J OH N M OLSON B U SIN ESS R E V IE W VOLUME 7 SPRING 2020
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THE JOHN MOLSON BUSI NESS REVIEW The John Molson Business Review is a student initative devoted to featuring articles on current business developments. Founded in November 2015, the publication is currently overseen by a team of undergraduate students from Concordia University. JMBR aims to put forward innovative pieces that explore business trends and their links to various sectors, including technology, economics, public policy, and others. Though it is based within the John Molson School of Business, the publication strives to foster a spirit of collaboration and encourages participation from students across all faculties at Concordia.
MEE T OUR TEAM Guillaume Troquet – Co-President Michelle Lam – Co-President Corey Archibald – VP Finance Cristina Cosma – VP Marketing and Creative Director Juan Ignacio Viera Garcia - VP Sponsorship Sara-Nienke Mercado Noordhoek - VP External Claire Benoit – First Year Representative
Editors Megan Ng - Editor in Chief Nisha Verma Konstantinos Kounadis
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IN THIS ISSUE “ Effective leadership is relational, nonhierarchical and contextual ”
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Take the Blue Pill or Take the Red Pill Cristian Pulido
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Why Are Companies Taking Measures to Achieve Corporate Social Responsibility? Yashaswi Vig
10 An Ode to Successful Customer Service Patricia Pop and Cristina Cosma
14 A Somber Outlook for the World Economy Professor Pierre Fournier
16 The Benefits of Rational Self-Interest, a Defence of Capitalism Alexander Modonese
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TA KE T H E BLU E P ILL OR TA K E T HE R ED PILL Leadership Needed in a Reality That May Be Often Disregarded B y C r i sti a n P u l i d o m a j or i n B u sine s s Te c hnology Manage me nt and Marke ting
Going Down the Rabbit Hole – An Introduction “Give me clean, beautiful and healthy air - not the same old climate change (global warming) bullsh*t! I am tired of hearing this nonsense” stated currently impeached U.S. President Donald Trump in 2014. Turning a blind eye to reality, a seemingly common practice among some business leaders and politicians today, distorts the interpretation of factual and objective information. When you ask yourself how this persistent blindness and lack of empathy can be overcome, the answer may be this simple: the current generation and our children must enthusiastically pursue the truth through brave and humanistic leadership. While one could discuss the semantics of the word “truth”, throughout this paper it refers to factual and unbiased information and knowledge. Throughout their years of education, students are exposed to countless concepts and theories that help to explain the world that surrounds them. Among the
many notions taught in school, sustainability appears to be a recurring theme which proves to be rather critical in our current context. In fact, sustainable practices should be embraced by businesses and leaders in order to reduce the disastrous effects of our economic activities. The author of this article has a self-imposed goal to share with its readers some thoughts on the business world and the responsibility of its players to act properly within their ecosystems. The article is presented in the following manner: (1) an overview of current disrupting social events helps to pinpoint issues that need resolutions by humanistic leaders; (2) the importance of a relationship between leadership and sustainability is touched on; (3) the reader is provided with actionable steps to take in order to become a humanistic leader in their immediate milieu; and (4) an explanation as to why our current generation, as well as future ones, must enthusiastically pursue truth with brave and humanistic leadership.
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Not a Fantasy, but Simply Reality The far-reaching disrupting events occurring throughout the world are often only seen through digital screens or read about in academic books and published papers. What one could only hope to be fictional entertaining stories are rather events occuring in a reality shared by all of us. Why should you pay attention to a seemingly unrelated event that could be happening 16,000km away? Because the pursuit of truth entails constantly learning about one’s world and how others interact with it. Discerning fact from fiction through critical thinking can prevent, or even resolve, similar local adversities. The connection between humanistic leadership and global events can be established by first looking at the following recent events: • 12 million acres of land have been destroyed by one of the worst wildfires in Australia. This has affected 1,000 households and 25,000 koalas; • Trump threatens to “hit very fast and very hard” cultural sites of the Iranian people in fear of retaliation for having terminated Maj. Gen. Qassim Suleimani; • Juul, offering vaping products to adolescents in North America, is undergoing a federal criminal inquiry for dubious marketing practices in the United States. E-cigarettes have caused the death of 11 teenagers in the U.S. Truth may come in the form of global challenges (e.g. wicked problems), and of course local adversities. Therefore, brave and humanistic leadership is urgently required in order to confront these challenges with novel solutions. Such solutions must also be harmonious with natural ecosystems, living organisms and the current economic structure in which our society operates.
Before Learning Jujitsu, Learn Sustainability Leadership “A leader [crafts] a vision and inspires people to act collectively to make it happen, responding to whatever changes and challenges arise along the way”. While it may seem trivial, it is critical to emphasize the difference between leadership and management. Leading individuals involves the development and evaluation of strategy, while management focuses on operational efficiency. Effective leadership is relational, non-hierarchical and contextual. In other words, reciprocal relationships, informal or formal authority positions and situational factors are believed to be key aspects of good leadership.
THE PURSUIT OF TRUTH ENTAILS CONSTANTLY LEARNING ABOUT ONE’S WORLD AND HOW OTHERS INTERACT WITH IT. DISCERNING FACT FROM FICTION THROUGH CRITICAL THINKING CAN PREVENT, OR EVEN RESOLVE, SIMILAR LOCAL ADVERSITIES.
