Recently, i had the chance to visit “Indian School of Business” (ISB), in Hyderabad. Interacting with a couple of middle-level managers, i realized that they had never encountered the question about “who are the trustees” of ISB, which i asked them (following my question of “who owns ISB”).
All educational institutions in India are meant to run as Not-For-Profit Trusts. This means that the trust owns the institution and while it may (and should) make a profit, it is meant to use the profit to enhance their educational institution – conduct more courses, make more similar institutions, and so on.
ISB has an Executive Board which is responsible for the running of the institution. Representatives of their major donors – Reliance, Godrej, Bharti, and many others – sit on this board.
The seed of having such a business school was sown by, the now disgraced financier, Rajat Gupta. It seems he reached out to all top corporates in India seeking investments from them for forming such a business school. The concept is very similar to how Harvard and other top B-Schools around the world are financed.
Rajat Gupta is now not on the board. He is probably not even a trustee. He resigned, after he was charged of being party to a financial scam.
So, who owns ISB? Who owns the several hundred acres of prime property on the outskirts of Hyderabad? Who owns the campus, and the second one coming up in Mohali? This question remained.
It seems, and i am only guessing, that a Trust owns the campuses, the land and all assets of the school. Typically, there is no one who remains permanently on the trust’s board. It does not matter who formed the trust, she cannot be a permanent feature of the trust. The same goes for the Executive Board that may have been formed to run the school. Trustees and Board members may draw a salary for serving the school on behalf of the trust, just like all the employees including the managers i was interacting with, do. There could and probably is, a CEO who reports to the trust’s board, drawing a hefty salary.
But no one individual owns anything.
Abuse of Capitalism
It is estimated that 40% of US’s wealth is owned by 1% of it’s population. The average household income of a family in US, in the current recession, is equal to what it used to be in the late 1970s (it seems wealth was more evenly distributed then, for this to happen). In India, the top 10% own 52.9%, more than half the country’s wealth.
Can this data get even worse? Yes. Consider this:
- Richest 10% of adults accounted for 85% of the world total
- Bottom half (50%) of the world adult population owned barely 1% of global wealth
“Economic equality is the master key to nonviolent independence. Working for economic equality means abolishing the eternal conflict between capital and labour. It means the leveling down of the few rich in whose hands is concentrated the bulk of the nation’s wealth on the one hand, and the leveling up of the semi-starved naked millions on the other.”
“Supposing I have come by a fair amount of wealth – either by way of legacy, or by means of trade and industry – I must know that all that wealth does not belong to me; what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community.”
~ Mahatma Gandhi
This same idea of trusteeship comes forth clearly during a conversation between Rockefeller and Swami Vivekananda, which in two stages leads Rockefeller to setup the Rockefeller Foundation.
While i am a firm believer in the idea of trusteeship, i find it impractical to live by Gandhi’s standards, especially when he wants wealthy people to “…to come down in spite of their wealth to the level of those who earn their bread by labour.” I am not up for this, surely.
One the foremost long-time ideal in my life has been JRD Tata, who was inspired by the idea of Gandhi’s trusteeship model and found a practical way to implement this in his business. He lived an exemplary and truly inspiring life.
Everyone needs financial security. “Economic freedom” for most people can do wonders. People can be liberated from the daily quagmire of earning a living; and leapfrog into financially secure positions from where they can unleash their creativity and natural talents.
Economic freedom greatly enhances the risk-taking ability of such people to come forth and unleash what they love most, rather than spend their lives in “securing the future of their family”, while pursuing, if they at all can, their deepest interests on weekends.
The world needs people to live self-expressed. It desperately needs entrepreneurs and innovators. It desperately needs people who are passionate about pursuing one idea with a single-minded focus – in technology, music, sports, teaching, science – and in nearly every field the human mind has found expression in. The world needs people to find and follow their inner calling.
One tool of achieving this broad-based economic freedom is when the wealth stacked up with a few is liberated and made available to many.
A trusteeship model of operating in businesses is truly a good one. ESOPs, co-operatives, employee owned companies, are other ways which have worked in the world.
How much is enough?
As suggested in the path-breaking book “Conversations with God – Book-II”, perhaps a solution is to have “legislation” to have all wealth generation beyond a certain limit be fed back to society (not as taxes; but as donation). Gandhi in his newspaper “Harijan” wrote about similar ideas of legislating a “maximum limit” on earning.
There is only so much that any individual or family can do with money. Just so many luxury holidays, just so many big cars, and lavish houses.
Research has shown that most people in the west, well after having secured their retirement money, continue to seek more and more wealth and riches, owing to “competition with their peers“.
This is an endless, maniacal, rat race.
Conversations with God suggests that we as a human race define a “maximum figure” of how much money we want. It puts this figure at $10 million or something of the sorts.
Trusteeship in corporations
Coming back to where i started with ISB. I find this model of the ownership of large corporate institutions being entrusted in the hands of a non-profit trust, a rather good idea. All large corporations need to be freed from the clutches of individual owners and PE firms, and their ownership moved to employees or non-profit trusts as discussed above.
Then, the trust becomes responsible for making profit, but does so with enhanced goals of the larger society as well.
What is the purpose of the corporation? It is to give back to society what it has earned from society. What is the role of the CEO? It is to be the ultimate servant of society. ~ R. Gopalakrishnan during a lecture on “Gandhi, Governance and the Corporation“