Archive for the ‘Politics’ Category

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.

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What Happened to Bi-Partisanship?

June 5th

On the day of Governor Scott Walker’s recall vote when the left and the right seem increasingly hardened, the question of whether there is a future to bi-partisan cooperation seems particularly appropriate.

On Monday Chris Mathews spoke at President Gerald Ford journalism awards. He talked about Tip O’Neill, for whom he had been Press Secretary, and his friendship with Gerry Ford. Both had loved the House of Representatives and both had loved managing legislation on the Floor where the action was.

Their friendship was one of those bi-partisan institutions that seem rare in today’s light. In his remarks Chris explored the question of what has happened to bi-partisanship – beginning by talking about Washington.

This city without smokestacks, without factories…we only do one thing here…we make deals….

Its called legislation, its called government.

We come to this city with lots of points of view. But somehow, he said, we find a way to reconcile divergent, even opposing, points of view and pass legislation and govern.

Scott Walker has the lead on the morning of the Election.  (The polls show a seven percent lead).  But the savvy political pros report that its going to be very, very close.

What’s interesting is that the closer it gets the more it matters.

In spite of the fact that the decision may be made by a hair’s breadth, the winner – whether anti-union or pro-union – will claim the mandate to make extremely significant economic decisions.

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Do Leaders Read the Polls?

May 2nd

Do Great Leaders Look at the Polls?

The myth that leadership is some mystical quality that rises above the ebb and flow of short-term popular interactions is not something that most people who have lived around politics believe to be true. The late pollster, Bob Teeter, who was my teacher on these topics, believed that there was a special need to get the polls right and when they were surprising. to spend time helping the candidate’s family understand what had happened.

He referred to the “candidate’s wife” problem. To be surprised by an outcome on election night was worse than any other time. And understanding the end game was always one of the most insightful times.

(As a practical matter, today the professional pollsters can cushion the risk by aligning their final analysis with scenarios of likely voters and election day exit polls. So it’s harder now to miss by a mile.)

The point is equally important on the front end. To understand what happens on election night there’s also a need to go further back and to begin with an accurate baseline at the starting point. There is a point in virtually every election, even the blow out elections, when the voters essentially start the major candidates at parity. This was especially true in 1984 (Reagan – Mondale) when in spite of what later appeared to be an overwhelming base of popular support, there was a time in June 1984 when the two were almost equal. The shift can come quickly and decisively so that it appears that there was always a significant difference. But this masks the real baseline that can be seen at the starting gate.

What’s more as Bush v. Gore demonstrated, the Presidential races are not popular vote contests, they’re decided in the Electoral College (or the Supreme Court and the Electoral College.) Today red states and blue states are so polarized that elections are likely to be decided by a handful of swing states. So the starting gate is really the positioning of the two candidates in 10-12 specific plaes.

For Obama and Romney the election is likely to be decided in a dozen swing states. (There is never complete agreement on what these states are. Sometimes Wisconsin and Michigan are seen more as Democratic than swing.) As Romney gets the nomination Obama has nearly a 4 point lead in the Real Clear Politics poll average. But the interesting thing about the swing states is to see where they are and where they have been.

In 2011 Time Magazine published the following summary of the swing states and their approval ratings. What is clear is that while Obama may be leading nationally, his support has been soft in the key states.

This table shows the Gallop approval ratings and the way that they slipped in key states.

Gallop 2011 OVER  2010
Wisconsin

47.4

0.1

Iowa

45.6

-1.9

Pennsylvania

45

-1.3

Virginia

44.5

-2.1

Michigan

44.2

-4.7

North Carolina

43.7

-3.2

Florida

43.6

-2.2

Ohio

42.1

-5.3

New Mexico

41.7

-6.9

Nevada

41.3

-5.7

Colorado

40.4

-4.8

New Hampshire

38.7

-2.6

 

The table suggests softness in the Obama lead even if there no clear moment of parity yet.

The game is afoot. The moment of parity will come soon and then what may be the most the most import definitional moments of the election. Without watching the polls it may not be easy to recognize this inflection point.

So there may be leaders who do not pay attention to the polls, but they should.

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UK’s Watergate

July 19th

The Parliamentary Hearing into the actions of News Corp broke new ground and the whole matter has opened a new requirement for business analysts everywhere.

First, the questioning of Rupert Murdoch and his son on live international television was an extraordinary spectacle worthy of, say…Rupert Murdoch.

The opportunity to inquire into the most intimate details of corporate governance of one of the most powerful men in the world is extraordinary theater.

