Michael Posner appointed as the Jacob K. Javits Visiting Professor

Restoring Bipartisanship in the Public and Private Sectors

2019 Jacob K. Javits Visiting Professorship Lecture

Presented by Michael H. Posner

2019 Jacob K. Javits Visiting Professor at NYU, Jerome Kohlberg Professor of Ethics & Finance, and Director, Center for Business & Human Rights, NYU Stern School of Business

November 21, 2019

I am honored to be here, and to have been selected by the Javits Family and the Marian and Jacob Javits Foundation as this year’s Javits Visiting Professor. For the past six years, I have been very lucky to call the NYU Stern School of Business my home.

In 2012, when a State Department colleague and I decided to create a human rights center at a business school, many of my Upper West Side liberal friends rolled their eyes. To them, mixing business and human rights sounded like an oxymoron. Thankfully, NYU President John Sexton and Dean Peter Henry were considerably more receptive. They immediately recognized that human rights is vital to the success of 21st-century businesses—and our society. They saw an important gap that NYU could fill by promoting teaching and research in this emerging area. And they supported the creation of a new Center for Business and Human Rights – the first ever at a business school.

Our vision for the Center was to challenge and guide business in charting rules of the road in the 21st Century’s global economy. Right now, too often the model for businesses is to do whatever they must to make money in the short term, and then to give some money away — to charity, to community or arts groups, or to enhance or defend their own brand. We urge companies to move beyond this model of corporate social responsibility, which all too often has been more about how to protect the company’s reputation than about how to change problematic business practices. Our center focuses on how companies make money, not how they give it away.

Over the past six years, we have built a terrific team at our Center, and we are privileged to be working alongside similarly committed people on the Stern faculty. When I arrived at Stern, Peter connected me to Bruce Buchanan who had the foresight to create the Business and Society Program two decades ago. Bruce has helped foster our growth from day one. In September, Bruce handed the BSP baton to another wonderful colleague, Batia Weisenfeld, who continues to lead an inspiring group of people. They include the author and ethicist Jonathan Haidt, and Tensie Whelan, who joined Stern from the Rainforest Alliance to create the Center for Sustainable Business.

Our Center has benefited greatly from NYU’s commitment to taking risks and thinking big. President Andy Hamilton, and our current Dean, Raghu Sundaram, don’t just tolerate untested ideas; they don’t just try to manage change to make it less disruptive. They embrace change and encourage new ideas. This is a core value for NYU and one that has a storied tradition. As we gather here today I want to reflect on one chapter in that story, the story of a Great American change agent named Jacob Javits.

Jacob Javits grew up in a crowded tenement building on the Lower East Side of Manhattan, the child of two hard-working parents. He graduated from NYU Law School in 1926. Beginning in 1947, Javits served in the US House of Representatives for seven years, as New York State Attorney General for two, and then in the US Senate for twenty-four. Throughout that time, he belonged to a group known informally as Rockefeller Republicans: politicians and public servants who championed liberal social policies, prudent economic practices, and integrity in government. Sadly, today, Rockefeller Republicans are an endangered species. I hope they are not in fact extinct. Their decline explains in part why our political parties are less and less able to find common ground.

Today I want to discuss this decline of bipartisanship in our politics and society, and offer some thoughts on how the private sector, in particular, can help address our growing divisions and rekindle our capacity to reach out to the “other.”

Senator Javits devoted his professional life to reaching across the aisle, looking for opportunities to forge links between Republicans and Democrats, liberals and conservatives. On key national and international issues, he was a problem solver, intensely focused on achieving practical results. To borrow a line from New York Times columnist Tom Friedman, Javits aimed to make a difference, not just a point. And his track record of tremendous accomplishments in Congress points to the merits of that strategy of bipartisanship.

In 1957, he sponsored early civil rights legislation that laid the foundation for the landmark civil rights laws of the 1960s. He was an enthusiastic supporter of workers’ rights and understood the important role unions can play in empowering working people. He helped shape and then won support for reforms of our pension system through the Employee Retirement Income Security Act, which sets minimum standards for private retirement and health plans. At a time when old age and poverty were often synonymous – and accepted – ERISA, along with Social Security, made a secure retirement possible for millions of hard-working Americans for the first time.

