THOMAS J. BATA LECTURE SERIES ON

RESPONSIBLE CAPITALISM CONFERENCE REPORT

January 30, 2012

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“The first condition for the prosperity of our enterprise and, therefore, also of the preservation of the property invested in it, is that you should not think that the enterprise is only yours and only for you.” Tomáš Baťa, Founder, Bata Shoe Organization

“Why can‘t we do business to change the world and then I look around and say yes, this is precisely what we have been trying to do. And that‘s what I started talking about, the thing, that is based on an instinct to change the world, without having any intention of personally benefitting from the business.” Muhammad Yunus, Founder, Grameen Bank



Thomas J. Bata Lecture Series on Responsible Capitalism

Thomas J. Bata Lecture Series on Responsible Capitalism in Prague The Bata Shoe Foundation established the Thomas J. Bata Lecture Series on Responsible Capitalism in honour of Thomas J. Bata, who died at the age of 93 in 2008. The Lecture Series commemorates his dedication to responsible entrepreneurship and service. It is inspired by the belief of the Bata family that business is a public trust and that corporations should contribute to the well-being of the communities in which they operate. Known as “Shoemaker to the World,” Thomas J. Bata built the Bata Shoe Organization into the world’s leading footwear retailer and manufacturer with sales of over 20 billion pairs during his lifetime. His son, Thomas G. Bata, currently leads the Organization, which operates on 5 continents and serves 1 million customers each day. The Lecture Series reflects Thomas J. Bata’s special attachment to Canada and to the Czech Republic, the country of his birth. It is a joint collaboration between the Schulich School of Business at York University in Toronto, Canada, and Tomáš Baťa University in Zlín, the Czech Republic. Over a ten-year period, each university will host the Lecture Series in alternate years. The second edition of the Thomas J. Bata Lecture Series on Responsible Capitalism featured a Panel Discussion with Professor Muhammad Yunus, Nobel Peace Prize Laureate, Founder, Grameen Bank; Vladimír Dlouhý, Economist, Member of the Czech National Economic Council; and Šimon Pánek, Founder and Director, People in Need. The Panel Discussion was moderated by Robert Břešťan, Commentator in Chief, Ekonom. Furthermore, Professor Yunus delivered his Lecture to the honoured guests in the Senate of the Czech Republic. The following pages include transcripts of the Panel Discussion as well as the Lecture delivered by Professor Yunus.

Thomas J. Bata Lecture Series on Responsible Capitalism



Public debate on Responsible Capitalism (Mrs. Sonja Bata’s introduction) Good afternoon ladies and gentlemen! I am delighted that we are going to have this debate here at Žofín Palace. We have a truly outstanding panel. I‘m now chairing the Bata Shoe Foundation and one of our main focuses is to promote responsible capitalism. My father-in-law, as you know, believed deeply in it. He had a set of values and principles about how to help people educate themselves, how to help them to get the best out of life and he taught people that business was really here to serve society. The judges look after law-and-order, the doctors look after health, as a businessman it‘s your responsibility to do something for society through the products that you make and through the services you provide. Well, my husband really followed in his father‘s footstep and so does my son, who is the current CEO, and we all believe that a business has not only shareholders but that it also has many, many stakeholders – the employees, our customers. You may remember the Czech sign „Our Customer is our King“, and since the communities were receptive we decided to promote this whole concept of social responsibility to a very large extent. Now, I have just returned from Davos where our Nobel Prize Winner was also present and we participated in many seminars on the topic of value systems, with Professor Yunus being one of the speakers. It was important, particularly after all the economic unrest we went through, to go back to basic values, human values, and to address the greediness of the financial systems and banks. Interestingly, we also had seminars on trust. The least trusted people are governments and politicians, forget about them, but the second least trusted people are business people and that is unfortunate. The people who have the highest respect are some of the NGOs and I was surprised that the press got away lightly with a rather high level of trust. But to get back the trust of the people, we have to handle our business in a different way. We have to think of the impact we are leaving on society. Now, today’s speaker is very different from the speaker we had last year, who was Ratan Tata, the Indian industrialist and also philanthropist. And I think Professor Yunus and his social business is very different, let‘s say from the business of the Bata organization where we try to create jobs and well-being by helping people with their careers and their education. And I am so delighted that we are hearing from such a wonderful panel today, and I‘m particularly delighted that we are here in Prague, which is the city where my husband was born and a city which he dearly loved. Thank you.



Thomas J. Bata Lecture Series on Responsible Capitalism

(Prof. Petr Sáha’s introduction) Madam Sonja Bata, dear professor, dear guests and students as well, I am very delighted to be here and thank all of you for coming. I am proud I can say that our name is Thomas Bata University – after Tomas Bata. And you know Tomas Bata the first, is a hero in the Czech Republic, but we also have to remember Thomas Bata Jr. who, after the second war, rebuilt and finalized this worldwide shoe organization. So, of course, Thomas Bata has done many good things in the Czech Republic including Youth Junior Achievement and the Thomas Bata University in Zlín. We spent so much time together creating the philosophy of the University, and creating the structure of the University, so I hope the organization we are running today is useful, as it came from the philosophy of Thomas Bata Jr. Today, we are also talking about business, business administration; I would like to say that we are also connected with social business administration. We have one faculty which is connected with economy and business in addition to multi-media communication and human studies faculties that are also connected with the subject of Professor Yunus. Thank you very much.

Thomas J. Bata Lecture Series on Responsible Capitalism



Large Hall, Žofín Palace

Left to right: Robert Břešťan, Commentator in Chief, Ekonom; Professor Muhammad Yunus, Nobel Peace Prize Laureate, Founder, Grameen Bank; Vladimír Dlouhý, Economist, Member of the Czech National Economic Council; Šimon Pánek, Founder and Director, People in Need.

The audience including Monika Pignal – Bata, Regis Pignal, and Charles Pignal

Professor Yunus giving his signatures



Thomas J. Bata Lecture Series on Responsible Capitalism

Thomas J. Bata Lecture Series on Responsible Capitalism



Muhammad Yunus´ keynote speech Madam Sonja Bata and distinguished participants, I am absolutely delighted that I could come to Prague. This is my first visit to the Czech Republic. But that does not mean that we are not familiar with Czech Republic or all the glorious history of Czech Republic. I came here from Bangladesh. I couldn‘t believe that I would someday be meeting Madam Bata – and Mr. Bata, when he was alive. It was quite a thrill for me. Because as a child I grew up with Bata, and I did not know that there was somebody named Bata, I thought the name was just a shoe. So my family was originally made up of fourteen siblings out of whom nine survive – seven brothers and two sisters. That is the family that I grew up in. The reason I am mentioning the numbers is because when you grow up in a big family, one advantage for the parents is they do not have to buy things for every child. This is because the oldest child passes belongings to the next child, and you inherit those shoes as you grow up; you inherit everything – shirts and shoes, especially in the low middle class family where I‘m from. So, Bata shoes worked very well for us. The shoes survived several children, wearing the same shoe. So therefore, it is thrilling for me to meet the Batas today and to hear them talk about something that Thomas Bata felt so strongly about, about business. What I did, I never intended to become a businessman. That was not the slightest idea that I had in my mind, although my father was a small trading person, a small businessman in that sense. But I do not think, I would be a businessman, all I wanted to do was become a teacher and that is what I became, a teacher. Circumstances pushed me into that. At that time, I did not think that I would be going into business; I was trying to solve a local problem. Bangladesh was going through a famine in 1974 and I was teaching economics in a brand new university in Bangladesh. I had just come back from the United States where I was teaching in one of the universities there. The reason I came back was because after the long struggle, Bangladesh had become an independent country in 1971. So I decided to quit my job in the United States and go back to Bangladesh so that I could teach in Bangladesh rather than in the United States. That is what I did. At that time I did not realize that Bangladesh would reach a famine situation in 1974. When you have a famine in a country and you are a young teacher, teaching economics in the classroom of the university, I can bet you, you become terribly frustrated – terribly agitated. You feel the lessons that you give, lectures that you give in economics, are totally meaningless, worthless things that you can never think of. That is because life outside the classroom is so different than what you talk about in the classroom. All the beautiful elegant theories that you teach in the classroom are totally useless when you face the reality of life outside the classroom. So each day I was feeling rotten inside. And you cannot forgive yourself if you continue to do something which you do not believe in. So, in order to get rid of the rotten feeling I thought, why do not I just go out in the village, next to the university campus, and see if I can make myself useful to at least one other person, even if just for a day? If I can make myself useful to another person, I thought, at least my day has been well spent, instead of feeling useless. So that is what I started doing. Going to the village next door, just outside the campus, and then trying to see if I can be of any use to somebody which will make it easier for that person, for that day. So I did a lot of tiny, little things like that and doing something each day made me feel a little better, then at least I did something. But I had no idea that I would discover life, like I did, by the way I did these visits. Turning back, I thought that the village had become the real university to me. For the first time, I learned the real life of the people. And in that real life, I saw a terrible thing happening continuously, it kept coming back. The phenomenon of loan sharking – lending tiny amounts of money to poor people, and then taking full control of their 

Thomas J. Bata Lecture Series on Responsible Capitalism

lives and squeezing the money out of them, to the very last bit, just because you lent them money. So seeing that horrible thing happening in front of my eyes, one idea that came to my mind was, why I could not make a list of people who were borrowing from the loan sharks, at least know who they are, and how much money is involved, etc? I took a student of mine, went around in the village for several days and made the list. Once the list was completed there were 42 names on the list who had borrowed from the loan sharks and the total money they borrowed was 27 dollars. It was such a shock to me that I could not believe that people would have to suffer so much for so little. I felt terribly disgusted that we have to live life in a way that we ignore other people’s problems. And I know how intricate this problem of loan sharking is, which has been going on for years and years. I know I cannot solve it. But suddenly it occurred to me, I can solve THIS problem. I cannot solve the whole problem. But I can solve the problem of these 42 people. And the solution is very simple. Why do I not give 27 dollars from my profit to them according to the list, and ask them to return the borrowed money to the loan sharks? If they return the money to the loan sharks, the loan sharks cannot trouble them again, cannot touch them again. I thought that is a good idea. This will be a good thing for me to do today. I did exactly that. I did not even think twice about it. I thought this is like one of the many things I did, and I would soon probably forget, but people did not let me forget. Every time I went to the village, every day, people looked at me in a very strange way. As if I had performed some miracle. They could not believe anybody would do such a thing. And it created an idea in my mind, a question in my mind. If you can make so many people so happy with such a small amount of money, why should you not do it more often? So that question grabbed me. I wanted to do more. Then I went to the bank which is located on campus. Every campus has a branch of a bank, at least one bank. I asked them, why do YOU not lend money to these poor people? They would be very happy. It is such a small amount of money; it is nothing more than a little change in your pocket. The banker was shocked that I was asking a bank to lend money to poor people. He literally fell from the sky. He said, it is impossible, why can you not understand that the bank cannot lend money to the poor people? I said, “Why cannot you understand that you can lend money to the poor people? It will change their life.” He could not persuade me, I could not persuade him. It went on and on. He argued and I argued back to him, without any solution. He said, “Why don’t you go and talk to my bosses? The big guys. I have no idea. I have no authority to do that.” So I went to the big bosses of the country banking system. Everybody gave me the same story, it cannot be done. But after several months of these negotiations, and every time being rejected, I came up with an idea. I thought, I will use the idea. I said, “Why don‘t you take me as a guarantor? I will sign all your papers. I will take all the risk. And you give the money. If they do not give the money back, I will be responsible to pay you back.” This time the bank could not quite throw me out of the window, because I used their rules, but it took me another two months to get it approved. And that was the beginning of lending money to the poor people, me as a guarantor, coming up with ideas of how to pay it back. And it worked. And that is the history – it grew and grew and grew. Every time I do it, people say, ah it worked, it worked in those villages but it will not work in other villages. I said we’ll try, and I tried and it worked in other villages too. Then people kept saying, oh, it can work in Bangladesh, but it will not work anywhere else, because Bangladesh is a funny country, anyway. Any funny thing can happen. I said, I don‘t know, I have no idea; maybe someone else will try it out. And other people tried it out in their countries. It worked in Malaysia, in Indonesia, and then they say, ah it’s something to do with the Muslim culture. Maybe they are good at paying back. Then suddenly the Philippines got involved with it. This time they could not say it has to do with a Muslim country, because it is a Catholic country and it worked beautifully. Then they said maybe it is something to do with the Asians. They may Thomas J. Bata Lecture Series on Responsible Capitalism



be very good at paying back. Then other countries came and then suddenly, the United States. A governor in a southern state in the USA, he became very interested, he is known as the Governor of Arkansas, Bill Clinton. He invited me to see if I could do the same thing in his state. And I said, sure thing, no problem. So I went there. Out of these discussions we created a project called Grameen Project in Arkansas. And his wife, Hillary Clinton, became the Chairman of the Project. So we did it in Arkansas, and then it spread into other states in America. And this was 1987 – 88. So now it had spread all over the world. But in the States it worked and then went down. People said, ah, it will not work in the United States. I asked, why do you say that? It should work everywhere, because people need money, and if you provide the money, they will pay you back. No, no, the United States is a very different country, our culture is different, there is plenty of money here and people need lots of money, not just a little bit of money. I said, that is what you say, but if you go and look around you will find out that the reality is different. So we debated it many times and finally I said, why don‘t you let me do it myself. And figure it out whether it works or not. Every time I come I always argue with you. And somebody agreed and said why don‘t you come and do it for us. So we started a program in New York City, in January of 2008, called Grameen America. And it started working beautifully. That was the same year, when in the fall of the year 2008, the financial crisis came. Big banks on the other side of the street literally were collapsing, melting away. On this side of the street Grameen Bank was flourishing, expanding. I said, I wish some journalist would come and ask me: “Who do you think is the critic or depressor?” because they were telling me in the beginning, poor people are not credit-worthy and that is why the bank does not lend money to them. I said now they learned they should ask the same question to me, because you will see that these poor people in the Grameen program are the ones who are really paying, and on the other side, these are the big guys who are not paying back. So credit bank worthiness is not something which is decided by how wealthy or non-wealthy you are. Today, in New York City, we have four branches, 6500 borrowers, the average loan is 1500 dollars and the repayment rate is 99.3 percent. Exactly the same as what we do in Bangladesh, we repeated it in the United States with no problem. After two years we were invited to do it in Omaha, Nebraska. Someone from Omaha said, “We will give you all the money if you come and do it in Omaha.” So we went there, sent our staff, now the branch has started in Omaha, Nebraska. And it works beautifully. Last year we were invited to start in Indianapolis. That one works beautifully. This year we were invited to do it in San Francisco and Detroit. Soon we will be opening those two branches also. I am telling this story because I did not intend to become a businessman but circumstances converted me into a businessman. All these things I run as business propositions, not as charity propositions. It should cover its costs, it should be sustainable and it should be making an impact in people’s life, and that is what microcredit is all about. And as we were doing microcredit, we also saw many other problems with people’s lives, particularly, people at the very bottom level. There were a variety of problems. So the closer I get to these problems, the more I try to find the solution to those problems. And every time I try to find a solution, instinctively, I find a solution in a business way. So I create a business to solve the problem and I feel very confident that it works. One after another, I keep creating businesses and over time I have created more than fifty such companies. One of them is a mobile phone company, a cell phone company, to bring cell phone service to the poor women in the villages of Bangladesh. Our regulatory authority was shocked to even hear that. “Why do you want to bring a telephone to the poor people? And, poor woman, she does not know anything about a telephone. She has never seen a telephone.” I said that is why I want to take it to them. The others saw it, they don’t need it. She has never seen it, but she will need it. Then they asked me who is she going to call? I said, I don‘t worry who she is going to call. 10

