Remember the Old Boys’ Club…? The boring, cranky, devious one that controls the banks, the economy and most of our wealth creation and money supply from behind the scenes? The one where nearly every key position in government is occupied by an Old Boy? Yes, that one.

Well, there are still a few lifetime members of the OBC firmly entrenched in the Federal Reserve (Grandpa Ben), and the Treasury (Timmy G and Larrykins) who continue to give all our money away to their ever-popular clubby friends.

These are the same old boy club members who along with ex-Goldman partner and Treasury Secretary Robert Rubin gave the store away to the big banks in 1999 with the repeal of the Glass-Steagall Act. Ordinary banks like Citigroup could now legally play roulette with government guaranteed deposits. OB Robert Rubin thought it was such a great idea he took a job with Citibank only weeks after leaving the Treasury.

These same old boys, Summers, Greenspan, Geithner with OB Senator Phil Gramm (now a lobbyist for Swiss Bank UBS) the very next year pushed through the ill-fated Commodities Futures Modernization Act – otherwise known as Derivatives-Are-Born-Free Act. This little understood law overturned a century old rule that had prevented unregulated market bets since the Panic of 1907. Now all bets were off…

Meanwhile back at the Securities and Exchange Commission, the agency that was supposed to be supervising the gladiator games, another group of old boys put the final nail in the coffin. In early 2004, Chairman of the SEC William Donaldson (former head of securities giant DLJ) got together with a few good friends, card-carrying OBC members and business colleagues, the heads of the five largest investment banks in the industry including soon-to-be Treasury Secretary Hank Paulson. Together the six overturned a law that stood on the books for three decades limiting the amount of risky assets the nation’s largest securities firms could hold.  In a 45 minute meeting, the barrier between 12 to 1 capital to debt ratios and all hell breaking loose was removed.

Unlimited leverage became official:  the biggest banks no longer had to follow “the net capital rule” and could use their “own judgment” for how much risk to take with other people’s money. Within four short years, the five firms would triple and quadruple their risk levels to the point where three of the five firms collapsed along with the United States banking system.

Who benefited from merging boring deposit-taking banking and casino trading by dismantling Glass-Steagall? Citibank, JP Morgan Chase, Bank of America, Wells Fargo…

Who benefited from under-the-radar derivative anarchy?
AIG, Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS, big banks, the hedge fund and private equity community…

Who benefited from reversing the capital restrictions on  risk for big banks?
Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers, Bear Stearns, JPMorgan Chase, Citibank, Bank of America, Wells Fargo…

I think you know how the roller-coaster fun ride ended.

It is clear who did NOT benefit from the free-for-all deregulation of banks and the refusal to create a derivatives exchange…The working public, small business, you and me. In fact it was the elimination of these three important legal statutes that pushed the American financial system to the brink of collapse in less than a decade. Are you getting the picture? In the words of Oliver Hardy, Old Boys’ Club of America: Another fine mess you’ve gotten us into.

And now for something completely different. The All New Girls’ Club.
Move over boys. The girls are back in town.

Democracy and Law

The recent nominee for Supreme Court Elena Kagan summed up the need for law in the preservation of freedom. “Law matters because it keeps us safe, because it protects our most fundamental rights and freedoms, and because it is the foundation of our democracy,” she said. These words could be easily translated to the current debate on financial reform.  Freedom only functions when the laws protect everyone. Keeping our nation’s financial system safe from rape, plunder, and pillage is the ultimate goal for financial reform.

Out of Washington this past decade, little of our government’s actions made rational sense. Economic anarchy was called “free-enterprise” and “reform” was equated with more war and less public safety. Same old story as the old boys kept their stranglehold on the gov and our economy.

Back in the old days (late 20th century America) one voice of reason rang out-the former head of the Commodity Futures Trading Commission, Brooksley Born. In 1998, Born singlehandedly stood up to the firmly entrenched old boy network of Greenspan, Summers, Rubin, Geithner and SEC Chairman Arthur Levitt and fought hard to regulate lethal derivatives citing the risk of unmitigated disaster. Unfortunately, the irrational voices of the old boys drowned her out and her warnings of financial crisis came true.

Sitting on the Financial Crisis Inquiry Commission a few weeks ago, Born had her chance to chastise the champion of free-for-all enterprise and economic recklessness, Alan Greenspan. She told the old boy that he “failed to prevent the housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse…You failed to prevent many of our banks from consolidating and growing to a size that are now too big or too interconnected to fail.”

