psychological effects.  If it smells this bad, how do we know it s not harming our children?  And they couldn t sleep at night.  It didn t smell very good. When enough people, and in this case, around 30 households were impacted and the individuals found one another, they organized.  They complained together and they either formed or were joined by NGOs.  They took legal action.  They contacted the regulatory authorities.  In the worst case scenarios, they would relocate. And those costs, not necessarily one for one, but did start coming back a demand for the companies to abate, to install odor abatement equipment, internal legal costs, public relation costs, fines and penalties from the regulatory agencies, or in the case of the system imposed effects, property declining in value.  Who wants to buy property next to that kind of odor?  Tourism declining, employment declining, lost goodwill, lost job productivity, lost trust, and in many cases, in the examples that we looked at, the community just simply wanted the company out and it would find any reason that was no longer connected to odors.  So there are some very good reasons for companies to look at those externalities as an indicator of future potential costs, even though you can t come up with the exact number or the exact time. I worked on another project with GEMI, the Global Environmental Management Initiative and the Environmental Defense Fund.  This was, in fact, a partnership project to develop a guide to successful Corporate-NGO partnerships.  And the reason that this project even became enabled is the growing influence of partnership relationships between business and NGOs.  And both parties wanted to share best practices in creating successful partnerships and create case studies to really highlight them. This was just rolled out two weeks ago and I will tell you at the end how you can get copies of this.  But let me tell you the organization.  GEMI, the Global Environmental Management Initiative, is itself a 501(c)(3).  It s a consortium of 37 multinational companies and its business is helping business improve environmental health, safety, performance, shareholder value, and corporate citizenship.  It s really become more of a CSR-kind of organization as well. EDF, as you know, is an environmental organization that is scientifically based.  It s guided by its scientific evaluation to solve environmental problems, creating solutions that are intended to be nonpartisan, cost effective, and fair.  These are the companies of GEMI.  You ll recognize, I would hope, many of them.  And these are the kinds of corporate partners that EDF has.  And within this guide, we decided that the partnerships we were going to focus on were of independent organizations that were working together toward common goals, primarily around environmental issues, because of Environmental Defense Fund, that the partnerships required active engagement.  So it wasn t enough for a company to give money to an NGO. The guide goes into great depth on best practices.  So how to design a common project, how to implement, how to measure progress at the end and communicate results, there isn t time here to go into any of that, so I m just going to hit some highlights on the value of partnering.  Oops, I may not hit this very much.  But these are some of the values, creating business and environmental benefits, raising the bar, leveraging skills that might not fall in both organizations, building respect and credibility, independent validation that sometimes third party NGOs can provide, and helping achieve long term visions. A couple of examples, Kodak was looking for a way to expand into Western China and grow its strategy.  The Nature Conservancy was looking in Western China for ways to document cultural and environmental issues.  And they combined forces to create PhotoVoice, in which Kodak provided the camera and film to members of remote communities to document how they saw their cultural and environmental issues.  And not only was this an incredible set of documentaries on the issues, but it also produced innovation for the cameras and expanded the markets for Kodak.  The environmental and social benefits included the documentation, the support of conservation planning by the Nature Conservancy, and empowering the local villagers with a PhotoVoice. The last example was Occidental Petroleum joining with Ecopetrol, the Colombian oil company, which entered into a new project.  They had been aware of international alerts, social assessment toolkit for conflict resolution, and decided with a local partner in that remote area of Colombia, Fundaci�n Ideas Para La Paz to test pilot the conflict resolution methodology.  It was so successful, it was going to be a six-month project, it was extended by 24 months and some of the successes had to do with the improved trust and respect and sharing of issues between all parties. And so there are myriad benefits that are documented in this report for businesses to partner, from risk, cost reduction, revenue enhancement, cultural change, new perspectives, credibility, to the social benefits that the NGOs have found to be of value, from environmental improvement, health and safety improvement, advancing their new approaches, influencing the value chain, and at the end of the day, raising the bar on sustainability. So in closing, I just want to say that NGOs are like the canary in the mine for companies.  They provide a snapshot.  They give companies early warning systems on issues to come.  Successful partnerships can be developed that build trust and share new ideas.  Businesses and NGOs can partner to leverage the best of the experiences in both and the capabilities.  And working cooperatively does have, at the end of the day, many results that are tripled bottom line-oriented. This can be found on the Web sites of both the Environmental Defense Fund, edf.org or gemi.org, and I suggest that you look at it if you re interested in these partnerships.  Thank you. [Applause] Nicholas Capaldi:  Thank you very much, Beth.  Our next three speakers have all been overeducated in the discipline of philosophy.  Anthony O Hear, who s our next speaker, is a professor of philosophy at the University of Buckingham, which is Britain s premier private institution.  He is also the director of the Royal Institute of Philosophy and he has served as the senior education adviser to the British government.  In addition to that, he is a well-known journalist who wrote and has written on a variety of public policy topics in Great Britain and has even become notorious for one of the articles he has written.  But if you want to know which one that is, you ll have to ask him after the session is over.  Anthony. Anthony O Hear:  Yes, sorry, I m a senior adviser, not the senior adviser.  The focus of this meeting has been international and very much on the way that NGOs operate as multinationals and as vicarious arms of, if not Western governments, at least of Western mentalities.  And we heard from Thomas Dichter that there may be 40,000 such organizations.  All I can bring you is a dispatch from behind the lines of old Europe and some philosophical reflection on some of these matters. Now, the name nongovernmental organization might, as Jonathan Doh rather complacently suggested, suggests a Burkian little platoon autonomous of government, something like a club of people pursuing their own artistic, charitable, communal, sporting, educational interests.  Some are indeed like that, such as my son s rugby club or Eton or the Monteverdi Choir or Friends of Classics, or interestingly, the Royal National Lifeboat Institution, which runs lifeboats in Britain off the British coast and has refused all government interference or funding for over a century. What interests me though is not these genuinely autonomous institutions but the increasing overlap between NGOs and governments in both directions, which I think is being somewhat neglected or glossed over in the very interesting presentations we ve heard.  I think that point has not really been brought out enough.  But as I say, I can only speak for Britain so I m going to give some examples from Britain, or what we now apparently have to call the United Kingdom, which I think may make some points which may or may not be relevant more generally.  That would be for you to decide. Anyway, in Britain, the most easily recognizable and prominent NGOs are organizations like Greenpeace, Oxfam, Barnardo s, which recently dropped Doctors because that was too elitist, Childline, Shelter, organizations with evermore dramatic, not to say melodramatic, publicity campaigns and also, all initially started in response to particular crises. These are all single-interest, pressure or campaigning groups, sometimes referred to as secular missionaries.  They are often transnational, either working throughout the world or rushing wherever disaster threatens.  