Thomas J. Bata Lecture Series on Responsible Capitalism

All I know is, if she has a telephone than others will come to her to make the phone call and she will sell the service of the phone. They were totally unconvinced that such a thing could happen, that there would be a poor woman selling the service of the telephone. But finally we got the license and we began expanding in the villages, giving loans from the Grameen bank to be used to buy a cell phone from the Grameen phone company and started a business by selling the service of the phone. Villagers had never seen a telephone in their life. It became a roaring business. They made such good money selling the service; soon we had almost half a million telephone ladies all over Bangladesh. They became known as telephone ladies, because if you had to make a phone call, you had to find a telephone lady, because, the phone would not go to you. Today that telephone company, Grameen Phone, is everywhere in Bangladesh. Bangladesh has 160 million people now with 70 million telephone subscribers. So you can imagine when every single family will have more than one phone. That is how it has spread. So telecommunication became very simple. With telecommunication comes internet service and everything else, because the telephones have internet enabled capabilities and God knows how many other things will be coming to these telephone networks through the internet. Bangladesh did not have much electricity, so we created a company for solar energy. We said we will bring each home an energy grid. We called it Solar Grameen‘s Energy Company. It was so difficult to sell just four or five solar home systems every month because people in the village did not even understand what the solar home system was all about. But we struggled to explain. Today, we are continuing to grow after 15 years, as we become a big national company. We sell more than a thousand solar home systems per day and each day that number is increasing. So people become very familiar with the solar home system. We do not have an electricity grid but we do have our own electricity from the sunshine, and we have plenty of light to use and so on. So always, I am trying to solve problems in a business way. Then I thought, this is something which is missing from the entire framework of economics. The entire framework of economics is based on money-making. You are taught to maximize profit. So everybody is busy making money. That is the success. The more money you make, the more successful you are. So we became a kind of profit-centric world. All we are looking for is to make money. And sometimes it is not only profit centric, but profit becomes an obsession. You want to make more money. Sometimes it becomes an addiction. We are addicted to it. Then I look at us – why do we have to have businesses that get addicted to money? Human beings are not just money-making machines. A human being is much bigger than that, but all those other aspects are kind of squeezed away from the business world. Some, individually, try to bring the social dimension into business but it’s very hard to keep it that way because the whole aim is to make money. Your stock-market performance shows you how successful or what a failure you are, nothing else. Nobody says that you did good things for people. People say you were a very successful company, growing and making a lot of money. But you made a good investment. I think that is a misrepresentation of human beings. Human beings are selfish and, at the same time, human beings are selfless. But the selflessness does not have a place in economics. Why not? What is the problem? Is economics as different from me, as it is from you and everybody else? If they want to have us in economics then they have to take both parts of us, both the selfish part and selfless part. If we can build companies on the basis of selfishness we can build companies on the basis of selflessness. Then I look at ours – maybe this is the kind of business I created, on the basis of selflessness because I did not want to make money out of this. I wanted to solve problems. Then I started talking about a new kind of business to be included in the economic system. These are non-dividend companies. A non-loss non-dividend company to solve problems. And we started creating those companies and named it social business, that is the whole idea of social business. In social business you want to solve problems, that Thomas J. Bata Lecture Series on Responsible Capitalism

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is the motivation, you do not want to make a personal profit out of it. The company makes a profit – the profit stays with the company. You do not take it. You are entitled to take back your investment money. One good example of social business, out of many that we have created, is the joint venture we have, with the multinational company, Danone Milk Company, from France. We created a company that was a joint venture to address the problem of malnutrition among the children of Bangladesh. Bangladesh has a massive problem with malnutrition amongst its children. 46 percent of the children are malnourished. So we created this company to produce yoghurt and put all the micro-nutrients in the yoghurt and made it very cheap so that even the poorest child could eat it, and Danone made it very delicious so that the child eating it does not forget he wants to eat it again. And now they are eating this yoghurt and if they keep on eating this yoghurt for several months they become a healthy child, no problem. So this is what is happening and this is a social business because Danone will never take any dividend out of the company and Grameen will never take any dividend out of this company. But we are entitled to take back the investment that we made. And since social business is a self-sustaining company it can become as big as you want. If you are depending on charity then you will be stuck. You can only do as much as you are capable of. As much as the amount of money that you get, you do that. Or you freely distribute the amount of money that was given to you by someone else who had the intention of it being redistributed. So you are stuck with whatever limited amount of money that you get but if you get lots of business, the sky’s the limit. You can grow as big as you want because the money always keeps coming back. Charity money does wonderful work in solving problems but it only does it once – it goes out but it never comes back. But if you can do this in a business way, in a social business way, then money comes back, so you use it again. It comes back again – so it recycles, again and again, up to perpetuity. Using this process the same money can be used many, many times to complete the purpose you have been working on. That is the basic purpose of social business. Now I am hoping this will be included in the economic trademark – social business does not say all other businesses have to be closed down – we are not arguing that, we are good with “let it happen the way it will”. I‘m not interfering with fate but we do need to allow space for social business. Anybody who would like to use space for creating social business can enter. Today that space does not exist; as a result, we cannot step into it. If we open the space, then young people and/or business people can think how to enter the space and create social businesses to solve problems. Problems of unemployment, problems of old age, problems of welfare dependence, the problem of housing, problem of drugs, problems of crime. You name it. All you need is a creative idea, to create a business to solve the problem and we can keep on doing that. In the process we can deduce or even eliminate some of the problems that we have. So that‘s the challenge and that‘s the kind of outlook that we can see in the future to make the world different and to give it new life.

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Thomas J. Bata Lecture Series on Responsible Capitalism

Public debate on Responsible Capitalism Professor Muhammad Yunus, Nobel Peace Prize Laureate, Founder, Grameen Bank Vladimír Dlouhý, Economist, Member of the Czech National Economic Council Šimon Pánek, Founder and Director, People in Need Robert Břešťan, Commentator in Chief, Ekonom

Thomas J. Bata Lecture Series on Responsible Capitalism

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Robert Břešťan: Šimon Pánek, Vladimír Dlouhý, do you see profit as an obsession and addiction, as Mr. Yunus said? Vladimír Dlouhý: Let me start a little personally. I would like to very much thank Bata Shoe Foundation for inviting me, for two reasons. It is a pleasure and honor to be a commentator to a speech of somebody like Professor Yunus, and second because I have a personal bond with both Sonja and the late Thomas, as we discussed before the start, which goes back to the emotional days of December 1989. I will start from this period; as it has been mentioned I was once the Minister of Economy, first of Czechoslovakia then of the Czech Republic. I was at that time, and am still to some extent, a strong believer in a liberal capitalism, and we structured our economic transformation from the centre, planning for a market economy along very strict liberal principles, for which we used to be criticized for, at that time, and we are still criticized today. Still, I believe that we did a relatively good job but this is not the subject of today’s discussion. Let me start from globalization, that awful word that seems also to be the culprit of today’s problems. It was a liberalization at the beginning of the 1990’s. That combined with technical progress, namely in the telecommunications sector. Later came the end of Communism, and the victory of the so-called West over the so-called East. And the famous “end of history”. Then came progress with macroeconomic theory and macroeconomic policy-making, which led to a certain complacency of the macroeconomists and policy-makers in a period of the great moderation. This, combined again with new sophisticated financial products produced the largest financial and ensuing economic crisis since the great depression in the 1930’s. It brought, on one side, an indisputable economic growth, but it also unleashed irresponsible capitalism, allegedly, absurdly high levels of income for too few. Yes, I did not say that I am a bad guy, because I would like to question Professor Yunus‘ words, but because I have been affiliated for the past fifteen years with Goldman Sachs. From this point of view unfortunately, even within the business sector which seems to be, now, the second least trusted group of people, there are differences; there are better business people and there are worse business people and the worst business people seem to work at investment banks. Anyway, this led to absurdly high levels of income for only a few, it brought speculation and bubbles and in its consequence brought the ensuing financial and economic crisis, accompanied by misery for many, as opposed to the few that have an absurdly high income. Yes, it happened. But I should concentrate a little bit on the so-called third world countries, also known as the emerging economies, or emerging markets. And I do have some limited personal knowledge. Apart from Goldman Sachs, I served as a non-executive director of an Indian Company located in Hyderabad, which builds power plants, lignite-based power plants. The plants are powered with solar energy and water; water in the Himalayas and solar elsewhere in India. Because, as Bangladesh relatively lacks electricity, so does India. So I must travel to Hyderabad, Mumbai, and Bangalore, a couple of times per year. And indeed, when you are there and you see the poverty, it indeed changes your attitude towards business, to the world. But still my experience is quite limited. But before the crisis, to make it clear, in today’s world, most of those emerging economies enjoyed a prolonged period of relatively robust growth. And also, they showed a greater resilience than the developed OECD countries during the economic crisis. And the main determinant of this was the growing integration of the emerging economies into the world economy, into that liberalized, globalized economy, combined with domestic, very pro-market liberal reforms. It doesn’t go well in all countries, there are ups-and-downs, but the long-term tendency, even in countries like India, not speaking about China, because China is a slightly more complicated case, all these domestic reforms, which helped to develop substantial growth, which took millions of people out of poverty, were in the direction of liberal economic reform. And as I said, economic growth enabled, within 14

Thomas J. Bata Lecture Series on Responsible Capitalism

the past twenty, twenty-five years, emerging economies to achieve considerable progress in the fight against poverty. Since 1990, we have seen a dramatic fall in the absolute level of poverty in China, Brazil, Indonesia; it was more moderate in India, South Africa and in some other countries, but it is remarkable, on an absolute level, how many people since 1980 have been driven out of poverty in the emerging worlds. Having said that, on the other hand, it is clear that there are still huge cross-country disparities in absolute poverty. But what matters even more, at least according to my limited studies, are intra-country inequalities. If you take the most common measure, like the Gini coefficient, measured on a scale from one to zero, where zero represents that everybody has the same income and one represents that all income goes to one person, it’s a very theoretical extreme. The OECD countries are somewhere around 0.2 with Chile being the highest, approaching 0.5, while countries like China, Brazil, Indonesia, and India have Gini coefficients substantially higher. Although the underlying drivers for this are different compared to the OECD – the large and persistent informal sector, regional or urbanrural divides, gaps in access to education and barriers to employment and career progression for woman or women, are all factors in the level of inequality within a country. Women are one of the most, I would say, core and difficult problems along with the position of women, and the chance for career development for women. At the same time, on the other hand, women hold a much more important role in these societies, at least, again, in my rather humble experience. The social benefits and tax system in emerging economies, where the poverty is most appalling, play a much lesser role than in the OECD countries in easing these inequalities. And also the approach needs to change, and here I am coming to praise Professor Yunus, not because I have been chosen as your commentator, because I just believe in it. The approach to address is different. You should have more incentives for more formal employment, social assistance that targets those most in need, you should spread the rewards from education, prepare to finance higher social spending in the future and introduce many other policies which go beyond the remit of labor, social welfare and tax policies, which are, for instance, the business environment, product market deregulation, infrastructure development, public administration, health care reform etc. But the conclusion, Ladies and Gentlemen, is that despite every laudable role played by the redistribution, tax reform, provision of social benefits, and charities, at least in my limited experience and in what I heard from Professor Yunus’s speech today and from following his activities, is that the strongest way of solving poverty is via business. I would say long term, it is the only way. But probably, its necessity is conditional, not sufficient. And sufficient should not exist in development capitalism, even in the emerging economies. To allow for the responsibilities and – how not to allow the responsibilities – this will be discussed in another lecture. But here I should finish with a strong appreciation of Professor Yunus‘s work, because he combined business with an immediate solution, and helped many poor people and I want to say thank you very much for that. Šimon Pánek: Well, it is difficult to add something, because what we’ve heard from Professor Yunus is a mixture of a very clever and very well thought-out business strategy that at the same time possesses very high ethics and values. I also prepared something about the trends in development. I have been working for twenty years in humanitarian and development organizations. The question of urban poverty, which is a new trend, is a really big problem seeing as more poor people will be, or are, already living now in towns and cities, not in the countryside and that basically, at least for basic life needs, urban poverty can sometimes be more difficult to solve. Another very interesting trend is that more really poor people are now living in the middle-income countries, not in the least developed countries, but in the middle-income countries; these are the countries that have the resources. It’s a question of using them. So it is basically Thomas J. Bata Lecture Series on Responsible Capitalism