Wow! What a woman. It was almost worth the  painful two years of financial woe to see Greenspan become visibly angry and categorically deny what is already documented fact. Ding dong “the Oracle” is dead.

In a sea of male bankers, another woman’s wise words stand-out. Sheila Bair, Chairwoman of the FDIC and long an advocate of safe banking and distressed homeowner assistance, has the odd distinction of being one of the few banking industry regulators in favor of a Consumer Financial Protection Agency. Such an agency “would help community banks, not hurt them,” she claimed in direct opposition to her old boy colleagues. In accepting the Profile in Courage Award alongside Brooksley Born, Bair said, “I’m particularly pleased to be joining …other female awardees who stood up when some of their male counterparts failed to act, or worse, actively fought them.”

Next up in the House of Feminine Wisdom is consumer rights champion Elizabeth Warren, Harvard Law Professor and Chairwoman of the Congressional Oversight Panel. As head of the panel, Warren is a fierce critic of how the bailout money was allocated by the Fed without condition. She has become the nation’s most vocal and toughest advocate for a Consumer Financial Protection Agency.

Warren summed up her fight for reform with this, “It’s ultimately about protecting the whole economy. When we destabilize American families; when we sell them terrible products that explode in their faces. That in turn destabilizes the entire economy. These products that were gonna offer these huge, huge profits weren’t just lousy deals for consumers. They were lousy deals for investors. They were lousy deals for pension funds. They were lousy deals for the worldwide economy.”

Wall Street: Fix this Mess You Made

Two weeks ago as I stood outside New York’s City Hall listening to angry protestors chant, “Wall Street fix this mess you made.” I realized that only our lawmakers can fix the mess they made.  A financial system without laws protecting the innocent constitutes economic anarchy… And anarchy is a dangerous thing. It has been an expensive and painful lesson for us as a nation and global community. What does the “free market” really mean? What keeps a  society truly free from tyranny after all? Laws can create tyranny or protect us from it – the choice is ours.

The only way to safeguard our economic system for consumers, financial professionals, investors, as well as for bankers is to vigorously regulate the markets. Limiting leverage with capital and debt restrictions, reining in risk of deposit-taking banking institutions (separation of Bank and State), removing conflict of interest from official regulating and rating agencies (eliminate regulator – ratings shopping), and creating a consumer financial protection agency in the same way we oversee every other product on the market from food (FDA) to children’s toys. These changes are basic and reasonable responses to maintain economic freedom, not obscure it.

The Old Boys’ Club has launched a battery of lobbyists who are fighting hard against these reforms and the women in power are pushing back.

Ladies Night

At a recent evening celebrating women leaders, California veteran Senator Diane Feinstein claimed that, “If Congress were all women, we would have financial reform by now.” That may or may not be true. Yet there is something to be said for the healing quality of women. The women in government right now seem intent on fixing the problem, not denying it exists or throwing more wood on the fire.

Feinstein pointed out that 18 years ago when she was first elected to the Senate, there were only two females in that body of Congress. Now there are 17 female U.S. Senators. That is an increase of representation from 4% to 34% in a decade and half. Every election we move closer to shattering the glass ceiling held firmly in place by the OBC that has dominated our nation’s financial system for over two centuries.

Feinstein, Olympia Snowe (R-Me), Susan Collins (R-Me), Barbara Boxer (D-Ca), Kirsten Gillibrand (D-NY), Kay Hagen (D-NC), and Nancy Pelosi (D-Ca) are all leaders on comprehensive financial reform. Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce took the opposite view on financial reform from her male counterparts at the big business lobby thinly disguised as the U.S. Chamber of Commerce. The USCC is campaigning against the creation of a consumer financial protection agency. Dorfman declared her support for the agency and for “America’s small businesses and communities” by urging Congress to “pass comprehensive financial reform.”

Additionally, Mary Shapiro as head of the new and improved SEC, Bair, Born, and Warren -embody a newly established feminine wisdom that is moving the ineffectual and outdated Old Boys’ Club out of the way.

Women are healers by nature. We are mothers, sisters, daughters, problem solvers, and leaders. The time has come for the feminization of our politics and our economy. Our nation needs to be healed. That’s not a job for the timid or delicate. It’s not for sissies. It is for the strong, powerful, and wise. The way women really are.

The logic of the Old Boys’ Club represented by the ancient Greenspan and the not-so-ancient 50 year old males controlling the nation’s largest financial institutions has rapidly dissipated by its own self-defeating actions.

As for me, I think the patriarchs in the tired dreary old boys’ network had their shot and screwed things up just fine – now it is time for the ladies to take their turn and see if they can clean up the mess the boys made. For my money, I put my trust and faith in the New Girls’ Club.