In these instances, they ignore boundaries, as we ve already heard, and often supplant local governments, acting sometimes as surrogates or conduits for home Western governments, which could be good, but what perhaps is not so good is their bureaucratic and self-aggrandizing tendencies, what Jonathan Doh called their professionalism, but I think Thomas Dichter gave you a different view of that. These institutions also tend to be self-perpetuating.  Although, as I say, all the ones I ve mentioned actually were founded in the wake of a specific crisis, rather than going out of existence when their work has been done, they then find that their remit begins to expand indefinitely and in all kinds of directions, which were unanticipated by the founders. Of course, the very notion of every poverty is, as everybody knows, a very elastic notion so there s always going to be poverty, if poverty is measured in terms of what s relative to the rest of society.  So there will always be a place for Barnardo s, you ll be pleased to know, which was set up to rescue poor children from the streets, which I don t think there are any or not many in Britain at the moment. They re also self-interest groups in that, and this, of course, is part of their strength but it s also, I think, can be seen as a weakness in their role in civil society.  In that activity on campaigning, they tend to ignore often relevant balancing considerations and counterevidence, which is, of course, part of their role as missionaries.  Yet, this apparent purity enables them -- sorry, this apparent single-mindedness enables them to have an appearance of ethical purity, which is not always merited, the most notorious example being Greenpeace and Brent Spar, which I m sure you all know about, even though when they were proved to be wrong, they never actually apologized. So I wanted to ask six questions about NGOs, not that I can ask them about any or all of them, but just questions that I think might be relevant to thinking about any given NGO.  Who funds them?  Who works for them?  Who listens to them?  Are they collectivist in mentality?  Are they privileged as lobbyists, as consultants?  I really meant as consultees because if are they consulted by the government, do they have media access and do they have commercial relations with governments?  So I m now going to look at six examples from Britain where I ll give some examples of thoughts and things that I have in mind in asking those questions. First example, which actually answers questions four and five, I think.  On the 31st of October this year, the charity Help the Aged issued a report saying that in a survey they conducted, I don t really believe this, but they said a million old people said that they were lonely.  So they said they conducted this survey with a million old people.  While they called on people, that is, you and me, individuals, to check on relatives and neighbors, the main thrust of the report and what was highlighted on the British Broadcasting Corporation was that the government, local and national, must do more to combat loneliness among old people, which I think answers very well questions four and five.  They had the main news story on the BBC and what were they suggesting?  Well, perhaps I need to say no more. Second example, I don t know how much money Help the Aged gets from the government, though for the reason I m about to explain, I m sure it does, but in its Annual Trustee Conference this year, the National Council for Voluntary Organizations, which styles itself -- sorry, in its Annual Trustee Conference, which styles itself the largest and most important annual event for those who sit or work on voluntary sector boards and giving voice and support to civil society, highlighted the fact that state funding now accounts for nearly half of the voluntary sector s annual income.  And actually, Thomas gave us some examples of that, how state funding is being filtered through other voluntary organizations.  Half does strike me as being extraordinary but it s authoritatively laid down here. The keynote speaker at this conference was somebody I d never heard of but he s called Sir David Henshaw, who is the chair of the National Health Service Northwest, formerly chief executive of Liverpool City Council.  He s the deputy chair of Mersey Partnership.  He d been on the Probation and Youth Justice Board for England.  He d been adviser to the Cabinet Office Unit, a board member of the Museums, Libraries, and Archives Council, a member of the HM Public Services Productivity Panel, and so on and so forth, all from his rather modest start with a degree in Public Administration from Sheffield Polytechnic. Now, I think it s interesting that the National Council for Voluntary Organizations would have been calling on somebody who is so evidently part of statist thinking and the state sector to address them as their keynote speaker.  One is reminded, I think, inevitably, of Auden s phrase the lords of limits and of contumely. Now, my third example relates to the state funding of these voluntary organizations.  I didn t know this but my wife runs a very small charity, which receives, I have to say, no money from the state.  Nevertheless, she was sent a questionnaire, a very big fat questionnaire from the Cabinet Office.  The Cabinet Office, in Whitehall, Office of the Third Sector.  You see, the government isn t going to fund things if it can t control them.  So there is now in Whitehall an Office of the Third Sector.  And she was required, of course she didn t, but she was required to fill this up.  I said, The government is not going to give you money unless you pursue their agenda.   First question, who does your group or who does your organization most benefit?  I ll just go down the list, which is New Labour, to a nutshell, people with physical disabilities, people with physical health needs, people with learning difficulties, people with mental health needs, people from black and ethnic minority communities, asylum seekers, refugees, homeless people, people with addiction problems, faith communities, lesbian, gay, bisexual or transgender people, socially excluded vulnerable people, victims of crime and their families, offenders, ex-offenders and their families.  I mean, I m not saying that those groups aren t worth considering.  I m just saying this is the mindset of New Labour and what it wants to give money to. And I guarantee that you will not get money from New Labour unless you can show that in some way, you re benefiting groups like that.  That s certainly true from the lottery. Now, many of these, that was my third example, is the Ipsos MORI Cabinet Office of the Public s Third -- sorry, Office of the Third -- do you have the Third Sector? Nicholas Capaldi:  Third Sector. Anthony O Hear:  No, I mean, it s a phrase you ll get.  I think the First Sector is government.  I think the Second Sector is business. Nicholas Capaldi:  We just use the term estate [indiscernible]. Anthony O Hear:  Well -- Nicholas Capaldi:  [indiscernible] Anthony O Hear:  Anyway, I deeply resent the government having an Office for the Third Sector.  The Third Sector should be allowed to get on with it by itself and not be interfered with government questionnaires and then government policies, no doubt, will come in their wake and funding, which will ruin you. Now, my fourth example is the Charity Commission.  Many of these voluntary organizations or voluntary sector organizations, nongovernmental organizations are charities.  And in Britain, we have an organization called the Charity Commission, which is supposed to make sure that charities are, on the whole, operating correctly as charities.  That is to say, they are not just for the benefit of the people who run them and they are not funneling money into uncharitable ends, in a general sense.  But the government is now using the Charity Commission as an instrument to pursue its own policies and, particularly, in respect of independent schools. One of the tests, which charitable organizations have to undergo or respond to, is whether they offer public benefit.  Okay, that sounds fairly innocuous.  But public benefit now, according to the government s new Charity Commission provisions, is not just educating, you might think educating people was a public benefit, nor is it just transmitting or keeping alive the best that has been thought or known, which, in distinction to state schools, many independent schools in our country do still try to keep alive, what you have to show is that you are benefiting some of these sections of the community.  And that, of course, hits at the very root of the independent schools because it means they then have to start offering their education to pupils who are not going to them but who are in state education.  And so the time and efforts of teachers in public schools who, paid for by people like me, are now going to have to be spent in educating the children from state schools who are not being properly educated in those state schools.  