Session 4: Greed, Norms, Culture, and Trust

 

In this session, panelists discuss how corruption persists when formal rules are undercut by eroding norms, political polarization, and compromised trust in institutions. Drawing on experiences from business, law, and public policy, they highlight the limits of enforcement and the risks of overreliance on compliance systems detached from real-world dynamics. The conversation underscores the need for cultural change, ethical leadership, and stronger networks of accountability.

Moderator:  Didi Kuo, Freeman Spogli Institute for International Studies, Stanford University     

Panelists:

  • Jonathan Katz, The Brookings Institution
  • Peter Solmssen, Former Siemens AG
  • Miriam Baer, Brooklyn Law School    

Discussant:  Paola Sapienza, Hoover Institution, Stanford University

 

Key Takeaways:

Democratic Backsliding Mirrors Global Trends: Jonathan Katz described how declining democratic norms in the U.S. reflect global patterns, urging a coordinated response across sectors to defend core institutions.

Seven Pillars for Defending Democracy: Katz outlined the 2025 Democracy Playbook, highlighting seven pillars—elections, rule of law, pluralism, media freedom, disinformation, economic delivery, and anti-corruption—as essential to democratic resilience.

Healthcare Kickbacks Are Widespread: Peter Solmssen revealed a firsthand account of Stanford Medical Center soliciting a $50M donation in exchange for GE equipment purchases, illustrating the pervasiveness of illegal incentives in medicine.

Siemens Power of Internal Reform: Solmssen described how Siemens rebuilt its reputation after a global bribery scandal through cultural transformation, government cooperation, and a “find it, fix it, report it” model that promotes ethical self-disclosure.

Corporate Compliance Relies on Information Flow: Miriam Baer emphasized that effective compliance systems promote not just rule-following but internal reporting and information sharing to detect and prevent wrongdoing early.

Polarization Undermines Whistleblowing Norms: Baer warned that political polarization reduces altruism, promotes motivated reasoning, and discourages employees from speaking up, weakening compliance from within.

Culture, Not Just Costs, Drives Compliance: Paula Sapienza argued that trust networks and social norms, not just rational cost-benefit calculations, are central to whether firms comply with legal and ethical standards.

Communication Is Key to Restoring Institutional Trust: Katz stressed that explaining how governance failures affect everyday lives, such as veterans’ services or local benefits, is vital to building public support for institutional reform.

Internal Culture Can Resist Corruption: Solmssen shared how Siemens employees in China refused to pay bribes even after headquarters’ scandals, proving that empowered local culture can uphold ethical behavior.

AI Alone Can’t Fix Compliance Failures: Baer cautioned against replacing human relationships with automated compliance systems, arguing that genuine ethical culture can’t be outsourced to technology.

Slide Decks from This Session: