Submitted by: Alex vanDalen

We’ve been talking quite a bit about the differences between China the United States. We’ve discussed “the good, the bad, and the ugly”. Despite the myriad of cultural differences that exist between these countries, and indeed the world over, I am more and more struck by the blatant similarities that exist, not only in China and the USA, but in large nations across the board. Despite the rampant finger pointing, name calling, and general ideological drivel that emanates from party elites on both sides of the pacific, it seems that large nations everywhere are proceeding in the general direction of tyranny; imposing greater restrictions on the freedoms of their citizens, increasing the manipulation of the media, and tightening restrictions on the flow of capital, information, and people.

In China the CCP is reorganizing the method in which local and township officials are chosen, giving its citizens a voice on who they wish to elect. Under the new system, which is gaining steam in many areas, local citizens are encouraged to participate in local Party leadership and elections for officials are being held. Yes that’s right; ELECTIONS in China… provided of course that the nominee meets all eligibility requirements (i.e. CCP membership). See the full story here … China has also sent observers to judge the fairness of foreign elections such as the one in Palestine. Does the CCP judging the fairness of elections sound a bit ironic to anyone else?… while elections are great, as we’ve seen in the past decade in the US they are easily manipulated, stolen, and influenced via irrelevant “hot button” issues. Also, let’s not forget that China, as of the end of Feb., has barred foreigners, especially journalists, from Tibet and sensitive regions of Sichuan …what will THAT do to foreign investments and MNEs operating in the country?

Earlier this year, Pentagon officials said as many as 20,000 Soldiers under the U.S. Northern Command (NORTHCOM) will be trained within the next three years to work with civilian law enforcement in the area of “homeland security”. This is, to quote the report, in case “the economic crises should lead to civil unrest, such as protests against businesses and government or runs on beleaguered banks.” US military being trained to move against the US citizenry? Sound a bit like all the hoopla we’ve heard about China preparing for civil unrest in advance of its 20 plus million migrant workers becoming jobless? Party loyalists who don’t believe me can read the full government document here…

Then there’s the “hot” topics in the US: Nationalization of banks and insurance companies, CEO pay capping, industrial subsidization?… er… does that really sound like free market capitalism?

And let’s not forget Russia, after all it’s a democracy too now … isn’t it? Though Putin supposedly gave up power in 2008, it is common knowledge that his protégé Medvedev’s maintenance of his regime and it’s stranglehold on both government policy and media expression (not to mention the flagging economy) has led to pro-Bolshevik demonstrations across Russia earlier this year. Story here… Yes that’s right… many Russians apparently feel that the Reds can once again provide a more economically and socially viable alternative to Czar Vladimir I and “democracy”.

Regression toward the mean (thank you Dr. Jaggia) is apparently not just a concept applicable in the realm of numerical analysis. While it could be argued that the “communists” are becoming more fiscally open and the “capitalists” more socialist, I would argue that these ideological divides are nothing more than a fabricated excuse for all three of these nations to further restrict the freedoms of their citizens. The excuse time and time again is the same; “maintaining stability” or “ensuring prosperity” … prosperity and stability for whom … Washington DC, Beijing, and Moscow?

You may be wondering what this diatribe has to do with international business. How on earth can this be applicable to you ?… I believe that free enterprise is a critical component in ensuring the social and economic liberties of the individual. We’ve been talking quite a bit as well about sustainability and localization as it relates to “corporate social responsibility”. A firm is dedicated to making profit, yet at the same time this profit cannot be sustained in the long run unless the firm invests in cultivating and maintaining the well-being of its customers, economically, socially, spiritually,… across the board. Corporations are in a unique position to subvert the authority of governments as they function with many of the same rights individuals, yet with far fewer restrictions. With the advent of the internet, capital and information can move ever more freely across borders. China has met with almost no success in its efforts to block the internet data flow. There is some talk of an open-source banking system (see Ripple) that could subvert, and thus devalue, the worlds leading currencies. While at present this is only dream, business leaders are in the unique position to make critical decisions that facilitate an increase in the fluidity of not only capital and knowledge, but hopefully of people as well.

It is the responsibilities of corporations to do everything in their power (aside from illegal actions which may pose financial liabilities) to funnel capital away from governments that take actions that are not in the best interests of the people. These citizens are in fact the corporation’s customers. While boycotting investment is a popular method, it is one that may ultimately hurt a firm in the long run as other firms may not join you in the boycott ( i.e. prisoners dilemma). Creative business models that subvert or avoid tax liability (see the IKEA nonprofit example) are wonderful in that they have both legal authority while at the same time undermine fiscally irresponsible governments that use tax funds for items such as ICBMs, space lasers, and for all we know genetically engineered marsupial soldiers.

Unfortunately in the IKEA example, the firm has chosen not to “close the loop” and use their tax savings as an investment in human capital, rather they hold the funds so that their founder and his family can grow still richer. Still, I would argue that a consumer holds more power than a citizen (money talks) and that it is far easier to oust a possibly irresponsible corporation than it is to oust an inevitably irresponsible government.

To close, individuals can be corporations too! Running one’s life as a corporate entity may seem a bit far out, but it has some definite advantages, especial when trying to make oneself more mobile and adaptable in the global marketplace. Loyalties should lie with one’s community, one’s family, and one’s customers, not with an ideology or an assembly of autocrats thousands of miles away. To meet the environmental, economic, social, and political challenges of the 21st century it will not be on government officials but on us as future business leaders to think small, think sustainably, and perhaps most importantly, to think independently.

Comments, thoughts, and arguments are greatly appreciated (pls no name calling … i.e. “that guy is a Nazi” as it doesn’t befit the caliber of our academic institution).