Duncan Austin has a new article in Responsible Investor entitled “Trump happens when cultures believe private can cover for public.”
Here is a brief summary of the article:
History shows that when cultures favour ‘private’ too much, tyrants emerge and public problems accumulate that private cannot fix.
This time, the lurch to ‘private’ has been rationalized by the belief that markets ‘have it all covered’ and, hence, all we need is ‘minimal’ government to uphold property rights. The mantra of our times: ‘markets are the solution/government is the problem’.
But ‘government is the problem’ becomes self-fulfilling. Persistent discrediting of government drives the best of society into the silos of private business and a vacuum slowly forms in the public square into which ambitious men are emboldened to venture. Tyrants emerge when we believe it safe simply to ‘mind our own business’.
The same ‘anti-public’ narrative underlies the widespread belief we can solve global public goods problems primarily via voluntary private effort. To fit with the times, ESG has claimed that solving problems like climate change is a ‘win-win’: “Government can’t be the solution. But, Unilever and Tesla can fix things instead…”
Now may be the time for the ESG community to think about whether its core ‘win-win’proposition holds true, or whether it is a belief forced upon it by our ‘anti-public’ times. It may also be the moment to ask corporations to suspend political donations permanently and to front up to the reality that our sustainability challenges have real costs we can no longer ignore.
