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Morton Bast

editorial coordinator, TED

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Are markets equipped to solve our social problems?

At TEDGlobal 2013, Harvard professors Michael Sandel and Michael Porter faced off on a very big question: Should the fate of our social values -- healthcare, family, education and the like -- be left to the power of markets? Is business' potential for success and scalability the answer to a set of big problems that sometimes seem to be getting nowhere, year after year?

Porter believes that, in the long run, social good is the ultimate business interest. Sandel sees the care of our society as too important to be driven by an amoral system. What do you think?

Watch Sandel's and Porter's TED Talks, and then see the debate, hosted by Chris Anderson on the TEDGlobal stage (http://wp.me/p10512-lty).

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    Oct 8 2013: The driving force of markets is to gain a surplus, to maximize profits for a minority of private individuals.

    This concept is self-contradictory to the concept of social values and the idea of the 'common good', as private profit maximization drains the financial budget society has to collect by its members to support their social services.

    On the other hand, government structures, as the representative form of society, has proven its inefficiency in maintaining social services and therefore drains the financial budget as well.

    Yet efficiency is no magic and does not need 'profit incentives' to be installed and to function.

    My approach was, to take compatible, sustainable and effective concepts and tools from 'the market' to substitute and re-design the ineffective concepts and tools within our government structures. It would combine the best of both worlds and this in the idea of the common good for the people who form society.

    Social evolution is a dynamic process and if its done consciously, we would learn from our mistakes to improve on them. And thats no magic either. Its applying experiences.
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      Oct 8 2013: Yeah but, I think that you are a touch too hard on business. Business depends on customers. Customers in a well ordered society, where all is functional and individuals have every opportunity to exchange goods and services. Profit is what makes goods and services available for exchange.

      What is "common good" and who decides? And why should government maintain social services?
      I look at the Federal; Government in the USA. In the last 50 years, the US has established cabinet level Departments for health, education, housing and welfare and we have more sick, homeless, hungry and uneducated people then ever. Is there a business model that could use these circumstances?
      No that I can think of.
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        Oct 8 2013: Business depends on customers, but it doesn't care for them beyond business.

        Thats intrinsic, and yet incompatible to social interactions.

        If you love your mom and she becomes sick, you care for her not because she pays you. Business is different. A company cares for its customers only to keep them as their customers, so that they'll buy more of their products for profit maximization.

        If this wasn't the case, no insurance company would have ever rejected a customers claim. In fact, insurance companies have an incentive to reject as many claims as possible, to maintain their own interest and not that of their clients. Thats self-explanatory.

        But there is more to human societies than business interests ever since its early days.

        There is no logical reason for any tribe to care for their sick and elderly people. On the contrary, as it only drains resources and workforce from the young and healthy ones. Being young and temporally sick may be tolerable on the long run, but the elderly and chronic sick young ones?

        Some tribes have been a bit more rigorous in the past in saving their resources, yet it hasn't become very popular in those days and died off finally. The ongoing 'marketisation' of our societies, driven by capitalism, is actually the revival of those harsh manners and just because we have no 'body-counter' attached to it, its destructive effect on society remains mostly unseen by those who are spinning the hamster wheel. Those who happen to fell off, got a taste of it already and this in increasing numbers.

        Why does the US government hands out food-stamps? Because no private company could make any profit in doing the same. And thats why it is so important, that this funny 'invisible hand' of the market is not interfering with humanitarian concerns and matters.

        The term 'common good' is self-explanatory in who gets to decide this. In a democracy, it is the majority of the people. In 'direct democracy' even more so.
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        Oct 8 2013: The reason why the US has 'more sick, homeless, hungry and uneducated people then ever' is easy to answer. This happened, because capitalism was allowed to corrupt the political system in that country for so many years. You can only harvest what you sow. No magic here either.

        I only need a single look on the numbers of millionaires in the house of representatives, to know, that the majority of the people in the USA is under-represented. This is one of the reasons why I am very much into 'direct democracy', as it stops just that from happening.

        If the true majority of a nation then decides, that food-stamps are no part of their 'common good', then so it shall be! If they can cope morally with a starving minority in their streets, thats up to them. I would not vote for that and would do my very best to help my fellow minority citizens to survive.
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          Oct 8 2013: I am not sure how you have come to these conclusions... If you are in business, you want customers who are willing and able to buy your product.. Poor, sick,homeless, and uneducated people are not likely to come into your fine dining establishment, have a gourmet dinner and a bottle of good wine.
          You paint all "capitalists" with this brush.
          I will maintain that most capitalists are honorable business men who are concerned with the businesses, and are sensitive to their customers needs and wants and behave in a competent manner.
          Now are there corrupt conmen who have bribed and cajoled politicians to create situations where the PSHU members of society are exploited. Way too many and that is why I have strongly supported term limits for congress men and holding lobbyists subject to bribery laws.
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        Oct 8 2013: Mike, I paint capitalists with this brush which are exactly the opposite of those honorable business men you rightly mentioned, yet unfortunately these species isn't controlling the overall system.

        The banking sector. Once there were many honorable bankers often with high moral codices, today a new breed is collapsing whole economies out of sheer greed.

        The automotive industry. Once a strong pillar within the US economy, today they have branch offices which only purpose of existence is tax-evasion. And the y are not the only ones.

        Walmart - Putting high pressure on local US producers to compete prise wise with Chinese products. Those who don't manage that, go out of business and China is in. Don't get me wrong. I am not against China or the products they make, but if it destroys local economies, it isn't healthy for the people who happen to live in those economies. Any low-income country destroys middle or high-income countries in open competition. Global markets are open competition, thus dangerous for higher income societies. Walmart doesn't care if their products destroys the US economy on the long run. They just leave wherever new and fresh markets occur.