What could this possibly mean to you? In order to create positive change around you, formal positions of leadership are simply unnecessary. By merely being part of your community, neighborhood or even family, you are in an excellent position to generate positive disruption. However, it is fundamental to understand that effective sustainability leadership can only flourish under the appropriate circumstances. Thus, empathy towards the ecosystems and their organisms, as well as balance between your strengths, skills and the resolution for wicked problems, are required. Therefore, the relentless pursuit of truth can only enrich your thoughts, abilities and actions.
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Then, what is sustainability leadership? It is quite simply “[inspiring and supporting] actions towards a better world”; nothing more, nothing less. Becoming Your Own “Chosen One” By helping to overcome persistent blindness to reality and lack of empathy towards the environment, sustainability leadership encourages (1) a “shared responsibility” to properly use the planet’s resources, and (2) “cross-fertilization of ideas” that embrace multiple lines of thought and disciplines. According to an article by Andy Hargreaves and Dean Fink published in 2004, If you want to become a sustainable leader, then you must: • Promote learning. • Contemplate long-term achievement rather than short-term gains. • Support the leadership of your peers. • Confront social injustice problems. • Develop resources rather than exhausting them. • Improve environmental health. • Adopt an activist engagement mindset with ecosystems and their organisms.
Based on an article published by the SAM Advanced Management Journal, in order to implement sustainable principles such as those previously mentioned, sustainable leaders must consider the following: 1. Stakeholder Management: Reciprocal relationships with others require understanding stakeholders’ needs, motivations and concerns. 2. Organizational Culture: The need for positive disruption is not temporary. You are in a position to instill a culture of openness to change and innovation in your social circle. 3. Holistic Thinking: Ideas and resolutions must be collectively brainstormed through the cross-fertilization of disciplines and different lines of thought. Wicked problems are social challenges that require complex resolutions and often add value to some while reducing value to others. 4. Organizational Learning: Our world is evolving at an unprecedented pace, facilitated by technology and increased availability of information. As you are in the relentless pursuit of truth, your peers must also be motivated to constantly acquire and share their knowledge. 5. Measurement and Learning: In order to know whether your sustainability leadership is creating positive disruption around you, constant evaluation and improvement are required. While some sophisticated frameworks have been developed in the past for this purpose, you can simply gather feedback by informally communicating with your immediate stakeholders.
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The Red Pill Shows You Wonderland – Make A Change Today Sustainability leadership is desperately needed in our current reality, which is sometimes disregarded by unscrupulous and influential individuals such as business leaders and politicians. It is within our power to create a positive influence on the world, as you, the reader, are most likely in the perfect position to initiate change and solve challenges that you feel passionate about. Before becoming a sustainability leader, you must acknowledge that it will require deep self-reflection and fearless pursuit of the truth. Collectively, you and I must strive for a brighter future, whether it be in our communities, neighborhoods, or even families, because there is little sand remaining in the hourglass.
E x tra read i n gs : [1] C il lizza, C. (2 0 1 7 , 0 8 0 8 ) . T h e Po i n t. Re tr i eve d f rom CN N Politics: http s://w w w. cnn. com/2017/08/08/p oliti cs/ tru mpglo bal - warm ing / ind e x . h tml [2] Pa rs o ns , A ., & G o l d ma n , R. (2 0 2 0 , 0 1 0 1 ) . W h y the F ires in Australia Are S o B ad. Retr ieve d f rom T he N e w York Times: h ttps:// www.ny tim e s . c o m/2 0 2 0 /0 1 /0 1 /w o r l d /a u s tralia/f ire s. html?se archResultPosition=2 [3] Torre , G . (2 0 2 0 , 0 1 0 5 ) . T h o u s a n d s o f k o a l a s bur n to death as Australia fe ar s native w ildlife may neve r recover from bus h f ire d is as te r. Re tr i eve d f ro m T h e Te l e g ra ph : h ttp s://w w w. te leg rap h. co. uk/ne w s/2020/01/05/thousands-koalas-bu rn dea th -aus tralia- fe ars- n a ti ve - w i l d l i fe / [4] C oo p e r, H ., Sc hm i tt, E . , Ha b e r ma n , M . , & C a l l i m achi, R. (2020, 01 04). As Tensions With Iran Escalate d, Tr ump Opted fo r Mos t E xtre m e M e a s u re . Re tr i eve d f ro m T h e N e w Yor k T ime s: http s://w w w. ny times. com/2020/01/04/us/p ol itics/ tru mp- s ule im ani.htm l [5] K ap lan, S., Ric htel , M . , & C re s w e l l , J . ( 2 0 1 9 , 0 9 25). Juul Re p lace s Its C. E. O. With a Tob acco Executive . Retrieved from The N e w Yo rk Ti me s : h ttps : //w w w. n yti me s . c om/2019/09/25/health/j uul-vap ing . html [6] Viss e r, W., & Co ur ti c e , P. ( 2 0 1 7 , O c to b e r ) . S u s ta inab ility Leade r ship : Linking T heor y and P ractice . doi:10. 2139/ s s rn .19 4 7 2 2 1 [7] Harg re ave s , A ., & F i n k, D. ( 2 0 0 4 , A p r i l ) . T h e S eve n P r incip le s of S ustainab le Le ader ship . Educational Leadersh ip, 61(7). [8] C re ws , D. E . (2 0 1 0) . S tra te gi e s f o r Imp l e me n ti n g S ustainab ility : F ive Leade r ship Challe ng es. S AM Advanced M an ag e m e nt Jo urnal, 7 5 (2 ) , 1 5 - 2 1 .