We have come a long way, haven’t we?

Monika Mitchell - Executive Director    editor@goodb.net

David W. Miller, Director of Princeton’s Faith & Work Initiative, attempted to tackle the monumental job of “civilizing” the economy. No small task for anyone let alone the unusually courageous and innovative Miller. Formerly the Executive Director of the Yale Center for Faith & Culture, Miller also taught a popular course in the Management School, “Business Ethics: Succeeding without Selling Your Soul.”

The ebullient Miller holds a M.Div. and Ph.D in ethics from Princeton Theological Seminary and combines that with prior experience as a senior partner in a London Private Equity firm. Among his many achievements (he looks much too young to have done all these things), Miller also held a top executive position in the securities services and global custody division at HSBC. His combination of banking, academic, and theological expertise made him the perfect host for the one day business and spirituality conference dubbed, “Civilizing the Economy: A New Way of Understanding Business Enterprise?”

Miller gathered inspirational leaders from academic, civic, religious, and business fields to discuss Pope Benedict XVI’s social justice encyclical, Charity in Truth – Caritas in Veritate and how it can be applied to the practical material world of business and economics. The conference was presented from the differing perspectives of economics, theology, employees & shareholders, and CEOs. The only downside was that there was not time to attend every panel and breakout session.

The “Economist’s Perspective” was moderated by George Enderle, Professor of International Business Ethics at the University of Notre Dame, and presented by Leonardo Becchetti, Faculty of Economics, University of Rome II, Charles Wilbur, Emeritus Professor of Economics from Notre Dame, and Paul Oslington, Professor of Economics from Australian Catholic University.

The charismatic Becchetti spoke of the important roles of trust and charity in daily business and referred to the solidarity principle of banking in his native Rome—one of the reasons he cited for the Italian banking industry’s relative stability throughout the economic crisis. His personal roles as economics professor, banking industry board member, and head of an active NGO allow him to develop a deeper understanding of how all three disciplines interconnect.

Moderator George Enderle, a world-renowned business ethics expert, conducts research on the ethical challenges of international business and corporate decision making. When this journalist asked the panel how to bridge the gap between economic theory and every economic reality, Enderle replied that one of the first approaches begins with teaching enlightened business practices in business school. “Everything emanates from social thought,” he said.

The panelists were full of innovative and practical insights in economic and spiritual dilemmas. One of the highlights of the economics breakout session was the wise words of the impressive Charles Wilbur, Enderle colleague and Notre Dame professor. Wilbur is currently researching moral values and the economy and has written several books and articles on ethics and economics. Wilbur gave a brief, but fascinating talk on how economics is often predicated upon “patching it up when things go bad” or “cleaning up the mess” left behind by economic failure. Wilbur stated that “economic decisions are moral decisions.” He urged economists to become more proactive in preventing crises, because “economic institutions and policies impact personal lives.” Wilbur referred to an article he wrote in September 2009 for America Magazine on how industry economists fell in love with the elegant math of their formulas and neglected the human application of its original purpose. In his powerful and brilliant article, Misleading Indicators: How U.S. Economists Missed the Great Recession, he wrote of the need to apply theory to human reality.

His words were so sincere and compelling they inspired me to do some research on the professor. To my delight I discovered that Charles Wilbur is one of the prime thought leaders on “social economics”- the humanizing of economic theory with real life. Wilbur wrote that mainstream economics is based on “soulless consumerism.” Social economics places the individual human experience at the center of economic theory – not simply as “economic actors,” but as “persons that live in community.”

The premise of social economics according to Wilbur’s paper is:

“The person is the basic unit of the economy…who acts freely but within certain limits, self-interestedly but often with regard for others, and calculatedly but at times impulsively, whimsically, or altruistically, in a self-regulating economy which from time to time must be constrained deliberately in order to serve the common good and to protect the weak and the needy…

Social Economics “is not reducible to economic calculus because it rests squarely on the conviction that humans have a worth and dignity beyond measure.” (Ed O’Boyle, pp. 1-2 )

Okay I love this guy – the retired professor that is! Here I thought that the concept of intersecting economic theory with the economic reality of everyday people was new and cutting edge and apparently (according to Wilbur’s website) it was first developed in 1941 (The Association of Social Economics). The panel led to a wonderful discovery of the like-minded scholarly field of research similar to the “better world business” work we are currently focused on at GoodB.

