Interview with Robert Braun (Part 2 of 2)

August 13, 2014 12:00 am Published by Leave your thoughts

Tomasz Pierscionek: To what extent do you think the government should be involved in directly managing the economy?

Robert Braun: Very much so; especially in this part of the world. When you say ‘managing the economy’ this can mean many things from ownership to regulation. Although there may be very few parts of the economy that should be state owned, I think the biggest role of the state should be regulation: hard, strong and ruthless regulation. So, if I were in charge, my answer would be very simple. Ruthless regulation to defend the powerless and to fight against oppression in the workplace. I am a Professor of Corporate and Social Responsibility and Marketing. To me, corporate and social responsibility is about corporate democracy – it is about taming the beast. The biggest question of the 21st century is whether capitalism can be turned around to offer a stakeholder democracy. Capitalism within the corporation is still based on a 16th and 17th century model. You have a feudal and absolute structure within a company. The owner is akin to the king and has absolute power. Then you have the aristocracy – the management – who are trusted by the absolute monarch to run and manage the company. Finally you have the voiceless people without rights – they have no say and, in most cases, no information about what is going on.

In effect, you have a 21st century liberal democracy outside the company and a 16th century feudal absolute monarch within the corporation. This is the society which you and I are living in and I feel that no macro change can happen without micro changes. You can’t change a society unless you change parts of the society. Take corporations, for instance: the role of the state should be to empower stakeholders and help their revolution, bloodless hopefully, come about. And this is what regulation can bring.

Let’s raise the minimum wage. It is wrong that this should, as some claim, result in job losses. If those jobs are to be lost, then those jobs were bad jobs to start with because they were extremely low paid jobs. We also need to consider if there is part of society which cannot sustain itself and, if so, then it is the role of the state to care [for them]. In such cases is our fault: we were not good enough at sending them to school, we were not good enough at bringing infrastructure into their communities, we were not good enough at offering them equality in all walks of life to enable them to begin life on an even playing field. In such cases, it is our duty to help them reach the starting line. And if they are too old, already grown up, then maybe a minimum living wage is a solution.

TP: Do you feel that in addition to regulation, the state should also nationalise the largest enterprises?

RB: No. I think that nationalisation, in most cases, brings about corruption and oligarchic practices. I see few example where state run enterprises are well managed.

TP: What about public ownership?

RB: I think that cooperatives are a way to move forward. I don’t think that the solution for the 21st century is either private or state ownership. I think we need to venture into uncharted territory and experiment with different forms of ownership – public, local, cooperative and others that we haven’t even invented yet. Perhaps, future shareholder schemes, for the workers not just for the management [are a possibility]. We need to become more open, we need to experiment and open up.

It is clear that part of the [economic] crisis has been caused by the closed and limited options that capitalism has offered us. It is clear to me that if change is to happen, it will not be driven by technology as it was in the 17th century. We need to change out life structure. Few people realise that the biggest invention of the 20th century is not the mobile phone or computer technology. It is an additional 25 years of life.

And if people, at least in the Western world, are living 25 years longer, then our whole way of life needs to change. If a 60 year old will live for 25 or more years, why can’t he go to university? This is almost unheard of today but he or she is not going to pass away in 5-10 years, as the pension system assumed. The pension system is unsustainable l for two reasons. Firstly, it is not drawing enough funds into it and secondly it is having to pay out for far longer than it was designed to do. And this system is no longer functioning. After 30 years of work, you cannot accrue funds to pay for another 20-30 years of not working.

It will not be simple but we will need to restructure out lives.

The same with ownership; we will need to find new ways of involving people. Ownership is involvement and responsibility. It is not the people who are made for the laws but the laws that are made for the people. Capitalism should promote involvement for more people to become involved, responsible and empowered. And then we need to restructure our forms of involvement and responsibility. Ownership is one form but there are many others.

Just as we see our children growing and experimenting through playing and doing different things, we too need to learn and discover. As a parent, I try to teach myself not to say ‘no’ because if your child grows up with barriers only, then he or she will be as in a cage,. You need to help them learn and not say no when they are experimenting. Instead say, ‘that’s very interesting but maybe you should try it a different way. Let’s try it together’. When a child falls, there is a tendency for parents to run and shout, ‘oh god what happened’ and then the child starts to cry. But she is not crying because it hurts, she is crying because she sees you being frightened and shocked, It wasn’t easy but every time my daughters fell, I would say ‘wow, how good you are’ and this helped because when they still cried, then I knew there was a real problem.

TP: How has the economic recession affected Hungary compared to the rest of Europe?

RB: Just like most of the EU countries with a weak economy and a huge unskilled labour force, Hungary was hit very hard. And you can see similar statistics here to what you would see in Italy or Greece – high youth unemployment, growing inequality, a frustrated and angry working class, rising unemployment with the only offered solution being austerity with some quantitive easing. But when the economy does not have the resources for quantitive easing, when you are not Germany or the US, quantitive easing cannot help because you do not have the quantity to make the ease.

TP: Is the Hungarian economy still in recession?

