Good Governance, Culture & Ethics

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Institute of Public Administration

"GOOD GOVERNANCE, CULTURE AND ETHICS"

Speaking notes of Most Rev. Diarmuid Martin Archbishop of Dublin

Institute of Public Administration, Dublin, 27th March 2014

Ethics is a buzz word.  Business ethics is a buzz term and indeed business ethics is a business in itself and a growing business.  There is a growing awareness that being labelled “ethical” is not just good for one’s own reputation, but that it can give market advantage to a business; and that being labelled “unethical” is not just to be regarded as sinful, but it is bad business policy and bad for public relations.

 I had a friend many years ago who ran an international development charity and he annually approached five major clothing retail outlets in the United Kingdom asking them to publicly declare their policy regarding their possible involvement in child labour.  He was politely told annually, to mind his own business. He continued each year in his campaign until one of the five decided to go public and declare themselves as child labour free.  At this stage nothing remained but for the other four to do likewise.

 The pressure to act ethically can come in various ways.  The motivation can be religious, or a question of the integrity of one’s own values, or it can come from market pressure and the pressure of public opinion.

 Way back in 1995 I was heavily involved as a Vatican delegate at the World Summit on Social Development which was major UN Conference held in Copenhagen, at its time the largest ever gathering of heads of State and government.   During the negotiations I requested that a reference be inserted drawing attention to the social consequences in developing countries of the use of landmines.  My suggestion met with almost universal opposition. I was told that this was a conference on social development and not on disarmament and the question of landmines could safely be left to the disarmament experts to deal with in their own rather arcane negotiations.    Finally I had to be happy to have inserted into the documents a reference to, and I quote, certain conventional weapons which may be deemed to be excessively injurious or to have indiscriminate effects.

 That may seem to many of you a rather circumspect way of including a reference to land mines.  It is in fact the title of another UN convention which has been ratified by most countries and they could hardly then have rejected it.  I could say that least that reference was better than no reference at all, even though the average reader would not have had a clue then or now as to what it meant.

 Why I tell this story is that just over two years later what was considered a major development in international affairs took place in Ottawa when the vast majority of countries around the world adapted a full-blown International Treaty outlawing the use of land mines.  Why the change of mind?  What had happened in the meantime?  Had I managed to convert the unrepented?  No: international public opinion had changed and dramatically so and it was now more popular in talking about landmines to be on the side of the saints. 

 Public opinion can form and greatly influence the common ethics of business, or the common ethical framework of national or indeed of international affairs.  The Ottawa Landmine Treaty was not the result just of a change of heart.  Many military experts still had their doubts about the wisdom of the Treaty, but there comes a moment when anyone watching the tide of public opinion realises that you have best cut your losses and go along with the changed stream of public opinion.   The price of not doing so can be costly.

 Ethics and ethical behaviour especially in the business world march with the times and develop with the times.  The major changes come normally through public opinion changing.  This would have been the case with slavery, with the estimation of the role of women in the workforce, or child labour.   At times the change in public opinion can actually surprise the pragmatic:  take the ban on smoking and the obligation to wear seat belts.     There were many pragmatic reasons to think that an absolute ban would never work and that perhaps some compromise would be the best way of moving forward.    But an idea whose time has come and which is being swept by the tide of public opinion becomes impossible to resist and curiously the total ban or the total imposition becomes then easier to sell than the compromise.

 But for public opinion to change there have to be forerunners.  There have to be those men and women of intuition and innovation, of courage and conviction who are prepared with determination to take a stand and to take a principled stand and to take an uncompromising stand.   In the complex world of business and politics the art of the compromise is an essential part of the day- to-day ability to move forward.  But the level of compromise which becomes acceptable is determined by those who do not compromise.

Curiously democracy requires another presence in society than that in which everything is decided by majorities.  The Thatcher government attempted on more than one occasion to reintroduce the death penalty and it had solid support in public opinion, but members of parliament consistently voted against it.   The single issue campaign can be extremely effective, for good and for the not so good. Democracy without groups which unflinchingly espouse and defend values and principles can easily slip into a dangerous relativism of constant compromise.  When it comes to the defence of unchanging values in a society characterised by radical and continual change there may be need of some whose principle is “no surrender”.  