The one sour note of the breakout session was the oddly inappropriate words of panelist Oslington who said among other uninspired utterings that, “Protestant social ethics should disappear from the face of the earth.” He recalled in his one year teaching at Princeton in 2006-07 of being dragged to a Presbyterian Church to listen to boring old social ethics doctrine. “They had no expertise. There were no theologians or economists present,” he remarked revealing his clear disdain for these “non-experts.” The oddity escalates when realizing that one of the key presenters of the conference was Kirk O.Hanson Professor of Social Ethics at Santa Clara University in California. Also, several social ethicists identified themselves subsequently in the lecture hall. However, since “experts and non-experts” make up the economic system, it seems clear that we would all benefit from a free exchange of ideas.

But no matter – the discussion and exchange of ideas on the moral and material fusion of business and society rocked the Ivy League Halls of the old patrician bastion. This was not your daddy’s or granddaddy’s Princeton get-together, this conference set the tone for 21^st century “New Economics” and the socially responsible quest for moral money. Something Harvard, U Penn, Cornell, and Stanford have been doing for a few years already has finally caught hold of Old Nassau thanks to David Miller.

Other highlights of the conference included Christine Firer Hinze, Professor of Theology at Fordham and Geoffrey T. Boisi, Chairman and CEO of Roundtable Investment Partners, and senior partner from the old partnership days of Goldman Sachs pre-1999 when they traded and risked their own money. Ahh, the good old days…

David Miller remarked in the morning that while the conference was attended and presented by top CEOs and market makers from global corporations, we should never forget the small business people who make up much of the world’s markets and the innovative entrepreneurs who create new and cutting edge businesses every day. Here, here.

One last note on the conference … if I could improve anything, I would do one thing – make it longer. My only regret there just was not enough time to hear all of the presentations and speakers. Yet, the passionate focus on the common good left participants with renewed hope for a more civilized economy. We can only hope that this conference is the beginning of a fine new Princeton tradition.

Reported by:

Monika Mitchell - Executive Director Good Business International    editor@goodb.net

©2010 – All Rights Reserved

Atlas Shrinks

Once upon a time in a far off land of sea monsters and fairies, there was a man named Adam. Now Adam was not the First Man. He was, however, the first man in his society to write down his ideas of man controlling his own economic destiny without the heavy hand of kings. Adam was a moral man and wrote that one’s “enlightened self-interest” and innate moral code should guide him in all matters of money and commerce.

Yet man is a funny beast Adam knew, and in case of a lapse in reason, a guiding hand, “the Invisible Hand,” existed to override his less intelligent and unjust impulses. He put all of his fine words and moral sentiments down in a book that changed the western world. The Wealth of Nations was birthed in the same year of 1776 that a little rebel nation was born of its empirical British mother. America and Adam Smith’s free market capitalism grew up together.

Fairy tales inevitably have happy endings. Due to their simplistic nature, these tales usually close with, “And they lived happily ever after,” yet fail to finish the story. Adam Smith’s theory of “enlightened self-interest” presupposed an inner morality by its actors. Something many people simply don’t possess. His treatise was a tale of an idyllic world where the real story was yet to be written over the next two centuries.

Smith had a deep belief in a supreme intelligence that guided all things human and natural. When human reason failed, God or the Hand would intervene. Free markets according to laissez-faire capitalism’s father were dependant on a firm foundation of ethics. Smith wrote, “Markets could not flourish without a strong underlying moral culture, animated by empathy and fellow-feeling, by our ability to understand our common bond as human beings and to recognize the needs of others.”

Taking the “underlying” morality out of capitalism, Smith’s vision is unrecognizable. Without empathy, capitalism becomes the grotesque distortion revealed through the financial depravity of 21^st century mortgage markets.

Two centuries after Smith’s theory went through bumps and starts, rejections and debate, it was embraced with gusto in another fairytale called, Atlas Shrugged, written by former Hollywood screenwriter Ayn Rand. In Rand’s lengthy and outdated sci-fi novel, protagonist John Galt is brutally electrocuted by the rulers of the “collective” hoping he will renounce his staunch belief in individualism over altruism. No matter what painful tortures he endures, he never fails to claim the moral superiority of self-interest.

The 1957 novel stirred up controversy between FDR adherents who believed economies and governments should serve the common good and materialists who believed as Rand did, that “selfishness” was a rational moral code to live by.

To read the rest of this article and check out other information from Good Business International go here:  http://good-b.com/blog/

The concentration of these projects is to “update society to present day knowledge, taking the carrying capacity of the earth into account and realigning our methods based not on the reward of monetary gain..but the goal of social sustainability as a whole.”

