Why is a focus on the bottom line literally a race to the bottom?
The race to the bottom is a socio-economic phrase which is used to describe government deregulation of the business environment or taxes in order to attract or retain economic activity in their jurisdictions. An outcome of globalization and free trade, the phenomenon may occur when competition increases between geographic areas over a particular sector of trade and production.
Bottom line refers to a company’s net earnings, net income or earnings per share (EPS). The reference to “bottom” describes the relative location of the net income figure on a company’s income statement. Most companies aim to improve their bottom lines through two simultaneous methods: growing revenues (i.e., generate top-line growth) and increasing efficiency (or cutting costs).
Triple bottom line is a phrase introduced in 1994 by John Elkington and later used in his 1997 book “Cannibals With Forks: The Triple Bottom Line Of 21st Century Business,” which seeks to broaden the focus on the financial bottom line by businesses to include social and environmental responsibilities. A triple bottom line measures a company’s degree of social responsibility, its economic value and its environmental impact. A key challenge with the triple bottom line, according to Elkington, is the difficulty of measuring the social and environmental bottom lines, which necessitates the three separate accounts being evaluated on their own merits.
In last week’s article entitiled Is CORRUPTION the invisible hand of the free market?, I endeavoured to show that our rules of engagement at the global level have been corrupted with the invention of money when it became a store of value and a standard of debt repayment as it facilitated the destruction and devaluation of life capital by its stewards in positions of trust for the benefit of maximising money capital interests. Even worse, I am now beginning to appreciate that nation states were invented to protect the vested interests of the private ruling classes, as the stewards of these nation states (called government) now enact laws and enforce them, not in the best interests of their people (who are in the majority) but for the financial benefits of the minority ruling class elites within and without their jurisdictions.
With globalisation and “investor protector rights agreements,” our nation states have now become “treatied sub-states” competing for capital inflows so as to generate government revenue. Interestingly, by having VAT being used as a source of revenue that is a percentage of the price of goods and services in the transaction exchange mechanisms, our “treatied sub-states” governments are now totally captured and dependantly “forced” to reduce any regulations that impede the flow of capital, as it pertains to laws of protection for labour, health and the environment. Tax incentives, flags of convenience and secrecy jurisdictions are also established to facilitate the flow of money capital by transnational “treatied supra-states” to areas that would positively affect their bottom line.
Hence jobs are outsourced to areas of weak or nonexistent regulations that protect labour, health and the environment, income gained is layered, shelled and offshored in secret trust entities to minimise tax repatriation in countries where taxes are due, and there is great potential for state-sponsored actors to launder black money of proceeds from the drug trade to fund proxy wars to enrich these money interests and their proxy wars for expediency sake. Although there may be legitimate reasons for international financial centers to operate behind the veils of opacity and plausible deniability, my sense is that the potential for abuse is much greater given the reasons cited above, and does more harm than good within and between countries they serve.
So to compete in the global arena to maximise the bottom line, it has become a race to the bottom for many of our “treatied sub-states”. As a result, our Mother Earth has become more devalued and polluted, her resources have become depleted, climate has been destabilised, living standards have declined, diseases have skyrocketed, income and wealth inequality has widened, public and private debt is at its highest, and the prospects for conflict and an attendent global war, with intimations of nuclear armaggedon, is at its highest probability ever.
If this is not corruption at the highest degree where the stewards of the public purse abuse their trust and power for private money-maximisation gain, I do not know what is. Although in the corporate world, we hear of pronouncements of trojan concepts of the like of the triple bottom line and public-private partnerships, they function to get one foot in the door before they begin strip-mining the life supporting system of the planet and the people for financial gain.
The only solution to this realisation is to reset and rebase our bottom line on maximising life-capital wealth, via new rules of engagement based on protection of people’s lives, health and that of their environments. The triple botton line will now be made fuly life coherent and rebased on life-value coordinates, where money’s use is no longer corrupted and abused as a store of value or a standard for debt repayment, but stewarded properly and used as a means of exchange and method of accounting. Public banking systems, complementary currencies and worker-owned cooperatives will become the order of the day.
The added benefit of this is that data for money flows and investments can be collected, collated and shared in a transparent and accountable manner, where policy decisions can now be gauged, moinitored and evaluated based on trustworthy data to inform evidence-based policies. Secondly, we can have open competition of sharing of ideas and best practices in many fields of our human endeavours that will no longer be construed as a race to the bottom, but now a gentle stroll to the top. Instead of the whole being less than the sum of the parts in terms of life-capital wealth sustanance and creation, it would be now more than the sum of the parts. Globalisation will now find its right place, no longer among “treatied-substates” competing and warring with each other for the crumbs that have trickled down from the plates and tables of the transnational money-maximisation vested interests, but now among equal nation-state partners at the table of shared prosperity, true peace, with life-partnerships between all peoples of the world and the life-supporting systems of the planet.
Before doing so however, we must accept that our mindset has also been corrupted by an authority-based pseudoscience, which now has to be replaced by an evidence-based life-valued science. Furthermore, the integrity of our global system of governance should be protected in our nation-states from invasion by cancerous financial capitalistic elements by a social immune system. In truth and in fact our social immune system can be called a national integrity system, the pillars, rules and practices of which have already been spelled out for us and of which I have reproduced in CONFRONTING CORRUPTION: THE ELEMENTS OF A NATIONAL INTEGRITY SYSTEM – The TI Source Book 2000 by JEREMY POPE, and of which I hope will be studied, debated and shared by one and all, for the benefit of one and all, for once and for all.