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Cross‐generation roundtable – Business: the value of rule of law

    • Rome
    • 10 June 2015

          Underpinning discussions at this Aspen Junior Fellows roundtable were lawfulness and merit as dual pillars of intergenerational solidarity. It was observed that illegality curbs growth and social mobility, rewards the undeserving by distorting competition, and widens social gaps. Its victims are the young and honest businesses. Figures were cited showing that, between 2006-2012, Italy’s resultant “reputational deficit” led to an estimated 16 billion euro loss in foreign investment.

          The participants noted that awareness levels with regards to illegality are particularly high among Italians, attributable in part to publicity surrounding the many initiatives aimed at combating the phenomenon, and to the magnitude of related government expenditure (especially in Italy, where it represents over 50 per cent of GDP). It was submitted that current legislation on the statute books is arguably heavy on rules but short on principles, recalling Tacitus’ admonition that “the more corrupt the state, the more numerous the laws”. Moreover, legal grey areas and conflict between different levels of government – local, national, and European – were seen as favoring a lack of transparency and illegal behavior.

          Great emphasis was placed on the need to step up all initiatives aimed at better regulation, both at national and international levels, in support of transparency, simplification, and business competitiveness. This was viewed as requiring Italian firms to participate more in EU public consultations on legislative matters, and to become better acquainted with European laws, with the aim of reducing the more frequent violations encountered (such as breaches of competition rules), limiting the number of infringement proceedings brought, but also better seizing available opportunities (in which regard it was noted that Italian firms have only tapped into 7% of European funding for research and innovation, compared to a potential of at least 12%).

          It was acknowledged that the process of making lawfulness an accepted – rather than just an obligatory – standard within a given firm is onerous in terms of training costs and time. Any such transition was seen as needing to be built on three successive tiers, namely: widespread familiarity with the law, compliance of all business (and sector-wide) activity with regulatory requirements, and the establishment of an ethics of responsibility and of individual integrity as corporate values. These concepts were seen as reminiscent of the principles advocated by Ennio Presutti[1], who posed the question: “What is a firm’s main asset? Its reputation. A company without ethics has no future. In the business world, all players are required to raise the behavioral bar. Ethics is not a burden, it’s how business is done.”

          The participants stressed, however, that the underpinnings of ethics are ontological rather than economic or sociological. In this regard, it was suggested that recent events point to a widespread international drift towards illegal behavior. At the same time, two options were seen as presenting themselves: liberal economic globalization on the one hand, and free-market-inspired political and cultural integration on the other. It was suggested that any affirmation of the preeminence of the market over state-issued law entails an underestimation of the importance of regulation. Conversely, a model based on striking a balance between state and market denotes the pivotal role of rules (and of individuals and businesses, that are both subject to and the beneficiaries of regulation). The view was expressed that regulatory compliance cannot be fostered through a persistent imbalance in favor of surveillance and penalty mechanisms, with the focus instead needing to be on preventing crimes and educating citizens. The latter – it was noted in conclusion – requires relatable role models that point up the importance of respect for the individual as an end rather than as a means.

          [1] Ennio Presutti (1931-2008), Co-founder and former Vice Chairman of Aspen Institute Italia, and former President of the Friends of Aspen, in “Riflessioni e consigli ai giovani dirigenti”, Fondazione IBM Italia, 2008.

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