A profitable collaboration

Well, yes. Without profit there are neither jobs nor revenue to tax. However, business must live in a wider world where social and environmental issues do affect how they do business. Business cannot succeed in societies that fail. They are under greater scrutiny than ever. This must be healthy.

Corporate responsibility and shareholder and stakeholder rights are a growth industry given the criminal excesses of Enron, WorldCom and others. However, I disagree with Friedman because labour is not just another product and standards, transparency and commercial honesty all matter. This is both the responsibility of business and government.

The former labour secretary in the Clinton administration, Robert Reich, in his book I'll be Short said, "each year of education or job training after high school, whenever it occurs in the course of a career, increases average incomes by 6 to 12 per cent". Companies that introduced formal employee training programs experienced a 19 per cent larger rise in productivity than firms that did not train their workers.

The question then is, should governments direct business to do what's good for them or should it be left to the market, and let business get rewards for good practices? In the old days, employers could capture their investment in training. Nowadays, people are mobile - few stay with their employer for life. I believe the state has a role in providing training, education and skill upgrading in partnership with business - especially in times of economic restructuring, otherwise the social, even political, costs are too high. Friedman would disagree. Yet business skills can play a role in making things happen in poor countries. Nothing else works there.

Meanwhile, failed societies function as breeding grounds for disease, with two million people crossing national borders every day, many as refugees. And as we saw from the severe acute respiratory syndrome scare, health problems can travel very quickly. If one person falls ill or is infected, the whole world is at risk. Only when every child is vaccinated will polio be eradicated.

Only one disease, smallpox, has ever been exterminated worldwide. Two million children die every year from diarrhoea alone. Gro Brundtland, as director-general of the World Health Organisation, commissioned a team of economists to price the cost of health failures in dollar terms. By substantially scaling up investment in health we could be saving billions of dollars by 2015, she claims.

Those states are close to anarchy, failing, and dangerous to their own people and to the rest of the world. True, if they had honest politicians, competent bureaucrats, true property rights and open economic policies, they would not now be in the trouble they are in.

Now I'm going to say something I never thought I would say: in these troubled states the future of delivering social services may best be done by private-public partnerships. What's the point of giving free medicine, millions of dollars, if it's ripped off by politicians, bureaucrats, or phoney capitalists.

A number of private-public partnerships have been launched in Africa. Microsoft is providing free software for all of South Africa's 32,000 schools. And here's an inspiring program from the Overseas Private Investment Commission run by the former chair of the US International Trade Commission, Peter Watson. He's announced a project to provide treatment for HIV-positive home-owners in South Africa, enabling them to keep their homes by guaranteeing banks against the risk of defaulted mortgage payments. Here's the deal: you must be HIV-positive to get the coverage, but you must take treatment.

Here's the next part of the deal: the drugs are made available from US foundations. Bypassing governments and ministries and getting to the real need is where the business community can deliver. Virtuous business practices are not only actions of profitable self-interest, they may be the best short-term means of helping the victims and producing the better world we old social democrats still dream of. Not the way I thought we'd do it in my youth.