RB: That’s another debate. Measured in GDP, the Hungarian economy shows very slight growth of between 1% and 2%. However, we must ask whether GDP is a good measure of economic progress and I firmly believe that it is not. For example, a large part of Hungarian GDP is propelled by car manufacturing – Audi and Mercedes.

Audi have a Hungarian workforce of 10,000 and pay no taxes. Mercedes has a workforce of 3,500 and they also pay no taxes because of the tax holidays they received after moving their businesses to Hungary. So, I would say that although they add to the Hungarian GDP, they do not add, or have a very limited contribution to Hungarian society at large. So that is the problem. While Tesco had a Hungarian workforce of 23,000, they contribute to Hungarian society not because they are a responsible company but because that is what their operation is based upon. Their operation is based upon Hungarian customers and they are dependent on the shelf manager and the cashier lady and you can’t hire these from Germany, you can only hire them from the local vicinity. So, while technically there is some limited growth from a fundamental economic perspective, there is no growth in real terms. Also, there is no inflation so this is a stagflation society. No growth with no inflation is the worst combination you can have because this means that you don’t even have a hope of turning on the engine of the economy. Also, Hungary is a country on the fringes in Europe and not the healthiest economy in Europe. Hungary is what we would call a middle income country. It is extremely hard to grown if you are in the middle income gap because you have achieved a certain level of welfare with structure in place but that structure itself is insufficient to propel you to a higher level of development. Firstly, you need to restructure your society and your economy and this takes a long time because you require a better educated workforce and a better skilled professional class. This is a long process.

Hungary’s real problem is not the present but the future because the current government is not only destroying the present but also sacrificing the future to save its political wellbeing against all odds. They are changing the health system so that we won’t have a healthy population.

TP: Are they privatising the health system?

RB: No. Quite the opposite. They are making it more centralised and drawing funds from it. They are introducing a two tier system where the wealthy can pay for additional services and the poor get less. They are also centralising education, primary, secondary and higher education. The biggest exodus of Hungarians takes place after high school. Everyone wants to go somewhere else and not return, which obviously is not good. There are one million Hungarians working in London which is bad not only because we have lost one million of our most talented citizens but also because their tax revenues which should go to fund our public services are paid to the UK government.

TP: With rising inequality, is anti-semitism and anti-Roma feeling increasing in Hungary?

RB: Yes but looking around Europe where you see nationalist and anti-immigration to the extent of seeing white supremacist movements, I don’t think that it is growing. I think that it is perhaps more visible but I wouldn’t count this as Hungary‘s biggest problem. I think that it is much more an outpour of anger and frustration than part and parcel of the social fabric. I think that it will ease once you have better living conditions and a more forward looking leadership.

TP: Could you please explain a little about your involvement with the Raoul Wallenberg Association?

RB: Raoul Wallenberg was a taboo subject when Hungary was part of the Eastern Bloc because of his arrest by the Soviets. It was a group formed to defend the Roma as at that time we saw this as a bigger problem than anti-semitism. My thoughts back then were that I am a Jew and I don’t care if there are anti-semites because I can resist them as I am educated. But the Roma can’t defend themselves because they are not educated, they lack a voice, they lack a social network. At that time, we thought that it was our job to help them gain a voice.

We chose the name Raoul Wallenberg as he was a wealthy Swede who came to Hungary [as Swedish Ambassador during WW2]. He didn’t have to defend the Jews, he didn’t have to sacrifice his life. He was taken away by the Russians [after the war] though could have been killed many times by the Nazis. He came to Hungary [during the war] even though he was a rich Swede who could have lived comfortably in Stockholm.

It was not his fate and yet he chose to do it. So we chose his name more as a symbol than a message that we were there to defend the Jews. We were there to defend the Gypsies. And our first action was in 1988 after the local government in a town called Miskolc about 100km east of Budapest, wanted to push the Gypsies from the centre of the town to a ghetto like estate in the outer suburbs so they could renovate and sell property in the centre of town. So we organised a civil movement in Miskolc. We had marches and our legal team persuaded the local government to abandon its plans. And then one of the counties in the east of Hungary, in the turmoil of the late 1980s during transition, wanted to have a territory to which they could deport the Gypsies – a reservation of sorts. And we fought against this and won.

It [the Raoul Wallenberg Association] reached its high point and then wound down, The Raoul Wallenberg Association still exists but it is less important now as it could not grow bigger than a bunch of people who made statements, organised marches and celebrated the life of Raoul Wallenberg.

TP: Sounds like it can count quite a few achievements in the late 1980s and early 1990s.

RB: I’m proud of it. It is interesting as 25 years have passed and some of the ideals haven’t changed. Perhaps looking back 25 years, we were not successful enough at putting those ideals into practice. However, because of the biggest achievement of the 20th century, I have another 30-40 years of life left so I can keep trying.

Robert Braun is also Pro-Rector at the International Business School in Budapest, Chairman of the New Economics Forum Budapest, and Associate Professor of Corporate Social Responsibility and Marketing at Corvinus University of Budapest


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This post was written by Tomasz Pierscionek

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