After another UN Conference, I went with an African delegate to a shopping market and he showed great interest in a small carpet which he felt would make a wonderful gift for his wife.   The shop owner told him that the price was $100.  To my great embarrassment my friend offered $1 and despite a certain amusement on the part of the trader my friend stood his ground as if he was really serious.  For most of the morning we came back to the stall, four or five times at least, and my friend only began moving from one to five dollars when the seller had gone down below $50.  He eventually got the carpet for $10 and both he and the trader were happy.  I tell the story to show that the uncompromising can very often arrive at the best compromises.  An ethics with built on compromise alone will always be weak.  Cheap ethics is of no avail to anyone.  Veneer ethics is useless.  In a society where compromise is the order of the day and where many dislike the dogmatic and the inflexible or reject any concept of the absolute, we need the uncompromising. 

 That said, public opinion is a two edged sword especially in situations which are not black and white in the ethical sphere.  Two of us can set out to journey towards and attain the same societal value, but from very different starting points and taking different paths.  This is a challenge in all economics where the desired values may be similar but the means chosen to attain them can be very different.  This is the case with political theory and with political parties which seek to attain the common good with at times radical different policies regarding the role of government and business and the private sector.   That is why we have a plurality of political parties; that is why we have elections; that is why we need choice.  Public opinion is not the same as populism. When public opinion becomes populism, then choice is undermined.  

 Ethics must attempt to involve the widest possible acceptance and ownership if it is to attain its effects.  But public opinion is not quite the same as ownership.  Public opinion can be manipulated; it can be emotional rather than rational; it can easily treat superficially and reduce to apparent simplicity situations which are in fact quite complex.  The judgement of public opinion is a blunt tool, with very little space for subtle details.  This is especially true in situations in which a culture of spin begins to dominate.  You can win many battles with spin, but spin in the long run weakens victory of the real war which is about trust and confidence.   When spin gets out of control, then it gets tied up in knots and people are left adrift not knowing where they stand, where the truth is to be found, and the confidence in institutions is weakened.  When that occurs in public institutions and in public life then the consequences of a failure in trust are serious. Spin is a huge business in Ireland and spin is rarely the friend of transparency.

 Ethics must have an independent foundation.  Ethics is not ideology or just a pragmatic programme of ideas.  The very nature of ethics is that personal responsibility must at its centre.  We are responsible for the foreseeable consequences of our acts. Independent personal responsibility is always at the heart of ethical behaviour.  Ethics is not an ideology which we trot out, or a handbook of does and don’ts that we turn to for ready answers.  Ethics is always about the way we responsibly and authentically structure our own personal behaviour.  It is about the responsible application of fundamental ethical principles to the decisions we make.  In the long term a just society is attained by people who live justly and with integrity.

 In today’s society in which demands are on the increase, funding is being cut back and ever higher standards of medical care are rightly being set, the level of risk for members of boards of governors is unnerving.   There is always insurance which covers financial liability, but one also has to think of reputational damage that could result from the wrong decisions of others.  Boards of governors of voluntary organizations need recognition and even more so require training and support.

 In corporate governance also the concept of personal responsibility is central.  It can be very easy to say that I did not know and that the blame is with someone else.  When things go wrong and it comes to the crunch, resignations often take place at the lower levels.   This is a problem also in the Church where the particular autonomous position say of a bishop leaves him as the sole legal representative for actions and where there is a tendency to think that therefore there is no corporate responsibility.  I was stunned on the occasion of the scandals of child sexual abuse to encounter what I came to call the “baking the cake culture”.  I only put in the sugar and he only put in the flour, but neither of us have any responsibility for the cake because were not there when it was put into the oven.  We are all responsible for the foreseeable consequences for our actions and for our omissions.  Real corporate responsibility can only be constructed on the foundation of an acute sense of personal responsibility. 

