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Monday, November 05, 2012

If Only We Had a Leader

It's Election Eve and Americans are nearing the end of a puzzling four-year ritual in which millions walk into their local voting booth, choose between two Presidential candidates who can't clear a 45-47 percent preference hurdle prior to the vote, review the names of federal and state candidates enjoying a job approval rating of about thirteen percent, then return over 85% of them to office to continue conducting our business the way we all despise. We do it every cycle. Why?

Ignorance. Hypocrisy. Money.

Ignorance

As if to spite a certain fringe of nostalgic conservatives who wish to return to a 1700s era world view of economics, justice and politics, America continues evolving into an ever-more complex, highly interconnected society with complex financial, social and political links to the rest of the world. The vast majority of Americans have a very poor understanding of American history, much less of world history and have difficulty recognizing re-runs of old ideas which produced problems in the past. Ideas like conducting a war on credit that artificially stimulates the economy then causes a recession and hangover when the defense stimulus stops and the bills arrive.

How bad is Americans' ignorance of history and short term memory? The 2008 economic collapse was the direct result of financial deregulation enacted in 2000. The collapse happened only four years ago and only took eight years after deregulation to occur -- far shorter than even many pessimists would have predicted -- yet we have politicians campaigning for office in 2012 promising to rebuild the economy by cutting regulations.

The ignorance of many Americans extends to more practical things as well. The food at the store is magically provided by benevolent corporations who would NEVER think of reducing plant inspections, using downed cows at beef packing plants, or cutting corners when building massive ponds for -- ahem -- "effluent" produced by massive chicken and hog farms. The roads, bridges, trains subways we ride and water, gas and sewer systems have always been there, don't require any maintenance and magically add capacity when needed without any taxes and bond issues. Never mind the routine product recalls for salmonella and e. coli, the collapse of an aging interstate highway bridge during rush hour or the routine water main breaks and neighborhood floods produced by crumbling infrastructure that's often 70 or 80+ years old originally constructed for a third of the current load.

If the public doesn't understand how things work, it's very difficult to explain to them why new dollars are required to refurbish 80+ year old infrastructure. If the public doesn't understand what happens to home prices when everyone is allowed to borrow money with insufficient income and bid up prices, it's next to impossible to explain why vastly more complicated financial instruments based upon millions of those bad mortgages need to remain regulated.

Hypocrisy

Americans claim to be tired of politicians lying to them to get elected and lying to them once in office. We're all adults, give us the truth, we can take it -- say the voters. However, for most politicians at any level, telling the truth is a CLM -- a career limiting move. If the average politician had spoken up in the early 2000s about the danger of deregulated banks and financial institutions coupled with artificially low interest rates, mortgage backed securities and derivatives, they would have been dismissed as "negative" and hopelessly stuck in the regulatory shackles of yesteryear. How many American homeowners now sitting in a house underwater by $100,000 or $200,000 wish someone had slowed the economy down back then to avoid the bubble that burst on their future? How many Americans work with their parents to rig their finances so the parents are technically paupers before heading into a nursing home so state Medicaid programs have to pick up the tab? Is that any more ethical than buying alcohol with food stamps?

Part of this hypocrisy is driven by the over-leveraging of the economy. In Road Runner terms, we're Wile E. Coyote (genius) who has already run off the cliff and is now briefly suspended in mid-air, hundreds of feet above the desert floor below. We're hoping the momentum of a broken system will either carry us to the other side or magically keep us frozen in mid-air. Our politicians and central bankers all know the wrong bit of truth at the wrong time could resume the clock on the cartoon, starting the inevitable drop -- whistle -- SPLAT. Woe to the politician that would consider pointing out the obvious and suggest we position something at the bottom of the canyon or (heaven forbid) pack a parachute next time. Any official who does state the obvious is branded as "negative" and incapable of inspiring the people with a positive agenda. Give us the truth, we can take it. Yea right.

This electoral hypocrisy is also fueled by corrupt state-level manipulation of voting districts by the dominant parties. As one pundit so precisely put it, Americans have been fooled into thinking we select our representatives. In reality, our representatives select us by gerrymandering of voting districts to create "safe seats" with little chance of churn from one party to another. Occupants of those safe seats seldom need to compromise to protect their seat so they seldom compromise with their peers to produce middle-of-the-road legislation. In this environment, the only legislation likely to survive the gauntlet of special interests are omnibus bills that spend money everywhere or cut taxes for large groups, pushing fiscal balance in the wrong direction. In this environment, voters in gerrymandered districts never have to worry about hearing any idea that might stray from the majority opinion of that district.