For more info  on these projects or to get involved please go here:  http://zday2010.org/about-zday/what-is-zday

“Now as we get closer to 2012, and the alleged end of the world as we know it, we’ll be hearing from new voices on their perception of 2012 and the alleged shift. One such voice is William Gladstone, the author of The Twelve – who, in the spirit of full transparency – is also a colleague. In his novel he takes a gander at 2012 through the eyes of a character who discovers his own humanity. I spoke with him about his book and his thoughts on a more conscious approach to work and business in this weeks WorkLifeNation webisode.”

Watch full interview on Work Life Nation with Judy Martin and William Gladstone here: http://ow.ly/1oPgJh

Maverick thinkers have warned of the perils of unbridled greed for centuries, yet few were listening. Not until the world turned dark on September 15, 2008 with the perfect financial storm did the rest of society take notice.

That was a day of economic infamy-the day Wall Street investment banking died. Lehman Brothers, one of the most respected and powerful financial institutions in the U.S., came crashing down in an economic shock heard round the world. With its demise, the remaining investment banks went on life support resuscitated only by woeful government rescues.

With the crash of the credit and securities markets in 2008, the relationship between business and the public irrevocably changed. No longer is the old adage, “it’s not personal, it’s business” an acceptable view. The crisis resulting from the misbehavior of bankers at the expense of ordinary folks unequivocally reveals that everything we do in business is indeed personal to someone.

The official theme of this year’s World Economic Forum (WEF) in Davos, Switzerland is “Rethink, Redesign, and Rebuild.” The unofficial theme could be called, “Greed is Ugly.” We traveled a long hard road to get here from the Ivan Boesky days of last century. With it, we endured a lot of economic pain. Yet as human beings we rarely change when things are comfortable. It is the advent of crisis, either personal or public, that forces us to reexamine our values and reinvent ourselves.

The Economic Crisis of 2008 has brought forth the Economic Epiphany of 2010. The sentiments last week among the world’s business leaders echoed the urgent need for a moral economic framework. Out of the halls of darkness comes the light. Mercy, mercy, hallelujah.

For all those skeptics out there, the 2010 Davos Forum focus on values signifies an enormous change for the year ahead. People are mad as hell and they don’t want to take it anymore.

Yet these are not ordinary angry mortals, like Joe the Plumber or moose shooting hockey moms. The outraged include the banking and business elite themselves. Members of a once admired fraternity hold errant colleagues responsible for destroying the good business model. Barclays’ President Robert Diamond said, “Those who stayed strong are angry at those who had poor management.”

Trust is your bread and butter in business. Banking is a respectable and honored profession when used to serve the community. Not a roulette wheel spun with the chips of pension-less factory workers, ninety-year-old widows, and the working poor. Where did common good values go?

Deutsche Bank CEO Josef Ackerman complained to the Davos crowd, “We should stop the blame game,” and “start looking forward.” His remarks were directed against the inevitable new taxes and industry regulation favored by those present. Ackerman did not realize that regulating banks is looking forward-toward creating a system that works for all, not just a self-serving few.

The German banking chief acknowledged the importance of public opinion. “If you lose the support of society, you are not going to realize your corporate objectives in the long run.” (A belief that seems not to be shared by some colleagues.)

As WEF’s official theme reveals, the new paradigm is to “rethink and redesign” the global economy to include world interest with self-interest. It is no longer okay to create suffering for others in the savage quest for more. French President Nicolas Sarkozy stated that for “those who create jobs and wealth” to “earn a lot of money is not shocking. But those who contribute to destroying jobs and wealth and also earn a lot of money (it) is morally indefensible.”

Survival-of-the-fittest naysayers have become like dinosaurs on the verge of extinction. The only ones who don’t know that seem to be employed by bailed out banks.

Yet “blame”, as distasteful as that might be on most WEF participant lips, is not altogether fruitless. If the perpetrators of this colossal calamity continue to ignore their personal responsibility, then the world will continue to point fingers and tighten the strings. Call it blame if you must, but the post-crisis behavior of unrestrained banker bonuses looks greedy to those looking on. And greed no longer looks good.

Mexico’s ex-banking chief pointed out that banks have “misjudged the deep feelings of the public.” The Wall Street Journal reported that banks returned to a “culture of high-risk-taking and lavish pay as soon as they were out of intensive care” and brought the anger on themselves.

The President of the European Central Bank, Jean-Claude Trichet, claimed bankers changed the game by using taxpayer money “to guarantee loans at banks…a gigantic amount” and could no longer dictate the new rules.

