Archive for August, 2012

Efficiency, Equity and Democracy

August 25th

If belief in the efficacy of markets to allocate resources was a powerful anchoring belief that was shaped by my experience in 1983 watching Reagan, I had also seen that believing in markets was not without its limitations. Unlike other market loyalists who were prominent in Reagan’s time, for me, watching markets work on social issues created a tension.

Faith in markets only took me so far because it often conflicted with values that I had grown up with. If my Quaker education during the Civil Rights movement and my experience at Yale reading Bobby Kennedy’s hearings on the problems of the cities were not enough to have created a healthy skepticism, certainly my experience in Washington during the ‘70s had left me feeling that however effective markets might be that there needed to be a balancing concern with equity. Unfortunately, this was more commonly missing in the dozens of policy debates over energy and the environment that had consumed my life for the decade plus since I had left Harvard Business School.

Just as Steve jobs later wrote that you often can’t see the way in which the dots connect at the time, I realized in those Reagan years that it was an experience that I had in Russia that had shaped my belief that the tension between efficacy and equity needed to be moderated so that the hard choices that are ultimately made will be guided by a palpable sense that they were legitimate.

In the fall of 1974 I had traveled to Russia on a Ford foundation trip studying education and for someone who was still trying to make sense of American democracy and the white heat of the political debacle that had erupted during Watergate, Russia was a sobering contrast.

We stood in the lobby of the Rossoya Hotel waiting for our transportation to take us from Red Square to an office in the Education Ministry and I absentmindedly glanced at the display of pictures next to the door. Suddenly I realized I was looking at tanks in Portugal proclaiming a celebration of communist victory. Nearby a similar exhibit celebrated events in Chile. You would not have seen such a display at the Hilton Hotel in Washington. In fact, I don’t think that until that moment I had quite appreciated that these people were serious.

That afternoon at the USA Institute we sat among fluent English speaking Russian hosts who looked as though they were Canadians who had been dressed by Brooks Brothers. At the end of our discussion of education one of the hosts said,

“Do you mind if we ask you about Watergate?”

My colleagues could not have been happier. One of the members of the delegation, a distinguished civil rights lawyer from Washington, gave a speech about the victory of constitutional law and explained that this was how Americans looked at the political scandal.

The Russian hosts could not contain themselves. They disagreed and they offered an alternative explanation. They pointed to the composition of the Nixon Cabinet in the first administration and then the changes that took place after 1972. These were matters that I knew well. Working on the White House staff in 1973 I had helped do the work to create post-election team. I was struck by the fact that the Russians practiced their own form of Kremlinology in reverse in studying the US. They pointed out that in the first administration the cabinet had consisted of individuals with political constituencies – Volpe, Romney, Hickle, Richardson, Rumsfeld and so forth but in the second administration they had been replaced by technocrats Lynn, Breniger, etc. the faceless bureaucrats who could presumably be better controlled by the White House. This was a fatal mistake, the Russians believed, and they felt that above all this showed why Nixon had no political support to draw upon when it was most needed.

I did not think that the Russians got it right. In the Nixon White House, the concern with the Pentagon papers, the plumbers unit that was created to make sure that the leaks didn’t continue and the anxiety over what the Russians would do with the secrets in the Pentagon papers drove a great deal of what happened next.

There was indeed frustration with the way that Democracy introduced barriers to action – whether they were high minded (Cooper-Church debates over war powers) or routine fights over appropriations – but there were frustrations with Executive Branch inefficiencies too. The great challenge of the times was to rationalize the explosive expansion of government that had followed Lyndon Johnson’s Great Society vision. Making improvements in performance of federal programs was  a centerpiece of the Nixon Administration’s goals.  The debate shifted from policy to practice.

So I didn’t think the shift was a political coup.  Watergate was a big, unwieldy, complex side show. I had been far closer to the center of the fire than anyone would have wanted to be. Testifying before the Ervin Committee, the press was bemused with the fact that I was such a non-story. My contribution was to add some details that were essential for the Committee and later the Special Prosecutor in building a larger picture. In the Justice Department and its uneasy after-action report on what the FBI had known and when, there was a natural wish that the scandal could have resolved by itself and there might never have been a need for a special prosecutor (or an evaluation of performance.)  Some wanted to blame the witnesses for being missed. But Watergate was bigger than all of us.

To me, the famous quote from the David Frost debates “it’s okay if the president says it is” was behind a great deal of the foolish political behavior in the 72 campaign and in the White House. Sadly, there were quite a number of people who believed that even though what they were doing was wrong in the real world, that they were not working in the real world. They were working for the White House where there were special rules like Ian Flemming novels. They were operating by some other code that had no basis in criminal law and many lives were ruined as a consequence.

But most of all, the contrast between the simplistic formulations that Watergate was an intentional assault on the Constitution or the Russian belief that factionalism explained behavior spoke volumes. What the Russians were missing I thought was a reading of the Federalist papers. They didn’t understand how important the structure of the American system was not only in the view of Madison but in 200 years of experience in providing checks on excess.

