Eminent Stiglitz

Eminent Stiglitz

31st March 2007

If you think wearing a khadi kurta is just old hat, walk into the annual meeting of the American Society for International Law. Among all the dull grey suits and power suits, were an odd threesome sporting greens and oranges, pinks and purples. Of the three, only one asked, after the talk, “why did it get over so fast?” She was merely three years old and has sat through much longer conferences. Perhaps she was shocked as we were that no time was allotted for the audience to ask questions. So, pardon me while I vent …
Stiglitz, delivering the Grotius Lecture (named for Hugo Grotius who in 1625 coined the phrase dominium eminens) did not mince words about the corporations’ tendency to violate laws and certainly to violate common decency not enforced by law. While his earlier work had led me to believe he was hell bent on driving the globalisation machine forward, just in a “reformed” way, yesterday’s lecture left me feeling that his criteria for regulations left adequate space for people to question and to reject companies that would do harm, and paved the way for companies that could honestly supply goods and services through their operations. All while treating multinational corporations as if they could, in theory, be useful contributors to society. Kyte, of the International Finance Corporation, who responded, seemed hunky dory with this, what she objected to was people’s right to go to court to convict and punish a company that actually did violate laws. “It is not legal action that is going to make the companies do better, but concern for their reputation, profitability, and their shareholder value.” Dismissing (without mentioning by name) examples like Bhopal which Stiglitz had cited several times, she said, “It is not particularly instructive to keep citing cases from the 80s and 90s. The companies have learned their lesson.”

WHAT>>> Learned what lesson??? The people of Bhopal, minus all the thousands who died in the Union Carbide toxic spill, have lived to see the company, under new ownership coming back with the helping hand of Tata, to do business in West Bengal, what seems to be the new capitalist dreamland of the 21st century. Neither Union Carbide nor Dow has cleaned up the toxins from the land and water, neither has paid damages that would cover even a fraction of the health care expenses for the survivors and their children. When Union Carbide reached a settlement with the Government of India in 1989 for a paltry $470 mil, the company gleefully announced to its shareholders that the whole mess had cost them only $0.43/ share. Share value then rose by $1.57 / share. [Joel Kovel, Enemy of Nature, Zed 2002]

But then Kyte, a World Bank Blogger, is used to asking tough questions of corporations the World Bank is courting. “How much is too much?” is her take on what environmental standards to require. Her major concern is not actually for the environment of for society (though her title isDirector of the Environment and Social Development Department ) but rather worry that companies may “seek another financial institution to back them up or another country to invest in?”

Even though shareholders have proposed a resolution that Dow take some initiative “to address the specific health, environmental and social concerns of the survivors,” the Board not only unanimously rejected it, even when archiving the resolution in the company files, they cannot come out an acknowledge that they or the company they bought, Union Carbide, has any liabilities in Bhopal. The note opens, “Dow Chemical has acquired Union Carbide, its assets and it (sic) liabilities.” (sic)?????

Here I had thought that in a public talk by Stiglitz and a respondent, I would be taking issue with Stiglitz and taking notes from the respondent. However it turned out the opposite. Another jawdropping statement Kyte made: “We don’t know how the third world businesses are doing, because we aren’t blessed with the kind of investment analysis that we have for North America, Europe and Australasia. This information assymetry will have to be corrected for your and my pension funds to work with these businesses.”

Ah. Good thing we know what our goals are here.

Three of our comrades joined us in the corridor as we shared aloud our reactions to the speakers. Kyte had called Stiglitz and armchair philosopher and Stiglitz returned the favour by calling Kyte Pollyannaish (about her rosy forecast that corporations would behave). Meanwhile the rest of the delegates moved towards the reception. I asked my friend Jerrah, bona fide Law Student to come over to the Cambridge University bookstall and confirm that my confusion was warranted …. another story. [And we were nearly denied entry to the reception following, a good bit of fun we’d perhaps not have had had we been darkly suited and booted :-) ]