Toward a Global Economic Ethic: Fraternity Needed

I just got back from a presentation at the United Nations of a new manifesto on advancing a "Global Economic Ethic" by the UN Global Compact, the Swiss Government, Novartis Foundation, and the Global Ethic Foundation. Swiss Ambassador Peter Maurer, UN Global Compact Executive Director Georg Kell, philosopher Hans Kung, economist Jeffrey Sachs, economist Josef Wieland, and Novartis Foundation CEO Klaus Leisinger presented the new manifesto, which draws from all the religious and non-religious moral traditions of the world (including Humanism) and includes as its first signatories Michel Camdessus, Hans Kung, Mary Robinson, Jeffrey Sachs, and Desmond Tutu.

The manifesto starts with a preamble that situates this effort for a more ethical globalization in the urgency of the financial crisis:

For the globalization of economic activity to lead to universal and sustainable prosperity, all those who either take part in or are affected by economic activities are dependent on a values-based commercial exchange and cooperation. This is one of the fundamental lessons of today’s worldwide crisis of the financial and product markets.

At the core of the manifesto are two pillars: humanity and the Golden Rule (or reciprocity).

On humanity, the manifesto states:

The fundamental principle of a desirable global economic ethic is humanity: Being human must be the ethical yardstick for all economic action: It becomes concrete in the following guidelines for doing business in a way that creates value and is oriented to values for the common good.

On the Golden Rule, under its fourth article, the manifesto states:

What you do not wish done to yourself, do not do to others. This Golden Rule of reciprocity, which for thousands of years has been acknowledged in all religious and humanist traditions, promotes mutual responsibility, solidarity, fairness, tolerance, and respect for all persons involved.

Such attitudes or virtues are the basic pillars of a global economic ethos. Fairness in competition and cooperation for mutual benefit are fundamental principles of a sustainably developing global economy that is in conformity with the Golden Rule.

Some of the discussion at the conference focused on the French motto: Liberty, Equality, and Fraternity. Some argued that while governments and societies have done their best to improve the first two goals--liberty (or freedom) and equality--the third goal of fraternity (or brotherhood) had been dropped by the wayside. And this lack of a sense fraternity--the sense of caring for others--accounts for a lack of ethical thinking in the world.

Coincidentally, the new Japanese Prime Minister Hatoyama's personal philosophy (yuai) also emphasizes fraternity.

This morning I attended Japanese economic official Hidehiko Nishiyama's talk at the Japan Society in NYC, moderated by Merit Janow. Giving the audience a sense of where Japan is headed under the DPJ as APEC 2010 approaches, Mr. Nishiyama introduced some concepts:

- Japan's economic policy will emphasize "inclusive growth" (which is to say a fairer economic policy benefiting more people in my words).

- Japan will promote green, sustainable growth, including energy efficiency and green infrastructure.

- Japan will champion "human security," improving food security, human health, etc.

- Yuai (fraternity or brotherhood) will be a guiding principle of Japanese society and Japan's relations with the world.

After the conference, I mentioned Prime Minister Hatoyama's expression to the organizers. Their response: "Probably not a coincidence."

Buddha statue in Kamakura, Japan. Photo by Kristian Stevens (CC).

Should America "Buy American"? Remember the Golden Rule

Today, joining European leaders and U.S. President Obama, Japanese prime minister Taro Aso weighed in on the ethics of the "Buy American" clause (championed by the U.S. steel industry) in the stimulus bill passed by the U.S. House of Representatives last week. From Bloomberg:

"'Buy American' is definitely wrong," Aso said today in parliament. "It's clearly against the spirit of the World Trade Organization to say you must use American steel to make bridges."

From a strictly utilitarian perspective, more American companies use steel than produce it. Protecting a few U.S. steel jobs at the expense of larger U.S. companies bears scrutiny. As economist Douglas Irwin put it in the New York Times: "General Electric and Caterpillar have opposed the Buy American provision because they fear it will hurt their ability to win contracts abroad."

But it is worth remembering another, perhaps more universal ethical principle--the Golden Rule--in making policy.

In this Christian Science Monitor editorial, the Golden Rule is invoked:

If "Buy American" is not expunged from the recovery package, President Obama will cede his moral authority to lead the world away from mutually destructive trade policies – triggered by a crisis for which the US shares much blame.

To recover, America will have to export more, not less. "Every man for himself" won't accomplish this; only the golden rule will.

Economist Douglas Irwin also calls on the Golden Rule in the New York Times op-ed:

Remember the golden rule, or the consequences could be severe. When the United States imposed the Smoot-Hawley Tariff in 1930, it helped set off a worldwide movement toward higher tariffs. When everyone tried to restrict imports, the combined effect was a deeper global economic slump. It took decades to undo the accumulated trade restrictions of that period. Let’s not make the same mistake again.

Similarly, Nayan Chanda warns against "beggar thy neighbor policies" in the Straits Times:

The legal challenge aside, one unavoidable consequence of any “Buy American” provisions in the stimulus package would be retaliation from China, Europe and other countries now in the process of allocating government funds to boost their sagging economies. Concerned about the wider ramifications of this retaliation, US business groups — including major companies such as Boeing, Caterpillar and General Electric — have called on Congress to resist such protectionist measures.

Despite the lessons of history, the dangers posed by protectionism are often seen as a problem for tomorrow while saving jobs is a fiercely urgent task. The world now needs leaders who can stay calm in the face of the raging storm and work together to stimulate their own economies without triggering a new wave of protectionism.

"Buy American" provisions may temporarily provide job security for some Americans, but the contagion of protectionism will stunt global trade and bring misery to Americans and the rest of the world.