Why Common Good matters

By Jean-Loup Dherse, Chairman , the Finance Monitoring Center


 

The Common Good concept has to be defined precisely. Common Good does not equate with public interest, itself a hazy concept sometimes brandished by government departments or public authorities in support of their own institutional ambitions. It does not coincide either with the market, equally brandished by private sector institutions for similar purposes. Nor does it with the economists' optimum, where John's loss (and suffering ?) is canceled out by Peter's gain : individuals do not count, only the aggregate is meaningful. Somehow, both the good of the individual and the good of the community are important.

Concentrating exclusively on the good of the community without any respect for the good of the individual is a recipee for totalitarian dictatorship, such as those which still exist today. Their archetype which was the Soviet system of government. China ­ are the Chinese more clever than the Russians ? ­ seems to succeed in developing its economy while keeping the lid very tight on the dissidents, with an enormous contribution from all over the world, including Taipeh, the US, and Europe.

On the other side, total lack of interest for the good of the community, leaving the good of the individual be the dominant factor leads to disasters of one sort or another : a worldwide debt crisis, a revolution here or there, all sorts of unpredicted events of major importance take place before the eyes of amazed forecasters. History does not comply with theories, if only because men and women loathe to behave as programmed robots. Equations ­ however complex - cannot describe individual human behaviour, even within some margin of error. In my opinion, they never will. One can make a similar case concerning human group behaviour. Economics is a wonderful body of knowledge, not an exact science. Mastering it requires being able to judge it from outside, to get out of the wood to have a look at the whole of it. The master knows when his tool becomes inappropriate.

Somehow one has to define in one single concept the good of the community together with the good of each of its members : this is the best definition of the Common Good. This looks like a cheap compromise. It is in fact a profound concept, espécially if we believe that each human individual is both unique and also a member of the human community.

It can be a very useful concept. Our day to day progress or decsion-making, whoever we are, can be compared to our moving ahead on a narrow road, between two deep ditches on a foggy day : one where the good of the community is dominant : this is the totalitarian ditch ; the other where the good of the individual is considered exclusively, and this is the maffia ditch. The Common Good is the compass that we need in order to progress (from one decision to the next) without falling into either ditch.

Applying the Common Good concept in day to day decision making is another matter. Many people have tried to find a formula without much success. Fortunately, and this may be new, there is no need to articulate a more precise definition of the Common Good before finding adequate criteria for day to day decision-making. A rather simple approach is proposed., acceptable by everyone including the less literate, but important for top decision makers as well.

 

Complex situations (all situations are complex, with very few exceptions) can and should be considered from four different sides. This is especially valuable before making decisions. The four sides are :

1. The measurable or quantitative side of reality : a " bottom line " approach, always needed and justified, but never sufficient. The question is : which decision will give me (or the institution I serve) maximum benefit in quantitative terms ? Everyone understands this.

2. The structural side of reality : we all work within organizations, or structures, that are far from being perfect, however legal they may be. Structures, however improved they may be, can be impediments for the good of the community and for the good of individuals, i.e. for the Common Good. We have little choice but accepting to work in them, even though they may be very wasteful or unjust. While working in them, we can bring a spirit of reform, and assist those who try to do the same. If rebel against the structure we work in, we may prevent others from working, start a crisis, which has a cost to everyone. That can be the thing to do (as dissidents courageously do) but this is acceptable only when structures cannot be reformed, which is the case in totalitarian regimes.

3. These two levels are far from accounting for all sides of reality. The third one deals with quality of personal behaviour. Are we, in the decision we contemplate taking, fostering or destroying mutual trust between people ? Mutual trust is needed everywhere for risk taking, and risk taking is a requirement for progress. There are only very poor substitutes to mutual trust : if my collegues or partners do not trust me, I have to force or buy their cooperation. The totalitarians and the maffiosi do just that. The result is not the same. Mutual trust is highly valued in all cultures, ancient or recent. It has, it is a universal value.

4. But there ia a fourth side that the decision maker can and should consider explicitly before making up his or her mind : three types of motivations can be involved in any decision : personal rewards (in terms of money, authority, reputation, pleasure), institutional objectives (the institution is the group we work for : governement, corporation, ngo, etc), and lastly the good or the bad that any people may experience as a consequence of the decision. The three motivations : personal, institutional and, so to say, altrusitic) are all perfectly legitimate.

 

Here a most important finding can be made : one of the three motivations is usually, consciously or unconsciously, dominant and, when we have a problem to solve or a task to perform, our decision may be very different depending on which one our strongest motivation is. The first three sides of reality are all important, but our ultimate goal, even if it remains unconscious, determines the choice we will make.

An exemple that the financial world will readily understand is the case of a major World Bank loan ( $ 500 m),to Brasil, in order to produce alcohol from cane and cane sugar, and use it in substitution for imported petrol. A first loan was made in 1982, and it helped the balance of payments, but it also caused 30 000 families to be uprooted and (in spite of a fair compensation in terms of money) to become errants in the country : no one except the very rich people can indeed buy agricultural land in Brasil. A further special loan had to be made by the Bank in order to help the governement in developing a very distant corner of the country, at the foothills of the Andes near Peru to allow these people to settle. The question was : should a second loan be made ?