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WHY A RE C OMPAN IE S TA K ING M EA S UR ES TO AC H IE VE COR PORAT E S OC I AL R ESP ONS IB ILIT Y? B y Ya sh a swi V i g m aj o r i n F i n anc e
Today companies are taking various measures to achieve corporate social responsibility (CSR). Some of these measures include implementing sustainable practices, taking part in charitable organizations, advocating for social causes, and having a more inclusive and diverse workforce. Due to changing trends in the workforce and consumer preferences over the years, it has become increasingly important for companies to achieve CSR. Furthermore, rising concerns regarding climate change are urging companies to take action to achieve the following: Enhanced Brand Image Many companies establish new policies and standards in addition to investing in new renewable energy projects with the goal of improving their brand image. Pfizer is among the companies that are committed to funding programs that provide healthcare facilities for underprivileged women and children in the world. Pfizer’s CSR strategies have changed consumer perceptions and have
helped it become a recognized global brand for pharmaceuticals. Not only have these strategies strengthened the company’s reputation, but they have also proven the company’s dedication to caring for society by better relating to people. Financial Growth Along with brand image, an increasing number of companies have begun to take measures to improve their CSR image in society and regain the trust of customers, increase customer loyalty and ultimately achieve financial growth. Lawsuits, protests, and complaints from lobbying groups can severely damage a company’s reputation and result in financial losses. A key example of this is CocaCola. A few years back, an Indian NGO published a report that found pesticides present in Coca-Cola products which exceeded the European standard. This report gained a great deal of attention from the media and the public, which lead to an immediate drop in company revenues. It had also led to a loss of consumer trust and damaged the company’s
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worldwide reputation. To combat this, Coca-Cola got involved in the Aqueduct Alliance, which focused on addressing the ecological and environmental concerns of society. Not only did this CSR strategy allow the company to improve its financial performance, but it also helped Coca-Cola earn its rank as the 6th best company in the world by Forbes. Higher Employee Retention Employees decide whether or not to work at a company based on its corporate culture. With global integration and migration spreading over the world, it has become increasingly important for companies to have a diverse workforce. Other major issues that companies must address in North America are pay and childcare benefits. Apple has set an excellent example of CSR in the world through its childcare benefits program which includes new parent leaves, dependent daycare spending accounts, and caregiving. The launch of this program improved the overall morale of the company’s employees, increased productivity, staff retention, and also increased women’s participation in the workforce at Apple Inc. Along with salary and career opportunities, childcare benefits CSR policy is another contributor to Apple’s status as a desirable employer.
Why Does This Matter? A company’s corporate social responsibility policy contributes to its success in the industry it operates in. Over the years, implementing sustainable practices or investing in renewable energy projects has become a prominent trend. Taking measures to improve CSR allows companies to combat lawsuits, address societal concerns, and ultimately remain competitive in the industry. Extra readings: [1] h ttp s : // c hanne ls .th e i n n ova ti o n e n te r pr i s e . c o m/ar ticle s/w hy -cor p orate -social-resp onsib ility -is-b e coming -moreimpor tant- to - o rg aniz a ti o n s [2] h ttp s : // d ig italm ar ke ti n gi n s ti tu te . c o m/e n - c a /bl og /cor p orate-16 -b rands-doing -cor p orate -social-resp onsib ili tysu c c ess fully [3] Par tne ring to I m p rove He a l th f o r A l l | Pf i ze r [4] h ttp s : // b lo g .ip le a d e r s . i n /c o ke - c o l a - u s i n g- c o r p orate-social-re sp onsib ility /
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AN OD E TO S U C C E S S F UL C US TOM ER S ERV IC E By Patricia Pop and Cristina Cosma major in Sociology with a minor in Business Studies
An entrepreneur launching a new business in the upcoming weeks will have probably thought of everything from the product to the pricing to the location of their store. However, an overwhelming number of businesses fail – according to Forbes, 20% fail in the first year and half of the remaining ones fail within five years (Otar, 2018). In an article published in Entrepreneur magazine in December of 2016, R.L. Adams claims that only 4% of businesses survive their first decade. This failure is overwhelmingly due to a lack of customer base to purchase the business’ product offering. As many entrepreneurs will tell you, you can have the perfect product and the best marketing strategies, but if there is no demand for that product, your business is doomed to fail. Once you have customer demand, you need to maintain it, and to do that, outstanding customer service is the only way to go. An additional reason behind these failures is not having the right team, according to Chad Otar. The
right team would perhaps favor a focus on customer service instead of marketing, as good customer service can lead to positive word of mouth which has been proven to be a successful, and relatively inexpensive marketing strategy (Adams, 2016). Quality customer service can also help expand the lifetime of a business. As Adams puts it, When you ignore the needs of your customers, and you don’t focus on going out of your way for them, you’re cutting short the potential for longevity in business […] if you’re serious about your business, you have to focus on the core -- your customers. Because, without them, you have no business at all. Although the marketing concept of the 4 Ps is widespread, it is also becoming increasingly antiquated due to one factor: it fails to account for stakeholders. In fact, the 4 Ps should be rebranded as the 5 Ps: Product, Price, Promotion, Place and People. This essay does not claim to be a revolutionary discovery of the fifth area of focus, but rather a reminder of the importance of this 5th P. New businesses and