I ve got a solution to this but I ll come to it in the end. I must say, as a fee-paying parent, I deeply resent having already paid taxes to educate children in the state sector and paying fees for my own children to be educated.  Some of that money then has to go yet more into the state sector. Now, my fifth example is, you might think this is slightly contentious, I will just talk about, for a moment, about QUANGOs; that is, quasi-autonomous nongovernmental organizations, on two of which I sat and hence my claim to be a senior government adviser on education.  Of course, they weren t quasi-autonomous nongovernmental.  They weren t autonomous at all.  At all their meetings, one of the chief civil servants from the Ministry was sitting in and we were always told before we got going what the Secretary of State was minded to do and when we d had our deliberations, we were told whether he was likely to be content, notice those phrases, minded and content. Now, last week in the Sunday paper, there was a report saying that QUANGOs spent ten million pounds seeking more government money.  So get that, these QUANGOs are set up by the government to advise the government.  They have a budget.  They are spending some of that budget, which, of course, comes from my taxes, in order to employ consultants in order to persuade the government to give them more money.  So they re charging me for making them or helping them to get more money.  And who are the lobbyists they are getting?  They are people who had, themselves, been working in QUANGOs, the Cabinet Office, and things like that, that then set themselves up as lobbyists. And even if the QUANGO example isn t, even if you think that s slightly farfetched, what I wanted to suggest is that there is a whole narrow cadre [sounds like], a whole, I was going to say race, that s not what I mean, but a whole section of society that moves from government work to consultancy to these big nongovernmental organizations sliding effortlessly and with the same mentality from one to another. By the way, also here next to it, Eton will be opened to all within ten years because Eton is supposedly collecting a fund.  They won t get it, of course, but they re collecting a fund, which will allow anybody from any walk of -- any section of the community, without fees, to go to the school.  Now, you might think that s a good thing.  It might be a good thing.  But what the proponents of this scheme haven t explained is how Eton will keep its distinctive ethos without -- sorry, by letting in anybody, whether they can pay or not.  St. Paul s is going to do the same thing.  What will happen is that these schools will then be completely taken over by very clever children from probably particular groups, which will, as I say, completely change their character, which may or may not be a good thing but it s something that s always overlooked in these discussions.  So these schools have tremendous traditions; in Eton s case, going back to the 15th century and St. Paul s back to the 16th century.  But the proponents of these schemes, in order to respond to the government s pressure from the Charity Commission, are proposing to completely change the ethos and traditions of their schools. My conclusions, first of all, the state cannot abide genuine autonomy.  Secondly, many of those who operate within NGOs are themselves instinctively statists.  Thirdly, these two tendencies converge in NGOs seeking and receiving state funding.  And both the state and NGO is exercising a two-way influence on thinking and practice in a statist and collectivist direction. My solution is that if a -- well, I don t care what you call things, but if a body is really to be regarded as a nongovernmental organization, it should preserve its autonomy and on principle, refuse state funding.  And if this means losing or repudiating charitable status, they d be better off without it. Nicholas Capaldi:  Thank you very much, Anthony.  Our next speaker is Elaine Sternberg, who is the principal of Analytical Solutions, a consulting firm specializing in business ethics and corporate governance.  She also holds a visiting scholar position at the University of Florida and is a visiting fellow at the University of Leeds.  She has numerous publications.  I m just going to mention two of her books, which are my favorites.  She s the author of Just Business: Business Ethics in Action, which I ve actually used as a text in my classes, and my favorite book of hers, The Stakeholder Concept: A Mistaken Doctrine. Elaine Sternberg:  Thank you.  Is this on?  Yes, right.  First of all, I want to thank Professor here for giving me a perfect lead-in to my talk.  NGOs are usually presumed to be members of civil society and have historically enjoyed a good reputation, at least with Western intelligentsia.  When, however, NGOs are judged by their actions rather than their rhetoric, that reputation is problematic.  NGOs [audio glitch].  Although NGOs legitimacy and accountability are perceived [audio glitch], much of it has been misdirected.  Even more fundamental objections can be raised against NGOs acting in ways of undermining freedom.  Too often, both the objectives they seek and the means that they employ are inherently corrosive. In order to evaluate that statement, it s first necessary to be clear about what NGOs are.  Despite what might be suggested by their initial standing for nongovernmental organizations, it s far from clear that NGOs are nongovernmental or indeed, what relation they bear to civil society or CSOs.  Judging from the ways that the terms NGO and CSO are commonly used, it s not even evident whether they re meant to designate the same or different things. In being subject to fundamental and widespread confusion, the label NGO strongly resembles the phrase corporate social responsibility.   Both are frequently used in ways that belie the meanings of the constituent words and they re either vacuous or pernicious.  All too often, social responsibilities, or simply, whatever extraneous purposes, special interest groups and other activists with voice on corporations and more generally, businesses, and NGOs are simply organizations devoted to promoting special interests, particularly those associated with progressive causes.  In their advocacy form, most NGOs are hard to distinguish from what the founding fathers condemned as factions. Contemporary commentators typically define civil society, CSOs and NGOs, either by extension or by contrast.  But the identities of the elements are often unclear.  Consider a definition cited by Teegen, Doh, and Vachani, academics who consider that NGOs should be taken seriously.  Quite.  Civil society, which is often referred to as the Third Sector or the nonprofit sector, is used to probably describe all aspects of society that extend beyond the realm of the public sector and the private sector. Although characteristic, this characterization is extremely obscure.  Does this sector that extends beyond the public and the private include them or exclude them?  And to which sector, public or private, does a corporation with listed shares belong?  To the extent that its shares are not owned either directly or indirectly by governments, it would reasonably be considered private.  To the extent however that its shares are traded in the public stock exchange, it would normally be described as a public company. The reference to the nonprofit sector, though typical, does not help.  If profit is interpreted broadly, many organizations commonly considered NGOs would not be considered to be nonprofits. NGOs that achieve official UN recognition wouldn t qualify because they profit significantly in terms of access and rights of representation from their consultative status.  Also excluded would be the 501(3)(c) foundations that enjoy exemption from federal income tax and the charities that benefit from donations. If, however, profit is directed at maxi -- sorry, construed narrowly as financial surplus from sales of goods or services directed at maximizing [indiscernible] value, then loss making businesses would qualify as nonprofit.  Why should they be considered part of non -- as civil society but productive enterprises not?  If the aim is to identify a sector consisting of something other than businesses, then that restriction should be justified and made explicit.  Characterizing business properly is the objective of maximizing owner value by selling goods or services would make such a distinction straightforward. Unfortunately, nothing so precise is provided by the second equally typical definition of civil society, the Teegen, et al quote, an area of association to action independent of the state and the market in which citizens can organize to pursue purposes that are important to them individually and collectively. First, as I ll say more about later, properly identifying independence is a serious problem.  