Why is it so difficult to rein in Wall Street?

Suhaib Riaz, University of Massachusetts Boston; Sean Buchanan, University of Manitoba, and Trish Ruebottom, Brock University.

Reforming Wall Street has become a key issue in the ongoing presidential primaries.

Bernie Sanders in particular has used his rival’s close ties to the financial industry, including speaking fees and political donations, to suggest Hillary Clinton wouldn’t rein in Wall Street. At the same time, Sanders has tried to highlight his own independence, declaring:

If I were elected president, the foxes would no longer guard the henhouse.

Clinton has tried to dispel the notion that Wall Street donations affect her judgment or independence, claiming her regulatory plan is actually tougher than Sanders’.

These exchanges underscore a crucial point: almost a decade after the 2008 financial crisis, the reforms that many Americans have demanded remain incomplete. Claims of independence, including by Republicans such as Donald Trump, are one way for candidates to suggest that they would be able to bring about real change.

Who would be the best candidate to do so is an important question. But first we must understand this underlying dilemma: why has it been so difficult to reform Wall Street following the worst financial crisis since the Great Depression?

This led us to a more fundamental question: whose voice matters most in determining how the financial industry should be run?

Given how much anger there still is at Wall Street, the answer may be surprising.

The Force of Political Economy Awakens at UMass Boston

By Keshav Krishnamurty.

Two weeks ago, UMass Boston played host to the Academy of International Business (AIB) US-Northeast 2015 Frontier Conference themed “Bringing the Political Economy back in” (October 22-24), facilitating a broad discussion and engagement on the issue of Political Economy and International Business amongst leading academics from top universities across the world. The first highlight of this conference was the panel “Challenges to International Business Research: Bringing the Global Political Economy back in”, featuring panelists Mona Makhija (Fisher College of Business), John Cantwell (Rutgers University), Rajneesh Narula (University of Reading, UK) and Ravi Ramamurti (Northeastern University), with Suhaib Riaz (UMass Boston College of Management) as the panel moderator. This panel underlined the great importance of political economy perspectives and raised some fundamental issues for future research.

Beyond the Status Quo: How Corporate Sustainability Can Become a Reality

By Nardia Haigh.

Many would agree that corporate sustainability has become a buzzword, without actually changing corporate practices all that much. Recent news supports that: BP was found grossly negligent in the Deepwater Horizon disaster; the U.S. tobacco industry continues to rely on pre-teens working in the fields; and Pacific Gas & Electric is under legal scrutiny for allegedly causing a gas explosion due to suspected safety violations. So why aren’t all those sustainability strategies and programs, including new ‘sustainable’ products, the appointment of Chief Sustainability Officers, and the submission of regular sustainability reports, enabling corporations to become more sustainable? And what does it take to change that?

Whose Values Count? The Hobby Lobby Decision and Corporate Social Responsibility

David Levy, Professor and Associate Dean in the College of Management at UMass Boston and Director of the Center for Sustainable Enterprise and Regional Competitiveness

Women held placards proclaiming “Bosses out of My Bedroom” to protest last week’s Supreme Court decision in the Hobby Lobby case, which permits privately-held corporations to exclude coverage for contraception from health insurance coverage on religious grounds. In the media, opponents of the decision saw the issue as corporate owners imposing their religious beliefs on all the employees in Hobby Lobby’s nearly 600 stores. The decision has been widely condemned by feminist and other progressive groups, who smell a theocratic agenda that represents discrimination against women (Viagra and vasectomies are covered by insurance), a threat to women’s health, and a continuation of efforts to control female sexuality. The Court itself was divided along gender lines for this and the follow up Wheaton College decision regarding exemptions for religious non-profit organizations, in which the three female judges issued a sharp dissent. For women, reproductive freedom and economic independence are closely intertwined, as Justice Ginsburg noted in her dissent: “The ability of women to participate equally in the economic and social life of the Nation has been facilitated by their ability to control their reproductive lives.”

But the Hobby Lobby (HL) case is not just about corporate control over women’s work and health; it holds broader significance for corporate governance. The decision severely undermines those who seek to use corporate social responsibility (CSR) to hold business accountable and to channel the vast financial, technological, and organizational resources of business to advance social goals. The heart of the HL case turned on the technical question of whether a for-profit corporation, as a legal person, has the same rights as an individual to exercise religion under the 1993 Religious Freedom Restoration Act (RFRA). On the face of it, the idea of a corporation having a religion is somewhat bizarre. After all, we don’t see corporations being baptized or singing at a Bar Mitzvah ceremony. But if a corporation, as a person, does have values or religion, whose are they? A small group of owners, or the wider community?

Slumdog Millionaires: Can Impact Sourcing Alleviate Poverty?

By Chacko Kannothra and Stephan Manning.

Call centers, tech support, payroll processing – more and more service jobs are performed abroad. Global outsourcing is one of the most controversial trends of our time. To some, it is mainly a cost-cutting exercise which has led to job losses in Western economies and has started a ‘global race to the bottom’. The recent shift of clients and providers to second and third-tier outsourcing locations to keep labor costs low is an indicator of that. To others, outsourcing has also generated new income and entrepreneurial opportunities especially in developing countries. Clearly, in particular for the young and educated in urban areas, such as Bangalore in India, the outsourcing sector has been a career stepping stone. But how about the vast majority who still live in poverty? Will the global service industry widen the gap between the new urban elite and the rest? Maybe not if we believe in the new trend of ‘impact sourcing’ – the creation of outsourcing jobs and training opportunities for the poor and disadvantaged, in particular from slums and rural areas. Impact sourcing was celebrated a few weeks ago at the 17^th World Outsourcing Summit as a promising way of combining business and social benefit. The Rockefeller Foundation even calls it a means towards reducing poverty. But are these claims realistic?

Blogging Highlights: Higher Education, Lehman Brothers, Microfinance

This week we would like to draw your attention to three interesting debates in the blogosphere as well as a new book release.