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thriving ones have not necessarily been ignoring the importance of people either; many have been giving their customers an increasing amount of attention. It remains, however, that some entrepreneurs fail to give this area proper consideration and dedicate sufficient funds to customer service operations, especially upon launching a new venture. Even among big names, some implement their customer service policies better than others. To prove this point, we interviewed a serial complainer, who will be referred to from here on out as Ellen to protect their anonymity, and who has granted us insight into their exchanges with the customer service departments of several big firms. Customer service as the forefront business strategy is not only “the right thing to do; it also makes great business sense,” as the 2017 American Express Customer Service Barometer survey put it. Not only is great customer service the only way to retain clients, it’s a good way to justify higher prices seeing as American consumers are reportedly “willing to spend 17% more” on a company with outstanding service, according to the same survey. This is the reality under which Starbucks operates; its premium prices are matched by its excellent customer service and dedication to consumer satisfaction. Ellen has had two unpleasant experiences with Starbucks, one online and one in a foreign branch of the coffee shop, but her complaints were met with professionalism and resolve, ensuring she remains a loyal customer. While travelling in Europe, Ellen tried using her points card at a local Starbucks only to be rudely told the card did not work in that location, contrary to what was indicated in the window of the shop. Here was the response from Starbucks’ customer service:
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In the second incident, Ellen was not awarded her loyalty points for an online purchase. The response she received for that complaint was similar in nature to the one pictured above. In both cases, the customer service agent was understanding, knowledgeable and took steps to find a solution. Both responses also offered financial remuneration in the shape of credit to Ellen’s account, but this kind of remuneration is not necessary for the service to be considered outstanding. Last year, right before the biggest storm of the year, Ellen bought a sturdy pair of boots to brave the winter ahead. The laces soon fell apart and the soles became damaged very quickly. Ellen reached out to the customer service department of Columbia. What she got in response wasn’t a gift card, but options. Columbia offered to send her replacement laces off
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12 the bat. If that was insufficient, they offered to pay for the return shipping of the boots to have them assessed by the warranty team. However, since there was a storm happening at the time, the customer service agent agreed that shipping the parcel was perhaps not the best course of action. Going off pictures of the boots that Ellen had attached to her complaint, the customer service agent offered to reimburse up to $35 of repairs at a local cobbler– as long as the warranty was in effect and the cobbler stamped the receipt to be reimbursed.
This last example might have involved the firm paying to fix the product, but what stands out is the array of options from which the client could choose what best suited them. Another important aspect of this response was the apology for the inconvenience and an immediate attempt to rectify the customer’s dissatisfaction. Although there are different ways of tackling customer dissatisfaction, as proven by the above examples, what matters is making the customer feel heard and understood. The American Express survey revealed that millennials are more likely to spread the word about positive customer service experiences than they are for poor ones, marking a change from previous generations’ inclinations (2017). Positive experiences lead to positive word of mouth which in turn leads to customer retention and acquisition. As the old business adage states: It’s cheaper to retain customers than it is to acquire new ones. To this effect, a document written by Fred Reichheld of Bain & Company suggests that “customers generate increasing profits each year they stay with a company” and that a mere 5% bump in business from existing customers can lead to as much as 25% higher profits from this customer segment (2001). Now those are numbers companies should be getting behind.
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13 And if numbers are what is necessary to convince, these, pulled from an infographic created by Vonage in August of 2019, do a compelling job: Every year in the United States, $41 billion in business revenues are lost due to poor customer service. Also worth noting is that 44% of American consumers have reported switched businesses “as a result of inadequate service” which can include feeling unappreciated (as reported by 53% of respondents) and having to deal with rude or unhelpful employees (reported by 42% of respondents). Taking things a step further, in his Entrepreneur magazine article, Adams finds many positive outcomes of good customer service on the non-customer functions of the business. The author states that quality customer service “improves employee turnover” as employees are more likely to feel pride in their work and feel valued when they are encouraged to treat the customer well. Treating customers right can also welcome business opportunities from like-minded companies, as was the case of the Zappos acquisition by Amazon. Adams claims that this partnership was made possible because both companies shared the “same values and beliefs” of putting the customer first. The point was never to question whether customer service is important, but rather to point out that there are many ways to climb a tree and to do so effectively. Although only Starbucks and Columbia were given as examples, many more companies immediately come to mind when one thinks of outstanding customer service. Those doing it right benefit not just from increased revenues, but from employee satisfaction and retention, and a widening selection of business opportunities. Extra Readings: [ 1] American Express, Customer Service Barometer, 2017: https://about.americanexpress.com/press-release/wellactually-americans-say-customer-service-better-ever [ 2] Fred Reichheld, Bain & Company, 2001: http://www2.bain.com/Images/BB_Prescription_cutting_costs.pdf [ 3] Nicola Brookes, Vonage, 2019 https://www.vonage.com/business/perspectives/the-multibillion-dollar-cost-of-poor-customer- service-infographic/ [ 4] R.L. Adams, Entrepreneur, 2016 https://www.entrepreneur.com/article/284799 [ 5] Chad Otar, Forbes, 2018 https://www.forbes.com/sites/forbesfinancecouncil/2018/10/25/what-percentage-of-small-businesses-fail-and-how-can-you-avoid-being-oneof-them/#1a975e5243b5
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A SOMB E R OU T LOOK F OR T HE WOR LD EC ONOMY By Professor Pierre Fournier
Despite the stock market’s all-time highs, the negative impacts of ongoing trade tensions on the global economy are becoming increasingly visible. Global trade remains stagnant while the threat of new tariffs, particularly between China and the United States, continues to undermine business investments and harm the prospects of the manufacturing sector. In the eurozone, Germany is likely already in a recession, while France has shown some resilience. Despite a new Brexit withdrawal agreement, the issue risks negatively impacting the UK’s economic outlook. China’s growth slowdown continued in the third quarter, posting an annual real GDP growth of 6.0%, the lowest level in decades. Furthermore, recent concerns over the coronavirus are ratcheting up worries over its impact on the world economy as China is one of the biggest drivers of global growth. Markets hate unpredictability and the coronavirus is the ultimate uncertainty because no one knows how dire its effects will be on the global economy.