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a question of decently good governments or at least decent governments, and what we can do to make sure that the governments of those countries will take care of the poor parts of the society which could be thirty percent, forty percent, sometimes sixty percent of the population of the country. So in development discourses and its ways, we have faced new challenges in the last decade. But back to your speech, because it is more important than to speak about something which I read or heard in the last couple of years or that we spotted during our work. And, I think it is extremely interesting and important in this part of Europe, which went through Communism. Communism basically, repeatedly, tried to push us to live in a very small niche and to take care of just ourselves and the very few close people around – don’t care about anything else. Then we went to a another extreme, capitalism and the message was very similar – do not care about anything other than your business – your profit, maybe, at the most your country; but do not bother about those who are not that capable, smart, or educated as those of us who are basically responsible for catching the train and building a new capitalism. So it was another period of, what I would call, building on profit, instead of building on values. And I think it was one of the, if not the biggest, mistake that we made after 1989 – and some of you know that I am co-responsible, having been a Student Leader in 1989, but I was not able to influence, or maybe not able to intellectually forecast what would happen in the future. So it is very important for us to hear, and for Czech business people and Czech politicians to hear, that business can be – and should be – about honesty, about the truth, about sharing, helping, and about caring for those people who are not as successful as the top ten or twenty percent of the society. Instead of that, we really went through a very long period in which most of the successful politicians and successful businessmen were persuading themselves, and also the public in the Czech Republic, and with the enthusiastic support largely of the media that this was the right approach. Those who are not as successful as us, they can be happy to receive some social benefits, but for us it is most important to be as successful as possible, which means to make as much profit as possible. That was the reality. Fortunately, things are changing and in the last five to seven years we can also see that more and more businessmen – that after the first ten, fifteen years of sometimes really wild business – are thinking about something other than just numbers and we can see more and more people appearing from the business world who really care about their share of responsibility for the life of society in the country and sometimes even thinking beyond the national borders, which is a very good signal, I think, because charities, and NGOs can do something, but not without business also adopting a responsible approach to the new and growing challenges. We all know that the future of Europe will not be as well assured by surpluses as it has previously. So there will not only be space, but there will also be a need, for wealthy individuals to take their responsibilities more seriously, both at home and abroad. So, returning to my background, you know, of course, that we from the NGO‘s are attempting not to give aid away at absolutely no cost and simply distribute it each month and wait for people to come back to us for another package of food. We are undertaking more and more sophisticated projects with regard to livelihood, food security, and small businesses. Maybe we have never been able to create a sustainable enough business model because we are not businessmen. So about three or four years ago, with one specialized Human Resources company in Prague, we created a profile of the staff of People in Need and it was very interesting. Some of the factors scored very high figures, e.g. ethics and social feelings, social issues, but the level of focus on economic issues was very low – only thirty percent. Which on one hand is good, because the people do not expect to get rich because they are not doing their work because of salaries, they really want to have a career of service. But in some aspects it’s negative, because they are lacking in entrepreneurial motivation, business thinking. So they are able to create very fine humanitarian and develop16

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ment projects, but they are not able to combine these with business thinking and a business model. So for us, from the non-profit sector it is also very inspiring and interesting to listen to Professor Yunus and I hope that we will be able to communicate better with the business world, with the more open-minded individuals on the business side because, as I have discussed, we hope that the future will be more or less stable and will work well, without the more serious or deeper structural problems or more social tension than during the last ten, twenty years. We really need more open people from the business side, not only Bill Gates – he had the nose – he already announced four years ago that he will give away eighty percent of his income, but we need the same wave of support coming in on a lower level – and not just as a PR step, but as a step that will really offer something in terms of social entrepreneurship, one that represents a great model for the future. So thank you all very much for coming. It has been very inspiring for me and I wish you good luck with the next steps. Robert Břešťan: I think that you will agree that today we can hear plenty of words desiring to change capitalism, to find new forms of capitalism, to sustain capitalism but make it different, but the key question is how. Mr. Yunus, do you think that social business is or can be the future of capitalism? Professor Yunus: At least that is what I am proposing. The way I present it, I say, capitalism, the way it is interpreted today, it is practiced today, includes a wrong interpretation of the human being, because only one aspect of the human being is accepted within that framework. That is too personal an interest as we want to benefit ourselves individually, personally, rather than the society. Society comes as a second or third issue in the row. The first focus is me. That “me” focused economy narrows down everything. So, how to widen it? “Me” plus “we”. Kind of take care of others. So if you go for the “we”, in the broader picture, then you also need another piece of business. Business, which addresses that – that is the social business that we are talking about. So today, in a way, for the purpose of imagination, you can say that capitalism is standing on one leg. So if it is very unstable, that‘s the reason. If you add a second piece to it, the social business, then you have two legs. It will bring balance into it. And it will be stronger and then you can solve problems. So today, with one leg, through the economy that we have created, we keep on creating problems. We have very little capacity through our current businesses to solve the problems. There is only one entity that solves problems. That is the government. So we say, well, businesses can say, we are paying the taxes. Let the government solve it. I wish government could solve that. But the problem is government does not have the technology, government doesn’t have the dynamism to make it happen. All the technology of the world is controlled by business. And the only thing they do, that the businesses do with the enormously powerful technology that they have at their command, is use it to make money. If we could use this technology, and each technology is becoming more powerful than ever, if we could use this technology to solve our social problems, these problems would disappear very soon. And that window, that door that I’m talking about, those businesses could get involved in other types of business, social business, they could bring the technology. And that technology and the creativity that it creates, it will solve the problems that we have. And to sum it up again, once more: If you add together all the creativity of human beings that exist today and put it on one side, and if you put all the problems that human kind faces today and put that on the other side, and ask them to fight a battle, a duel, who will win? And I can bet you one hundred percent that the creativity of human beings would win. Problems would not win. Problems can be overcome at anytime, provided that we have a mechanism that will define how creativity could be used to solve the problem. Today we do not have that and that is why we continue to pile upon this problem rather than solve it. Robert Břešťan: I have a similar question to both of you. Do you see the future of capitalism Thomas J. Bata Lecture Series on Responsible Capitalism

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as more responsible capitalism? Is it possible to make all the companies more responsible? Vladimír Dlouhý: Responsible capitalism is the title of a series which the Financial Times launched a couple of weeks, three, four weeks ago and is still in the process of being published and I have tried to read every article on the matter, and I personally know some of the authors, and I am sure Professor Yunus knows more of them. And I am not very smart, I am not smarter today then I was four or five weeks ago, before the Financial Times launched that series. The number one point is that [I] will play devil’s advocate, if you allow me, but with consideration of what I said at the end of my remarks. First, I do not believe that we can compare the situation in the advanced OECD countries, which did not go through the experience of Communism or another totalitarian regime, namely Western Europe and the United States. That is one class of capitalism. Another class of capitalism is that of those countries that emerged out of the totalitarian system, namely the Communist countries of Central and Eastern Europe. And the fact that we launched a transformation which was along the very liberal capitalist ideas was also a reflection of our understanding of how inefficient the former system was. And when we say Communism, we believe or we remember, I would say, a kind of a disgraced, totally mismanaged system in the seventies and eighties in the former Soviet Union and elsewhere, but the whole idea of Communism emerged as, in my opinion, an honest attempt to improve the poverty and the position of people in the production process and their living. And it failed, because it completely suppressed what you call, Professor, a “me” centric economy. And it was a reign and such a liberalization which saw the suppression of competition in production and a hard-working attitude in the population during the seventies, especially in Europe, in the UK and elsewhere. And it was an attempt to liberalize and to find, I would say, the healthy forces of capitalism that it led, especially after 2000 and the nineties, to its manifested expression of really irresponsible capitalism. And it is not only about the huge salaries of some CEOs in the financial sector and the CEOs of the large multinationals. There were other expressions of total irresponsibility, but it was only a reaction to the previous understanding of how in Europe, the social model which developed after Second World War started to cripple down the competitiveness of Europe within other developed or developing regions. And then there are the emerging economies, the so-called – I do not like the name, but the Third World Countries. And that is for me again, a completely different class. And we all must admit that liberalized capitalism, or globalization, at least on the absolute level helped, let me repeat, to take huge numbers – millions of people in the emerging economies out of poverty, but it does not seem to be able to give that chance to the millions who still remain in poverty. And there I would probably go along with your reasoning that this is the part of the world where the future lies and that not we but you, because we do not understand it so much, should try to find some mechanism. And it’s going to be extremely difficult because I personally believe that China is going to evolve a huge wall of problems. Maybe not in five years, maybe not in ten years, but definitely in twenty years. So unless China changes substantially politically and socially, their success is bound. India, another huge country, has extremely difficult problems with policy, corruption, in local administration, and medium administration, but despite that has made huge progress. So your part of the world, it is the future for the entire world, but how to go about it, because the devil is always in the details, how to responsibly manage the capitalism in your part of the world will be extremely difficult and I do not dare to give any recipe. Our part of the world is developed, allow me to say, fat enough and we can tighten our belts. You cannot. Šimon Pánek: Well, it’s difficult to add to that. I basically agree with most of the things. What might be interesting is to look at the wave of dissatisfaction, at least in the western world with how the financial system, the global economy and our politics are working. It is, if not grow18

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ing, at least come on the scene for the last two, or three years and it’s a substantial concern for most. And I expect that it will lead to much larger social pressures or societal pressures on the politicians to take some steps and to regulate business in some ways, more than they have previously. But I do not know. Or businesses will regulate themselves to some certain extent because it’s the way they can defend themselves to not be pushed too far by the governments, but something is brewing. We can feel it in the air that there are more and more question marks about the way of capitalism and a global economy and a political leadership structure that is basically not able to react effectively enough and to produce results in the economy. Is this something that should last for another ten or twenty years? I think almost anyone will say no. Something should happen. And that something might be a combination of the social society and political pressure on the businesses to, maybe, share part, or at least a bigger part of the profits, or maybe to be more transparent. I do not know. But I am just feeling that the time is near… it is probably like in the sixties, when these things were in the air and led not to revolutions, but, in the western world led to a very significant push for some changes, and some changes happened after that. So, I do not know if it will lead up to that, but I think there is quite a high chance that it will not just disappear, due to what has been happening in the last three years in Western Europe and in the US and in some other countries as well. Vladimír Dlouhý: Yes, it will not disappear, but don’t try to throw out the baby with the bath. Adam Smith twenty years before Wealth of Nations wrote The Theory of Moral Sentiments. But, very few people know all about it. Everybody knows that he has written the Theory of Moral Sentiments but very few people study it, at least to the extent that they studied Wealth of Nations. And here, I am mentioning it because, I do not believe very much in government, but I believe or I hope we could all jointly believe in, I would say, the understanding and selfcorrecting capabilities of business. Because, I hope at least that the top people in business, – I stopped going to Davos three years ago, because it is always so overcrowded – but I hope that at Davos and at other big gatherings of big business people, that it is now genuinely understood that unless business is able to change itself, it is going to be difficult to change capitalism in the developed economies. It must change from the inside and from below, rather than the change being imposed from above. Robert Břešťan: Mr. Yunus, do you feel the wind of change as well? Professor Yunus: Well, the discussion that was going on both at Davos and in the media, and everywhere the last few months, was kind of a doom and gloom kind of environment, I would say. You mentioned that the emerging countries are adopting the capitalist system and moving in a direction which is overcoming their problems in a fantastic way. Yes, they have done that and they are doing that, but see, that kind of doom and gloom is in the very birthplace and the prosperity of capitalism. Lots of question marks are put in their minds too. After all, the East is imitating the West to get to the same destination. And they see this is not a very reliable way. So today you talk about how the more we see people’s feelings, the more likely it is that we are coming to an end. Is it collapsing? Permanently? Are we trying to make it work, that which is not working? With some kind of intensive care can you keep it alive with artificial respiration of that sort? These are all temporary solutions. Temporary solutions will get us a few more steps, but the problems will not be resolved. So we have to look at just the fundamental issue, the fundamental flaw in the system. Unless we get to the fundamental flaw and to the fixing of it, this will continue to repeat itself; we will find solutions, one or another, but we will come back to a bigger surprise. So this is a wakeup call, for me at least. I see this as a wakeup call that this civilization is coming to an end. We have to build a new civilization. There is no escape from this and I say that because of the young people who are at the forefront of this change that will take Thomas J. Bata Lecture Series on Responsible Capitalism