But as a start, it should be noted that there s hardly anything in modern society that it s not, at least indirectly, subject to government action or market forces.  The definition actually presupposes an essential connection to the state in identifying civil society by reference to citizens. Second, even to the extent that it were possible to achieve independence of the market, why should such independence be central to characterizing civil society?  The exclusion of profits and markets is particularly curious because business profits ultimately finance civil society and markets are supremely civil institutions.  Markets are the quintessential [indiscernible] of uncoerced activities based on shared purposes.  They can only function when value is freely exchanged for value. Nevertheless, rejection of markets and profits is characteristic of the ways in which CSOs, and particularly NGOs, are identified by their supporters.  A somewhat clearer notion is offered by the Center for Civil Society at the London School of Economics.  According to its definition, Civil society refers to the arena of uncoerced collective action around shared interests, purposes and values.  In theory, its institutional forms are distinct from those of the state, family and market, though in practice, the boundaries are often complex, blurred and negotiated.  Civil society commonly embraces a diversity of spaces, actors and institutional forms, varying in their degree of formality, autonomy and power.  Civil societies are often populated by organizations such as registered charities, developmental non-governmental organizations, community groups, women s organizations, faith-based organizations, professional associations, trades unions, self-help groups, social movements, business associations, coalitions and advocacy groups. Now, this definition has the distinct merit of explicitly excluding all coerced action and thus, all government action and tax-supported activities.  By also specifically excluding actions by single individuals acting entirely on their own, it serves to identify something distinct, albeit, counterintuitive.  On this account, civil society consists only of organizations. But the LSE list of typical civil society organizations seem long duly influenced by political correctness or a prejudice in favor of progressivism.  Why, for example, include business associations but not businesses?  Why are women s organizations mentioned but not gentlemen s clubs?  Or [indiscernible] and leisure groups, the Brownies, the Star Trek Fan Club, the Semicolon Appreciation Society as much a part of civil society as professional associations and trade unions?  But all would have been recognized by Alexis de Tocqueville, who explicitly acknowledged that associations can be diminutive and even futile.  And why does the LSE description specify registered charities? It s true that in Britain, charity has come to mean an organization that s recognized by the Charity Commission as qualifying for preferential tax status.  But there s no reason why that fiscal criteria should apply to membership of civil society.  Why exclude philanthropic organizations that eschew taxpayer funds? The emphasis on voluntary association for uncoerced collective action is nevertheless constructive and in keeping with the understanding of civil society prevalent in much of political philosophy.  For the rest of this presentation therefore, CSO will designate any association that does not involve coercion in its objectives or its operations. Typically, such organizations stand between individuals acting in isolation and the coercive forces of the state.  It was, as such, an intermediating factor that they were lauded by both de Tocqueville and Edmund Burke.  Civil society consists of such organizations and also of individuals, whether or not they re members of organizations.  Should there be some occasion for designating the subset of civil society consisting of organizations not business as there might well be, for example, when identifying those that are consumers rather than producers of wealth, a label is readily available.  They are simply known as business CSOs. How do NGOs fit into civil society?  To what extent and in what ways are they even nongovernmental?  The reported origin of the term NGO is suggestive.  In the 1930 s, to satisfy membership criteria of the International Labor Organization, the Soviet Union declared its labor unions to be nongovernmental organizations.  The label was subsequently adopted in the United Nations Charter.  Even though contemporary governments tend to be less overtly totalitarian in Stalinist Russia, claims of nongovernmental status by NGOs are often no less bogus. The governmental link is evident in the UN s treatment of NGOs.  Rather than requiring NGO s distinctness from government, the NGOs definition of NGO presupposes connection to government by restricting NGO status to groups of citizens.  The select organizations whose status as NGO is officially recognized and privileged by the UN can have their objectives and even their members designated by governmental authorities.  They can also be funded by governments.  All it takes to be nongovernmental for UN purposes is that the organization not be established by a governmental entity or intergovernmental agreement.   By that definition, governments established by their people are nongovernmental. Compare these feeble understandings of independence with the criteria that apply on the corporate sector, often at the behest of NGOs.  For a non-executive director of a UK company to qualify as independent, for example, he may not have or have had any material or financial relationship with the company or any of its advisers for several years.  He may not even be a member of the company s pension scheme. On that understanding of independence, no NGO, whose staff would be eligible for social security, would count as nongovernmental.  If those UK conditions are considered to be harsh, note that the criteria of directorial independence applied by the U.S. Council of Institutional Investors, itself a prominent NGO, are even more stringent and apply as well to members of the director s family. If the standards that the NGOs impose on others were applied to NGOs themselves, very few would qualify as independent of government.  Few would do so even if the only ones considered governmental were those NGOs that accept substantial contributions from governments and/or do work as agents of governments and/or devoted to lobbying for coercive government action. So few, indeed, are genuinely nongovernmental that the organizations commonly called NGOs would be more honestly described simply as pressure groups.  If that term seems applicable more to advocacy than to operational organizations, special interest groups is a generally applicable accurate alternative.  Although NGO will continue to be used here for convenience, it should not be presumed to be a factual description. It s also questionable whether, far from representing civil society, most organizations commonly referred to as NGOs are even members of it.  That role is precluded from the many NGOs whose objectives and methods are coercive.  Any NGO that advocates banning anything or making anything compulsory endorses coercion.  Less obviously, but as dangerously, so do all NGOs that promote government regulation or seek tax-funded support for their programs.  Government action is intrinsically coercive. Consider the commitments made in the International Nongovernmental Organization s Accountability Charter.  Its prominent subscribers undertake to advance international and national laws that promote human rights, ecosystem protection, sustainable development, and other public goods.   Not only are all laws that are enforced that use a threat of force essentially coercive, but most programs for the stipulated objectives involve outright bans and public goods are typically those that are claimed to acquire compulsory funding. Moreover, the human rights most typically promoted by NGOs are positive rights, sometimes known as welfare rights.  Negative rights, such as freedom of speech and assembly, simply require that people refrain from using physical force against the right of other [sounds like] person or property.  Positive rights, in contrast, entitle their holders to something more than mere forbearance.  Fulfilling them requires coercive diversion of other people s actions or assets.  Such positive rights constitute the bulk of the UN Universal Declaration of Human Rights.  It claims to guarantee provision for example not just of food, clothing, housing, and medical care but periodic holidays with pay. Though seldom recognized as such, the Universal Declaration is essentially coercive.  Besides asserting welfare rights, it explicitly authorizes extensive duties to the community.  It also allows rights to be restricted when governments consider that doing so will usurp morality, public order, or general welfare.  Far from protecting genuine human rights, the Universal Declaration does significantly undermine them. Nevertheless, NGOs seeking official recognition by the UN are required to support the Universal Declaration along with other principles of the UN.  Individual liberties are undefined by many of the policy agendas with which NGOs have been most closely associated.  The European Union, for example, expects NGOs to contribute to EU integration.  Although for refugees in totalitarian regimes, the EU may seem a haven of freedom, many of its policies are incompatible with the liberties traditionally enjoyed in America and England, including many bizarre restrictions on freedom of speech. Even independent of the UN and the EU, NGOs have been characteristically pursuing coercive public policies, particularly ones relating to environmental protection, sustainable development, debt cancellation, and CSR. At least as coercive, and sometimes extremely violent, are NGOs that subordinate human life to that of plants or animals.  In testimony to Congress, a deputy assistant director of the FBI s Counterterrorism Division declared, After 9/11, one of today s most serious domestic terrorism threats comes from extremist special interest movements.   We had in mind particularly the ones that would promote animal rights.  I ll move on quickly. These are not the only destructive activities perpetrated by supposedly humanitarian organizations.  NGOs that work with governments to damage the health of people in developing nations by banning the use of effective insecticides, they ve helped increase starvation by rejecting as unfit donations of foods that Americans routinely eat.  The ways in which Greenpeace misrepresented the dangers of Shell s plant disposal at the Brent Spar are well known.  The ways in which the AARP have undermined the interest of the elderly are perhaps less well known.  There are too many examples of misconduct for NGOs to be granted automatic possession of the moral higher ground. Unfortunately, when even they have been criticized, most of it has been misdirected.  Democratic governments came [indiscernible] on the basis of being elected by the people and of representing their interests.  But similar claims of legitimacy are unfounded for NGOs.  Their ostentatious claims to represent the planet or future generations or universally accepted principles are grossly presumptuous. Not only are the interests of inanimate groups only metaphorical, but the interest of any human group are typically diverse and conflicting.  They re as likely to be subverted as supported by NGOs claiming to represent them.  All that NGOs actually represent are the interests of their self-selecting official members and having the NGOs official objectives achieved and they represent even those only insofar as the NGO s actions are actually directed at its official objectives.  Broader claims are both dishonest and dangerous.  When accepted justifications for NGOs acquire a privileged role in public policy formation, they give NGOs unjustifiable access to coercive government policy.  [Indiscernible] Recognizing that they are often not going to be justified as representative, supporters of NGOs have offered various alternatives.  In a book devoted to civil society activists, L. David Brown offers no less than six.  Regulatory legitimacy is grounded in compliance with regulations and legal requirements.  Associational legitimacy is created by ties to other actions or actors widely recognized as legitimate.  Performance legitimacy is based on demonstrated expertise.  Political legitimacy, on representing the interest.  Normative legitimacy grows from embodying enacting for widely held values.  Cognitive legitimacy comes from consistency with the expectations of how stakeholders understand the world. Far from providing substantive grounds of legitimacy, these bases are doubly relative.  They depend on the range of the variables.  Which regulations?  Whose recognition?  What expectations are involved?  And they depend on the identity of the standards invoked.  Even profoundly evil practices in organizations can be in compliance when the norms themselves are defective. Moreover, some of the suggested notions seem intrinsically implausible.  Is legitimacy by association any more soundly based than guilt by association?  What legitimacy can NGOs gain from their association with the UN when the UN claims its legitimacy on its association with NGOs?  Organizational legitimacy requires more than mutual admiration society.  Equally, cognitive legitimacy presupposes knowledge, not near belief.  None of these bases can render coercion legitimate. I m almost done.  The nature of accountability is equally problematical.  The problem is not however that NGOs worthwhile objectives render them immune to the need, as some have claimed.  Many of their objectives are not worthwhile.  Nor is the problem that NGOs are not primarily accountable to any clearly defined stakeholders.  It has been seriously asserted they are accountable to donors for resources, to clients for delivery of goods and services, to allies for performance of joint activities, to staff and members for meeting expectations, and to government agencies for complying with regulations.  They re also billed accountable to their own core values and missions. These claims represent serious confusions.  NGOs are not accountable for providing donors with resources.  They re accountable to donors and funders more generally for using the resources provided to further the organization s official objectives.  It does not make sense to consider that they are accountable to values.  They re accountable to persons or groups of persons for achieving outcomes. The multiplicity of stakeholders is actually irrelevant to accountability for NGOs or any other organization.  As has been comprehensively argued elsewhere, the stakeholder doctrine is conceptually incoherent, practically unworkable, and totally unjustified.  Far from being a model of accountability, it undermines accountability.  The stakeholder doctrine denies that the people who pay the piper have any special right to call his tune.  It assigns that right indiscriminately to, among others, competing musicians, flute makers, and the rats lured away by his piping. Being accountable isn t the same thing as being functionally responsive.  Accountability means that individuals and institutions are answerable for what they do.  They must account to others for their conduct in their use of resources.  It typically involves four elements: a person or persons, usually the agent or agents, is answerable to some other group, the principals, the performance of some act or acts, the outcomes, and are subject to sanctions for defective performance. The purpose of accountability is to help ensure that the stipulated outcomes are brought about, whatever those outcomes may be, they need not involve any direct benefit for the principal.  An organization that s answerable to many people for different things is effectively answerable to no one.  Accountability presupposes a single substantive purpose. I ll just move on.  Sorry, am I running out of time?  I ve got 20 minutes.  All right, I ll leave out the rest of accountability and legitimacy.  But to say in conclusion, it s important to distinguish between the extremely valuable work done by voluntary civil service society organizations for the more questionable activities of many NGOs.  Far from being nongovernmental, many NGOs have agendas that essentially involve the powers of government and individual freedom.  But for society or individuals to flourish, it s vital for everyone, NGOs included, to eschew coercion.  Thank you. Nicholas Capaldi:  Thank you.  In the meantime, I want to address the issue of corporate social responsibility in developing countries.  Despite my initial skepticism and hostility to the concept of corporate social responsibility, having been unable to defeat it, I have decided to join it and to try to push it in a more positive direction. So the paper that I m going to present to you is intended for business professionals in multinational corporations engaged in global commerce in a market economy and others who want to understand and to contribute constructively to global commerce.  The paper is not aimed at academics whose only interest in corporate social responsibility is to obtain tenure by publishing articles and journals of CSR read only by other academics.  Nor is it intended for those who are either ignorant or opposed in principle to free market economics or to those who wish to project a domestic political agenda onto the international stage.  Nor is it intended for those who pay lip service to a hypocritical and condescending cultural relativism. Every firm or corporation faces both political and social transaction costs.  The existence of political transaction costs is one reason that firms and even whole industries employ lobbyists.  CSR is an example of a social transaction cost.  