Assuming for the sake of convenience that the decision is made by an individual in the Bank, three possible decisions can be made :

¸ If this individual is motivated mainly by his own carreer in the institution, he will propose that the loan be made, and he will do his best to minimize the social problem. Bringing a major new lending operation brings good marks, even the World Bank.

¸ If the individual is motivated mainly by the Bank's interests, he will propose that the loan be made with conditions designed in order to shift off to the Brasilian governement the risk of any adverse media reactions concerning the social issue. A good bureaucrat knows how to draft such conditions.

¸ If the individual is motivated mainly by the Brasilian men and women interests, he will do its utmost to find a better solution to solve the problem, helping all Brasilians but not at the expense of a group of people. He will dig deeper into the issue for Brasil, which is not to produce " green oil ", but to develop local oil resources, at a competitive cost.

An excellent solution was found : removing the monopoly that prevented Petrobras, the national oil company, allowed foreign companies totake part in exploration. After making a sensitive political decision and a change in legislation, Petrobras admitted foreign partners who took 100 % of the risks against 50 % of the productions rights, and were allowed to run the operations both at the exploration and production stages. Exploration started offshore and a lot of oil and gas was discovered at a much better cost than any " green oil " and without having to send tens of thousnds of additional families on the roads.

The three solutions are professionally correct, but one only is outstanding. It took a lot of courage and determination to refuse making the loan, and to convince the Brasilian officials to move into another direction.

 

What the loan officer did in the third case was to pay attention to those who are going to suffer damage from his decision, although they have no specific weigh in the issue. The question he asked himself before deciding is : " Do I consider the other people, especially those who will suffer from my decision and which cannot defend themselves and hurt me, as instruments for my own purposes, or are they persons (one could say " mysteries ") that I do not necessarily understand, but which I respect ? "More briefly : " Is the other an instrument or a mystery ? " There is no third option, when we dig into the real issue. The problem is that we very seldom look at the consequences of what we do beyond the narrow circle of those who can help us or fire back on us.

Considering other people not as " instruments " but as " mysteries which I respect " means " caring for people " because they are people. It is a attitude of unselfishness, which does not lead necessarily to " softer decisions ", but to " other decisions ." This caring for people, or concern for people, is the practical, easy to understand, way to aim at the Common Good, however difficult this concept may be..

 

The Common Good is not a luxury. One can show easily that those who just do not care about others when they make a decision will cause three types of damage to the world or to society.

¸ They will get increasingly blind : not caring about others becomes a way of life, where one forgets that purposes in life could be quite differently.

¸ When a group of people behave without " caring for people ", and when someone who does care for people steps in, this poor newcomer may well find himself in a dilemma : he will have either to forego his values in order to be admitted ans survive, or to be excluded, perhaps violently. The newcomer suffers a grave injustice. Selfishness on the part of some compels others to heroism. Such vicious processes are present everywhere : corruption in some business sectors, gangs of youth in some suburbs, etc Lack of concern for people (and therefore for the Common Good) literaly wounds other people, and society, which in turn becomes dangerous for people.

¸ Lastly, and this may be news to many, lack of care for the Common Good causes major macroeconomic losses or comparative losses. Between two scenarios, one where the decision-maker cares and the other does not care for the Common Good, one can always pinpoint a macroeconomic difference. A major example ­ at the level of the planet - was the decision to produce chemical weapons by the Soviets after the war. Their cost of production, and of destruction (still to be undertaken) may be of the order of $ 200 bn. There are no positive economic fall-outs, and huge secret cities were built, without any other activity, nor respect for the environment. All this is a straight loss. Because money is fungible, one can say this production was financed by the West, and future destruction certainly will. The costs are immense, to the former societ community, to their heirs and to the whole planet. One can find smaller scale examples : the member in the decision meaking team that becomes overobsessed by his ego (greed, or desire to hide his weaknesses) is a cause for delaying decisions and corrupt its content, causing a cost to the institution that will not be fully made up by someone else.

This loss is macroeconomic : the selfish decision maker may well profit from his attitude, even in the long term. Crime can pay, but its cost to the planet is huge, much bigger than its benefit, far beyond the amount wrongly made. This is a major source of poverty in the world. Indeed financial burdens tends to eventually spread throughout the world, and the poor is always at the end of the line. Lack of care for the Common Good leads to fruther poverty and therefore to spreading hunger. There are 800 millions of hungry people in the world.

 

Fortunately these vicious circles can be reversed. There is no medium, or indifferent, position. Either I care for people in the decision I make, or I do not. If I do, positive consequences will emerge :

¸ I will develop a keener judgment on the consequences of what I do and do not do.

¸ If I team up with others like me, it will become more difficult for a newcomer to play a selfish game : he will be more visible and may risk being rejected.

¸ Some macroeconomic (comparative) loss wil not take place and the world (though not necessarily me) will be richer.

 

We can therefore put our fingers on why the Common Good very concretely matters. All decisions are important, even in the world of finance which is so disincarnated in many respects that what is bought or sold seems to be wholly abstract, far from people.

But this is not the case : everything we do has consequences on people, however far or remote they may be. These people have faces, even though we may never see them. Without developing any vague sense of guilt, let us make sure that if we see one day their faces, we can tell ourselves that we have have worked for them, and not against them.