[MUSIC] My name is Anat Admati,
I'm a professor of finance and
economics at the Stanford
Graduate School of Business, and
I teach interdisciplinary courses.
>> And I'm Rob Siegel, a lecturer
and management here at the Stanford
Graduate School of Business.
I teach a variety of classes here
at the school.
And today Anat and I are going to
talk about our course, business and
governments power engagements in
the 21st century world.
[MUSIC]
>> Our first point is that markets
can work well without functioning
governments and legal systems.
We take a lot for granted around
here at Stanford GSB.
We think operations just exist, we
think that there are transactions
and there are contracts, and
there is competition in markets,
all these things.
And we don't start to think what
makes that happen.
How is it all these things
come about?
And what do you do if somebody
breaks a promise that they made to
you doesn't pay you a right time,
or prevents you from doing
something after you finished
working for them, because of some
non-compete agreement?
Where do you go?
You need a system to ensure
that all these things are working.
[MUSIC]
Leaders in business and leaders in
governments must remember that what
they do can protect lives and
livelihoods, or
it can also harm and endanger.
We have numerous examples,
where we love products and
markets work great and
everybody's doing their bit and
it all works out.
But in this class, we also saw
examples of both business leaders
and government leaders.
Hey people, for example,
we saw a corporation sold a product
that became clear was unsafe for
children and yet, they don't inform
consumers about it and
they leave the product on
the market for a while.
And even when they're we call it,
they don't take very much action to
remove it from the market.
And the government doesn't disclose
that information very broadly and
doesn't force the corporation to
recall more aggressively.
[MUSIC]
>> Third, we found that leaders
need to find and
challenge assumptions and wishful
thinking including their own.
For example,
we saw that assumptions people
would make in how they would assume
markets work and where market will
fail were not always clear and
obvious when people dug
down beneath their assumptions.
Similarly, we also found that
the capabilities and
competencies that were assumed of
leaders in business and government
were not always matched up to what
people thought was the world versus
what the reality actually held.
[MUSIC]
Fourth, we found that leaders need
to beware of false choices and
misleading labels that prevent us
from getting at core issues and
understanding what's really
being discussed.
For example, words like capitalism
and socialism, regulation and laws.
What are costly and
what are helpful and needed,
even trying to understand things
like critical infrastructure.
Is it best served by government or
is it best served by
the private sector?
And how does it serve the citizens
of a particular country or area or
nation?
This can get in the way of our
understanding.
What are the core issues that we're
trying to address?
And really, understand what are we
trying to accomplish as humans and
as a society.
[MUSIC]
>> Our fifth point is that
effective governance harnesses
power, information, and incentives
to create trustworthy systems.
We talked in this class about
institutions, institutions of
government, institutions in the
private sectors like corporations.
And in these institutions,
there are leaders that have power,
that have information, and
they have discretion or
a way to act.
Good governance means that they
are trustworthy and that they
are accountable for what they do.
That is the opposite of abuse of
power and
corruption, you might say.
So creating trustworthy system
means creating institutions
that have good governance.
And if we do that,
then we can thrive as a societ.
[MUSIC]
>> Or not and
I bring very different
backgrounds experiences and
trained to these important topics.
One thing though, is very true,
I'm not an idealist,
disagree on everything.
>> No Rob, you're wrong,
we don't disagree on everything.
We're agree many things actually.
>> Okay, eventually yes, we do end
up agreeing on everything.
>> [LAUGH]
[MUSIC]