 There are rarely totally black and white ethical decisions.  Yes, good is to be done and evil avoided will be accepted by all.  Most would agree that the exploitation of vulnerable individuals is unethical.  But there are so many ways in which our consumer driven society exploits all our vulnerabilities.

 I recently attended a fascinating seminar sponsored by the Dublin Archdiocese’s Parish for the Travelling People on “Debt and Dying”.  It was a fascinating cultural insight into the pressures that are placed on traveller families to spend exorbitant amounts on lavish funeral services and monuments.

 The discussions showed the peer pressure that was put on families, but also the economic pressure that was placed on traveller families to be more extravagant than their relatives.  Much of the pressure came from undertakers who know exactly the type of products that their clients would like, but do not need.

 What was interesting was the wisdom of some of the older members of the travelling community who saw the extravagance and it uselessness.  But they also had responses that were very practical.   I had thought that they would have been asking me to preach and to condemn abuses and hopefully then to change people’s hearts and attitudes.  They were in fact much more practical and said that that was needed, for example, was for cemetery authorities to impose a ban on monuments over a certain height and to enforce that ban.

 Ethics must be value generated, but the enforcement of ethical standards can often be attained not through preaching and moralising but by establishing a down to earth legal and governance framework which makes unethical behaviour less likely and less attractive.  In the mid-nineties the World Bank wished to draw attention to the enormous social and economic cost of corruption in Latin American countries.  The conventional wisdom of the time, however, was that international organisations had no right to intervene in the internal affairs of independent sovereign states. Loud anti-corruption campaigns were never going to be tolerated.  The World Bank approached the question proposing packages of technical reform of the tax systems.  The existing systems were so complex and involved so many passages – and therefore many hands to be greased – that the simplification of the tax system made the system much more efficient and greatly reduced the possibility of corruption.  Ethics do not always require preaching and moralising to be applied.

 Ethics requires governance and regulation and enforcement because we live in a world of human beings and where corruption will always appear on the order of the day.  It should also be noted that one of the most common forms of corruption is inefficiency, which robs people, especially the poorest and the most vulnerable of the quality services which are their democratic due and for which they pay anyway.  In this sense there should be no real conflict or tension between ethics and effective leadership and management of an organization.

 Transparency is an essential part of efficient governance.  Transparency involves allowing all stakeholders in business and in public service to know their rights and to be able to claim their rights and entitlements.  A survey done at the turn of the century, again by the World Bank, called Voices of the Poor was the widest ever consultation of the poor and how they viewed their needs.  Interestingly the poor identified as the single most significant factor that would help them rise from poverty “voice”.  They found that the very institutions which were institutionally constituted to defend their rights – police and local authorities - were often the ones who deprived them of their rights and that they were left with no recourse.

 A business just as an economic system must not just be marked by transparency; it must be also be fit for purpose; it must clearly understand its mission as a service.  Pope Francis, in his message to this year’s World Economic Forum, in Davos expressed the hope that humanity might be served by wealth and not ruled by it.

The economy has a social function.  Economic growth and profit and wealth, no matter how important they are, are never simply ends in themselves.  They should lead to social equity, to an equitable growth of society and to enhancing the people and the human infrastructures which strengthen society. Economic growth always brings with it social responsibility. 

There has never been a successful project of sustainable social development and inclusion which was not accompanied by sustained economic growth.  But sustained economic growth has never on its own attained social progress.  The difficulty of maintaining this balance could be seen here in Ireland and still can be seen in how we manage the tension between growth and austerity and how we manage to foster growth and maintain social sustainability.

Are there then non-economic values which economic growth requires to achieve social progress and inclusivity? Where do we find economic models which manage to foster both growth and equity?   What is the place of ethical values in the design of an economy?

The economy is part of a wider social framework.  This is not just moralising.  An economy is more sustainable if it springs up within a stable society in which human needs are addressed and in which people have voice, in which all feel that they can be participants.  Exclusion weakens any society; exclusion damages an economy.  A society which fosters innovation and participation is a society which fosters a knowledge based economy.  An economy which fosters passivity will be a weaker economy. 