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place, because this new generation of young people, I would say, is the most powerful generation in the history of mankind because they came with a completely different perspective and capacity. Our generation did not grow up in an age with Facebook and Twitter and the cell phone and total global connectivity. But there is a seven year old and he understands technology much better than his seventy-year-old grandfather. He can help you in every single way, with any problem that you are facing with any of those gadgets. He or she is the one who is going to fix it in seconds and the grandfather or grandmother will forget in the next moment what was done. But this is the speed that they are absorbing and that speed never before existed in humankind. So with that speed the new generation is coming, imagine what we‘ll have in twenty years from now or twenty five years from now. It is a completely new world. And what framework do we give to this world so that it gets to the right place? So that we can end up in the right place? That young generation that I have just mentioned, and I tried to explain what I feel about this young generation, they are the ones who will be leading us to go to that new stage of civilization. What is actually happening, these young people, very powerful young people, are thrown to the wayside, because the train that we have cannot accommodate them. 50 percent of them will be unemployed, and a variation of 20 percent, 10 percent, 5 percent are unemployed around the world now. Why should a fully capable human being asked to waste away their life? What kind of system do we have? So is not that the system that we have to build and I think we are capable of building a system, where you can guarantee that nobody in the system will be left out. Unemployment as a word, as a subject will not be known to people. Why should any able-bodied person be out of creative activity? That is the most creative person that you can have in the world. How can you reject the person? They are the leaders – but now they are the waste basket. It does not make sense. No matter how you try to explain it, I do not have a solution, but I know human beings have the capacity to find the solution. But we are not asking for it. That is my problem. We are not even looking for it. If we look for it hard enough, we are capable of designing systems, today very intricate systems, even the cell phone that we have is a very intricate system. We design it in such a casual way that we touch buttons and get everything done but we don‘t know how to make the system of human beings work on this planet simply, nor can we ask anybody to design the system. We have taken what history has given us. History came with a buggy and we are still carrying that buggy. We do not know how – we improved the wheel a little bit but still we have the buggy. So forget about the buggy. Now it is time to devise – in the twenty-first century we can design a completely new machine, a completely new bagel. The old bagel is out, it is not going to deliver us anything, so we need to design, and raise that question and in that, not only eradicate unemployment, but also poverty. Why should we repeat the cycle of the same human being with all the capacity inside of them remaining poor? And no welfare dependence. Why should anyone be dependent on welfare? And in Europe particularly, I just saw in the United Kingdom, in Glasgow, a fourth generation unemployed family; four successive generations they never went to work. What kind of system is that? So this is a totally unacceptable system. We have to figure out what type of system we can do and how to create a system that can use the creativity of human beings in the fullest fashion. Nothing should be wasted in this system. So this is the task now: build a new civilization brick-by-brick. We have to put new pieces into it. We cannot have all the things pre-prepared and then go into it. One example I will give is, during a press interview I was asked, do you really believe you can create a world without unemployment? I said, you have to 100 percent believe that we can do that. First I believe that I as an individual have the capacity to create a business, at any time, no matter what the state of the economy, I have the ability to create a business that can employ five unemployed people as a social business. I can do that because I am not geared up to make money for myself. I am 20

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geared to create a business which employs five people. I can design it any time. If I can design for five people, you can design it for five people. Anybody can design it for five people. It’s not a massive investment that is needed. Why should there be any unemployment? The reason we create unemployment is because we are not looking for the business – we are looking for money. A money-centric economy is looking for money; jobs are created as a by-product. In a by-product economy what you are doing, is that you are always trying to make sure to create as few jobs as possible so that you are efficient, and you use less people. So you are asking seven billion people to be absorbed into using technology to create less unemployment. There is a mismatch there so you have to get out of the money-centric economy; you have to create a problem-solving economy. A problem-solving economy is not less happy than a money-centric economy. I would say it is happier. I used to say that I made myself happy by making money. It created happiness because the more money I made the happier I got. I also said, you forget the fact, that the more I make other people happy is also a way to create personal happiness. You are depriving yourself from that particular happiness because your textbook does not allow that. If you are allowed that you will have enormous happiness by making everybody else happy – and through that happiness you will feel very sublime happiness, very serene happiness that you have done something. Inside of yourself you should be proud of yourself because you have done that. So those are the issues. I am particularly focused on the young people and giving them a chance so that they can start thinking about the world 25 years from now, so that they can start designing things which we cannot. And I am saying it very boldly: WE CANNOT – THEY CAN because they have the capacity to design that type of system for the future. Question: I would like to ask Mr. Yunus how you make sure that the people who you provide micro-finance to are accountable and will actually give it back. I mean if you want to start somewhere, for example, how do you make really sure that it will work? Professor Yunus: Well, we have been doing it for thirty-five years so we know a way of designing a system in a way that you will pay back, not with the kind of grumbling like: Oh – I have to pay back; you pay back with pleasure, with happiness and that YES you have been of help to me and I am recognizing it by paying the money back so that you can give it to me again because it is a system that continues to provide support. You see, when we talk about microcredit some people will start thinking maybe it is like a bank – you go there, take a loan, pay it back and say thank you, I am not going to come back again, I have had enough trouble with you. It is not like that. Microcredit is a very friendly thing, you know we are partnered together in the sense that it is my job to help you to move, step-by-step, forward, and that is how I am designed. I am not designed to squeeze you and make money for myself. Microcredit is a social business where I do not have the intention of making money from you and I created this business to help you, so that you can find a way to move forward. And I do not want to create more trouble for you than you already have. If I am creating trouble for you then microcredit has no meaning – you can throw it out. Microcredit is to reduce your problem, not to increase it. So if you can communicate this and you really believe and really deliver it, why should anybody not be close to you and continue the process? That is why we always talk about beggars; we also lend money to beggars. We lend money to beggars, simply explaining to them – as you go from house to house, begging, for food, or for a little money so that you can eat for the day and then return tomorrow, we ask them: As you go from house to house, would you like to carry some merchandise with you, some cookies, some candies, some foods, whatever? And then you have two things; you can take money as charity or take food as charity or let people buy something from you and people will love that. Instead of just giving up, and saying okay give me the food! I can buy food from you – and if you can pick it up you have two things to do and gradually, if your business part grows you do not Thomas J. Bata Lecture Series on Responsible Capitalism

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have to beg any more – you are a door-to-door sales person. We began it and beggars loved that. And we thought maybe we will have one thousand or two thousand beggars, just to find out how it works. Quickly, it exceeded a hundred thousand beggars in the program. And then we made a very simple rule. We simply said, this money is a loan – you have to pay us back, but once you pay us back you can borrow again: Number One. Number Two: This money we give you as a loan, but with no interest. Since the money will never grow, they do not feel threatened by that, so they feel very secure. Then we say, this money does not have any time-limit. You‘ll never become a defaulter. So again they feel very relaxed about it. So there is no interest and no time limit, why then should anybody pay us back? For a simple reason; I borrowed fifteen dollars and created a business and then found out I can join a business of thirty dollars, if I had the money. So why do not I pay back the fifteen dollars and get thirty dollars. And they get thirty dollars. So all these hundred thousand borrowers or beggars are now in their second loan, in their third loan, in their fourth loan, and out of these hundred thousand plus beggars, now more than twenty-five percent of the beggars have stopped begging completely because they became such successful door-to-door sales-people. It is easy. You see it is a question of how you design those things, it is not a kind of business that you are asking how much money can I make out of these beggars. That is not the question. The question is, how quickly you can help the person restore his dignity and discover his ability, so that he and she can start living like a human being, not like some kind of insect or something. Question: Professor, I would like to congratulate you on your endeavor. It is excellent. You try, or you are trying, to do something from the bottom but please be aware that something must also be done from the top. By the way, Mr. Dlouhý is a small member of this top, therefore these endeavors, as it was clearly declared, is that the problem is financial plutocracy, financial oligarchy. You know very well about the movement called Occupy Wall Street or London City or something like that. Therefore, in this sphere, there was no hope; up till now that something is changing. Take the agenda of the Republican Party of the United States. By the way, on the other hand, Obama declared, as I hope and I think I can even prove, that he will be successful during the elections because his slogan is, it is necessary to get this oligarchy, plutocracy of magnates, what you wish, to give more to the society. Question: I should just add to what I‘ve heard before here in a few simple words, about Investment Banking and financial products. If you look at any product like noodles or aspirin or computer software you get information on products like agreements, guarantees, manuals, expiration dates. Products have to go through a process of certification in all branches of production. Not financial products. Upgrade the Bank Financial Products package standards to at least that of my noodle package in my kitchen. That is what we need – we need to understand what these financial products are and what capitalism actually means because capitalism is about money and this is where the ethics end. There are no ethics in profit and we have to regulate this. Thank you very much. Professor Yunus: See, we are speaking the same language all the time so we have no tension between us. This is what we are saying and you are dissatisfied, angry – very, very angry, and I am angry too. And people who have been occupying Wall Street, occupied Davos, hopefully [will] occupy Prague, we‘re in the same league, we are angry. This system is not working but you are still pushing it, pushing it down our throat, that is what we are screaming, and you are saying that the banking system has to change, that is what all my life I have done and they said it cannot be done and I have disproved that, look, this can be done. It could be an inclusive system; nobody should fall through the cracks of the financial system. That is why I gave you, 22

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just accidentally; the story of the beggars. You cannot be poorer than beggars. Nobody will dare to lend money in a banking fashion to a beggar. We did that, and we do it very successfully. It is not a casual charity work. We do it very successfully, so we are demonstrating that you CAN create a system where everybody can be included and can benefit and enjoy that inclusive banking system. Still nobody listens. We talk about microcredit being performed all over the world, including on Wall Street itself. We have done a program there, but, nobody pays attention. Just to tell you an anecdote, on the opening date of the program, in January 2008, lots of journalists from New York came to us to understand what is this going on: you want to run a Grameen Bank, in New York City? Are you crazy? So all the big media, the television, the newspapers, the New York Times, and all that, they all came and the one question was: Why have you chosen the United States for this micro-credit and then, in the United States, why did you choose New York City or other big cities to start this program? So I tried to explain, I said, look, for a simple reason, New York City is the global capital of finance, the global capital of banking and the people who live under the shadow of the skyscrapers, of all those tall buildings of the Bankers, they don‘t have access to banking. Pay-day lenders flourish all over New York City and the interest rate of the pay-day lenders in New York City is five hundred percent, one thousand percent, two thousand percent. You don‘t even notice that people have to go through this in that city. We have started this program to demonstrate that you can provide banking to the poorest person in New York City as efficiently as anybody else in any other type of banking. Once we have done this successfully then probably all those big banks will start looking at it – maybe we can do it too. To demonstrate to them that there‘s nothing to be scared about, poor people are nothing to be scared about – you can do business with them. So far it is working very well, but big banks have not paid any attention. We had the biggest problem in New York, please allow me to mention that the biggest problem in New York in doing this is that to open a bank account for all the borrowers, each borrower has to open a personal bank account for our system to save money because we will not accept any borrower who has not opened a savings account and put at least a tiny amount of money into it every week; this is our requirement. And they are willing to do that, but no bank will allow someone to open a bank account where you can save two dollars. Because that was the amount determined, that they will each save two dollars per week. No bank will allow that. We had to move heaven and earth to persuade bankers to allow them to open a bank account for them to save two dollars a week. Finally, we had to go to the top executive of the huge banking institution to plead with them: Please allow them to do it. I wish I could create a Grameen Bank here since I cannot do the banking; I don‘t have the license for that, so please do that. After months of negotiation, finally we were allowed to do that. But it still created a lot of problems for us. This is the banking system that we are talking about – just tiny little examples but this is a massive thing that we need to change. And nobody will disagree with that. Vladimír Dlouhý: Well it’s sometimes a pleasure to go against the majority in the room and against some authorities and let me start again with very strongly saying I appreciate the effort that took a long, long [time], a couple of decades, for the Grameen Bank in Bangladesh and elsewhere in the world, but I have some hesitations to state, so first – the two gentlemen over there, in the tone of your voice, there was real anger and I can imagine you are angry with the too sophisticated products which the bankers themselves did not understand fully and were selling to the customer who did not understand [them] at all. Yes, it is a shame of the financial sector over the past ten decades. As is the shame of excessive pay. I can afford to say that I am an employee of Goldman Sachs. I have been serving for fifteen years as the International Advisor, covering this region and I am proud of it and I consider my bank to be a great institution. This does not of course mean that there is not a problem within the financial sector, including my Thomas J. Bata Lecture Series on Responsible Capitalism

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own institution. That is point number one. Point number two: I wanted to give quite a similar example, not with the United Kingdom, but with Spain. Why on earth, since the end of Franco, is there such a high level of unemployment in Spain? Now exceeding over twenty percent, but it has always been like that since the end of Franco. And why, on the other hand, is Germany, after the strong pro-market liberal reforms of the labor market and the markets in Germany, paradoxically introduced by the Social Democratic Government, is today running an economy with 3.8 percent unemployment, and doing well? Because the Spaniards did not enact liberal reforms strongly enough, while the Germans did. And again according to my view, this is not a translatable experience to your part of the world but I must refuse on the spot, because that is a completely different paradigm; that profit is evil, that profit is not ethical and a moneycentered economy is not ethical. I am afraid that the economy was always money-centered and will remain to be money-centered. Profit has always been a driver of human behavior and it will remain so. And, Professor – you are the best example because you were endowed. If I was a believer in the Church, I would have said you must have been endowed by God with a certain idea which worked and was excellent. But I am afraid that there is an insufficient supply of Muhammad Yunus‘s in the world. People just do not have the view you had. You had an excellent business idea, how to generate a business for the poor but that does not mean that we should go away from a money-centered economy, that we should banish the idea of profit as something unethical. We remember the experiences of the twenty-first century. All these efforts leading to the quick requirement of abandonment of a fundamental parliamentary democracy are in danger of totalitarianism and that can end up in a way, as we have already experienced, especially in Europe, during the first half of the twenty-first century up until 1989. And I know that the balance is fragile, that we do not know exactly where the border is, and this is all going to be a process of trial and error and I do not want to end up like that. But, because I believe that I should stop since I was talking too much, my internal feeling is that yes, once again, not only in Europe but elsewhere in the world, we are on the threshold. We probably will have to start to search, probably not for a different paradigm, but – I think you used the word ground – on which we stand firmly. If I look at the United States history, or look at the long-term history of many European countries, if I look at the recent history of the twentieth and nineteenth century, this is a very dangerous period because very often we found new ground only through wars and we should not allow for that. All else stated, human beings are going to manage one day, sooner or later. Professor Yunus: I accept your points. I tried to explain – and I hope that I am not guilty of skipping that – I was saying Capitalism, as it is practiced today, is standing on one leg. All I am trying to do is to put on another leg. I did not take away the existing leg so I am not taking away anything, I said this leg exists, I am putting another leg there which will be “we”; “me” remains. “Me” is not eliminated – I am adding the “we” part of it. This is social business, business to solve problems, and I define the second point, I define social business by saying: It is a non-loss, nondividend company; I did not say non-profit company, non-dividend company – that means the company makes profit, profit is not eliminated, so there is no fear of profit disappearing. If profit disappears, sustainability disappears. Without sustainability we do not have anything left, so I am always focusing on the sustainability issue. A profit company makes profits, a social business makes profit but the owners do not want to take the profit. It stays with the company. So comfort is not under threat. It is a question of if I can create a company which solves problems, and then I said: Making money is a source of happiness, I am not eliminating that. I am saying making other people happy is also a source of happiness – also – so I underline that point, also happiness. I said you never tested the happiness because our textbook does not open the door. 24