Alongside addressing the fate of working Americans, Senator Javits was also active in the international arena. Troubled by the escalation of US military involvement in Vietnam, and the failure of the Executive Branch to consult with Congress about the conduct of an undeclared war, he was a major force in advocating for the adoption of the War Powers Act and wrote a book on the subject. Though mindful of the importance of maintaining control over our borders, he also supported continued US leadership on refugee rights. The list of his accomplishments goes on and on.

Javits’ success arose from his pragmatism, passion, and principle. As a pragmatist, he held himself to a very high standard of achieving tangible results, namely getting legislative proposals enacted into law. His actions were fueled by his passions for fairness, equality, dignity, and integrity. It was frustration with the corruption of New York’s Tammany Hall that first drove Javits into politics. What’s more amazing is that he never became jaded. He maintained a firm moral compass and devotion to principle throughout his long career.

Unfortunately, many of the attributes that made Senator Javits so effective seem in short supply amidst the growing polarization and paralysis in our government and in US society at large. It is all too easy to blame our divisions on our current President alone. I find his actions and demeanor deeply disturbing. But I realize that his 2016 election, and continued popularity with a sizable minority of our population reflects deeper divisions within society, often driven by anger and fear. Though this President clearly exacerbates these divisions, often on a daily basis, he did not create them. Whatever our beliefs, it is incumbent on each of us to go the extra mile to try to understand the perspectives of others that are antithetical to our own, and to look for common ground.

Much has been written about America’s intensifying polarization, driven by what one analyst has called a “culture of contempt.” A recent study by the Pew Research Center confirmed that our partisan divisions are more intense and more personal than in the past. 58% of Republicans say that Democrats are “more immoral” than other Americans. Most Democrats say the same thing about Republicans. Men and older people are more likely to harbor these intense negative perceptions of those with opposing views. And these negative feelings run deep. In 1960, when pollsters asked whether people would be unhappy if one of their children married someone from the other party, just 5% of Republicans and 4% of Democrats said that they would be upset. By 2010, half of Republicans and more than a third of Democrats harbored those sentiments. According to a recent poll, 71% of Democrats say they feel like strangers in their own land. 52% of Republicans feel the same way. 83% of all respondents who discuss politics more than once a day say they feel angry about something they have heard or read in the news. It seems that the only thing we can agree on is how angry we are at each other.

There are various explanations for why we have descended into this partisan rancor. Some are obvious – the growing religious, racial, and ethnic diversity in our society; the growing gap in employment, income, health and even longevity between Americans; and the demise of traditional news media outlets, which once offered daily descriptions of public affairs that were widely accepted as accurate. Other factors are less obvious. Some have cited the end of the Cold War, which had united most Americans in opposition to Communism, or the passing of the World War II Greatest Generation. I will focus on three broad trends that I think deserve special attention. The nature and scope of these changes would shock Senator Javits if he were alive today.

First is the rapid expansion of the global economy and its residual effects here at home. As I stress to my students, the benefits of globalization are obvious. In the last 35 years, more than two billion people have been lifted out of extreme poverty. The private sector has created unprecedented wealth, generating hundreds of millions of new jobs. A globalized economy also has given us access to more goods and services, and at greatly reduced costs. We enjoy blueberries and melons from Latin America in the dead of winter. We buy cheap clothing online that has been manufactured in Asia and is delivered to our doorsteps in a day or two. And we spend hours every day on our electronic devices powered by batteries built with minerals mined in Africa.

While enjoying these advances, we have been slow to address the social consequences that accompany the rapid growth of the global economy. Because wages are so much lower in Mexico, China, and Bangladesh, a significant portion of US manufacturing jobs, especially in low-wage, labor-intensive industries, have migrated to those places. Factory workers in Youngstown, Scranton, or Flint who have lost their jobs have every reason to be upset and afraid for their future. But instead of finding ways to mitigate these negative consequences, politicians of all stripes too often fuel popular anger, by demonizing trade agreements, dismissing the value of economic progress in developing countries, and trying to build walls around our country. While these tactics may yield short-term political advantages, they fail to address the underlying challenges facing many working class and middle-class Americans.