The current period of weak global economic growth could persist until 2021. Measures taken by central banks, such as interest rate cuts in the United States, will help limit the damage. However, these measures are unlikely to fuel a sustainable growth acceleration if current levels of uncertainty persist globally. Without a clear “positive” outcome in the trade negotiations between China and the United States (despite the Phase 1 deal mid-January), the next few months may see no clear trend in the performance of stock markets, bond yields and the Canadian dollar. Much will depend on whether the US and China opt to suspend a new round of tariffs, which is set to go into effect in the next few months if trade tensions remain high. In the United States, growing signs of economic slowdown have emerged, although the trend has not spread to the whole economy. The ISM indexes and several other labour market indicators are pointing in
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a negative direction. However, unemployment has hit a new low and some consumer confidence indicators are up. The situation is encouraging in Canada. The gradual resumption of oil production in Alberta helped Canada’s GDP growth reach 3.7% last quarter. Consumer spending and residential investment have been boosted by a robust labour market and high consumer confidence. However, uncertainty surrounding foreign trade remains present and is likely to continue to affect Canada’s growth. The domestic economy’s resilience has led the Bank of Canada to leave its benchmark interest rate unchanged since the beginning of 2019. This status quo should persist in the coming quarters, with the decline in bond yields and mortgage rates already supporting Canada’s economy while raising new concerns regarding household debt. Meanwhile, Quebec continues to be a strong performer. Despite mounting difficulties in foreign trade, Quebec’s economy kept up a brisk pace in the first half of the year. Job creation remains strong and unemployment stands near its historical monthly low of 4.7%. Finally, the residential real estate market has reached new heights in terms of sales and prices.
Extra Readings: [ 1] Wall Street Journal, The Guardian, The Economist, Les Affaires, Bloomberg.
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THE BENEFITS OF RATIONAL SELF-INTEREST, A DEFENCE OF CAPITALISM By Alexander Modonese major in Communication Studies
I want to start by saying that Capitalism is by no means a perfect system, free of exploitation. However, it is arguably the most efficient economic system ever devised due to it being based on mutually beneficial trade, human prosperity, and continuous innovation. Capitalism is Based on Consent, Not Exploitation One of the most common fallacies we hear about Capitalism is that it is a system founded on exploiting the most vulnerable members of society. However, this could not be further from the truth. In his text “The Wealth of Nations”, Adam Smith states that Capitalism, as paraphrased by Investopedia author Rakesh Sharma, is a system in which “Every person, by looking out for themselves, inadvertently helps to create the best outcome for all” (Sharma 1). This cannot be achieved without the consent of all the parties participating in the exchange.
price-fixing—could be most accurately described as crony Capitalism, rather than free-market Capitalism. In Quebec, this occurs regularly through the SAQ, which to the detriment of consumers, maintains a monopoly over the sale and distribution of alcohol. This lack of market competition forces the public to pay exorbitantly high prices and leaves them with significantly less disposable income. You may not realize it, but every time you make a purchase, you are tacitly endorsing the quality of the product, its efficacy, and the values perpetuated by the organization selling it. Consequently, to prevent corporations from engaging in unethical behaviours, it is essential to think very carefully about the products we buy. This is exemplified by the phenomenon of ethical consumerism, which has led to the growth of Fairtrade Certifications, as well as GMO-free, locally sourced, and cruelty-free products (Kirchoff 1).
Any instances which involve the coercion of an individual—typically through government lobbying, and
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Contrary to popular belief, we as individuals are not helpless as we have the power to encourage companies to renounce socially regressive beliefs through boycotts. For example, in 2013, the CEO of Barilla Pasta received widespread criticism for stating that he would only feature heterosexual families in his advertisements (Davies 1). The international dissent he received for these comments prompted an apology and the appointment of a Chief Diversity & Inclusion Officer (Buckley 1). Due to this social pressure, according to Bloomberg, the company has now received the highest possible score on the Human Rights Campaign’s Corporate Equality Index for five years (Buckley 1). One could even argue that due to its foundation on meritocracy, Capitalism is the most optimal means of fostering social inclusivity. This is because organizations that choose to discriminate against employees based on arbitrary characteristics, such as skin colour, will be at a significant disadvantage and will likely eventually succumb to market forces. Renowned African American economist Thomas Sowell explains that: “Capitalism knows only one colour: that colour is green; all else is necessarily subservient to it, hence, race, gender and ethnicity cannot be considered within it” (Ridgers 14). Capitalism has led to More Prosperity than any Previous Economic System One of the best arguments in favour of Capitalism is that it was a crucial factor in one of the most important changes in human historythe Industrial Revolution. Economist Yaron Brook summarizes this argument by asserting that: “The value of leaving individuals free to think, to innovate, to produce without asking for permission, without getting the state to sign off on it [led] [to] the Industrial Revolution” (Stossel 1).