It means serving social and political interests without direct remuneration but which is consistent with and indirectly serves long-term investor value.  It is not philanthropy.  Some will argue that the firm is not really being responsible or generous but only serving its own long-term interest.  But that is precisely the point. The reasons that this category of CSR needs to be introduced are three.  First of all, it is obscured by the classical liberal perspective, sometimes to the detriment of shareholders now trying to indicate how that is.  Secondly, it fails to recognize or it obfuscates the role of management, part of which is to look at the macro context that includes more than markets.  And it misses the important extent to which business leaders can and should have a vital role in influencing public policy. We cannot talk meaningfully about the social role of corporations without an adequate understanding of or presupposing a larger thesis about the role of firms in a global market economy.  And I m going to do that by providing you three background assumptions.  Those three background assumptions refer to globalization, a co-seat analysis of firms, and with all due modesty, something I call the Capaldi Thesis.  Let me begin with the Capaldi Thesis.  This is an empirical, historical and logical thesis. Contemporary commerce operates within the context of the technological project, which is the transformation and control of nature for human betterment.  Despite the problems this creates, for example, the environment, it is an irreversible historical fact about the modern world and its commitment to this product and its projects.  The technological project engages or requires constant innovation and it requires autonomous inner-directed individuals in a free market economy. A free market economy requires a limited government, that is, a government limited to servicing an unplanned economy by protecting property rights, enforcing contracts, and adjudicating contractual disputes.  Limited government only takes place in societies, which recognize the rule of law, not rule by law.  And it means a commitment to the concept of a nation as a civil association, that is, one that does not have a collective goal, and procedural norms that are not aimed at substantive outcomes.  The rule of law only exists in a culture that promotes personal autonomy.  So the logic of the argument is that technological project requires free market economies that require limited government that requires the rule of law, which, in turn, requires a particular cultural context, which I have here identified as personal autonomy. Now critics of this particular paradigm that I ve outlined for you generally make three points.  First, they argue for the redistribution of wealth.  This argument can be dismissed both on economic grounds, because it fails to recognize that regulating distribution affects productivity, and on practical grounds.  It diminishes both overall wealth and economic opportunity.  These critics fail to recognize that we no longer live in a zero-sum economy but in a, perhaps, infinitely expanding economy.  And I want to underline that even after the events of the last few months. Distribution in a true market economy is impartial, not equal.  Impartial distribution creates more economic opportunities for everyone.  Autonomous people want equality of opportunity, not equality of outcome. Second, the critics of this model argue that there are other values besides economic efficiency.  This argument can be dismissed because A) they never present independent arguments for specific values.  Secondly, they fail to prioritize those values.  Thirdly, they fail to consider the adverse impact on efficiency from the pursuit of some of these values.  Fourthly, they fail to indicate just how these other values are going to be achieved.  And finally, they present no evidence to dissuade us from the belief that at least some of these values are better achieved in an expanding economy. Third, they argue that there are cultural differences that make it impossible or unwise to adopt this model to non-Western cultures.  All such arguments made in the past have been shown to be false predictions.  One has only to stand in downtown Tokyo, Singapore, Miami and Hong Kong or to notice the success of immigrants from many cultures coming to developed countries to see the ludicrous nature of the claim.  Cultures are not rigid structures.  They are historical constructs capable of further evolution. Firms are enterprise associations as they have an overall collective goal.  But the association is a voluntary one that exists only as long as there are associates.  Firms are not persons but, as I shall argue a nexus of contracts, to invoke Coase, it is misleading to argue that a firm is an entity in its own right, free to pursue its end without oversight.  It is also misleading to argue that a firm is discrete from its environment.  Recognition of this, of course, undermines any strict dichotomy between shareholders and stakeholders. However, the recognition of firms as a nexus of contracts does not support the communitarian position.  Rather, it is a more sophisticated argument in favor of the libertarian position.  So corporate social responsibility becomes an example, in Coasean terms, of a social transaction cost.  And one particular reason for wanting to address that, as I ve argued earlier, is that members of the business community should have a vital role in influencing public policy.  This dimension is also very much overlooked.  But I think it can contribute to the resolution of larger social issues. Without getting into too much detail, I will just indicate some of the ways in which this might be done.  I should point out though, as a parenthetical remark, that intellectuals hostile to markets see corporate social responsibility as a way of shifting the costs of social policy to the private sector in the face of taxpayer rebellion.  Such intellectuals assume that they personally will determine the policies and that the corporations will then foot the bill.  They have been encouraged in this endeavor by companies who see CSR as a relatively inexpensive public relations gimmick.  Or as a way, they think, of buying off critics. But what we really need is for the business community to become more actively involved in identifying problems and in helping and formulating implementing remedies.  I will just give one primary example of how I think corporations can make a major advancement of Western civilization possible and that would be to stop funding of any kind to American universities, largely because these universities provoke [sounds like] ignorance of and hostility to markets.  So to the extent that we can convince the business community not to support universities, I think that would be a major contribution and I would say a major example of corporate social responsibility. I have some other suggestions.  Secondly, ignore or refute what many intellectuals hostile to the market economy have to say about CSR.  Secondly, stop treating this as purely a manner of public relations.  I would offer the following distinction.  If you are a multinational company, you must distinguish between countries which are committed to globalization but with different mores not incompatible with the globalization package; second, countries which are moving towards serious commitment; and third, countries which are actually hostile to the package. If we re talking first about countries who are already committed to it but simply have different mores, this would involve, I think, merely cosmetic adjustments.  For example, I much prefer a power lunch in Paris to a power breakfast in Dallas.  Not only is the food better, but I also have a larger appetite at lunch time.  Secondly, I think they should refrain from conducting businesses in countries that are in fact hostile to the package, which I described earlier.  It cannot be in the long term interest of any shareholder to wage [sounds like] either governments or multinational thugs who seek the destruction of the free market economy.  Corporations should refuse to conduct business in countries or with individuals not committed to basic values.  It cannot help shareholders by reinforcing the impression that private enterprise is short term.  The issue is not about wages and working conditions but whether the people with whom we do business respect the rule of law. With regard to the second and the more important area, those, which are moving in that direction but are not quite there yet, I think we have to, here, introduce all the traditional and sensible forms of corporate social responsibility, some of which have been mentioned earlier.  And I will just give examples of these.  CSR as marketing, so for example, sponsoring organizations and events that create a positive association to the public mind, McDonald s sponsorship of Special Olympics.  