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The City on the Hill

August 15th

Working on leadership issues that are being generated every day by the changing market in which we now live, one of the clearest and most notable changes that can be seen everyday has been the growing visibility of leaders.  Future leaders will have to learn to manage this heightened, 360 degree inspection.  Above all will be the pressure to communicate what you believe in, often in the most personal terms.  The following post came from this discussion of the personal leadership statement.

In 1983, I was asked by my college friend, Jim Coyne, who had just left Congress and had joined Ronald Reagan’s White House staff, to come to work as his deputy in the office of Private Sector Initiatives. This was a new program that had the personal attention of President Ronald Reagan. My first task when I came to work was to organize and our budget suggested that that might mean dropping the person who had been there when we came, a White House staffer named Michael Castine.

But I thought that it made sense for me to go and talk to Michael first and to see what he knew. Ten minutes into the conversation I knew that my first decision in the Reagan White House was to bust our budget and find a way to get more funding. This was probably not the small government that President Reagan intended. But Michael had unique abilities to get things done in the White House. He started by getting Jim and me onto Air Force One.

Everyone who has ever worked in government knows that getting visibility for your program is half of the battle. And in the case of Private Sector Initiatives, getting Ronald Reagan’s attention wasn’t hard. He loved them. What I hadn’t expected was the education that I was going to get by watching Reagan up close.

Two days after I arrived, President Reagan flew to Western Pennsylvania to review a jobs training program and, far more visibly, to give a speech to the NAM-AFL-CIO meeting in Pittsburgh where the unemployment rate was 22%. Going to Pittsburgh at all in such a time was hardly what most political strategists would have suggested to the President. Governor Thornburgh, I would soon see, would have just as soon missed the honor as would Senators Specter and Heintz. But there they were, bundled into a job training site in March 1983, listening to President Ronald Reagan talk about the City on the Hill.

President Ronald Reagan had become a symbol of a failing economy by the Spring of 1983. He was so unpopular that his opponents were able to organize large protest rallies to greet him when he went out to give a speech. But before we would see the crowds surrounding the luncheon speech, the motorcade swept underneath a new office building and everyone, President, Secret Service, Politicians, Press, staff – everyone – crowded into a classroom where former steel workers were being trained as computer technicians.

Reagan gave a short talk. At the end of his brief remarks, the trainees were able to ask questions. One young man in jeans stood and asked,

“Mr. President, I appreciate the opportunity that I have been given here, don’t get me wrong. Some of my buddies from the plant were past 40 and were too old to be trained for computers. But President Reagan, I have a question for you. Now that I’m going to be retrained, is there going to be a computer industry in 10 years?”

In that moment I felt as though a hand had shaken me awake. I of course knew in principle that these were the consequences to the policy choices that had been made 10 years earlier during the energy crisis. Policy had said that if the steel industry couldn’t survive with a Clean Air Act and higher energy prices that this was OK, steel jobs could move abroad if that’s what the market decided. Here, the steel worker trainees in front of me were the result of those trade-offs.

Reagan’s answer was memorable. He bowed his head and paused. When he looked up he began talking about wanting to take a Russian leader up in a helicopter to tour an American city from the air. He wanted to show him the swimming pools and the boats in the driveways.

I didn’t understand what he was talking about. Later I would hear the speech a second time and then a third and I came to understand that he was talking about one of his core beliefs in the power of the exceptional American system to manufacture opportunity.

A look back from 1983 ten years from the 1973 energy crisis, reconsidering energy and environmental policy debate of the 70’s showed where the steelworker trainee’s question – “will there be a future?” – was coming from. To look forward then from that point and think about the question of whether there would be a computer industry in 1993, is the preamble to a remarkable story. The steelworker/computer technician was asking a reasonable question at the time. But its truly ironic in light of what would happen when the Internet moved to center stage. Silicon Valley had not been invented. Microsoft had only just been created. The Macintosh had not been presented to the world in the Superbowl. The Internet explosion would have been unimaginable at the time of the question.

Yet, Reagan in Pittsburgh was standing at a strategic inflection point for the American Economy. He could not have proven that his vision of the future would be correct nor could he have steered the course through executive action. His vision of opportunity was an effective way to address a fundamental turning points that are faced by every leader.

I have thought about that cold, rainy morning in Pittsburgh many times. Above all, I was astonished at Reagan’s vision and his optimism that even in a place where the economy seemed to be at its worst that the American system would work its miracle and create opportunity. I was to hear the City on the Hill speech many other times while I was at the White House because it was a core belief of the President’s. But for me personally, Reagan’s visit to the realities of market failure and recession also came at a pivotal time.

I would have found it impossible not to have not seen the Reagan White House through a dual lens. Everything that happened in the spring and summer was a sharp contrast with my experience in the same building exactly 10 years earlier as Richard Nixon’s presidency collapsed. In contrast, the spring of 1983 was when Ronald Reagan turned his presidency from failure to a generational scale success that is often given credit for changing the direction of the country.

In 1983, I could also see, more clearly than ever before in my life, the consequences of decisions.  Here in this steelworker trainee’s angst were the results of decisions that had been made a decade earlier. Just being in the White House had created an echo. This was my experience with the phenomenon of being brought to the acute realization of the consequences of the decisions that we all make whether we see at the time that we have been given a position of leadership or not.