Money

The 2012 election is likely to cost over $1.8 billion dollars. Believe it or not, that's actually chump change in the larger scheme of things. As pundit George Will is fond of saying, America spends more in a year on potato chips than its elections (probably 3x as much, actually). The problem isn't too much money, it's too much money entering the process in ways which distract politicians from doing actual work. The money also floods across representative boundaries allowing outsider ads and interests to overwhelm the support and interests of local residents. The most expensive Senate race in the 2012 election is in Montana, a state with only 998,199 residents. The two candidates will spend more than $20 million. Why? Because a Senate vote is a Senate vote and big corporate interests determined it was cheaper to swing a vote their way in a cheap media market like Montana than a larger state. The interests of the 998,199 citizens in Montana are immaterial to the process.

The influx of money also distorts the mix of people willing and able to enter the fray and serve in an elected position. If the typical race becomes dominated by outside money, anyone considering a run immediately requires cash that only larger donors can provide, making it FAR more likely that the typical candidate entering the fray already has a relationship with a powerful interest group and, in essence, already "owes" someone before they garner a single vote. We've managed to turn talent searches for unknown singers into must-see TV for millions of people on a weekly basis. Shouldn't there be some way of reducing the cost of identifying the next generation of political talent in the country?

The 2012 election involves one President, roughly 33 Senators and 435 Representatives at the national level. The $1.8 billion dollar cost for this cycle isn't even a meaningful percentage of our yearly GDP. It's only 0.06 percent (yes, 0.0006) of the yearly $3 trillion US federal budget. If we could fund candidates in a way that broke the ties to hidden interests and put the entire process above the table, what might it look like?

Since the power of these positions is not equal, some split of the money has to be considered. if the 2012 spending is split to provide 40% for the Presidential race, 20% for the Senate races and 40% for the House races, you wind up with the following amounts per candidate:

  • per Presidential candidate = $360 million
  • per Senate candidate = $5.5 million
  • per House candidate = $827,600
If campaigns were publicly funded with this kind of chump change, might we find politicians spending less time in back rooms groveling for money and more time reviewing actual legislation?

 

If Only We Had a Leader

Part of America's election routine is the collective grumbling about the poor quality of our political candidates. "If only we had a leader...", millions say. Well, leadership skills are fuzzy in many dimensions and hard to nail down but there are a few relatively concrete must haves:

  • subject matter expertise in a few key areas (finance, organizational behavior, technology, foreign policy)
  • ability to identify and follow a handful of guiding principles or tie-breaking criteria used when deciding between competing priorities
  • communication skills to solicit information for decision making and explain decisions made and directions to take
  • insight to identify future roadblocks, include contingencies in plans up front and communicate them in advance to instill confidence
  • prioritization skills to react to new challenges and allocate attention to them or prevent them from becoming distractions from existing priorities
  • the interest in fulfilling a leadership role and the opportunity to land the role

These skills might be minimum requirements, but they are not sufficient alone to yield a successful leader. Successful leadership is a two-way street between the leader and the led. Those being led have their own list of minimum requirements:

  • enough practical and analytical skills to judge the merits of the leader -- you cannot reliably assign leadership control for responsibilities you barely understand yourself
  • an objective set of criteria by which the leader's work will be measured -- measuring the leader on factors they cannot influence is pointless
  • an objective set of processes for gathering information used to calculate the success criteria -- if job growth is a yardstick, is everyone going to use the same formula?
  • a consistent process for tallying the score and hiring / firing the leader
  • a willingness to actually follow the leader's direction until the scorecard indicates a change is required

We certainly have processes in place to change our leaders on a routine basis. Unfortunately, We The People are falling woefully short on all of the other criteria. The country remains almost perfectly divided between philosophies not a mere handshake apart but miles apart. Washington or Lincoln couldn't climb down off Mount Rushmore and lead in this environment. They wouldn't make it past the primaries. With the problems facing the country, We The People need to realize the problem is not just "them", it's us.