Sarkozy summed up the general sentiment of the conference stating that “indecent behavior will no longer be tolerated.” He claimed that capitalism could only be saved “by restoring its moral dimension.”

That morality is being discussed at all in the setting of the formally “greed is good” culture of Davos is extraordinary. Continuing global economic hardship is yielding remarkable changes in profit perspectives. Glimmers of hope are emerging from the depths of despair.

New economic thought has shifted to a world that cares for the poor, voiceless, and forgotten. The official message of the conference proclaims, “Now is the moment to rethink values as we rebuild prosperity. The interrelated fights against unemployment, global poverty and climate change are not just noble struggles: they are essential for long-term recovery and avoidance of future crises.”

It was not good to be a banker at the World Economic Forum this year. The chairman of Morgan Stanley Europe compared their social status to that of “terrorists.” The comparison is humorous until one thinks about the havoc reeked by what economist Joseph Stiglitz calls “negative value”. Traders, underwriters, lenders, analysts, salesmen bought and sold securities, loan products, and swaps that were based on mortgages that could/would never be repaid.

American Heritage Dictionary defines terrorism as a “state of fear and submission.” Considering the submission of millions of families to banks who took their homes and millions more who lost their incomes through no fault of their own, the fear gripping those facing foreclosure and unemployment, and the millions of investors who face uncertain retirement, the subprime mortgage debacle could undoubtedly be viewed as economic terrorism.

As we begin the second month of the year 2010, it seems clear that greed, defined as the accumulation of wealth and profit at the expense of others, is no longer ”good” to most of those observing. That is a great relief.

The outrage expressed by pillars of the global economy in Davos, as well as the general public, reflects that the new “good” is as much about serving the common good as anything else.  I would call that an epiphany!

About the Author:

Monika Mitchell is the Executive Director and Editor-in-chief of Good Business International, Inc. (GoodB). She founded GoodB in response to the growing need to unify and support the global good business community.

GoodB is happy to report that Google continues to be one of the best models for Good Business around. No, we are not sipping Kool-Aid! As most of you know, Google, the internet search giant, has challenged one of its biggest clients, the money machine of the 21^st century Communist China, on the subject of free speech and ethics.

In all the hullabaloo this past year as the financial crisis enfolded and China stepped in to lend America piles of cash against a future of debt, little was mentioned about the communist government of China. People like brilliant policy shaper Tom Friedman waxed rhapsodic at the wonders of China with green-eyed envy. China had become the flat world’s wunderkind.

I marveled at the hypnotic affects of China’s “capitalism” in the past decade over respected and innovative thinkers. Friedman in “The World is Flat” listed China as a welcome addition to the global economy, a great commercial giant leveling the playing field.

In the U.S. love affair with China, as the Big O (and George Dubbya before him) shake their hands and money tree, otherwise smart people seemed to forget who our benefactor really is. It’s the Big Bad Wolf, folks and we are on our way to Grandma’s house.

For all the Red Scare of the 50’s through 80’s, the Soviet Union was the wolf. Russia continues to be vilified in the press and Public Square. The message is repeatedly clear. They are a communist dictatorship and do not value American-style freedom. They can’t be trusted.  Okay…so how did China slip through the cracks to become one of the most admired economies by the western world?

The affair with Big Red began with the smell of money. Back in the mid 1990s, top execs at Goldman Sachs were scouting the world for new opportunities. The economic neutron bomb, hedge fund Long Term Capital, had exploded and with it the Russian market.

All eyes turned to the East. CEO Hank Paulson turned for help to Goldman pal, Robert Rubin, who sat comfortably in the U.S. Treasury seat. President Clinton signed on and the stars aligned. China was open for business.

The belief in the early 21^st century among many of the “best” economic minds of the day (including Alan Greenspan) was that communism through capitalism would slowly transform into democracy.  Ahh, we were so young and foolish back then. We believed so many fanciful things, like capitalism actually has anything to do with democracy!

In the lust for profits in the developing nation of China, American businessmen and policy makers seemed to forget – they kill people there! They round up “dissidents” (anyone who does not agree with The Party), force them into kangaroo courts, torture them behind closed doors, break their spirits, and whisk them away forever. And we think Iran’s government is ”bad?” I guess they are not our trading partner, so we can afford to be preachy. As soon as China became a primary source of revenue we were up the creek without a paddle….

(Just a quick note, if the financial crisis had occurred in China, what do you think would have happened to the subprime mortgage industry titans who took the money and ran? It is doubtful a Chinese Wall Street could have run too far. Guess there are perks to living with the Green-Reds after all.)