For many leading economists, economics belongs within the framework of ethics.  What Kant said of politics can be applied to economics, namely that for economics to move forward it must first of all give precedence to ethics.  Amarthia Sen stressed that an absence of reference to moral philosophy leads to an impoverishment of economics.  Pope John Paul stressed that there are fundamental human needs that do not belong in the market place, as goods that can be bought and sold.  Pope Benedict called for the insertion into economic models of the value of gratuity as a complement to profit alone. He stressed that “when we loose hope in a transcendent horizon, we loose a taste for gratuitousness, a taste for the good for its own sake.”

Even the most capitalistic systems see a place for corporate social responsibility.  Economics cannot be based on individual or corporate profit alone but has responsibilities towards the common good.   Pope Francis stresses that one of the greatest contributions to the common good today is job creation.  Again an interesting link between economic and ethical language!

Social and economic progress belong together.  At a time of rapid change or at a time of challenge such as ours, ownership of social change is vital if change is to be accepted and fully embraced. Ownership of social process does not mean exclusive private possession of the process on the part of any sector.   Each sector of society must be able to find ownership within the terms of its own heritage.  

The market can only function in an ethical and judicial framework where the vulnerable are protected and the natural arrogance of the powerful is curbed.  We see today how gross and unregulated individual misbehaviour in market activity affects the stability of companies but also of countries and then of the men and women who make up the society in which we live.  Irresponsible traders do not just gamble with the future of a big multinational firm – they eventually affect the lives of people all over the world.

Government and business need to work together. Government and business have the same interest in many ways when one is talking about economic growth.  Governments have the responsibility to provide a favourable environment for the growth of business.  This means that there can be a legitimate corporate interest in shaping aspects of the politico-economic environment.  But this interest can become dangerous where there are insufficient regulatory mechanisms in place.  We need the market and we need a market which has the freedom to operate as it should. But market and regulator should never become bedfellows.  Unregulated market speculation or unfair interference in competition law damages the economy. 

Business needs government.  But governments can also fall prey to corruption.   Smaller government may be more desirable than some of the past experiences of massive and unproductive government interference in society and the market.  But lack of effective government is equally disastrous, just as inefficient government is. Government is essential to guarantee the ethical and juridical framework within which the market can flourish and within which ethical market behaviour will be fostered.

Running a good business means ensuring gain for the shareholders, making a profit through providing a quality product or service and of course that this also involves giving employment. The market involves risk and no one should complain when the person who takes risk makes a healthy profit.  That has traditionally been the way in which the businessperson looked at good business.   And anyone who challenged that viewpoint would be reminded – also rightly - that putting yourself out of business through increasing your costs helps no one.

On the other hand we should all feel a certain discomfort about huge and disproportionate profit within business.  Business is embedded in the reality of society and attains benefits from a healthily managed society and must then share some responsibility for society.   In some way, part of profit should be directed not just to the shareholders but also to wider concerns of the society in which the business is embedded and from which it benefits.  Investment will be attracted to places where a creative and innovative workforce is available.  But can business simply take that for granted and then plea for a form of small government which is then less able to provide on-going investment in the type of education and research which made strong growth possible in the first place?     Everyone must assume responsibility.   In a globalised world, taxation should be more closely linked with the concrete services from which business draws benefit.  

In today’s Ireland where we have very high levels of youth unemployment, the answer is not just sending more and more people to third level education and even subsidising it.  There must be more room for apprenticeship and the involvement of business in the task of generating employment prospects for the young. Countries like Germany and Switzerland have done this successfully.

Business also needs law and we need law enforcement and we need that especially today within an architecture of business which has become international and reaches beyond national boundaries, both as regards its activities and its effects.  It is interesting to note that organised crime was one of the first groups to recognise the advantages of globalisation. I don’t just mean drug or weapons dealers, but also new forms of irresponsible speculation and dishonest behaviour within the business community.  An ethical framework is not just pretty words on a piece of paper or in a mission statement but is something that must be integral to the way people work and exercise their role in society.  The new globalised nature of the economy requires new structures on an international level to combat irresponsible and criminal behaviour and that is urgent.  

