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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