Public Square

Adam Smith & the Olympics: Is It Just Laissez Faire?

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On February 4, the Beijing 2022 Olympics will kick off to much fanfare but few actual fans. It will be the second Olympics in a row battened down by COVID-19 restrictions. Moreover, it occurs amid a global outcry against Chinese atrocities: the quashing of pro-democracy movements in Hong Kong, continued oppression of Tibet, and abuses of Muslim Uyghurs and other minorities in Xinjiang that the U.S. State Department labeled “genocide” in March 2021. Activists and athletes refuse to be silenced over the seeming disappearance of tennis star Peng Shuai following her public allegations of sexual abuse by former vice premier Zhang Gaoli early in November. Her tweet got 20 minutes of airtime before it was yanked. Notwithstanding a few sightings, Peng appears to have succumbed to the heavy thumb of her own country. 

Responding to China’s abysmal humanitarian record, the U.S., Canada, Britain, Australia and Japan have announced they will not be sending the typical diplomatic delegation to the Beijing Olympics. The calculated gesture sends a disapproving message while still allowing athletes to compete, avoiding a full-on boycott as occurred in 1980 with Moscow. In Washington parlance, it threads a very sharp needle. China has promised “resolute countermeasures.”

So much for politics. What about the array of deep-pocketed corporate sponsors like Intel, Airbnb, Procter & Gamble, Coke, or VISA? Or the broadcasters like NBC? What kind of moral suasion could these financial behemoths bring to bear?

Crickets.

Surely it would be business folly to oppose the world’s second largest country on such indelicate matters. Intel learned that the hard way when it asked its suppliers to avoid sourcing materials from the Xinjiang region. Intense pressure by China led the company to issue an apology, even though the move was in accordance with a recently enacted law forbidding imports of goods manufactured with forced labor. 

While principled dissent certainly can cost customers, contracts, and market share, firms sometimes use it as a savvy business move. Standing against injustice plays (and pays) well at home—think, for example, corporate boycotts of North Carolina for supporting bathroom laws or righteous support for the #MeToo movement. Why then do the same firms turn a blind eye to China’s long list of humanitarian violations? Why the double standard? 

Enter Scott Simon, chairman and CEO of the Women’s Tennis Association. His continued harangue about the whereabouts of Peng Shuai puts large corporate sponsors to shame. In December, with the full support of the WTA Board, he announced the suspension of all “WTA tournaments in China, including in Hong Kong” until there is a “full and transparent investigation—without censorships.” The move is likely to cost his tiny organization up to $1 billion in lost revenue, something his organization can ill afford.

“We’re definitely willing to pull our business and deal with all the complications that come with it,” he said, making the WTA the only major sports organization to take the tough stance. “If powerful people can suppress the voices of women and sweep allegations of sexual assault under the rug, then the basis on which the WTA was founded—equality for women—would suffer an immense setback. I will not and cannot let that happen to the WTA and its players.”

Adam Smith & Moral Imperatives in Business

Simon’s value-based defiance would make Adam Smith proud. Some might be surprised to know that the 18th century free-market philosopher and father of “laissez-faire” economics also argued that virtue was foundational for sustainable commerce. In his 1759 Theory of Moral Sentiments, Smith called on leaders to summon an impartial spectator, the fictitious “man within the breast,” when making tough business calls. In Smith’s view, moral conscience—and moral courage—need to have a seat in the corporate boardroom. 

How is Smith’s theory of the impartial spectator relevant to the 2022 Olympics? If corporate titans would envision the faces of Uyghur children, jailed Hong Kong students, or the abused and shamed Peng Shuai as silent spectators to their fateful decisions, would not some be morally constrained to speak out (or back out)? Perhaps one act of moral courage would engender others, creating a domino effect as other firms raced to trade ill-gained lucre for moral gold. As Smith reasoned, people desire not only “to be loved, but to be lovely.” Corporations value their reputations above all.

Some scoff that Smith’s quaint views don’t apply to global commerce, where standards are driven down to those of the least moral, most polluting, most oppressive regime. While it’s true that globalization has upped the ante for taking a principled position on any issue, Simon’s refusal to bend offers a refreshing counterpoint. In playing a long game, he has bet his chips on keeping the WTA in line with its values. Doing the right thing for the right reasons takes wisdom, conscience, and courage. Like investing in new equipment, ethics is always costly, but ethical firms can post durable returns in time. Let’s hope as much for the WTA.

By contrast, acquiescence to injustice may seem expedient but exacts stiff costs over time. Politicians, if not consumers, will eventually care how much cash was made over the heads of China’s oppressed groups. And God certainly sees and cares: “Whoever oppresses the poor to increase his own wealth … will only come to poverty” (Prov. 22:16). The moral arc bending toward justice has tripped up many a firm.

It’s a sad irony that the world’s most successful capitalists are kowtowing to the world’s largest communist with their own dollars and cents. We’re getting beat at our own game. Adam Smith and Scott Simon have the better idea.

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