Recruitment, things that aid recruitment, things that aid -- you re maintaining the employees that you already have.  And generally, community involvement, as a whole, for example, rather than a particular company, one might imagine the local chamber of commerce trying to promote the privatization of schools in a particular area because this will directly impact their future bottom line in terms of the kinds of employees they re about to get.  So I think there all kinds of things that can be legitimately described as corporate social responsibility and which do in fact contribute to the bottom line.  Or certainly, we can raise the question in a meaningful way. A second thing that corporations might do is to educate their employees and their families in the globalization package.  And I m going to follow the suggestion made earlier that I should start my own NGO.  I will plan to do this and offer my services to corporations.  And those of you interested in contributing to this, I ll give you my email address later. So I would suggest that we can conduct seminars in the globalization package for the media, for teachers, et cetera.  We should also insist on hiring MBA s only if they have taken a special course in the globalization package that I have outlined.  I think we should coordinate efforts with other multinational corporations to expose and to oppose political corruption.  I think we can borrow from financial institutions which conduct and publicize research on which countries and which leaders in which countries are actually promoting the globalization package and which ones are opposing it. I think we can coordinate efforts with international organizations, even the WTO, aimed at countries engaged in reforms that smooth the transition to the globalization package.  I think we should contribute money to nonprofit organizations aimed at peacefully speeding up the commitment to the globalization package. Next, we should calculate the costs in human suffering imposed by delays in implementing the package and identifying individuals and groups facilitating and advocating the delay.  I m very much in favor of the blame game.  In fact, I m going to suggest that we have -- set up a museum of shame in New York City across from the New York Times building, which we can document endlessly all of the public policy suggestions made by the Times and other organizations and what the consequences have been of those policies in terms of human suffering. I think we should make a list of the -- I ll start out with this -- of the ten worst NGOs and perhaps document exactly what they do.  I have a sort of short organization.  Here, we can have those which are well meaning but ignorant, those which are well meaning but misguided and those which are simply pernicious. And then my final suggestion is to conduct a study of major corporations, let s say the 400 worst corporate social responsibility programs in the United States, documenting how the money spent by these corporations actually goes to institutions which are aimed at undermining a free market economy and reducing our liberties.  I can give two examples here.  I think the Gates Foundation would be one, and Jon s favorite example, the Body Shop.  I have another list of the suggestions [indiscernible], but I think this is enough to give you the idea of what I m suggesting.  Those of you who have questions for the panel as a whole or for members of the panel -- Jon Entine:  I think the panel is [indiscernible]. Nicholas Capaldi:  Oh, yes. Female voice:  Hi.  I just, I d love to hear more on why the Gates Foundation undermines [indiscernible]. Nicholas Capaldi:  One of the things they do is he has contributed to the construction of the University of Washington Law School.  And one of the things I discovered when I gave a talk there recently is that the University of Washington Law School does not teach the concept of the rule of law.  They essentially try to teach lawyers how to game the system and essentially, that commerce is a bad thing and you should be ashamed of the fact that you work for companies instead of for nonprofit organizations.  That s largely the message that s given.  In fact, when they teach courses in constitutional law, they usually begin not by reading the first 30 pages of the Constitution, which is all about limitations on government, but they begin with the last ten amendments. And as was explained to me by one of the students there, his initial instructor, who wasn t an American but a foreigner, began the course by saying that the U.S. Constitution was written by dead white males who owned slaves.  There s therefore no reason to pay any particular attention to it.  That s the sort of educational institution that uses Gates money.  I have other examples but I think that should be sufficient. Fred Smith:  I enjoyed everyone s presentation.  Fred Smith, from earlier panel.  But I wanted to ask Beth a question.  Beth, I m trying to write a paper on sustainable development.  And anyone who doesn t realize is first, nobody is in favor of non-sustainable development.  So you end up with kind of acuity [sounds like].  There s a residue [indiscernible] meaning to the concept.  And obviously, you all are trying to do that.  So the question I have is let s suppose you re a corporation who s totally in compliance with all laws and you have a certain amount of reserves that you can invest.  You could get one percent additional profit on your bottom line that year.  You can get a ten percent reduction in your overall emissions.  You can improve your educational standards for your workforce.  There s a whole array.  How do we decide, what is the metric you use?  Because your diagram suggests there s a metric underlying all this and yet how do you do it? Beth Beloff:  Are you asking the question because it s so big, how do you decide where you start? Fred Smith:  No, not too much how you start but let s suppose I m the CEO and you come to me and I say I ve got five things I could do, all of which would be good, would be responsible.  I want to be more responsible but I want to be as responsible as possible.  Which of the five or six or ten options do I pick and how do we go about knowing that it s not just your preferences but it represents an objective criteria of the most responsible of all the responsible things I could do? Beth Beloff:  Yes, what I tell any company that asks about how to build a sustainability program and find the five most important things to do, it s contextual.  It really has to do with what works for that corporate culture and what works for the stakeholders.  It sounds like a circle but it s not.  There is not one good answer. I m working with a company right now that, I d prefer not to give the name, but they manufacture plastic products and they are going through a process of prioritizing where to start.  And one of the steps that I took them through was looking at the, in general, the value proposition and the value proposition for both the company and society.  So they d have a double ledger.  Roughly, would this lead to cost reduction?  Would it lead to potential new markets?  Would it lead to reputational value?  Will it increase the environment or the environmental effects or health effects in the community or among the labor forces?  And how do you look at the bottom line and top line potential over a period of time? I ve also constructed an economic model that is not only the indirect and the direct, or let me turn that around, not only the direct and the indirect but also builds in intangibles so that you can begin to say even if we can t get our arms around what that reputational benefit might be in financial terms, we can bring together a smart group of people within the organization to say, from a variety of functions, who are in tune with their stakeholders from those functional areas.  We think that s going to be large, medium, small in terms of benefits over this period of time. So that at the end of the day, you can make decisions about where do you start, even if you don t have perfect information on the valuation, you have a systematic method for making that evaluation. Fred Smith:  I just want to ask just one more question that I didn t know that [indiscernible].  I will talk later with you. Beth Beloff:  Yes, I d be happy to. Joe Johnson [phonetic]:  Joe Johnson, a retired lawyer [indiscernible].  I think Beth s answer to Fred s question exposes precisely what s wrong with corporate social responsibility, from a practical standpoint.  And my job was to advise corporations and their board of directors.  And it s exactly the problem that you have with, as Elaine was mentioning, with stakeholder theory.  If you say that the offices and directors of the corporation have duties not just to the shareholders and the corporation but to the employees, to the community, to plants and animals and so on, and you are an adviser in that corporate boardroom, you don t know what to say.  You cannot give them effective advice.  