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GLOBALIZATION; A ONE WAY ROAD??
20-Nov-2008
In a world which geographic borders are shrinking due to the enhancing technological developments (IT, Telecommunication, Google earth, Big Brother), the habits of regional societies are shrinking or even disappearing from those who are open hearted to changes and who are willing to adopt the developments. At the same time, the isolation is punishing those who refuse to listen to the signals of time and who refuse to walk the line by implementing these kinds of changes.
The variation of the earth’s population is more then 7 (7 continents). It varies between different regions of one country and even more, it varies between the different points of view of human being. So how could the economical march go along by crossing borders from the day world’s community has decided to go for globalization?? It simply found a unification between humans called greed sold in a packaging called wealth with a non mentioned side effect called addiction!! This has caused a period of hunting among the globe and the rape of what they call natural resources by ignoring the balance between humanity and the environment, and the balance between the different value of row material and industrialized goods. All this was justified by the shareholders value and the protectionism of national industries while blaming globalization itself to be a dangerous for aspect that could end up in a takeover of unwanted pirates of modernity. It was a one way action that allowed only one reaction; maximum of profit and the survivor of the strong!
The end of this game is well known as it caused the elimination of more than a 1trillion USD (dark numbers are by far higher) by revaluations and write downs of synthetic assets and of leveraged financial activities that dealt with humans destiny. Furthermore, it has brought the biggest Black Swan (The Black Swan by Nassim Nicholas Taleb) ever by shifting power!
But, is globalization as bad as it looks like right now?? Is a system invented by Karl Marx which is asking governmental organizations to become responsible for measured wealth distribution among populations? And is it logic to build up geographical and economical barriers by fall back into “we are something special” at a time of a global shrinking of borders and a time of unification of markets?? No, it is definitely not! Capitalism is dangerous when it is ruled by a minority, and Socialism is dangerous when it is followed by the majority.
The financial industry will be busy by itself for the coming two years getting out of the one way road it had put itself into it when following the trends which has started shortly after the new economy bubble in 2000/2001. Corporates will be forced to handle new strategies of how to get resources from abused markets how to sell their products into disadvantaged and sometimes discriminated markets and at the same time, how to finance this process. The result is definitely a new era of globalization that is accompanied by the shift of power, but also by the shift of values. And this is what’s all about it; values!!
The credit crunch began by the lack of trust what caused a decline of values of synthetic assets and a decline of trust in leverage methods what ended up with a series of events which has led to the current recession. Someone may say that the financial industry behaved in order of its legacy by increasing the value of money using all available instruments. This is right. But we learn at Universities what available instruments can and should be used for, without these Universities teaching us how to use them among the variety of different attitudes, constellations and objectives of each market. Simply, it does not include the human being with all kind of interruptions could be caused by humans into account.
Back to what makes a March possible (unification of interests), the new era now is looking for a new magnet that can pull attention and trigger a collective movement into a new direction. And it seems that this magnet has been defined already. It is called Corporate Governance and Corporate Social Responsibility and is focused on the arising of basic values of human beings everywhere on this globe.
As an Investment Banker, I know that Bankers do not give much attention to hazards come from ignoring moral aspects thanks to a challenging law industry and by moral aspects remain a voluntary issue. The former CEO of Citi Bank Prince said in early stages of the current financial crisis “As long as the music is playing, we will keep dancing”, what means going to the limit which is available for us, then make a U turn by defining new ways. We will pay our lawyers to clean up the mess left behind and we will be out of it before officials would get the chance to change it. But the goal will be achieved; maximum of profit!
This was before the crisis. In these days someone like Prince would be on remand when announcing this kind of statements.
The new era now is looking for a new kind of profit and new measurements for value that can be translated into assets. It is looking for trust. But how can a whole industry change its behavior and kill the natural habits of a Banker and replace them by immaterial values? It could be achieved by a new codex that is demonstrated by the Management and a new open communication strategy within the Bank’s units highlighting the new values, recompensing those who act following to the requirement of the new values and to punish those who don’t.
As mentioned earlier, habits cannot be eliminated through regulations or without replacing them by a new way of behavior as the industry is smart enough to find new ways to deal with laws and to avoid them.
This process cannot be achieved successfully in a direct way in relation to the male way of thinking in steps from A to B using the left half of the brain. It is more a conclusion of different stimulations caused to attract attention and to generate interest and to be able to fill the gap caused by abdication of the original habit (e.g. Blackberry caused an increase of working hours among employees starting as something special being available at any time and any where ending with more productivity and a higher number of breakdown of relationships). Stimulation through easing policies of Central Bakers or regulations coming from envious bookmakers who are more paper-shuffler then strategists is not the right message here.
A recommendation to corporates operating internationally could be generating the interest for cultural characteristics of a region that employees have to deal with. Also to spread the Corporate Governance among the different markets a company is dealing with and involving all members of the teams to become part of the Corporate Social Responsibility in these regions. Think global and act local should not be a headline on policies that stay unpracticed, it is time to implement it into our March heading leadership in this new era of Globalization.
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