I have not understood for the past decade how the U.S. government can crow loudly about the violations of individual freedom in parts of the Middle East and somehow remain non-committal on the ongoing human cruelty in China.

Last month, outspoken Chinese dissident and well-known member of the American civil rights group PEN, Liu Xiaobo, was convicted of “inciting subversion” for calling forth “greater human rights” in China and the end of one-party rule. He was sentenced to 11 years in a maximum security prison. His wife was held in house arrest by the Chinese police during the trial. So much for democracy, even worse, forget about basic human rights.

These are the people with whom we willingly do business. These are the folks whose fortunes are made by Walmart shoppers. These are the folks who now own the future of America. Isn’t business supposed to be based on trust?

Google’s recent challenge to the Chinese government’s hacking of private email accounts reveals the struggle between Chinese and American style commerce. When it comes to “free enterprise” in a non-free society, the limitations of capitalism are plain to see. In America, capitalism trumped democracy once again this year. In China, communism will always have the upper hand. 

China and Google have butted heads over user privacy and censorship before. In my book, Spiritual Capitalism, I detailed the complex ethical issues between Yahoo, Microsoft, Google, and Chinese authorities. In 2006, all three tech companies succumbed to pressure to remove any blog or website critical of the Chinese government. Yahoo shockingly turned a political activist’s email identity over to officials. He was never seen nor heard from again.

Google and Microsoft chose to allow censorship, yet refused to reveal private identities and moved all email accounts offshore. All three U.S. companies were summoned before a Congressional panel and summarily chastised for their actions. More than one congressman compared their actions to Nazi complicity.

Time Magazine ran a cover story in February 2006, “Can you trust Google with your secrets?” as the commitment of the tech giant to its mantra, Don’t Be Evil, was called into question. A Google spokesman stated the company was not “ashamed” of its action, but “not proud.”  Better to have limited Internet rather than none, he explained. The response never sat quite right with the rest of Free Speech America.

The current situation involves more than suppression of First Amendment values. The Chinese government stands accused of “hacking” into private email accounts of political dissidents. Hacking is the digital equivalent of breaking and entering. The issue at stake is the very essence of Google core values. It’s good to know that when Big Brother is watching you, your other Big Brother has got your back.

Google is considering pulling their search engine out of China – a country of 1.3 billion people, four times the population in the United States. An amazing action for any hugely profitable publicly traded company. The threat alone would make shareholders shudder and competitors gloat. It also can make their largest client, the People’s Republic of China, mad as a hatter.

Yet they are willing to put their money where their ethics are, potentially risking enormous profits, and raising the bar of corporate social responsibility to a new level most of us will have to leap to follow.

This week Google profits are down 13%. The toll of the recession and the threat of Chinese action are already weighing heavily on the tech giant. Yet Google stated in their 2004 IPO that they wanted to be a different kind of company, one that did not sacrifice their core values for short-term profits.

That is a tough call for any for-profit company. Business leaders meet ethical challenges daily. Little in the world of money is black and white. There is always a grey area where profits must be considered against human needs. This is what doing good business demands of us. Asking questions like, “How do you stay in business, answer to the bottom line, and still maintain the soul of who you are?”

These are the dilemmas faced by modern business -big, small, and everything in between. Wall Street has been called on the carpet in recent months. So far they have failed miserably to balance two essential values: profits and the human bottom line.

The key for managers and companies faced with difficult decisions is to have a clear foundation of principles from which to act. Like valuing quality of life and placing the welfare of people and planet before profits. That is a hard lesson for business. Yet it remains the fundamental test of good business for 21^st century enterprise.

However this issue rolls out, Google has made a profound statement with its current stance. Sergey, Brin, and all the Googlicans are saying simply, some things are more important than money- principles and people. In the process, they have renewed our faith in ethically responsible capitalism.

This year, we watched incredulously as one profitable firm after another justified reprehensible breeches of ethics as the cost of doing business.  Google’s actions set them apart from the pack by drawing a distinct line in the sand. They are in business to profit, but they refuse to sell their soul to do it. The search king reveals once again that trust in business is not a PR slogan, but an absolutely essential component in any contemporary business model. 

Just goes to show, there are some things in life you can still count on. It is good to know that Google is one of them.

Check out this video about Haiti Relief:  http://www.brasschecktv.com/page/788.html

Really what difference does it make why? The real questions are, is it the right thing and will it diminish public criticism? After all, according to one CEO, these firms are doing “God’s Work.”

