Barbara Boerner

From Daily Planet Staff Reports

COLUMBUS, N.C. — For the 14 percent of the world’s population that ranks among the “haves,” the current financial crisis is “seen as a real crisis,” but for “have-nots,” little has changed.

At least that is the view of Dr. Barbara Boerner, who addressed “The Global Financial Crisis” on Feb. 11 at Isothermal Community College in Columbus.

Greed, which always has been part of the human condition, is “out of control” now, unconstrained by mores, norms and institutions, and “that is part of what’s led us to where we are now” with the the worst financial downturn since the Great Depression that began in 1929, she said.
Another major component contributing to the current hard times was easy credit, she said.

Her talk, sponsored by the World Affairs Council of Western North Carolina, drew about 25 people at ICC. She gave the same address earlier in the same week at UNC Asheville, Brevard College and Blue Ridge Community College in East Flat Rock.

Boerner, a first-generation American from Frankfurt, Germany, is an associate professor of business and organizational leadershop at Brevard College. In addition to experience as an entrepreneur, she holds a fellowship at Oxford University.

Boerner began by noting that, “this topic is so broad, I immediately need to give you a disclaimer — I’m not an economist. So I’m taking this from a different angle.”

Notable among the authors and references upon which her presentation was based are Thomas Freidman’s “The World Is Flat: A Brief History of the 21st Century” and Vijay Mahajan’s and Kamini Banga’s “The 86% Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century.”

Boerner prompted laughter from the mostly older audience, when — with a smile — she expressed gratitude for not having to look into a sea of iPods, cellphones, backward ballcaps and “hoodies, all of which she said are common sights for professors addressing today’s college students.
Moments later, Boerner joined the crowd in laughing when her cellphone beeped, prompting an embarrassed apology for neglecting to turn it off. “It’s probably my bookie!” Boerner quipped. She quickly added that she was just joking and did not engage in betting.

More seriously, she said, “You know, we’re an incredible species, when you think about it.”

To that end, she noted that she taught an early-morning class that day on practical and critical reasoning during which they discussed the reality that “we have so much access to information now, the hard thing now is determining what’s fact and what’s fiction.” Boerner noted that she had to work hard to convince some of her students that Wikipedia is not last word in accuracy — and often is erroneous.

“The information availability is important to think of in the context of a global crisis.

She defined “crisis” as “an unexpected or unplanned change.”

Next, she referred to the book “The 86% Solution,” which, Boerner said, contends that about 86 percent of the world’s population has an income of less than $10,000 per year. About half of that total has an income of $2 or less per day.”

“It’s kind of comparing apples to oranges when we compared developed and undeveloped nations — the ‘haves’ and the ‘have-nots.’”

She cited greed as a major contributor to the financial crisis, noting that former Disney chief Michael Eisner was awarded $558 million in separate pay. Boerner termed that a ridiculous amount — and more than the company’s profit for that year.

A man in the audience asked Boerner to provide her definition of greed.

“Greed is desire that has no limit,” the professor replied. “You’re never satisfied.”

From her experience in running a business and attending business school, she learned that “nobody is paid what they think they’re worth ... It’s out of control (now).... No restraint is taking effect. This is part of what’s led us to where we are now.”

However, Boerner added that “it’s broader than that” and included “very available” credit, extending debt and trading debt.

“The concept of leverage is so attractive” to many people, she said. “I worked in real estate for some time. I put some money into it ... Sometimes, a banker would say, ‘Rather than lend you 80 percent, how about 105 percent? You could use the rest to pay off your credit cards.’
“The consumer kept thinking of the monthly payment, not the overall debt ... You can even take this to the emerging nation level ... Later, they (emerging nations) felt the World Bank was unfair to them. They thought it (a loan) was a handout.”

Next, Boerner poked fun at “buy-local” campaigns, citing an ad from Ingles supermarkets, proclaiming with a country drawl, “We’re your hometown store!” followed by a promotion for grapes from Chile. “Chile — that’s close to Isothermal Community College, isn’t it?” she asked, prompting laughter from the crowd.

Boerner said she enjoys talking about the third millenium. “About 6 billion people experienced that in 2000,” she noted. “Ten years later, we’re at 6.7 billion” people. “In 40 years, we’re anticipating 9 billion people — a 50 percent increase in 50 years in the world’s population.”

While American business culture has spread around the world, Boener said, “I really have great admiration for the British Empire and how they did it. You see the (British) influence around the world, from India to Singapore.”

To be successful, she said globally consistent solutions must be achieved via globally consistent standards.

The Romans understood the aforementioned concept — and the British excelled at it. “You have to understand the regulations and conditions of any culture you enter to do business. It’s one thing to conquer someone, but you have to make sure people are comfortable enough that they’ll work with you, versus against you.”

About 100 new democracies have been formed in the last few decades worldwide, she said. This trend was “partly influenced by the breakup of the Soviet Union. China learned from Russia that you just can’t sustain a communal economy ... It wasn’t able to be sustained, so you have these democracies springing up. Some have natural resources and some not.”

In 2002, the United Nations “put forth a big push to develop eco-tourism in these countries because many of them were unusual,” she said. An example is the Gallapagos Islands, which are part of Ecuador.

However, the eco-tourism push “became a problem,” she said. “As they developed and became consumers, they wanted things. Then they lost their quarantine, there was a kind of cultural colonialism.”

Moral ecology and the morality of economics requires trust, she said.

“There has to be trust. Ultimately, we bargain. We both state where we both feel we made a good deal. The point is there has to be this trust.”
The gap between haves and have-nots is getting wider in the developed nations, while the opposite is the case in developing nations, Boerner said.

Three countries “to keep an eye on” include South Africa, India and Brazil, she said. “Their incomes are increasing, from $10,000 per year to $11,000 in the last year, for a 10 percent increase.”

Manufacturing jobs tend to be the economic engines of the emerging nations, to which they increasingly are concentrated, Boerner said.
“For the United States, our major export is knowledge capital — innovation,” Boerner said. However, she also noted that India will graduate more engineers this year than the U.S., which is ominous for those hoping America can keep its world leadership position.

She said U.S. exports include “our culture, our art forms, our music, our style and our celebrity.”

High-technology is accelerating the rate of information exchange in the world, often giving celebrities undue influence, Boerner noted. “Now Twitter and other high-tech devices are exacerbating this.”

With 2 billion people in China and 1 billion in India, “we begin to see potential for power shifts.” This trend could affect America adversely because “we have been world-class consumers,” she said.

To some degree, “We’re becoming a third-world nation. We still manufacture, but on a smaller scale. We manufacture the front-end of the pipeline to innovation.”

At the moment, the U.S. still dominates in three manufacturing sectors — the aircraft industry, elevator industry and in the production of agricultural products, she said.

“To conclude, we just have to begin to understand this — the actions and powers of the non-NGOs (non-governmental organizations).

She said another important contributor in the equation are NGOs, which are non-governmental organizations, funded by governments but excluding government officials from membership.

Governments, individuals/consumers, operators/producers and NGOs must work together for the global system to work, Boerner asserted
“The power of stakeholder collaboration holds business’ feet to the fire, where we have a common good ... The norms, then, can be universal. it has to happen, as far as I can see. We are an incredibly complex society” and, therefore, the U.S. “can’t say, ‘We’re going to be isolated,’” Boerner said.