Contrary to popular belief, government funding is not necessary to encourage scientific development. Nearly all the major inventions we currently enjoy were led by a desire for profit, rather than altruism. For example, James Watt’s steam engine, which was arguably the most important invention of this era, was devised to increase the overall efficiency and productivity of his factories (McFadden 1). The Dickensian portrait of the industrial era, which focuses exclusively on the poverty and misery which ensued, is not entirely accurate since it fails to consider the enormous long-term benefits of industrialization. For example, Oxford economist Max Roser’s findings have shown that the technological progress experienced during the 19th century has significantly increased human productivity in all sectors and has steadily decreased the number of hours worked in nearly all industrialized countries (Roser 1). Moreover, according to economists Brook and Watkins, it was this increase in wealth, not the issuing of government decrees, which led to the gradual abolition of child labour and increased protection for workers (Brook and Watkins 1). One of the most popular myths perpetuated by socialists is that wealth can only be earned through exploiting and stealing from others. Contrary to these claims, in a free market system without government favouritism, entrepreneurs can only earn wealth by creating something new, which others consider to be valuable. Unlike the public sector, profit generated in the private sector is also typically re-invested in the company to fund future innovation and increase its overall growth. This benefits all shareholders, employees, and owners within the organization. Although it is true that new profit is not equally distributed, it is only fair that the individuals who have invested the most capital, and who have consequently
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assumed a larger risk, should be given a greater share of the rewards. Contemporary Examples of Capitalism’s Success Dispelling the Myth of Scandinavian Socialism Countries such as the former USSR, which strayed from a free market system through implementing a planned economy, have consistently experienced disastrous results, such as authoritarianism and destitute poverty. Since its collapse in the 1990s and the subsequent discreditation of the Marxist ideology, global poverty has dramatically fallen (Worldbank 1). Most recently, democratic socialists, such as Bernie Sanders, have shifted the discussion away from former communist dictatorship, pointing instead to Scandinavian countries as examples of successful socialism. Sanders’ fallacious claims fail to consider that according to the Heritage Foundation’s 2019 Economic Freedom Index report, the Netherlands, Iceland, Finland, and Denmark were all ranked among the top 20 most economically free countries in the world (Miller et al. 2). In fact, in order to dispel this myth, while speaking at Harvard’s Kennedy School of
Government, former Danish Prime Minister Lars Løkke attempted to set the record straight (Thelocal 1). He asserted: “I know that some people in the US associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy” (Thelocal 1). Moreover, economic freedom typically also leads to additional personal and political freedom. For example, the 2017 CATO institute Freedom index report found a strong correlation of 0.7 between personal and economic freedom (Vásquez et al. 30). The top three countries on the list, Switzerland, Hong Kong and New Zealand, were also all ranked at the top in terms of both economic and personal freedoms (Vásquez et al. 8). A contemporary example of how Capitalism can lead to enormous prosperity is Chile, which has among the highest GDP per capita in its region (Vásquez 1). Director of the Cato Institute’s Center for Global Liberty and Prosperity, Ian Vásquez, explains that: “Since its free‐market reforms began in 1975, Chile has quadrupled its income per capita, making it the most prosperous country in Latin America” (Vásquez 1). In addition, this has led to extensive improvements in numerous other areas, including overall well-being, which can be seen through maternal mortality rates and access to proper sanitation (Vásquez 1). In contrast, the abundantly resource-rich country of Venezuela has been completely ravished by its planned economy and is now one of the poorest countries in the region. The Repercussions of Envy Despite this overwhelming evidence, the philosophy of a socialist planned economy persists on many college campuses and remains an important part of the political discourse in Quebec society. In fact, until the recent election of the CAQ party, one could argue
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that there has been almost no concerted political effort in the province to promote fiscal conservatism. This is particularly alarming because, according to the Fraser Institute, Quebec has the second-highest deficit among all provinces in Canada (Fraser 1). Just to clarify my position, I do not believe that being pro-free markets necessarily entails cutting vital social programs that poor Canadians rely upon. However, it is crucial that we carefully evaluate the
long-term sustainability and effectiveness of the current policies. Ultimately, fiscally irresponsible spending policies will have a detrimental impact on future generations, due to increasing the country’s overall deficit, thus devaluing our currency, and potentially leading to an overall increase in taxes. According to economic researcher Michael Tanner of the Cato Institute, since 1965, the US government has spent over $23 trillion to fight poverty, with marginally