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If the textbook had opened the door, we will both have happiness. The happiness of making money, the happiness of changing the world. That part is what is creating the problem. That is, I feel, the fundamental flaw that it stands on one leg. If we had removed that, then we would have gained more balance. I used the word balanced life. I did not say this is the one. I have never said that. And I was saying that if each company, whatever company it is, like Bata Shoes, for example, had a parallel social business to run, for whatever purpose, it had a parallel social business, without closing down their main shop, what would it do? To take care of the children, maybe, if they figured out they would take care of children. Or we will give the best vocational education for everybody who is out of employment. That could be a beautiful social business. And they are not harming their shoe business at all; Simply adding one more piece. They give a lot of money to foundations. So it is not a question of taking money away from the company. Foundation money can be easily used for social business. It is already given away. Instead of giving it to charity, I said, why do not you use it as a social business? So social business is an addition. It is a non-threatening thing. When I come to talk about banking, I talk about the entire restructuring of banking. Because banking which denies a third of the world’s population their service, is an unattainable proposition. It cannot be accepted. So you have to open it up. I’m not saying a bank cannot be specialized, yes, you run your specialized bank for the rich. Even the law is tilted. Today’s law of banking, the Banking Law, allows you to create a bank for the rich. Because that is what you have been doing, all of us, all the bankers around the world. I said what bank legislators did not do, they didn’t create another type of legislation that would allow you to create a bank for the poor. It’s separate legislation, because the law will never create this kind of bank. And you introduce me as a banker to the poor, because I run a very special kind of bank, which is different from the other banks. So why can we not do that? I am not saying that you close down your banks. You reform, improve those banks. I did not say you close it down. I am saying have another bank, and other additional services, which will take care of the beggars and homeless and everybody else, because it is a doable thing. Unless we bring our creativity to do that, it will never get done. If you give this to fifteen year old kids, they will design a bank for the homeless. In one day. They will do that. But we adults have never paid any attention to it. That is the challenge. Vladimír Dlouhý: Yes. Let me make an observation, because I want to clarify if I was misunderstood. I did not question that you do very successful banking for the poor. But be careful of one thing. I am travelling a lot all over the world. And [when] I see disgusting behavior of the rich somewhere, [it] is not New York, it is not London, it is not Paris. It is the Middle Eastern world, it is Shanghai and it is Mumbai… Especially in the emerging economies, le nouveau riche are[sic] probably the most disgusting in the world. Professor Yunus: This is the problem. Why do the rich become disgusting? Why can’t they be like everybody else? Like one of the problems of imitating the West from the East, like the Chinese and so on. Suddenly they’re growing very fast; suddenly they have billionaire after billionaire. The most sophisticated products that you want to buy? You will not find them in Europe; you will find them in Beijing. This is the problem of imitating the West. All the best cars. The most expensive cars you want to buy, you go to Beijing. This is the danger. So we have to overcome that danger, we have to stop right here. Before imitations go too far off and we create a crooked world that we will look back and say we did a bad thing. So that is the challenge. I’m not criticizing you or me. It’s the system which creates all those bad people. Those people are not bad people. Simply the system has pushed them into a bad position and now they behave in the most irrational way that you can think.

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Lecture on Responsible Capitalism Professor Muhammad Yunus, Nobel Peace Prize Laureate, Founder, Grameen Bank (Mrs. Sonja Bata’s introduction) I must say, I feel very emotional tonight because I so much appreciate the opportunity to hold our lecture series in this very prestigious hall, and would like to thank Dr. Alena Gajdůšková for making this evening possible. I am glad that we are able to have this lecture here since my husband was originally born in Prague and then gained Canadian citizenship, but he always cherished the two countries; he never forgot Prague and he loved this city. Therefore, I‘m really delighted to be here tonight. The foundation that I chair, the Bata Shoe Foundation, started a ten-year Lecture Series on Responsible Capitalism. For those of you familiar with the Bata history you will not be surprised to know why we picked the topic of responsible capitalism. In the 1930’s my father- in-law defined capitalism in a new way, saying that a business does not have only one shareholder – it has many stakeholders and it is the role of business to look after all the stakeholders – the employees, the customers, the communities we live in, even the countries in which we work. He took this statement very seriously because he believed in the individual and he liked to give responsibility and trust to the individual, in order to empower the people who worked for him – so it was not for the benefit of the family, but it was really to serve society. I‘m very pleased that tonight I have some members of my family here: my son, my two daughters and my grandson. And so it is my hope that interest in the Czech Republic, and in the Bata family will continue for a long time. Now, to return to the subject of responsible capitalism; I just spent the last seven days in Davos, with Professor Yunus, whom you are going to hear from later tonight. One of the main subjects of the conference we attended was values. Discussions ranged from: Where has the world gone?, Why did we have this economic crisis?, What went wrong?, the existence of fundamental values, which we have to get back to – integrity, the truth, a work ethic, not to spend money if you haven‘t got it in the bank, etc. Many of these values were actually similar to what my father-in-law first taught and my husband after him. Now Professor Yunus, as you know, has a different approach to responsible capitalism in the form of micro-financing. Through microfinancing he has allowed many individuals to become entrepreneurs and to stand on their own feet. He has provided these people with self-confidence and I think the important thing that we take away from what we‘ll hear from Professor Yunus tonight, is how each one of us, individually, can help to overcome our current unemployment crisis as well as whatever other crises may occur – is that, it’s up to us to make the changes in this world. Anyway, with our Lecture Series on Responsible Capitalism we try to get speakers such as Professor Yunus to tell us their caseby- case history in the hope that it will stimulate our own thinking to find new ways to overcome the problems which we are facing today. So thank you very much for coming and I hope that you will enjoy tonight. Thank you.

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Thomas J. Bata Lecture Series on Responsible Capitalism

(Dr. Alena Gajdůšková’s opening remarks) It is a great honor to welcome you this evening within these beautiful premises of the Wallenstein Palace in Prague on the occasion of the lecture by Professor Yunus. You may be asking yourself why are we meeting here. The idea to organize this seminar was presented to me by Mrs. Sonja Bata who, like me, is a Member of the Board of the Thomas Bata University in Zlín. I liked the proposal – and was enthusiastic about it for two reasons. First of all, it was an opportunity to represent the Thomas Bata University, which intends to become internationally renowned, and of which we are all very proud, and the second reason, is the fact that such a serious theme, like the one we are discussing today, is a theme that the Senate should deal with. The Upper-Chamber Senate is pre-destined, by the definition in the Constitution to deal with long-term and essential themes, strategies and visions. I personally believe that real progress can be achieved in a better way and at a lower cost by evolution rather than revolution. The ideas of the Bata Company, based on service to the public, and the responsibility of the business sector towards the community are ideas that have always supported progress and continue to bring progress. An important condition is a balance among economic effectiveness, social sensitivity and respect for the environment that has been, and as far as I know still is, the company culture of Bata Ltd. All of us at Zlín have this culture embedded in us; it is projected in the development of the town and the Zlín region. I was lucky to be able to observe that this kind of balance seen in Bata’s company culture is also apparent in places like Nairobi and in Kenya. European strategies trying to achieve a high quality of life and global competitiveness are also based on these same principles. But, principles are nothing without people who implement them, who bring them to life, and that is why I am very happy to meet a person who managed to bring these principles to life in conditions much more difficult than we can ever imagine here in Europe. Our main guest this evening, Professor Muhammad Yunus, is somebody I very much respect, especially as a woman and mother; I respect him for his open attitude towards women from the poor strata of society. He has helped these women to survive, to find a purpose in their life and in their own environment, and thus, in doing so, also gave hope to their children and for this I respect him very much. I am very much so looking forward to today‘s lecture; I believe it will inspire us and it will be motivation for our own work in the future. Thank you very much and enjoy the evening.

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(Prof. Petr Sáha’s opening remarks) This is only the second meeting of Tomas Bata‘s Lecture Series on Responsible Capitalism, having held our first one in Toronto. This is also our first time in Prague, but if I understand fully – we are going to continue this tradition for the next ten years. Tomas Bata, did a tremendous job and now it is a question of the success of father or son. Tomas Bata’s father was the first to start to build the family shoe empire, but after the Second World War it was completely destroyed. It was Tomas Bata junior, who decided to rebuild the company and in doing so, he improved it. Today it is the leading shoe organization in the world. In the process of creating a global business entity, he has also made many contributions to society. He implemented many small, or relatively small, changes in areas he liked, such as, education. If you look back, he introduced Junior Achievement in the Czech Republic, or at that time Czechoslovakia, and he also helped to build the Thomas Bata University in Zlín. We spent plenty of time together envisioning the philosophy of the University and he never hesitated to fly from Toronto to Zlín, even if just for a small meeting or discussion about the University. And, after establishing the University in 2001, we included him again. We asked him to be a member of the Board of Governors and he was immediately voted as Chairman of the body, thus he continued to have a big influence on our University. Dear Professor Yunus, I am not going to introduce you because you are already so well known and have already received one hundred and eight awards – sixty three of which are connected with the Nobel Prize. A big person, big visionary, Professor Yunus, please, I invite you to take the floor and your time is not limited.

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Thomas J. Bata Lecture Series on Responsible Capitalism

Guests mingle at the welcome reception

Guests mingle at the welcome reception

Hall of Knights, Senate of the Czech Republic

Left to right: Prof. Petr Sáha, Rector, Tomáš Baťa University in Zlín; Thomas A. Bata, Bata Shoe Company Prague; Sonja Bata, Chairman, Bata Shoe Foundation; Prof. Muhammad Yunus, Nobel Peace Prize Laureate, Founder, Grameen Bank; Thomas G. Bata, Chairman, Bata Shoe Company.

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Muhammad Yunus´ keynote speech I am delighted, absolutely privileged, to be here in Prague on this particular evening in this historical building, in this Senate Hall. It is a great privilege for me – I wish to thank you for permitting me to be here and share with you all the things that I have done. I want to see if it makes sense to you because, at the time when I was doing it, it did not make any sense to me. But then, gradually it started making sense to me, and that is what is important – to have that repeated. At the time, I did things without knowing anything about them – I had no idea what it was all about. I never did any banking, banking was not a part of my life; I never imagined that I would turn out to be a banker and act as a lender of money to people, but that is what, I was kind of pushed into. Circumstances pushed me into banking and while I do not want to go into detail on how I got involved, in the end, I created a bank which lends money to poor people, particularly poor women. Everybody said “It can‘t be done” – I thought maybe I should try; maybe it will work, maybe it will not work, but there’s no harm in trying. So, that is what I tried to do – luckily it worked. Then people began to take notice – they must have thought I was doing a lot of research because I am a professor and they thought it required a lot of work to find out how to create such a system. They are always curious to know how I designed the whole system, seeing as it looks so critical and was done in such a way. It has balance and it works. I do not know how I did it – I couldn‘t ever provide a good answer to that question because I never actually realized what I was doing. But people always wanted to hear some response – so I cooked up something and I will tell you what I cooked up. I said, it was very easy to create, it was not difficult. Whenever I needed a procedure, on how to do something, or a methodology, I just looked at the convention on banks, and would learn how they do it, as detailed in that particular piece of work. Once I learned how they did it, I would do just the opposite – and it would work. However, people still did not get it, so I will have to explain. I say, look, conventional banks go and lend money to the rich – the more you have, the more you get; that is their principle. I reverse it – I go to the poor and I say, the less you have, the more attractive you are. If you have absolutely nothing you get the highest priority. So that‘s what the Grameen Bank is all about. And what about conventional banks? They operate in the city centre, they build a big building – the most impressive building in the town, and that‘s what the bank is all about. We build the reverse. We go to the villages, remote villages, we practically do not even have an office, and instead it is just like any other little shop or something like that. So conventional banks go to the city centre and we go to remote villages. That is another way we reverse the procedure. In conventional banks they ask the customer or the client, to come to their office to do business. We dismissed that practice. We said, we are a Bank of the People – people should not go to the bank, the bank should go to the people. Then think of the term micro-credit that you hear about globally – that is the principle. Nobody has to come to the office. Service is provided at the doorstep of the borrowers. In Grameen Bank Bangladesh, the bank that I created, today, after thirty-five years, has 8.3 million borrowers, ninety-seven percent of them are women and they‘re spread all over the country. There is not a single village that exists in Bangladesh where Grameen Bank doesn‘t work. Our operation is nationwide, intensively done and all of our loans are paid back in weekly installments meaning, that every week you pay a tiny little bit. So what do we do? Our staff goes to all of these eighty thousand villages in one week to do business with 8.3 million borrowers at their doorstep. So you can imagine, we have a huge workforce of some twenty-four thousand people to go out and do business at people’s doorsteps. So that is what the Grameen Bank is all about. Conventional Thomas J. Bata Lecture Series on Responsible Capitalism

