Business Ethics enters Politics

Finally. The American establishment is talking about the issues the Occupy Wall Street movement attempted to raise since October last year: the ethics of Wall Street investors, private equity firms, the inequality of income distribution, the unfair taxation system. All these issues are now at the core of the Republican primary. Four of the five remaining contestant use those things in an attempt to stop current front runner Mitt Romney. And apparently he looks guilty on all accounts.

Mind you – let’s not get into the ethics of why these issues are brought up. The Republican base, many of them evangelical Christians, just hates Mormons such as Romney. So any argument will do to stop an heretic on his way to the White House. And while Newt Gingrich, Rick Perry and Rick Santorum are pretty much guilty of most of the things they accuse their opponent of - Mitt Romney as the Ex-CEO of Bain Capital, a private equity firm and the richest of the contestants, is just such a clear cut, stereotypical representative of the ‘One Percent’.

There are a number of reasons why this is worth pondering. The first and obvious one is that none of the Republican candidates was a strong supporter of these classic ‘Occupy’ issues. They all more or less dismissed the movement. In the primary election, in which the Republican base selects the next presidential candidate though it appears that obviously the issues have traction even with conservative voters. Whether this is an indirect result of the ‘Occupy’ movement is hard to tell. But it certainly shows that the role of Wall Street, income inequality and a tax code that favors wealthy people resonates with a far wider constituency of Americans. These issues currently, in the Republican primary, appear to be somewhat engineered and disingenuous; but they will become a core issue of the election later this year, when Romney as the most likely winner of the Republican ticket will run against Obama in the fall.

This turn in the debate is also remarkable as for the first time in a presidential race, a serious candidate with a background in business is assessed on his credentials in business ethics. Not that he is the first business person to do so: Romney stands in a long line of the likes of Mike Bloomberg in New York, Silvio Berlusconi in Italy or Sebastián Piñera in Chile - all examples of this kind of career. But it is interesting, that for the first time the ethics of a businessman-turned-politician's wealth creation is the subject of a debate on whether s/he is fit for public office. Obviously, ethical issues in business resonate with the general public more than ever before. This includes the level at which they have paid taxes, which in Romney's case with just 15% over the last years will make it very hard for him to endear him to the '99 per cent'...

This said then, the crucial ‘ethical’ issue seems to be the question whether Romney’s activities at a private equity firm resulted in job losses for the average American. This is however just a small fraction of what really is the ethical issue with private equity firms. In some ways, the rise of the private equity industry in the US (and beyond) was a result of the Sarbanes-Oxley Act, which attempted at addressing limited transparency and accountability which led to the Enron- and other scandals 11 years ago. With Romney in the race, for the first time there seems to be a real public awareness and scrutiny of what has happened in corporate America in the last decade.

While this makes one feel somewhat hopeful with regard to the potential of politics and the public sphere to not just accept the current state of ‘financial crisis’ and all that has gone along with it, it is also important to not forget about the context in which this happens. In some ways, if we judge Romney by his track record as Governor of Massachusetts – from the perspective of a liberal democracy he looks actually not too bad: as much as he denies it now, he pioneered what Obama now wants to implement as a general approach to health care in the United States. At the same time, characters like Rick Santorum are nothing short of suggesting some sort of ‘Judeo-Christian Sharia’ law, dismissing the rights of gays or women’s rights of abortion, just to name a few. The first country in the world that constitutionally separated state and religion now decides on candidates according to their faith. But that’s a whole new topic.

Picture by LWVC, reproduced under the Creative Commons License