And, in this case, there was an element of human drama that would have been difficult to miss.  Here was Murdoch being asked “what did you know and when did you know it?”  He was given the choice that always dominates discussions like this one – what did you know about this scandal?  What steps did you take?  Obviously, the witness cannot say that he was fully informed and took actions to make things better for his company.  Now that the dam has broken and there is a formal, legal inquiry, any actions taken that were protective have the taint of being conspiratorial.

So what could he say?  He could say that he was a bad manager.  Or he could say that he was foolish or stupid.  Or he could say that he did not know.

But if he didn’t know and if he was a competent manager, then his son must have known.   So there was a human drama of potentially throwing his son under the bus.  Of course, his son was the Chief Executive and perhaps should have taken steps long ago.

Finally, there should be little question that this is not a “UK” problem as much as the Murdocks might have wished that it were.  US law – foreign corrupt practices and licensing before the FCC – make this inquiry a US inquiry as well.

The new ground?  In their answers the Murdochs referred frequently to their reform of the corporate governance committee.   Clearly it would have been better to have had a Management and Standards Committee that reported to the independent directors.   The corporate governance process would have been better protected and that decision may turn out to have been a multibillion dollar decision.

In the end, it’s hard to predict how extensive the damage will turn out to be.  Business analysts everywhere will have to be even better at being able to assess events and processes like this one.

New ground at a minimum, indeed.

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A Transformational President

November 15th

Two weeks later the political engine that drives public policy continues to serve up one of the most interesting moments in memory.

Returning to Washington on Sunday after a 10-day Asia trip that was marked by a pair of key setbacks on international economic issues, President Obama said that even though the U.S. has gone through a tough two-year period, America’s preeminent position on the world economic stage has not been forgotten. (Scott Conroy, Real Clear Politics, “Returning to Washington to New Domestic Reality”)

Two years ago when Barack Obama was elected President, there was a widely shared sense that he would be a transformational President.  Indeed, in the sense that he might have meant that, he has been.  Passage of Health Care Reform and recovery from the financial crisis (along with the new Dodd Frank financial regulations) were remarkable legislative achievements.  They are filled with policy change that will reshape core American industries.  At this point it would appear that the green agenda has been challenged and certainly a Cap and Trade and does not appear to be possible in the near future.  So the pattern is not uniform.  Isn’t that to be expected?

But the election of 2010 has conveyed the message that these were not popular historic changes in direction.  Returning from Asia President Obama still stands at a critical crossroads of transformational choices.  But the way forward is not at all certain.

Democratic Coalition Crumbles, Exit Polls Say

November 3rd

Writing in the Wall Street Journal Peter Wallsten and Danny Yadron pointed to one of the stories coming out of the election of 2010 that will be reported again and again in coming weeks.  This may be worth a deep dive.  There are going to be broad implications, not to mention puzzles.  In the aftermath of the 2008 election.  Among seniors 65 years and older Republicans now hold a “large advantage.”  And among white women there is a significant pro-Republican divide and yet after 2008, the two parties were even.  As Wallsten and Yadron write:

Amid deep pessimism about the economy, the coalition of voters that gave Democrats control of Congress in 2006 appears to have fractured.

Preliminary exit polls showed that the party lost ground to Republicans in Tuesday’s midterm elections among women, middle-income workers, whites, seniors and independent voters.

Driving the shift: broad anxiety over the economy, as well as skepticism of big government and opposition to signature Democratic Party policy achievements, such as President Barack Obama’s economic-stimulus package and the health-care overhaul.

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The Stone Age Didn’t End Because the World Ran Out of Stones

August 25th

In an article on the Saudi reaction to President Obama’s call for Energy Independence Jad Mouawad of the New York Times “Green Inc.” notes the ever-present dynamics of the geopolitics of oil.  (“Saudi Blasts American Energy Policy.”)

The Saudis are as sensitive to the cross currents of energy policy change as anyone.  In “In a short and strongly-worded essay in Foreign Policy magazine, Prince Turki al-Faisal, a former ambassador to the United States and a nephew to King Abdullah” critiques the broad statements of the Obama Administration.  His point recalls Sheik Yamani’s famous line about the stone age.

What this thought points to is the question of how soon green technology is going to replace the oil economy.  While it makes the stream of articles on China’s development of solar panels and electric vehicles all the more interesting, it does recognize that no one can imagine a technology that is going to radically shift the energy balance in the next five years.

In the meantime, OPEC looks quite different today than it did in 1973.  The difference is not in the names of the countries that are the sources of oil but in their leadership and their relationship to the U.S.  Iran, Iraq, Venezuela and Nigeria could not be more different today than they were in 1973 when Henry Kissinger and Richard Nixon first launched the policy of “energy independence.”