A Passion for Transparency

Capitol Hill wasn¹t the only venue in Washington where government and business slugged it out today.

As Goldman Sachs defended itself before the U.S. Senate, the 250 plus entrepreneurs, investors and business leaders gathered for day two of the Presidential Summit on Entrepreneurship engaged in their own debate about the relationship between the public and private sector. In particular, they talked about how much regulation and government oversight business requires. Yes, it was a "spirited" discussion.

There has never been love lost between government and business. Differing priorities would never allow it. Yet reality has never freed either from the other. And so the intense mistrust between the two has persisted. Celtel billionaire Mo Ibrahim and former UNDP head Kemal Dervis made that much clear.

On the panel “Promoting Entrepreneurship and Enabling Business,” Ibrahim and Dervis sparred over the government¹s role in business.

“Government should get out of the way,” Ibrahim said following Dervis¹s persuasive argument for government involvement in the private sector. “Let business do what it does best.” That’s a familiar line that we’ve been hearing a lot from business leaders. Ibrahim and Aramex CEO Fadi Ghandour believe it is with reason.

Yet while these two entrepreneurial titans gave their reasons why government and business didn’t mix, they also willingly acknowledged that business couldn’t live without government. At times they also separately admitted the failures of the private sector. That was largely due to the thoughtful comments that government officials such as Dervis made during day two of the summit.

“Politics is good,” the former UNDP official said. “It shapes what happens in society, including creating competition.” Dervis made the case that without government competition couldn’t exist. “Markets aren¹t necessarily prone to competition,” he said. “Government has a major role to create competition.” Here Dervis was referring to the rule of law and, yes, regulation.

“Even in the most advanced economy of the world,” he told the 250-plus audience gathered at the Ronald Reagan building, “when government got (sic) too much out of the way, Wall Street created a huge mess.”

Ibrahim reacted passionately.

“What happened here in the United States that affected everybody everywhere,” Ibrahim said in reference to Wall Street¹s recent collapse. He blamed the failure of corporate governance. “All the boards of Citibank and other investing houses have an official responsibility,” he said. “The question I ask is how can a board member or an officer of the company approve transactions which they don¹t understand?”

Understand, not to be mistaken for understanding, became a key theme from Tuesday’s discussions. Because entrepreneurship, investment and business is so complicated outside the United States, delegates gathered at the summit agreed that whatever transactions, partnership or regulations governments and the private sector put into effect needed to be transparent and understood by the general public.

That’s largely due to the fear of failure in these societies, which was also a topic that dominated delegates’ minds.

“The story of failure,” Fadi Ghandour said, “hasn’t been properly told in our communities.” This, he believes, is largely a result of the few success stories coming out of the Muslim world.

To change that narrative, Ghandour and Ibrahim separately agreed that government and the private sector need to work together to educate young people. “When we discovered oil in the Middle East,” Ghandour said, “we poured $2 billion dollars to develop it. When are we going to discover the tremendous talent that exists in our countries? When are we going to pour $2 billion dollars into our human capital?” That, Ghandour said, would be a better use of resources because “the brain is the only renewable source of energy.” The audience went wild.

I imagine the White House did as well. Investing in human capital, increasing transparency and simplifying regulation were exactly the type of take aways they hoped to give participants of the Presidential Summit on Entrepreneurship. What I suspect they didn¹t expect was that they were take aways that they themselves and the Wall Street financiers they’re at odds with could benefit from as well.