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banks not only go to the rich, they conventionally go to men; their borrowers are mostly men. We reversed it. Not only do we go to the poor, we concentrate on women. When we go to the women to explain what the bank is, she says she has never heard the word, and doesn’t know what a bank is – she tells us that the word doesn‘t exist in her language. So, what is a bank? Since she cannot remember the word bank, we had to invent something else to call it. The closest sounding word in the Bengali language – is something called bang, which means frog. We said we would remember frog and in return she would remember us. Otherwise the word frog does not have a meaning, so it was an ideal starting point – since she did not have any other idea of what a bank is. Then we explain what we do and try to encourage her to come up with an idea so that she can take a loan. After she goes through the process, when we say, “Would you like to borrow from us?”, she says, “No.” “Why?”, we ask and she responds, “I am afraid, I am afraid to take money. I do not want to make any trouble for my family. I never touched money in my life.” Then the more we try to encourage her she says, “Do not give it to me – give it to my husband. He is the only one who handles money.” So, there you see the contrast between the conventional banks and ours. The conventional banks want their customer, the client, to know everything about their business and he or she must convince the bank its worth giving the money to them. If a bank client says, I do not know any business – I never touched any money in my life, what does Grameen Bank do? Grameen Bank says, you are the one we are looking for, and we really work with her, for hours and hours, days and days, to build confidence in her so that someday she can say, okay. Maybe I should try. So that is the distinction. Conventional banks are owned by the rich. If you own a bank you have got to be a very rich person. What about Grameen Bank? Grameen Bank is owned by the poor. All the borrowers of Grameen Bank are the owners of Grameen Bank, so this is another contrast. You have the rich owning the banks, clamshell banks; here the poor own the Grameen Bank. And conventional banks are not only owned by the rich, it’s almost always, I would say, mostly owned by rich men. You see the contrast. Grameen bank is owned by the poor, poor women. So you can go on listing all these things and that will give you a sense of what Grameen Bank is. It is fundamentally opposite of the conventional banks who want to know how much wealth you have already accumulated before doing business with you. The more wealth you have, the more interested they are in lending you money. They make sure to keep account of all of the paperwork, so that they can make sure if you‘re not paying the loan back, they can take all the wealth that you‘ve got. How does Grameen Bank work? Grameen Bank has no call account, which requires a certain financial standing from a poor woman, it’s a meaningless thing – she does not have anything. So if you want to do business, you have to think of something else. So the only thing we could think of – forget about collateral, Grameen Bank has no collateral. How do you give a loan against which she‘s not promising anything? A conventional bank cannot even fathom that. Many conventional bankers ask me, Professor Yunus, can you sleep at night? I say, I have very a peaceful sleep. I have no problem because I know all this money will come back. You have the problem, because in many cases rich people do not pay you back, and you have to go through lots of legal battles. And that brings us to another point – as we do not have any collateral, Grameen Bank does not have any lawyers. We are probably the only bank in the world which is lawyer-free, and it works, we have no problems. Not only does it work in Bangladesh, it works all over the world. Another contrast is when you borrow from the conventional banks; they do not want to know whether your children go to school. They think that it is none of their business, whether your children go to school or not. But Grameen Bank is very concerned with whether the children of Grameen families go to school because these are the families, whose mothers are 32

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the women in Bangladesh, who never went to school in their life. Their husbands never went to school. Nobody in their family history ever went to school. So this is the population that we work with. So one of the things that we make clear right from the beginning is that we want to make sure the children do not repeat the history of their parents. It has become our job to encourage our borrowers to make sure their children go to school. It’s not easy to convince the borrowers because they feel that if a son or a daughter stays at home, they will help them to do their work or something else of value – they can fetch water, they can help them do whatever they are doing – but sending them to school will mean sacrificing their work. But, through Grameen, we have built an environment in which they feel that, yes, it is worthwhile to send the children to school. Then it is the responsibility of the staff to make sure that the children not only go to school, but that they stay in school. It took several years in the beginning to make sure this goal was accomplished, but since then not a single child in Grameen Bank has been left out of the school. So now we have millions of children. When you have 8.3 million families you have got lots of millions of children to send to school and so we sent them and they stayed at school. We thought that after completing primary education, which is sixth grade, the students would not come back and would never return to school. We were surprised. They continued, most of them completed their high school, and started going to the colleges and universities. And then they got stuck because it is expensive to go to the universities. Up until graduation from high-school, it does not cost much, because it’s free education, so they can all go, but the moment you get to higher education it costs money. So they get nervous – what do we do now? We said, do not worry, stay in colleges or go to universities, Grameen Bank will finance the entire requirement of your education. The Grameen Bank is duty-bound to finance every child of Grameen bank to continue and finish their higher education; if they qualify, they are good enough, as long as they can get themselves admission into higher education. Right now, this year, we have 52 thousand students at medical schools, engineering schools, and at universities, so you have a very contrasting situation. The parents are totally illiterate, and the children are educated – some are very highly educated. Again, it’s a very striking contrast, when you visit a Grameen Bank family. When I do go visit and talk to them, they‘re very excited to see me. The woman is very happy that she joined Grameen Bank fifteen years ago. Twenty years ago she was working and now she has changed her life completely. Now she wants to show off the house she built, all the things she bought, and all the furniture she has. It is apparent that she is proud of what she has accomplished. And I see a young girl with her and you can immediately see she‘s her daughter because she looks exactly like the mother, only one is younger, the other older; the similarity is so obvious, the younger version of her mother. So I assume she helps her mother with work, and so I ask her, “What do you do in the house?” She said, “No, I don‘t live here.” “So, where do you live?” “I live in the nearest town.” “What do you do there?” “I‘m a medical doctor. I practice there.” You are shocked because your mind suddenly awakens – that although the two look alike their lives are not the same. Because this is the girl who went to school, went to Medical School, became a doctor, and is now visiting the village. I asked, “What are you doing here?” “I came here because I heard you were visiting our village. I never saw you in my life. So I wanted to see you.” And I looked at her. I looked at her mother; to look at the similarity. And immediately Thomas J. Bata Lecture Series on Responsible Capitalism

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a thought came to mind. The mother could have been a doctor too. There‘s nothing wrong with the mother, but society never gave her a chance. She never went to school. She could not even read and write. Her daughter got a chance. Simply in an institution called Grameen Bank. We let her go to school and then gave her the financing to complete her education at a Medical School, and she became a doctor. If society had given the mother a similar opportunity, she could have been a successful professional person as well; there‘s no difference between the mother and daughter in terms of intellectual ability. You ask yourself the question – why poverty? What creates poverty? Is it inside the person or is it brought from outside and imposed upon the person? Every time you meet this woman in the village you come to the same answer – she is not the cause of poverty. Poverty is imposed on her, from the outside. What imposed poverty on her? Of course, society imposed poverty on her; the system imposed poverty on her, her intellectual–conceptual framework, imposed poverty on her. It’s not her fault and I have tried to explain this by using the analogy of a bonsai tree. You know you take the seed of the tallest tree in the forest and put it in a flower-pot. It grows big and then it stops growing. It looks exactly like the tree in the forest – it’s an absolute replica of the forest tree, but only a smaller one. We call it a bonsai. There‘s nothing wrong with the seed. Then what is the reason it became so stunted, so little? What is the reason? The reason is we didn‘t give the seed enough space to grow. We gave it only a flower-pot, so it only grew this much. And I try to tell people that, look, poor people are bonsai people. There‘s nothing wrong with their seed; as human beings they‘re as capable as anybody else in the world. Simply put, society never gave them the chances that it gave to everyone else. I also say, take the example of a child, born on the street – and suppose that at that same moment a child is also born in a palace, and that by some magic you switch these two little newborns. The child born in the palace is brought to the street and the child born in the street is switched to the palace. Come back a few years later; 15, 20 years later. The child who was raised in the palace – he grew up as a Prince. Everybody respects him, everybody salutes him; he talks like a Prince, he acts like a Prince. The child who grew up on the street – he became a criminal. So this would make a good movie story but that‘s the real story too. The child becomes what he or she is because of the environment in which we allow them to grow and that makes all the difference. Institutions are at fault. Policies are at fault. Laws are at fault. So when you look at a poor person – don‘t blame her, blame us, blame ourselves; that we are responsible because we designed those things which we are talking about. Look at an institution like a bank. Can you explain to me – I keep asking this question to everybody – can you explain to me why they do not lend to poor people? The only explanation that they can give you – is that the poor are not credit-worthy. “What does that mean?” “They cannot pay you back.” I reply, “You should have said that thirty-five years ago.” Today you cannot say that because we broke a record for incoming bank payments for the last thirty-five years. How systematically they paid! The daily payment record exceeds the repayment record of any bank anywhere in the world. You can‘t beat that! And Bangladesh is a country of disasters – every other year. The only way you know about Bangladesh, probably, is because you read in a newspaper that a flood has taken over, and Bangladesh is sinking or something like that. One disaster or some tidal-wave came, or a cyclone came, and so many thousands of people were washed away and millions of people became homeless. That‘s the story you read, that‘s the country that comes in behind. Did it make any change that Grameen Bank disappeared because the flood came? Did it look for bailouts from anybody? No. It didn‘t 34

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ask for any bailout money from anybody. The bank continued – by the way, Grameen Bank doesn‘t take any money from anybody and that leaves people to think, “You must be getting a lot of money from the World Bank.” To them I say, “What is the World Bank? – who are they?” We don‘t know. We have never taken any money from them. People assume that donors are giving us a lot of money and that‘s the way it works, but none of this is true. Of all the money we lend out, over one-and-a-half billion dollars every year – and, it keeps growing, [it] is not money from donors. Where does this money come from? It’s not a tiny piece. A billion dollars, one-anda-half billion dollars is a lot of money in Bangladesh. It comes from the main internal system. We don‘t take money from any bank, government, our own government or any donor agency, nothing of that sort. Instead, we take deposits, just like any other bank and keep this money for the people so that they can change their own lives. And also, we encourage our borrowers to save and they save small amounts of money. Our average loan – in case you‘re thinking, “How big is the loan?” – Our average loan today would be about two hundred and twenty-five dollars. That is the average, there are many below that, and many above that, but the average is two hundred and twenty-five. And each borrower is supposed to have a bank account to save small amounts of money. That small amount of money becomes big money if you keep on adding a little every week to that initial sum of money and then you have this action mirrored by 8.3 million people saving in that account, in their accounts. Of the one-and-a-half billion dollars that we lend out, nearly a billion dollars comes from the deposits from the savings of the borrowers themselves. So people always look at the poor people as somebody who only takes, and forget they have the capacity to give, to save. So the whole orientation of poor people completely changes overnight. All these children who go to school, receiving their Master‘s degrees, becoming MBA‘s, becoming doctors, or engineers – what do they see in the world? When I go and talk to a group of tens of hundreds of them, they always worry that yes, they have been helped in getting these degrees but there‘s no jobs in Bangladesh. “What do we do? Where do we go?” It puzzled me in the beginning, at the very start, and then I thought of something and now whenever this question comes, every time I meet these young people who always ask this question – “Where is my job? How do we find a job?” And finding a job in Bangladesh is extremely difficult. Even if the job exists, you have to be really connected with somebody really powerful in the country to recommend you and to get the job. So you‘re always looking for somebody who can recommend you to find a job – or bribe the people. Bribing for a job is a very common practice in Bangladesh. An enormous amount of money has to be offered as a bribe to find a job. So if we have no money to provide for the bribe, and we are helping families who have no connection with any big-shots, we must think of other ways to help them. When I meet them I tell them, look, you are a different kind of young people. Don‘t think like the other young people, because you are a class of very privileged young people. Why should you be looking for a job? Your mother owns a bank. Money‘s not your problem – your mother‘s bank has unlimited money. Why don‘t you think about something else? Like what? Like first of all, you need to decide in your mind, and then pick a pledge – a promise to yourself – and repeat this pledge every morning when you wake up. What do I say? How do I make a pledge? The pledge is ‚I shall never be a jobseeker‘, I‘ll be a job-giver. My mission in life is to create jobs and that I will. In the beginning they were shocked. I don‘t have a job and he‘s making fun of me. He says I should be a job-giver. How can I be a job-giver, I have nothing? Thomas J. Bata Lecture Series on Responsible Capitalism

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Then I respond to this question. I say, look, you remember your mother; you remember how she got involved in Grameen Bank? How many years – 20 years, 30 years ago? – She joined Grameen Bank. She was shaking when she received her first loan, a thirty-dollar loan. She could not believe that anyone would give her such an enormous amount of money. Tears were rolling down her eyes, but she was brave. She promised herself that she would take this responsibility and make it happen – and she made it happen. And ever since she started taking loan after loan, she changed her life and sent you to school, sent you to college, and that‘s why you‘re a graduate now, that‘s why you‘re a doctor, that‘s why you‘re an engineer, now. If your illiterate mother could do something for herself, without seeking a job with anybody; what good is your education if you‘re not better than your mother? And if you don‘t know what to do, look at your mother, look at what she did, what she‘s doing now. Whatever she has accomplished as an illiterate person, you can make fifty-times bigger, even a hundred times bigger. It will be your business because you have the finest consultant-in-residence; your mother is the best consultant that you can get, because she is an expert on the business. Nowadays many young people are studying business. We give them loans, so that they can go into areas where their mothers will never go. Before, I was talking about banks, how banks reject people, and works as an institution which fails people. Then their concepts fail people. Look at the concept of business; business is business to make money. We‘re so blinded by making money that we don‘t see anything else. We‘re blinded by making money, we‘re intoxicated by money generated by the banking system; sometimes making money can even become an addiction. You don‘t see the world as it is, you see it in a very narrow way. The point I always try to raise, after looking at what I have accomplished what it means to me and what it means to others, is that, as human beings we‘re not money-making machines, we‘re not robots in this world, we‘re much bigger than that, but our greediness has kind of compressed us into a very narrow role. We‘ve become tiny little robots, always scrambling around to make money and we don‘t know a way of making money or what to do with our money. I understand you‘re making your first million, fine you‘ve made your first million. But what to do with your second million, third million, fourth million or first billion – what do you do? Making money as a mean, but we are using it as if making money is an end. It can‘t be that way. The end has to be something else. So I said, why don‘t we see the end as what our purpose is – why do we live on this planet, what do we do? Is it just to make money and then say good-bye and disappear, or do something else? As a human being with enormous capacity, the unlimited capacity to do things, money-making takes up just a little of your abilities. Other capacities are never used and that means totally unutilized – other capacities to make a difference in the world. So I asked, why can‘t we make business to change the world and then I look around and say yes, this is precisely what we have been trying to do. And that‘s what I started talking about, the thing, that is based on an instinct to change the world, without having any intention of personally benefitting from the business. So this is a new category of business that I‘m trying to explain to people, and if you are interested you can participate. It makes sense to me – I hope it makes sense to you. This is a business to make a difference in people‘s lives and I‘m calling it social business. We started creating these social businesses one after another and luckily now people are catching on, many universities are opening Centers of Social Business to teach students how social business is designed and how it is practiced. Many universities are creating Chairs of Social Business, and have an Institute of Social Business; the young people love this idea – that they have the capacity to change the world by creating social businesses. Human capacity, human creativity is so enormous, that if you focus that creativity into solving problems in a business way, 1001 designs will be innovated. To elaborate on this point, I‘ll give an example of some of the multi-nationals 36