When I speak of law and law enforcement I feel strongly that in Ireland today we need to restore confidence in the workings of the law.  While there have been failings within an Garda Síochána, a culture of constant criticism of our police force is not good for society or for the economy or for the mainstream of a force which is highly dedicated and highly professional.  The regrets expressed at the closure of Garda Stations is in itself a real expression of appreciation for the contribution the Gardai make within our communities and the respect in which they are held.  

What can and should a religious leader say in the current situation.  Should he or she just leave it to “the experts” and return to the sacristy?  Can religious values influence economic and social stability? 

The job of the Christian churches is to preach the message of the Gospel. This is a message that is addressed to every individual and that has social implications for the people who choose to follow the message of Jesus Christ. The basic message of the Christian churches is about the love of God, and there are two characteristics of the love of God that I believe are particularly interesting in the modern world. One is gratuity. God loves people without any conditions. Take the story of the Prodigal Son, who comes back home to find that his father is there waiting for him. The son has his little negotiating speech ready, but he doesn’t have to use it. The son is just welcomed – that is gratuity.   The other is super-abundance. The love of God surprises you – it is so generous that it turns you head over heels.

These two values stand in contrast to a market-driven consumer society in which everything is precisely measured out.  If the label says 16 oz, you won’t get an ounce more. If we truly lived in an environment like this, where you got only what you paid for and nothing beyond, none of us would be where we are today.  We are all where we are today because someone gave us a break; someone put enough trust in us to give us a chance.  The world needs the values that create generosity; that make you care about another person even if that person is weak; that motivate you to make an investment in people.

          The market is an extraordinarily effective instrument.  But there are basic human needs which do not belong in the market place, which cannot be bought or sold like commodities.  For those we need something else.  The economy will attain its role if it is complemented by effective government, but also by a society with a heart and with generosity.  This last will be needed more and more in hard times.

Pope Francis is an amazing person who has made his mark on today’s society.  This is due to his extraordinary personality, which is based on his holiness and his understanding that simplicity in life can bring fulfilment in a way which a ruthless and relentless search for wealth cannot.  One of the great challenges, especially for leaders in the Church like myself, is that we can easily admire Pope Francis, but not imitate him. 

 Pope Francis is a man of God but he has also shown a remarkable sense of how to govern.  One of the sub-questions posed for this Conference is about combining good leadership and good governance.  Pope Francis has shown remarkable sense of leadership.  He has achieved something that is the real dream of any CEO:  he has turned around the image of his office and of his organization.  He has moved from an organization which was uncertain about its way, bogged down with scandals and challenges.  Pope Francis has given many a new hope and a feeling that that there are reasons why believers can be proud of their Church.   He attained this from the first moment in which he appeared after his election, without the help of expensive public relations strategies and spin doctors.

 He has also taken on the question of governance.  He decided not to live in the traditional Papal apartments, in what was the centre of Vatican administration, but in a community house where he eats every day with the other guests.  This is not just a gesture of humility.  He has totally put out of business those who had traditionally made it their business to manage privileged access to the Pope. He has shown very much that no one is going to tell him how he should behave as a Pope.  He keeps his private diary locked up.  He keeps his phone line busy. 

 There is an ethics of leadership and that is an ethics of responsibility and of leading by example.  It is an ethics of leadership which springs from an interior freedom which enables one to disengage from antiquated structures and to reach out freely to people.  One of the most striking examples of Pope Francis was an encounter he had with a young man whose face was covered in sores.  The Pope did not do what most of us would probably have done: greeted him from a safe distance or simply asked him what disease he had. No, he stopped and kissed the man.  There is a basic ethics of leadership which must be a basic ethics of humanity, which is the most challenging ethics of all and one in which all of us, me included, continuously fail.  That fundamental ethics of humanity is however the one without which all our other ethical projects will fall flat. 

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