A second, related change that is fueling polarization is economic inequality. The statistics are stark. Over the last 40 years, CEO compensation in the US has increased by 940%, while the salaries of the lowest-paid workers in those same companies have increased by only 12%. In fact, average incomes have not risen for the majority of American workers since the 1980s, and the top 1% of Americans are richer than the bottom 90%. These discrepancies have serious costs: life expectancy in this country has fallen for three years in a row and low-income communities are disproportionately affected. Reaching beyond our borders, this is a global problem. Oxfam calculates that the 26 richest people on our planet have wealth that is equal to the bottom 50% of the world’s population. Those 26 people own more than the bottom 3.8 billion. The need to right this balance is obvious.

The third seismic shift in our world is technology, what the World Economic Forum calls the Fourth Industrial Revolution. Every day, we see the benefits of instant global communication that has suddenly become free of charge. We now take for granted the easy and immediate access the internet affords us to massive amounts of data on virtually every subject. In the 1980s, a telephone call from Tokyo to San Francisco could cost $30 a minute. Now we get grumpy if our free video-conferencing apps take a minute to update themselves. We also expect advances in artificial intelligence and automation to improve the efficiency and convenience of everything from daily commuting to life-saving medical procedures.

As with globalization, however, the explosion of technology has brought myriad new challenges we have yet to address fully. The power of states to collect data often results in unchecked surveillance that violates personal privacy. Misapplication of data also can lead to discriminatory outcomes in areas ranging from law enforcement to the loan industry. This discrimination amplifies racism and other problematic biases that already exist in our society. Automated production lines mean that robots are replacing people, many of whom struggle to find another job. And as we have witnessed in recent years, various forms of political disinformation online now pollute social media and threaten our democratic discourse.

It is easy to feel overwhelmed, easy to retreat to our partisan corners and curse our political rivals. But inaction simply is not an option. There is too much at stake and each of us needs to find a way to contribute to solving these difficult problems.

As the first human rights center at a business school, we know it is possible to persuade the world’s largest companies to help tackle these vexing issues. We take a pro-company, high standard, industry-by-industry approach, focusing on what it will mean practically to integrate human rights into the core of how business gets done. Once companies recognize human rights as business priorities, we work with them to develop standards and metrics and build credible systems to assess their performance and enable fair comparison against their peers. If human rights issues are relegated to the margins of corporate management, and if progress is not measured clearly, we will never see meaningful improvements.

Our industry-based focus started with apparel manufacturers and their global supply chains. Five weeks after we arrived at Stern, the Rana Plaza factory complex in Bangladesh collapsed, killing more than 1,100 garment workers, most of them young women. We quickly organized a working session that brought together at Stern some of the largest Western clothing brands, their local Bangladeshi suppliers, along with representatives of Western governments and international organizations like the World Bank and International Labor Organization. We became part of a larger effort to forge industry-government cooperation on factory safety issues which has contributed to measurably improved conditions in first-tier Bangladeshi factories.

But as we pursued our engagement, we saw the widespread existence of largely invisible subcontracting factories, where workers are in the greatest jeopardy. Through an exhaustive research effort, we documented the existence of several thousand subcontracting factories across Bangladesh, all producing apparel for export in unsafe conditions. Recognizing resource constraints in Bangladesh, we have proposed and are working to create a model of “shared responsibility” in which Western governments and brands would work with their Bangladeshi counterparts to create a common fund to fix these forgotten factories.

Bangladesh is a front-line state in the struggle to make respect for human dignity a minimum standard for global supply chains. As Western consumers and investors, we have a responsibility to support companies that dedicate appropriate resources to improving working conditions.

Whether addressing factory safety issues in Bangladesh or dealing with job displacement here at home, the investment sector has a uniquely important role to play in addressing inequality. I am proud to hold the Jerome Kohlberg Chair on Ethics and Finance, and our work with this sector advances the late Mr. Kohlberg’s vision. Financial leaders like Larry Fink, Jamie Dimon, and Ray Dalio have sounded an alarm, warning that the gains generated by our current financial system are not being adequately shared. In August, 180 corporate CEOs, through the Business Roundtable, underscored this point and asserted that the purpose of a corporation is to serve the interests not only of their shareholders but also their workers, contractors and the communities where they operate. For these aspirational pronouncements to gain traction, Wall Street firms need to abandon a model focused primarily on short-term shareholder returns and move towards a broader approach that better serves the longer-term well-being of our society. Once they do so, they will also need better measures of corporate performance on human rights.