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that work with us on joint-ventures to solve problems through social business. One is Danone, the yoghurt producer; once I met Franck Riboud – I didn‘t even know his name was Franck Riboud at the beginning – he sent me a message that invited me to lunch, whenever I happened to be in Paris next. I said O.K., we‘ll make it happen, so when I visited Paris to attend a Women‘s Conference – I met with him, and he had lunch with me. First we discussed the conference, and then I proposed to him – why don‘t we create a company in Bangladesh, because Danone doesn‘t work in Bangladesh, he said okay, so we shook hands. Then I said, it will be a social business, and he said, what is social business? A social business is one where you will never receive a dividend but the company will be working to solve a problem. Again we shook hands. I‘ll do it, he agreed. Then I became a little suspicious. He doesn‘t understand my Bangladeshi English and I probably didn‘t understand his French English so our words might have gotten lost in translation. So, I sent him a long e-mail, explaining everything regarding what we‘d discussed, and within an hour he sent me back his reply. He said, I understood every word you said to me and I agree with whatever you have recorded, and I sign on it – let‘s go ahead and do it. And out of that we created Grameen Danone Company to produce yoghurt to address the problem of malnutrition among the children of Bangladesh. There‘s no intention of making any dividend out of this company for anybody. The company is totally dedicated to its goal and is doing a very good job. It’s very effective: yoghurt to remove the malnutrition among the children. So that‘s the whole purpose. If you can remove the malnutrition among the children in a business way, you have discovered something which can change the life of all the children. Malnutrition not only causes stunted growth – you don‘t grow as much and your mental faculties are also stunted. You cannot absorb things as much, you cannot concentrate on ideas as much, and you cannot remember things as well because your mental development wasn’t proper. So it’s a shocking thing for any nation to have children suffer through that, right in front of their own eyes. It costs pennies, literally pennies – you can produce things so cheaply once you set your mind on creating something for poor people. You have the business technology; your mind is removed from making money – suddenly all the creative power comes in to make the job. So this is what we do as social business. Enormous varieties of things can be done as social business. We‘re not saying that all the other business activities should be shut down – that‘s not what we‘re saying – all the businesses can grow as they are – I hope they‘ll improve a little bit – but in parallel, each business has the ability to run as a social business. For the things that they cannot do in a money-making format they can do in a social business format. The topic gets rather broad because the businesses have enormous creative power; businesses have enormous technology at their command. If we use this creative energy, if we use this technology that they innovate and use it for the goal of social business the problems that we have around us will disappear very soon. Let‘s try to do that.

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Questions & Anwers Josef Šíma, CEVRO Institute College: Professor Yunus, thank you for your wonderful talk. I’m a big fan of bottom-up solutions and you do not only talk theoretically about them, you really provided an example that it is possible and proven to work. My question is related to the current problems that we are facing. The thing is, the solutions to the problems today rarely are bottom-up. They are typically top-down solutions. Spending money is considered to be a good thing. Printing money is considered to be a solution. Whereas, as far as I understood you, you believe that entrepreneurship, human creativity, and alertness are solutions to the problem. Is there a lesson from your own experience with your bank that can be likened to general policy making? Thank you. Prof. Yunus: Well, I can only bring my experience[s] that are relevant to this and I can make some general comments about what I feel should be done. That’s what I am trying to do right now. For example, [with] regard to the young people that I was discussing, there are millions of young people coming from Grameen families. The message is: Do not wait for a job. Create your own job. Create jobs for others. You are capable of that but our education system doesn’t tell you that. Our education system and our parents are encouraged to tell their children: Son or daughter, work hard so that you get the best grade in the class and then go to the best schools so that you can get the best job in the best company. Getting the best job in the best company, is this the fate of human life? But this is what we are saying. This is what we are encouraging through our education system. We never say: Work hard. Find the way. Change the world. There are many ways how to change the world. This is one, this is second, and this is third. Take your pick. Design the world that you want to live in because this is your world. You create the world you want to live in. You are not coming to the world as a tenant, as a place to go and live for a while and then leave. You come here as a creator of this world, able to create the world that you want, and to design it. But that’s not the message we are giving. We are not providing a vision; we are not giving a creative message. So this is where we go wrong in our education system and as a result, we become a whole mass of workers. Those tiny little people going to the office work very hard to make shareholders to make [a] lot of money for themselves and to get a good promotion. That’s it. So we need to discover what we stand for, so that we can integrate it into our system and so on. And what about giving away? Yes, we can give away. We could give away those yoghurts; we designed that yoghurt and then gave it away to the children free. How many children can you give this free yoghurt to? You‘d give it to a hundred thousand, two hundred thousand, one million, but Bangladesh is a hundred and sixty million people, and half the population is under the age of twenty. So imagine how many cups of yoghurt you would have to give away. You can’t. Governments don’t have that capacity. Nobody has that capacity. But if you run it as a business, everybody has the capacity to change one’s life. So that’s what I am saying. That it can be done much more efficiently. I’m not against charity. Charity is very important for a certain time. But there are many things we can convert to business. Sometimes we provide free distribution, for example education is free for all. Good, but for the richest guys it’s also free, their kids get it free. So you want to make it free for everybody. They are the ones who will benefit. Poor people benefit, but they are getting it too. So when is it right to give it for free, and when do we charge for it? That dilemma, we have to resolve. We cannot just say that everything is free. This is one challenge for us. How do we make it efficient and sustainable? Unless it is sustainable we cannot get to the last mile. We simply say that we have given this as a token and say that the job is done. The job is not done. We have to find a way to get out of it. 38

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Prague Post Journal: I would like to ask you, what do the women usually do with the money? How do they get involved in entrepreneurship? What did they do? Prof. Yunus: Let me paint a familiar picture. We also carried out the same program, the microcredit program, in New York City, the same thing that we do in Bangladesh. What did the women in New York do that probably is more familiar to you than what the women in Bangladesh do? Women in New York take the money. For example, a woman who used to work for a cleaning service, house cleaning for a company, lost her job ten years ago and remained idle for a while and she has no money, she has nothing. So she started to offer her services. She knew how to clean. She offered the service to neighbors and unknown people for remuneration that she was going to clean their house. As an individual, she started doing that. For the past eight years, she did that. And then the Grameen program came to her. So she joined Grameen bank, and she took a loan to buy a carpet cleaning machine. In the interview, when I was talking to her, she was telling me, for eight years I scrubbed the floor with my bare hands. But I survived it and I am so grateful to the Grameen program that I now have a machine. I can clean much more, much faster, and with more ease. I am able to earn more. That’s how she borrowed the money and was able to pay it back easily. Many women who were hairdressers lost their jobs but still have their skill set. They took a loan so that they could rent a barber’s chair. It’s a rented chair like those you see in the hairdresser‘s salon. So they rent the chair, buy all their supplies, and are back in business. Also, pet care is another industry that is quite a flourishing business in New York City. This requires taking care of cats, and taking care of dogs. So a woman will borrow money so that she can set up a shop, to take care of dogs and cats and so on. You can go on with this thing, things that you are familiar with, things you don’t have to invent. You know it, but somehow you got derailed from it. Because you don’t have money in your hand, you think you are totally useless. But the moment you have your money with you in your hand, your mind starts thinking about how to use this money, how to make money and so on. This is what is done and it is done the same way whether it’s Bangladesh, whether it’s in Mongolia or whether it’s Guatemala. Wherever you are, you see the same issue, the same problem. Jan Mládek: Thank you, professor, for a very impressive lecture. I have the following question. When I was thinking about your example I came to the conclusion that something like you are suggesting already occurred in Europe in 19th century. It was basically the creation of the cooperatives. But the cooperatives in Europe were smashed by multinationals or they became multinational-like. In many countries in Europe you have still cooperative banks, like the Rabobank in Netherlands, but it behaves like a normal bank and its expertise as a cooperative bank is lost. Aren’t you afraid that your bank may go in the same direction, if not now, perhaps in the future? Prof. Yunus: Sure, anything can deteriorate pretty easily. Mission drift is a very common thing. Like Raiffeisenbank, for example, it came from the same background, and was founded upon the same reason. But today we are talking about Grameen Bank reaching the people unreached. Savings Banks all over Europe had the same tradition, and the same purpose, but look at the Savings Bank, look at what they‘ve become. They became the big banks, big guys. They drifted away from the tradition that they began with. So drifting is easy. But if you know where you come from, you can remember your beginnings. Even in microcredit, mission drift is not uncommon. What we created is a bank to help people, poor people, to get out of poverty. Unfortunately, some people saw a very clear picture of using this strategy to make money for themselves, and since, have done so. And so we shout at them, look, this is not what we call microcredit. Microcredit is created to help people get out of poverty, not to make money from it. You are turning microcredit into loan sharking business. They were there way before we were in Thomas J. Bata Lecture Series on Responsible Capitalism

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the picture. So it’s possible, but if you are conscious, you make sure it won’t happen again. That requires, somebody, you or me to try again. So that’s the whole thing, you can’t not try because you are scared you may drift in the wrong direction. We have to keep on trying so that we can keep somebody on track and continue to do so. Hopefully then, the image of microfinance will survive due to the character under which it was created. Ivan Pilip: I have two questions concerning the day-to-day life of the bank, because what you achieved is really excellent; but coming from a theoretical background and hearing you say that one of the ideas was to approach the poor people, unlike the big banks, I would like to draw attention to the fact the financial crisis four years ago started with a bit similar concept. The subprime loan started with an idea that the banks in United States approached very poor people and offered them a mortgage. So, of course, there is a difference in that you don’t have any collateral, if I understood properly, but in general, the idea is similar. So, why is your idea successful and why do you think that the idea of a subprime loan was such a failure? That is the first question. And the second question is; what‘s your default rate? Because I can imagine that even if you have a very low percentage of people to try to cheat you, that due to human nature you unfortunately still have at least some people trying to cheat, and also, what about the many people who don’t try to cheat, but they have, for example, a business plan that fails. So they are not capable payoff paying back the loan. So I am wondering, what’s the percentage on average, internationally, of people that don’t pay back their loans. Thank you. Prof. Yunus: Incoming bank repayment rate is very high, but of course in Bangladesh the repayment rate of the incoming bank account is about 97 per cent. So, about 3 per cent is accredited to default, but that default doesn’t necessarily mean it’s a bad debt. Bad debt would be about less than one per cent, bad debt, by definition, is money that is never repaid. Two per cent is accounted for as payment that was delayed past the last terminal date it was due on. They paid, but paid a little later than was expected or promised. So that money is repaid. Only one per cent is never repaid. So that’s the idea and to add on, to what we have recently seen the last four years in New York City. The women in New York want to be very clear that O.K., I am paying; I do not want to get in any trouble. And in New York City they pay 99.3 per cent of the time when they are the ones who were quite capable of fighting back with you and, saying that I won‘t pay because you didn‘t do this, why should I pay you. All kinds of things could have occurred there, but it never happened. Now we have expanded our activities to other cities, and in Omaha, Nebraska, where we have a branch, we have experienced exactly the same results. We have no problem with them repaying their money. Last year we opened [a] branch in Indianapolis, and so far we have had no problems. So we push on… we were invited to extend this business in those cities because their people were saying that they needed it, because they have the same problem. So we did that. And so, the repayment rate is quite high because of the way the system was developed. When you say cheating here – with a repayment rate so high, cheating virtually doesn’t exist, because we are very close to each other. That’s the advantage of serving at people’s doorstep. When you provide a doorstep service you look people in the face, and you remember the face, you remember the house. One of the tests we give to our new recruits of our staff when they are trained – is that, during the training we send them out to work with people, as an apprentice, and then we bring them back to the training academy. First, they have to write down the names of the borrowers they have met. So they have to write down their borrowers’ names and write down the names of their children. Then they are asked to name the children in order of their age. How intimately you know the person – that’s a whole issue. So some have a longer list, and some have a shorter list, some could only remember one out of three of the children’s names, another one remembers all the three, all the four, or all the two. So one is a better recruit 40