positive effects (Tanner 1). One of the primary reasons why I support a capitalist economic system is because, based on the available evidence, it is the most effective means of improving the quality of life for the poor and facilitating social mobility. When asked about how to cover the costs associated with increased social security programs, left-wing politicians typically explain that this can be achieved by increasing taxes on the wealthiest 1% of earners. However, according to The Fraser Institute, the top 1% in Canada already pay 17.9% of total federal and provincial income taxes (Fraser 1). This unjustified objection to wealth, not only thoroughly contradicts nearly every economic theory, including Keynesianism, which is often praised by progressives, but also punishes the successful (Beccaro 1). Although most socialists claim that their ideology is motivated by compassion, the reality is that a desire to redistribute wealth which has been legitimately obtained can be more accurately attributed to envy. In a free market system, the primary source of income inequality is the choices that individuals voluntarily make, such as what they choose to study. Perhaps most alarmingly, this ideology has also become increasingly prevalent in the US, which has historically favoured the pursuit of individuality and liberty. Interestingly, the recent rise of rightwing populism, which tends to favour measures like immigration control to protect the interest of America’s working class, was historically a left-wing position (Prakash 1). For example, in a speech from 2007, Sanders asserted: “I believe we have very serious immigration problems in this country, I think as you’ve heard today, sanctions against employers who employ illegal immigrants is virtually nonexistent. Our border is very porous” (Apper 1). It is worth noting that Sanders has since renounced this position, but many right-wing correspondents such as Tucker
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Carlson now use similar arguments to defend restrictions on legal and undocumented migrant workers. Contrary to these assertions, legal global immigration is among the most effective means of increasing the spending power of people living in impoverished nations. In 2018, according to the World Bank, a total of 529 billion dollars of remittances were sent to low and middle-income countries (Worldbank 1). Economist Bryan Caplan asserts that “Virtually all poverty reduction comes from economic growth and migration – not redistribution or philanthropy” (Caplan 1). It is untenable for a country to impede the development of other nations through strict border regulations, which significantly limit the economic opportunities of migrant workers. Ultimately, these restrictions are also antithetical to free markets since they limit competition by preventing companies from hiring the most skilled and qualified employees. The increased productivity which would ensue if migrant worker restrictions were abolished or severely limited would also be beneficial to consumers, due to lowering the price of commodities and increasing disposable income. Since the 1960s, due to market competition and increased innovation, the prices of most commodities have been steadily declining, even when we take inflation into account (Tupy 1). Unfortunately, sectors which are government-funded, such as childhood education and healthcare in Canada, seldom produce the same amount of innovation and choices for consumers which exist in the private sector. These remarkable results are only a microcosm of the prosperity which humanity could experience if all unnecessary market restrictions were eliminated. In her book the “Unknown Ideal”, author Ayn Rand states: “Capitalism was the only system in history where wealth was not acquired by looting, but by production, not by force, but by trade, the only system that stood for man’s right to his own mind, to his work, to his life, to his happiness, to himself” (Goodreads 1). To conclude this essay, I would like to encourage readers to challenge family, friends, or professors that are vehemently opposed to Capitalism by posing a simple question: what viable alternatives can lead to a similar amount of prosperity? In all likelihood, this will
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result in them either evading or dismissing your question. In my opinion, one of the essential moral principles which we should strive to follow in order to live a meaningful life is to constantly seek out the truth, regardless of what the consequences may be. Acclaimed author and survivor of the Russian Gulags, Aleksandr Solzhenitsyn, asserts that: “The simple step of a courageous individual is not to take part in the lie. One word of truth outweighs the world” (Goodreads 1).
Extra Readings: [ 1 ] A pp e r, M e g an . “ B e r n i e Sa nd e r s On I mmigra tio n I n 2007 Vid eo: Th is Is A Bad Bill For A m erican Workers.” Bu zzFeed News, B u zzFe e d N e w s, 20 Fe b . 2016, w w w. buz z fe e d ne w s . c o m/a r tic le /m eg anap p er/b ernie- sanders- on - im m ig ration- in - 2 0 0 7 - video- th is- is- a- b ad- b i. [ 2 ] B eccaro , T ho m as D e l . “ Keyne s Wo uld No t Ra is e Ta xe s To d ay.” Forb es, Forb es, 5 Dec. 2 0 1 2 , www.forb es.com /sites/th om asdelb eccaro/2 0 12/ 12/ 05/ key n e s- w o u l d - n o t- rai se - ta xe s -to d ay/# 60f6a 54b9c 62. [ 3 ] B ro o k , Yaro n , an d Do n Wa tk ins . “C a pita lis m in No Way C re a ted Pover ty It In h erited It.” Th e Ayn Ran d Institute, 2 5 Feb . 