My colleague Casey O’Connor-Willis is leading our efforts in this crucial area, working to give greater coherence and practicality to the social component of investment criteria known as ESG, meaning Environment, Social, and Governance. Investing that emphasizes these ESG factors is growing rapidly, driven in part by large public funds, and by women and millennial investors who prioritize these concerns. But we found in a report we published in 2017 that the current measures investors use to assess social and human rights performance are failing. They assess promises, not performance, and analyze what is most convenient, not most meaningful. Investors need more reliable comparative information on which companies are actually doing a better job in managing the factors driving increased income inequality around the globe. Though we’re still in the early stages, our aim is to build a model for the Social element that would better enable investors to respond to this urgent challenge.

The problems of inequality are also reflected in the lack of diversity in the upper echelons of the investment sector itself. A 2017 study commissioned by the Knight Foundation concluded that when it comes to roughly $70 trillion of assets under management in North America, investment firms owned by women and underrepresented minorities oversee only about 1.1% of those funds. Eleanor Roosevelt once wrote that human rights begin in the places closest to home. In that spirit, we are working with the Robert F. Kennedy Human Rights organization to encourage greater diversity among those investing university endowment funds, which collectively hold about $500 billion. Without asking schools to sacrifice financial returns, we encourage university investment offices to go the extra mile to give women- and minority-owned firms a serious shot at competing for this business. Last year, with RFK Human Rights, we organized and hosted a meeting with representatives of university investment officers and trustees from 13 of the 30 wealthiest schools, including NYU. In the spring, we will host a follow-up meeting to which we will invite representatives from all 30 schools. Schools like the University of Chicago, Georgetown, and NYU, are stepping up to accept this challenge, and we are eager to be their partners as they and others pursue this important practical agenda.

Finally, with respect to the breathtaking advances in technology, we have chosen to focus our energies on internet governance and the growing threat to our democracy posed by political disinformation on social media. Our Deputy Director, Paul Barrett, is leading this charge. We were fortunate to lure Paul away from three decades of excellence in journalism, first at the Wall Street Journal and then at Bloomberg Businessweek. He has applied his talents to author our four reports examining disinformation online. Our first two reports focused on the misuse of internet platforms by foreign governments, notably the Russians. This year, we turned our attention to disinformation generated by domestic actors, including extremist groups, who have utter disregard for the truth. Our most recent report, published in September, focuses on the 2020 Election. In each of these four reports, we concentrate on the responsibilities of the internet platforms and outline a series of practical steps they must take to better govern their sites to counter pernicious disinformation. These issues are ever more critical as the number of newspapers continues to decline and Americans are getting more of their “news” online. As so many of these sources peddle false political content, our failure to moderate online content sensibly is itself contributing significantly to the divisions in our society

We believe that part of our mission is also to encourage other schools to embrace the study of business and human rights. Next week we will co-host, with the University of Geneva School of Management, representatives from about 30 business schools from around the world that are interested in developing courses and doing research in these areas. And we are partnering with other academic institutions that share our commitment to driving progress on human rights through the private sector.

The common theme in our work is a commitment to applying core human rights principles and standards to businesses. Taking a page from Senator Javits, we endeavor to tackle these very challenging and often contentious subjects in a manner that builds broad alliances and achieves practical results. And while the corporate sector cannot eliminate polarization in our society or restore greater bipartisanship by itself, without meaningful private sector engagement, we are sure to fail in these efforts.

Senator Javits once said that “business, properly understood, is central to every aspect of our civilization.” Sharing this perspective, we see growing opportunities for business schools, and the future business leaders we teach, to play key roles in building responsible global supply chains, an investment system that promotes greater economic equality, and well-managed social media platforms that advance democratic discourse. To say the least, this is an ambitious agenda. But, as Senator Javits once said, “There is nothing to be gained by waiting for a better situation. You see where you are and you do what you can.”

We invite you to join us in doing what we can, in pursuing this timely and exciting endeavor.

Thank you.

This post was originally published on Press and Publicity – NYU Stern Center for Business and Human Rights.