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and another still has to learn a lot, he‘s not done well. So this is the type of intimacy we develop, because we have nothing else to depend on, we don’t have papers, as I previously mentioned. We are lawyer-free so we are paper-free too. What do you do with stacks of papers when you have no lawyers? You don’t need them. So, it’s a human relationship and, what is called microcredit, is a human relationship-based banking system. It’s a trust-based bank. She, the borrower, doesn’t know what you have written. She cannot read. But she trusts you, that yes, you have put down in her pay-book is the correct amount that she must pay back. And this is her record; she keeps it in case there is a controversy, she shows that see, you wrote this and I have it. So this is how it’s a completely different world. Now, about the subprime thing – subprime didn’t work; Grameen works or microcredit works, for a very simple reason. The goal of the subprime providers is they want to make money. They are not there to help you. They tell you how much help you can get, but in the back of their mind, one customer, somebody got signed. They think I got it made; I will get a raise or something. Or if I can find ten of them I’m sure I will get a raise because the bank is making money. When we face a potential customer who says, please don’t give it to me, I’m not there to make money. I’m trying to see if I can help you. And I know you are rejecting me, because that‘s what history has taught you. Defend yourself. Don’t become the prey of someone else. So you are protecting yourself and I’m trying to introduce myself – I’m not the tiger coming for the prey. I’m here to be your friend. Help you. See, a lot of time is spent to build the trust between the two. Then she says maybe I should try. And that’s the beginning and from then on we are friends. Our entire intention is to see that you work your way out of the troubles that you got yourself into. So the purpose is very different. That has to be distinguished. One of the performance indicators of our branch and staff members is, “Have you ensured that all the children of these families that you serve are at school?” So our staff has to make sure that as part of the performance record that all the children are at school. And somebody will check back to see whether that statement is correct. Because he or she is responsible for six hundred borrowers, this is their job. Six hundred borrowers’ lives depend on them. How quickly you can help them change their life, that’s what your task is. And the tool that you use is money. You have no other tool other than that, and persuasive capacity. Make sure that children go to school, and several other things, called the sixteen decisions, that for the sake of time limit I’m not going into. One of them though is: we shall not take dowry at the time of the marriage of our sons; we shall not give any dowry at the time of the marriage of our daughters. It’s a revolutionary commitment in the context of the society that we live in. But they commit themselves to that. And the bank’s job is to help them keep that commitment. It has nothing to do with banking, but you know that [a] dowry destroys families. If you cannot avoid paying [a] dowry you’ll be in trouble. And another one is, we shall dig a hole and use it as a pit latrine, as soon as possible we will set up a sanitary latrine because there are no toilet facilities in the villages. They all go out. So we go there and say don’t go outside. Make sure you have a toilet. It’s a very simple thing. We lend you money to build a sanitary toilet. It doesn’t cost much but they are not used to it. So we have to go on explaining why it’s so important for them and so on. So it goes into the sixteen such decisions. And we make sure that gradually they get implemented. That’s the relationship we build. William Lobkowitz: Thank you Professor Yunus, I was fascinated by the statistic of 97 per cent of the people you lend to were women. Is that a cultural thing in Bangladesh or is it something that you carry around the world? You were just talking about trust and human responsibility and I wonder if that’s connected. Thank you. Professor Yunus: Well, it’s just opposite, our culture is just opposite. Our culture is to keep the women at the back of your home. They don’t see their front door. They stay in the back, take care of the children. That’s why she says I have never touched money in my life. And this is the Thomas J. Bata Lecture Series on Responsible Capitalism

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truth. And she says I’m afraid of money. Give it to my husband. She’s not trying to be polite. She is simply explaining what she is. And we are the ones not giving up. So you ask, how did we get into the women issue at all? That’s a very fundamental issue. Why did we become interested in women? I should briefly give you the history. I became very agitated when the bank was not accepting my proposal to lend money to poor people. So I started making very noisy accusations against the entire banking system in Bangladesh. My first accusation was that the banking system was entirely wrong, because it denies the people who need the money; they don’t give the money to people who need it. Only people who already have a lot of money- they give the money to them. It is a senseless thing to me. So this is one accusation. The second accusation was something very difficult for them to accept, but I keep on pushing the point. I said, “You not only reject poor people, you reject women of all categories; even the richest woman cannot get a loan from you.” They keep on protesting. I said, “don’t keep on protesting I know your rules, I studied them.” If a woman comes with her business proposition to a Bank Manager, the Bank Manager as standard procedure will flip through the document in the presence of the woman to see what the proposal is about. And in between flipping he will say, “Have you discussed it with your husband?” And she will say, “Yes, I have discussed it with my husband.”Then he will politely say, “Why don’t you bring your husband along next Monday, we’ll talk about it.” As a result not even one per cent of the borrowers of conventional banks in Bangladesh happen to be women. Today it remains the same. When I finally began, the first decision I made was that half the borrowers in my program must be women. Here we go try[ing] to reach out to the men and women. Men jump in, and take the money or loan, women run away. Literally women ran away – when we entered a village on one side they ran away to the other side. They think we are coming to get their money, they are scared. And my colleagues, my students who were working with me at that time, I am always teaching, so I’m always working with my students. They said, “Why don’t you just give up on the women? It will not work because they don’t know anything.” No. Don’t listen [to] what they say. This is not their voice. This is the voice of history. History that evoked fear in them. So our job is to go back again and again, remove the layers and layers of fear. So that someday one of them will say, maybe I should do it. And if she dares to do it, and does it successfully, it will open up the door for others. Everybody will say, oh my god, I can do that too and they will do it. It took us six years to make it fifty-fifty. Then we started noticing that money funneled to the family through the woman brought much greater returns to the family than the same amount of money going to the family through the men. Same amount, but the impact is so different. The first impact is on the children. There is an immediate impact if the mother is the borrower. But you don’t see it. But you see many other things. Women have a longer vision, to move step-by-step. Men are more casual. So what? Women will get the best mileage for their money. Men were more casual, not so serious. So after seeing all this we finally decided to forget about fifty-fifty. Concentrate on women and ever since that is what we are doing. All over the world when you hear the word microcredit, it’s not credit for the poor. It is credit for poor women. It became the standard. Everybody sees the same result. So that’s how we became interested in women.

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Delegates profiles

Professor Muhammad Yunus Nobel Peace Prize Laureate, Founder of Grameen Bank, Bangladesh

Professor Muhammad Yunus is the founder and Managing Director of Grameen Bank, which currently has 2,564 branches providing credit to 8 million poor people in 81,351 villages in Bangladesh. He developed the core of Grameen Bank: banking without collateral for the poorest of the poor in order to enable them to lift themselves out of poverty. Muhammad Yunus was born on 28 June 1940 in the village of Bathua, in Hathazari, Chittagong, the business centre of what was then Eastern Bengal. He studied economics at the Vanderbilt University, USA, and received his Ph.D. in Economics in 1970. He taught economics in the Middle Tennessee University from 1969 to 1972. Returning to Bangladesh in 1972, he joined the University of Chittagong as Head of the Economics Department. He started the Grameen Bank Project in 1976. In 1983 this project received a banking license and thus was transformed into a formal bank. According to the meaning of “Grameen” (translation: village), Grameen Bank offers small loans for self-employment to the rural poor, especially poor women. The Nobel Peace Prize 2006 was awarded jointly to Muhammad Yunus and Grameen Bank “for their efforts to create economic and social development from below”. In addition to providing loans to poor people, during the last few years Professor Muhammad Yunus has devoted his work to spreading and implementing his idea of “social business”, a concept for businesses that strive to solve social problems, but are also financially self-sustainable.

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Vladimír Dlouhý Economist, Member of the National Economic Council, Czech Republic

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Vladimír Dlouhý has worked for Goldman Sachs since 1997 as an International Advisor for Central and Eastern Europe. Between 1997 and 2010 he acted as an advisor to ABB. Mr. Dlouhý is currently Chairman of the Advisory Board for Chayton Capital, London, UK, Non-executive Director of KSK Power Ventur, in Hyderabad, India, Chairman of the Advisory Board of Meridiam Infrastructure, Paris, France and an Associate Professor of Macroeconomics and Economic Policy at Charles University in Prague. He is also a member of the Scientific Board, Faculty of Economics and Public Administration, School of Economics, Prague, a member of the Board of Overseers, Illinois Institute of Technology, Chicago, USA, Deputy Chairman of the European Group, The Trilateral Commission, and the author of numerous publications. Mr. Dlouhý studied mathematical economics and econometrics at the School of Economics and at Charles University in Prague, and later received his MBA at Catholic University in Leuven, Belgium. He started his professional career as a university lecturer, and in 1983 moved to the Czechoslovak Academy of Sciences as a researcher. Later, he became Deputy Director of the Prognostic Institute. In 1989, Mr. Dlouhý was invited to join Czechoslovakia’s first post-communist government and served as Minister of Economy until 1992. After the Velvet Divorce, he served as Minister of Industry and Trade of the Czech Republic until June 1997. He was also a member of Parliament and Vice-Chairman of Civic Democratic Alliance, a party that was then part the governing coalition.

Thomas J. Bata Lecture Series on Responsible Capitalism

Šimon Pánek Founder and Director, People in Need, Czech Republic

Šimon Pánek is the founder and Executive Director of People in Need, a Czech humanitarian organization founded in 1992, and the largest of its kind in Central Europe. People in Need works internationally to provide relief and development assistance and to promote democracy and human rights, as well as locally, where its programs address social integration and education. Mr. Pánek has been actively involved with social justice since his youth. As a student, Mr. Pánek helped organize the November 17 demonstration in 1989, which marked the beginning of the Velvet Revolution. In 1992 he founded the conflict reporting-focused news agency, Epicentrum. From 1992 to 1997, Mr. Pánek worked as a policy analyst for President Václav Havel. As a testament to his long time commitment to human rights, in 2002 Mr. Pánek received the Czech State Medal of Merit and became the first Czech to win the title of European of the Year.

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Robert Břešťan Commentator in Chief, Ekonom, Czech Republic

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Mr. Břešťan began his professional career in the Czech section of the BBC World Service in London, where he experienced first-hand the high standards of professional journalism. Following the closure of the Czech section of the BBC World Service due to austerity measures, he spent several years as a political reporter and Deputy to the Head of the Political Desk for the Czech economic daily, Hospodářské noviny. Before joining the weekly Ekonom, Robert Břešťan spent two years as Editor-in-Chief of Radio Česko, the only all news radio station in the Czech Republic with a special focus on business and policy. Robert Břešťan obtained his degree at the Josef Škvorecký Literary Academy, the only institution of its kind in Central Europe and the first Czech private university with a full Master’s program in the humanities.

Thomas J. Bata Lecture Series on Responsible Capitalism

Sonja Bata was born in Switzerland and studied architecture at the Swiss Federal Institute of Technology. After her marriage to Thomas J. Bata in 1946, she became involved in the operations of the Bata Shoe Organization and is member of the Board of Directors. She is Chairman of the Bata Shoe Foundation. In addition, Mrs. Bata has served on a number of business boards including Alcan Aluminium, Canada Trust, and the Canadian Commercial Corporation. She has also been active in many volunteer organizations in the educational, health and environmental fields and is founding Chairman of the Bata Shoe Museum in Toronto.

Sonja Bata Chairman, Bata Shoe Foundation

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Alena Gajdůšková was born in 1954 in Prague. She graduated from Pedagogical Faculty of the University of Ostrava. Subsequently she worked as a teacher for fifteen years. In 1992 she became secretary of the Social democratic group in the Chamber of Deputies. Since 1999 until 2002 she worked for the local authority in Zlín as the Head of Department of Education, Culture, Health, Youth and Sports. In 2002 Alena Gajdůšková was elected to the Czech Senate and she was reelected in 2008. In the Senate she served as a Vice-chairwoman of the Committee for European Integration, Chairwoman of the Social democratic group, and also as the Vice-chairman of the Senate, which is the position she currently holds. Dr. Alena Gajdůšková Vice-President of the Senate, Parliament of the Czech Republic Member of the Board of Governors, Tomas Bata University in Zlín

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Professor Petr Sáha Rector, Tomas Bata University in Zlín

Professor Petr Sáha is the Rector and one of the founders of Tomas Bata University in Zlin, Czech Republic (TBU). As a significant scientist and public personality, he devoted his life to gathering and transmitting knowledge in the field of science and education. After studying Chemistry at the Faculty of Technology of the Brno University of Technology in Zlin, Petr Sáha began his professional career in the same place, eventually achieving the title of professor. To expand his scientific expertise, he spent more than ten years as a visiting researcher at Chalmers University of Technology in Gothenburg, Sweden. Closely connected with the Faculty of Technology of the Brno University of Technology for most of his professional life (also as Dean), Petr Sáha made continuous efforts to launch a university in Zlin. With the support of the Bata family his idea came to life, and after the TBU started operations in 2001, Petr Sáha was elected its first Rector, remaining in this leadership position through 2007. After a period of time as Vice Rector in charge of strategic development at TBU, he was again elected Rector in 2010. Apart from being in charge of the university management, Petr Sáha is above all a scientist focused on the study of polymers. Since 2001, Professor Sáha has been the head of the Polymer Centre at Faculty of Technology of TBU and is the head of the University Institute in charge of applied research of TBU. His lifelong achievements are connected with endeavors to enhance the quality of life in the Zlin Region of the Czech Republic by expanding education possibilities. He also supervises doctoral programs. Petr Sáha was president of the Polymer Processing Society from 2007 to 2009 and Chairman of the Czech Rectors’ Conference. He is a member of many government and international bodies, including institutions like the Research, Development and Innovation Council of the Czech Republic, EUA Council, EUA Funding Working Group, EUA Working Group 3, the Society of Plastics Engineers, the American Institute of Physics, the Society of Rheology, the Nordic Rheology Society, Business-Higher Education Forum and others. He is also on the editorial boards of many scientific journals and member of scientific boards and specialist boards of several universities and institutions.

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Thomas J. Bata Bat’a has always maintained that a business must have values in which people believe as part of a strong culture understood by all. Bat’a’s shared culture, shared values and shared beliefs have been the foundation of its approach to its customers, its employees and the communities in which it operates.

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“Service is the very life of business. Economic performance is important – without it we cannot survive – but it is not the sole responsibility of business today. The real role of business is to give a service by making and selling products that satisfy the want and needs of society, and in doing so to be a caring organization in partnership with community and government.” Thomas J. Bata

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