And suppose the board of directors have said, We ve got to plant out in, somewhere that s losing a lot of money and it s going to continue to lose a lot of money.   Now, of course, if we close that plant down, the employees are going to be injured.  The community may be injured. There was a wonderful movie called Other People s Money one time with Gregory Peck and Danny de Vito that beautifully exposed this whole story.  Now, the problem is that if I m a lawyer in that boardroom and they ve got a duty to all these different people, what can I tell them?  The answer is you can t advise them on anything so they do nothing. Beth Beloff:  May I respond to that?  What I personally focus on is developing the tools to make better decisions.  So what do you need to know to make better decisions about where to start?  Clearly, any company can identify the ten greatest risks in the environmental area and in the social area.  They have that collective knowledge in-house.  And so clearly, if you want to find a starting place, you can start with the environmental risks that have already been identified that can potentially represent major costs in the future or significant social concerns that are coming back from, I mean, there are clearly starting places. Joe Johnson:  The board of directors has a fiduciary duty to the stockholders.  It does not have a fiduciary duty to the employees, the community or the squirrels that are running around in the yard.  Therefore, the way, and we spent ten years right next door at the Mayflower Hotel here putting together the ALI, the American Law Institute, the principles of corporate governance, which say very specifically in Section One that the responsibility of a corporation is to maximize profits over the long term for the benefit of the shareholders.  That s the law and that s what -- and so where you start is with that fiduciary duty.  And then you move on from there. Charlie Chen:  Yes, Charlie Chen.  Beth, you gave some example of this so-called business-NGO partnership. Beth Beloff:  Right. Charlie Chen:  And it sounds like this is kind of promotion activity and advertisement activity.  And I think then go to further step is a more relevant need to answer those five or six questions Anthony gave.  And to Anthony, you cite the example in United Kingdom.  We have some kind of example like that.  And we have two very big real estate companies, for example, Freddie Mac, and this company give money to an NGO.  And NGO go lobby the Congress and [indiscernible] say, You should give more money.   And okay, I forgot the next part. Nicholas Capaldi:  Do you want to respond to that? Anthony O Hear:  Oh, no, no, no, no.  I m not -- I m sure there are lots of examples from the [indiscernible]. Beth Beloff:  But I do.  If you really believe this is all about promotion, take a look at it.  I think that the example of Kodak and the Nature Conservancy in China yielded extremely good results because R&D was brought in and engineering and operations and a variety of functions, not PR, to do the project to really look at what the community in China was saying about what they really wanted the camera to do.  They came up with innovations to the equipment that they claim they would not have discovered before that.  They would not have expected that particular marketplace that they were interested in to be moving in that direction. For instance, there is very little electricity in that part of China and yet, the people in the remote communities wanted digital camera equipment, so they really had to understand what that meant and why and how to design equipment that could work under those circumstances. So I think it s a mistake to assume that the only reason why businesses and NGOs partner is for publicity.  That doesn t mean to say many of them don t do it for those reasons.  Clearly, that is.  But for this guide, one of the criteria was that there had to be real measurable value beyond simply brand value. Norman Olsen:  Norman Olsen, Achievable Solutions.  Nicholas said to you, Anthony, that you re notorious.  So my first question is why.  Secondly -- Anthony O Hear:  Think [indiscernible]. Norman Olsen:  My question to Beth, Tom says that projects don t work and you said you had a great one in Colombia.  So why did it work? Anthony O Hear:  I mean it s not relevant to this, I made a few [indiscernible] reservations about the outbreak of hysterical warning when Diana, Princess of Wales, I think we d have to call her, died.  I got a media onslaught, including a personal attack from Tony Blair, that was quite funny, who interrupted solving, which I think is still working, on the Arab-Israeli peace process.  It happened, this in 1998.  He was working on it then he was working once again.  But anyway, he had to stop doing that for a minute to say that I was a right-wing snob.  But I got a lot of support from other people. And actually, my comments were very mild compared to things that people have subsequently said about her.  I feel a bit sorry now. Nicholas Capaldi:  What did you say?  I m curious. Anthony O Hear:  Well, never mind.  It s not relevant.  I mean, I ll tell you later. Nicholas Capaldi:  It may not be relevant but you have raised a point and most everyone in this room, I would imagine, would have an interest in [indiscernible]-- Elaine Sternberg:  It s a small room. Nicholas Capaldi:  Yes. Anthony O Hear:  Well, I can hardly remember what I said.  I mean, it was a long time.  I said that the mourning, the so-called mourning, I said it was genuine, because I think it was, but nevertheless, I found it hard to see how people who didn t know her could have this attitude.  But I said that if they looked at her a bit more, they might find that she was standing up for all kinds of things which shouldn t be stood up for, particularly a special form of sentimentality and abrogation of duty.  So that s what I said.  So I mean, I think, but of course, you weren t in -- I presume none of you were in London or in Britain at the time.  I mean it was like a kind of emotional fascism at the time, at the time of the funeral.  I mean I was walking around outside and I felt a bit peculiar because everything had stopped and people were slow and I wondered if people were looking at me and thinking, There he goes, I don t know, a right-wing snob.   I don t know what they would have thought, because I can t stand these things on television, anyway. But yes, so there was actually a very strange mood in the country.  It turned out that a lot of people didn t actually share it.  But their voice was unheard until I piped up mildly and got an onslaught.  But that was about -- see, I wrote this article at the time but it was published six months later, by which time, she d been canonized.  I mean, she s been un-canonized since but at the time, I was the first voice after the canonization that dared to utter a few mild reservations.  Nothing to do with this -- Nicholas Capaldi:  The next comment goes to Beth. Beth Beloff:  Yes.  In answer to your question, both teams, or all teams within that project claim that the best success came from the willingness of all parties to listen to the issues and concerns of one another and to forge a set of solutions, a common approach that they could all live with.  And what that did was that ensured Oxy and the Colombian Oil Company that the community would not fight them.  And in Colombia, I think everyone can appreciate how having the agreement of the community and knowing that they will be protective because they were part of the solution is important.  So that element of risk management for Oxy and Ecopetrol was very important.  And for the NGO, the NGO had a conflict resolution methodology that hadn t been tested.  And we all know that it s only on the ground that you can really fine tune those kinds of methods.  So it was very helpful to them and it worked.  It worked in the end and that was why the relationship extended and ended up being forging solutions, and I can t tell you the details of the solutions that all parties felt very good about, that they independently would not have come up with. Jon Entine:  Beth, Nick, Anthony, Elaine, thank you very much for a very provocative ending to our conference today.  I think we had a wide-ranging exploration of ideas around the issues of corporate responsibility, sustainability, NGO legitimacy, obviously, diverse opinions, some heat, some light, I hope.  It was a, I think, again, a provocative and thoughtful day.  We want to thank every one of you for coming out, again, to the American Enterprise Institute, and hope you ll visit us again. The copy of this, the video, I think will be posted on the AEI Web site for this event, along with some of the bios and some of the details about all of us here so it will be there in perpetuity and you can listen again and again and again to the wisdom that we brought out today.  Thank you very, very much. [Applause] [End of transcript]</body></html>