Employees at the big bailout firms stand to make even bigger gains for last year’s debacle than previously imagined. With the help of friends in high places, the “too-big-to-fail” banks have roared back to the top of the charts and execs expect to be paid for it. Bonuses are to be announced in late January and early February and are guaranteed to stir up ire among the long-suffering public. Some of Goldman’s efforts to soothe public resentments have included earmarking $500m for “small business education in community colleges” and $61m more to build urban affordable housing. Global investment banks are considering making employee tithing an official part of their business model.

Wall Street firms, including the greed-is-good 1980s Solomon Brothers, have long given back to the community. Junk Bond King Michael Milken has been one of the financial industries largest philanthropists since his release from prison in 1993. George Soros who “broke the Bank of England” has been an unceasing benefactor for many of the world’s neediest for decades.

Financial firms have built schools, underwritten libraries, created poverty programs, fought deadly diseases, and supported environmental sustainability and social entrepreneurship – all in an effort to balance the scales of prosperity.

Three of the biggest contributors to the fallen firefighters’ widows and children funds after the September 11 attacks were Merrill Lynch, Lehman Brothers, and Goldman Sachs. All the big Street firms gave hundreds of millions of dollars to rebuild the city and honor its fallen heroes. No one in New York ever forgot that.

So what is different now? Isn’t this what capitalism is all about? Making a profit and circulating it back to the people? Of course. Yet any firm that used bailout funds to get back on its feet is no longer viewed as a pure capitalistic venture. With the official label of “too-big-to-fail,” the public sees these firms as government-backed. Therefore the old rules of capitalism no longer apply. Giving a portion of profits to personal charities does little for those losing their homes or the millions of middle-class jobless who took the fall for others.

Since the days of Andrew Carnegie, people have confused good business with philanthropy. The titans of yesteryear, like Carnegie and Rockefeller, established the big business standard of supporting the arts and other non-profits. These men forced people to work at subsistence level wages in subhuman conditions, and then built libraries and schools for the same folks. In the 19^th century selective philanthropy balanced the scales, in the 21^st century it does not.

Business has an obligation to give back to the community that supports it. Therefore, charitable giving is a basic reality for any profitable company. However, in the past year it has become unmistakably clear that business also has an obligation not to profit by exploiting that community.

A great example of this model is the former investment bank Bear Stearns. The Bear was one of the most reckless subprime mortgage securities houses leading to the financial crisis. In the 2000’s, Bear Stearns also set the trend for “giving” by requiring top executives to contribute 4% of their income to charity. Levered at over 40 to one, Bear’s flimsy underwriting standards and outsized trading risk brought the behemoth firm down. Following in its footsteps were Merrill Lynch and Lehman Brothers, both high flying mortgage market makers and generous patrons. The loss of Lehman and Bear to the greater New York not-for-profit community has been heart-breaking.

Yet charitable giving by these firms has not made up for the financial devastation left behind in their wake. Donating 4% to a favorite charity while crushing the working and middle classes has not satisfied stressed taxpayers. The same people who lost their incomes and perhaps their homes directly due to market mayhem are asked to accept charitable donations to quell their rage. Hardly a reasonable offering.

While firms cannot earmark 10% of profits for philanthropy without enraging shareholders, they can invoke the “charity clause.” Setting aside 5-10% of earnings for top producers to support a special community fund might establish better relations with the public after all – if that fund is funneled into a program that supports those affected directly.

For example, Goldman has set aside $16bn in a 2009 bonus pool. What if $1.6bn of this executive fund was used to finance small business loans at zero percent, refinance at-risk homeowners, pay a portion of monthly mortgage payments for unemployed homeowners, or seed money to social entrepreneurship start-ups who guarantee they will hire U.S. workers? These may be highly unusual solutions for profit-seeking Wall Street, but these extraordinary times require extraordinary measures.

This week, the top banking chiefs expressed mia culpa for the industry’s part in the economic crisis. Apologies are due, but actions are imperative. Earmarking a portion of bonus checks to plaster your name above the public library door isn’t going to relieve suffering or reduce anger. Real and effective solutions to current economic dilemmas are expected from both the government and financial industry.

To calm the ire of the seething public, firms do need to acknowledge their part in the nation’s misery, but not by following the path of Gilded Age robber barons. The way to rectify ongoing economic fallout is not through subjective “charitable giving,” but through genuine proactive restitution and reform.

About the Author:

Monika Mitchell is the Executive Director and Editor-in-chief of Good Business International, Inc. (GoodB). She founded GoodB in response to the growing need to unify and support the global good business community.