MLK Day: 'Kingonomics'

With this being MLK weekend, I have found it as good of time as ever to reflect on the teachings and principals pushed forward by Martin Luther King, Jr.  As such, this and my next blog posts will try to uncover the modern adaptations of MLK's work.

To start, we can look at the concept of "Kingonomics".  This idea was first introduced to me when I purchased a book by the same title by Rodney Sampson just last year.  Unfortunately for me, school work, job recruiting, and investment banking hours have gotten in the way of my being able to pull it off of the bookshelf.

Fortunately for me, Devin Thorpe of Forbes was able to provide an excellent synopsis in his recent article 'Kingonomics' Embody The Spirit of Social Entrepreneurship.  In this article, Thorpe outlines the twelve "economic and entrepreneurial principles" as Sampson has interpreted from King's teachings and outlined in the book.  While you are able to click through to the article and read through all twelve, I will highlight and discuss two below:

1. Service: More than customer service, Sampson advocates service to mankind, "Many of us are discovering that selfishness, the currency of greed, is not all it was cracked up to be in business school," he says.

I have chosen this message in particular because, as a business school student, I take particular offense to being labeled "selfish".  For me, it is easy to see where this label comes from: in all of our finance classes we are motivated to find accounting gains and losses, add them all up, discount them for time value, and make a yes/no decision based on expected profits.  Very robotic-like.  However, professors and students are increasingly pushing for analysis outside of the balance sheet and income statement to make decisions.  It is now just as important for decision makers to consider environmental, sustainability, and consumer interests as it is for them to consider gains and losses on paper.

The second teaching of Dr. King that I will highlight is related to the first:

5. Personal Responsibility: King, himself, embodied Gandhi's counsel to "be the change you wish to see in the world."  Sampson argues that "followers must lead by the choices they make every day; then the leaders will follow."

In the modern age where the difference between a person and a corporation is being blurred (see: Citizens United), the idea of personal responsibility goes beyond just the "person".  Again, the teachings of business schools across America are promoting the goodness of "Corporate Social Responsibility", "Being Green", and "Sustainability".  However, I am of the mind that corporations who throw out this jargon are just using them as buzz words: they have little, if any, meaning.  That is to say, if they are not following the teaching as promoted by Dr. King.

In this sense, I am reminded of a business school case that my Strategy class analyzed last semester.  The company was Patagonia, who is not only known for its high-quality (and expensive) outdoor clothing, but also for their renewable and environmentally friendly practices.  What sets this company apart in their efforts is exactly what Sampson argued of King's work: employees of the company promote sustainable practices which are then reinforced by the leaders of the company who help facilitate these practices.

While there are many examples of successful, socially responsible corporations, there is a large black mark across the banking industry from the recent financial crisis.  James Sterngold took a look at 2014 in review for banking fines in his article For Banks, 2014 Was a Year of Big Penalties.  Sterngold goes through a laundry list of accusations, including fixing foreign-exchange and interest rate benchmarks, packaging and selling flawed mortgages, and money laundering.  These crimes amounted to "nearly $65 billion in penalties and fines, about 40% greater than 2013, the previous high, according to the Boston Consulting Group."

To me, the banking industry has largely ignored the economic teachings put forth by Kingonomics.  Outside of teachings 2 (Connectivity), 7 (Diversity), and 9 (Dreaming), which really have no relation to the crimes committed, the banking industry has violated all of the other twelve philosophies given by King and Sampson.  As such, not only are they feeling the accounting pain of fines and litigation costs, but they are also feeling social pressure as consumers continue to push blame onto them for creating and causing the financial crisis.