2 0 1 3 , ari.ayn ran d.o rg / issu e s/ gove rn m e n t- an d - b u si n e ss/ c a pita lis m/c a pita lis m-in-no -w ay-c re a ted- p over ty- it- in h erited- it/. [ 4 ] B u ck l ey, T h o m as. “ B ar illa Pa s ta’s Tur na ro und Fro m H o mo phob ia to National P ride.” Bloom b erg .com , Bloom b erg , 7 May 2 0 1 9 , www.b loomb e rg .co m / n e ws/ fea tu re s/ 2019- 05- 07/ b ar i lla -a pa s ta -s -tur na ro und -fro m-ho mo phob ia- to- national- p ride. [ 5 ] C a p l an , B r yan . “ E scap ing Pove r ty.” Ec o nlib, 16 Oc t. 2018, w ww.econlib .org /escap ing - p over ty/. [ 6] Davi e s, L i z z y. “ Pasta F ir m Ba r illa Boyc o tte d ove r ‘C la s s ic Fam ily ’ Rem arks.” Th e Guardian, Guardian News an d Media, 2 6 S ep t. 2 0 1 3 , www.the g u a rdia n . c om /w o r l d / 2013/ se p / 26 / pa s ta -f ir m-ba r illa -boyc o tt-gay. [ 7 ] Fra s e r. “ Gove r n m e n t D e bt— a Sna ps ho t o f E a c h Provinc e .” Fraser Institute , Fraser In stitute , 2 9 O ct. 2 0 1 8 , www.fraserin stitute.org /b log s / g ove rn m e n tde b t-a - sn ap sh o t- o f - e ach - p rovinc e . [ 8 ] Fra s e r. “ M e asu r i n g the Dis tr ibutio n o f Ta xe s in C a na d a : Do th e Rich Pay Th eir ‘Fair S h are’?” Fraser In stitute , Fraser Institute , 3 0 Nov. 2 017, www. f ra s eri n sti tu te . o rg / stu d i e s /me a s ur ing-the -d is tr ibutio n-o f-ta xe s - in - can ada. [ 9 ] K i rch h o f f , Ch r i sto p he r. “E thic a l C o ns ume r is m.” E nc yc lo pæd ia Britann ica, Encyclop æ dia Britan n ica, Inc., 1 7 May 2 0 1 6 , www.b ritan n ica.co m / to p ic/ e thica lc on s u m e r i sm . [ 1 0 ] M cFad d e n , Ch r i sto p he r. “ 27 I nd us tr ia l Revo lutio n Inve ntio ns Th at Ch an g ed th e World.” Interestin g En g in eering , In terestin g En g in eering , 10 Fe b . 2020, i n tere sti n g e n g i n e e r i n g . co m/27-inve ntio ns -o f-the -ind us tr ia l-revolution- th at- ch an g ed- th e- world [ 1 1 ] M i l l e r, Te r r y, e t al . “ 2 019 Ec o no mic I nd e x o f Ec o no mic Fre e dom 2 5 th A nn iversar y Edition .” Th e Heritag e Fou n dation, Th e Heritag e Fou n da tio n , 2019, www. h e r i tag e . o rg / i n d e x / pd f/2019/bo o k /ind e x _ 2019. pd f. [ 1 2 ] P rak ash , N i d h i . “‘ H e H a s Ma d e Wild Shifts ’: H o w Be r nie Sa nders Has Ch an g ed His A p p roach To Im m ig ration.” Bu zzFeed News, Bu zzFeed Ne ws, 21 J a n . 2 0 2 0 , w w w. b u z z fe e d n e w s. c o m/a r tic le /nid hipra k a s h/be r nie -s a nders- im m ig ration - record. [ 1 3 ] Ran d , Ay n . “ Cap i tal i s m Quo te s by Ayn R a nd .” G o o d re a d s , G oodreads, 2 0 2 0 , www.g oodreads.com /work/quotes/1 4 0 9 5 4 1 8 - cap italism - th e-u n kn o wn - ide a l. [ 1 4 ] Ri d g e r s, B i l l . T he Eco no mis t Bo o k o f Bus ine s s Quo ta tio ns . Econ om ist, 2 0 1 2 . [ 1 5 ] Ro se r, M ax . “ Wo r k i n g H o ur s .” Our Wo r ld in Da ta , U ni, 4 M a r. 2 0 1 3 , our worldin data.org /workin g - h ours. [ 1 6 ] S h ar m a, Rake sh. “Ad a m Smith: T he Fa the r o f Ec o no mic s .” Investop edia, Investop edia, 1 6 Feb . 2 0 2 0 , www.investop edia.com /up dates/ad a m - sm ithe c on om i cs/ . [ 1 7 ] S o l z he n i tsy n , Al e k sa nd r. “Ale k s a nd r So lz he nits yn Quo te s (Au th or of O n e Day in th e Life of Ivan Denisovich ) .” Goodreads, Goodreads, 2020, www. goodre ad s. co m / au tho r / quo te s /19771050. Ale k s a nd r _ So lz he nits yn. [ 1 8 ] S to sse l , J o h n . “A D e fe ns e o f the M o ra lity o f C a pita lis m.” San Gab riel Valley Trib un e, S an Gab riel Valley Trib un e, 1 9 Ju n e 2 0 1 9 , www.sg vtrib u n e . c om/2 0 19/ 06 / 19/ a- d e fe n se -o f -the -mo ra lity-o f-c a pita lis m/. [ 1 9 ] Tan n e r, M i chae l D. “ Wha t’s Mis s ing in the Wa r o n Pove r ty? ” Cato In stitute, 2 3 J an . 2 0 1 9 , www.cato.org /p u b lications/com m en tar y/wh at s- m issin g - wa rpove r ty. [ 2 0 ] T h e l o cal . “ D an i sh P M in U S: De nma r k I s N o t So c ia lis t.” T helocal.dk, 1 Nov. 2 0 1 4 , 0 9 :3 8 , www.th elocal.dk/2 0 1 5 1 1 0 1 /dan ish - p m - in - u s- den m a rk- is- n o ts oc i a l ist. [ 2 1 ] Tu py, M ar i an . “ Ch an ge s in C o mmo d itie s Pr ic e s Sinc e 1960 Sh ow a Rich er World.” Reason .com , Reason , 2 4 Jan . 2 0 1 7 , reason.com /2 0 1 7 / 01/ 24/ cha n g e si n -c om m o d i ti e s- p r i ce s- si nc e -1960/. [ 2 2 ] Vá squ e z , Ian , e t al . “ The H U M AN F RE E DOM I N DE X 2019.” C ato Institute , Cato Institute , 2 0 1 9 , www.cato.org /sites/cato.org /files/h u m a n - f re e do m - in de xf i l e s /2019- hu m an - f re e d o m-ind e x -upd a te -2. pd f.
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FISA is proud to present: Future of Finance, a forward-thinking and innovative conference which will transform the way students see the finance field and its future. The first edition of this event will be open to all students in Montreal who come from different schools and backgrounds, which will help stimulate diverse and interesting conversations between students and professaionals alike. Thought-provoking workshops, panel discussions and networking session will encourage participants to work in teams and think outside of the box. Students will embark on a journey of discovery and learning with business leaders and other talented students. Attending the Future of Finance interactive conference will not only give participants valuable insights into the finance field but will also help them acquire valuable leadership skills they will be able to use throughout their entire professional career.
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PATRICIA POP JMBR has the honour to dedicate this issue to it’s past President and Editor-in-Chief, Patricia Pop. Patricia was a valued member of the JMBR family. Her leadership, assertiveness and laughter will be missed. We wish her all the best in her future endeavors. With much love ~ your JMBR family ♡ JOHN MOLSON BUSINESS REVIEW
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