        What about Apple? Top US company in sales and revenue. But just the design is made in the USA, not the product! Yet if those companies which are on the 'sunny side' of business do not support their local economies, what do those who just barely make it? They have even more reason for tax-evasion and cheap labour just in order to survive or to gain a little profit.

        If this is honorable business to you on the long run, then yes, I paint all 'capitalists' with this brush.

        As long the global market has enough customers in total who are able to buy my products, I don't need to care for the poor, sick, homeless and uneducated people in my close neighborhood. Just open your eyes and observe whats going on worldwide and you may see what I mean.

        Do you think occupy wall street was just a flash-mob? I don't.
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          Oct 8 2013: Can you give me your skype ID? and I want to talk to you, my email is marco.van@hotmail.com
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          Oct 9 2013: Lejan,
          You seem to see the glass half full. Now, there are a number of individuals that should have been buried under the jail and there are probably more then a few politicians who received "campaign contributions" .
          First of all, it is a global market. It is that. Global Companies are not small neighborhood business that would be aware of the local .PSHU people. Yet, most have foundations and charitable affiliates that do try to attend to PSHU people. The Gates foundation has addressed disease, donated computers to schools etc. etc. Others to many to list are also so involved.
          . .
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        Oct 9 2013: Mike,

        as an engineer I tend to see the volume of those glasses twice as big as it needs to be to contain its liquid content.

        Anyway, have you ever heard of tax deduction? Many, if not all of those corporate donations are tax deductive, depending on the country, which means, that not the company makes the donation, the tax-payers do. No value is added to society. It would be the same if I would command your brother to give me the money that I spend on my present for you. For me this only works if you have a brother, for company this works fine if the laws for tax deduction are in their favor, and you bed they are!

        I do not separate in between corporate or political corruption. Both are equally illegal.

        The 'global market' that we know today is pretty young. It was different before and it will be different in the future. There is no natural rule for global markets to exist and any nation has the right to determine the level of their involvement. Import duties and export duties are valid tools for any society to protect the interest of the majority of their people to avoid drainage of value, jobs and the destruction of healthy local market structures. The participation will be decided by any nation at any given time.

        The size of a company does not reduce its responsibility for the community it is embedded in. Big companies with big profits pay more taxes than small companies with small profits. Simple rules, tax evasion illegal, long prison sentences for violation.

        Companies who produce in low-income countries pay proportional import taxes on their own product on their home markets, so that no benefit can be gained in job-export. Companies who leave the county out of profit reasons and to avoid local tax-laws are forbidden to enter their former markets. These companies will be tracked by certain criteria who won't allow for any shape-shifting tricks to re-enter their former home market by any back door.

        Misuse of freedom is answered by regulations.

        Worth trying
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          Oct 9 2013: OK,
          I see where you are going with this line of thought, but I question your basic premise that economic activity adds value to the society. I am not sure. I am thinking it is the other way around. Now, you are correct about the illegal activities and my biggest complaint about the lack of prosecution. I also am aware that you are not fully familiar with the organizational aspects of the "big box" stores. So,
          First: Although some stores have large portion of ownership with a few individuals, i.e. the Walton family or Bill Gates... most multinationals are owned investors such as Union pensions, banks, etc. Investors are only looking at the bottom line and hold the operating management to see to the return on investment. Most investors rightly assume that these managers are lawful and often have such clauses in the employment contract.
          These managers are overlooking sometime thousands of individual outlets and a number of suppliers who are contracted to make product at a price that is market worthy and provides the best profit spread. They will contract for that product from China or Pittsburgh. They are responsible to the investors for the best possible profit.
          The managers then turn around and checks the profits made by each store. If the stores are failing they close the store. Managers have to make goals or their jobs are forfeit.
          There is no thought of poor neighborhoods etc.
          Morally corrupt? Not socially responsible? You make that argument. .My point is that it's the nature of the beast. Big stores are there to provide goods and services at a market price and are to make a profit for their investors.
          I say that if there are these problems in society... it is the society's problem. To stand on the soap box and blame Bill Gates for all the problems in ... Chicago Is even more silly than it sounds.
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        Oct 9 2013: Hopefully your acceptance and understanding of the nature of the beast, as you called it, will always serve you well. May your trust be appreciated and handled with care.

        I for my part try to improve on failures, as nothing is perfect and never will. Learning from mistakes is essential to me and determines what to try next. As more complex a system grows, as more difficult it becomes to understand its interactions. Nevertheless, accepting system failures and not changing them will just repeat the same failure over and over again, which is senseless to me.

        I would accept to fall once in a hole in the ground because I didn't know it was there. But this doesn't happen twice. I wouldn't leave the hole open while knowing, other people are likely to fall in as well. We do this with the sidewalks in our cities, why wouldn't we do this within our system?

        Thats my way of thinking as you have yours.
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          Oct 9 2013: Lejan,
          In my life, I have literately traveled the world. I have seen all manners of society. Some not so bad and some total anarchy. I have no idea how one could effect society.
          One extreme of complete dictatorship or complete democracy? Neither works. A constitutional/democracy...
          I live in one of those and there are always some who are constantly trying to change the constitution mostly for their own benefit.
          I would like to see a robust society where enterprise can provide goods and services at a reasonable price and everyone in the society can fully appreciate all the benefits.
          But only the Society can provide such as:
          Quality education,.
          Encourage enterprise
          Relief for the sick and elderly
          Etc.
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        Oct 9 2013: I do not agree on resignation. Better answers lay in what you described.

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