Though it would seem that only global cooperation can solve global environmental problems, globalization in its current form works against sustainability. WTO-style capital liberalization causes investment to shift quickly to the site of highest returns, irrespective of national borders. To a far greater extent than in the past, fear of disinvestment causes CEOs to strive for maximum short-term profits.
It doesn’t take a genius to understand that corporate short-termism is incompatible with long-term sustainability.
When all operational inefficiencies have been squeezed out of a company, all new markets penetrated, and all M&A synergies synergized (or when the CEO thinks they have been), only three avenues to greater profitability remain: Screw the employees, screw the customers, or screw the environment.
Even as sustainability scholars begin to see hypercompetition-driven profit maximizing as maladaptive, psychologists have recently identified the above-described CEO behavior with classical psychopathy. While 1% of the general population are psychopaths, psychologist Nathan Brooks* has put that figure at 21% for senior corporate executives. (Another study yields a much lower but still alarming number for executives.)
Brooks and others point out that psycho CEOs’ business “successes” are short-lived, lasting only until employees realize what an SOB they’re working for and depart for more life-affirming jobs. This suggests a vicious cycle of negative feedback, reinforcing short-termism.
At a 2018 workshop in Japan, I wondered why we even bother to talk about sustainability under conditions like this. I was about to challenge the speaker, Professor ZhongXiang Zhang of Tianjin University, with this question, when he uttered the phrase “Post-WTO regime.”
Hmm. Serious thinkers are thinking that WTO isn’t forever. Non-serious thinkers are as well, as evidenced by Donald Trump threatening to withdraw from NAFTA.
So we ditch WTO. Then what? Trump doesn’t know. Deep thinkers in Switzerland are advocating transitioning the United Nations from an advisory to an administrative role. That is, to a world government.
The World Economic Forum needs to understand the profound depth of the "local control" sentiment in the USA, and the American paranoia about "elites" imposing "globalist" rules. America, it now seems, signs international agreements then repudiates them (Paris Accords, TPP, and the Iran nuclear deal). China, too, signs and then ignores or creatively interprets them. What can remedy this?
If there is to be a post-WTO, sustainability-enhancing regime, designing it will take not just a genius, but a whole scrum of geniuses. It will be globally coupled, but not rigidly immobile. Its messages, tailored to individual cultures, will be strong but not coercive. Its financing will bring back “patient capital” while discouraging “dumb money”**. It will reward cooperation, innovation, and data sharing. It will fail to reward venality and waste.
To close with an apt bit of doggerel,
“The upshot is, we cannot tailor
Policy by a single scalar,
Unless we know the priceless price
Of Honor, Justice, Pride and Vice.
This means a crisis is arising
For simple-minded maximizing.”
- Kenneth Boulding
*N. Brooks, Understanding the manifestation of psychopathic personality characteristics across populations. PhD thesis, Bond University, Faculty of Society and Design. Serial CEO Margaret Heffernan makes a reasonable rebuttal of the “the executive suite disproportionately attracts psychopaths” theory, at http://www.cbsnews.com/news/are-ceos-psychopaths/
** “Dumb money” = desperate investments in questionable vehicles, in times of low or zero interest rates.