It has been an amazing past few weeks. In less than a month, we have witnessed massive failures in political and economic governance world-wide and a moving spiritual appeal for individual responsibility by the Pope on his visit to America. The Papal message of individual responsibility (self-governance) was combined with an extraordinary focus on those left behind. It was was a badly needed rejoinder to the leadership failures we see every day, here in America and elsewhere as well.
The political and economic malaise that is evident globally stems from an appalling lack of leadership in both government and industry. The Pope stressed the importance of spirituality in motivating personal responsibility. His visit was a stunning display of respect for individual lives and a call for individuals, institutions and countries all over the world to address global problems with compassion and charity. Our politicians and business leaders have undermined our trust in government and business. Sadly, they seem not to have heard the Pope’s message. They neither lead nor do they listen.
Among our current economic and political failures, we can include:
Massive migration into an ill prepared Europe stemming from four years of warfare in Syria and Iraq. The failure of Western leaders to marshal sufficient resources to cope with the breakdown in Syria and Iraq and the growing strength of ISIS, who now controls the largest amount of territory in the two states combined, means emigration into Europe will dominate political life in Europe far into the future. The flood is only beginning.
Russian military intervention in Syria that underlines the failed leadership in the US and in Europe to deal seriously with the Syrian disaster. Leading from behind has been demonstrated to be a much-faulted strategic conception combined with feckless political leadership. Put simply, leading from behind is not leading at all.
Iranian Nuclear deal that now goes into effect is not a treaty (that would require two/thirds approval by the Senate), but as an executive agreement. Leadership that skirts American constitutional process in order to ram home an agreement whose full terms have not been disclosed is a travesty to our traditions of governance. Those who lead in this manner show a total disregard for allowing the judgment of the people’s representatives. Whatever the outcome in Iran, here in the US, it is a bad example to follow.
Unexpected resignation of the Speaker of the House shocked the politicos within the beltway. It leaves the Republican opposition disorganized and the Administration praying that the Boehner walk away will at least provide passage of continuing resolution so that the Government will not be shut down. The shambles into which the Republican Party has fallen is not a good omen for political governance. We are reminded of Ring Lardners great baseball quote. “Although he cant field, he cant hit either.”This leaves non-elected officials (such as the Supreme Court or the Federal Reserve) in charge of policy. Leadership failure has very long term consequences.
Growth slowdowns in emerging markets have thrown prices for basic resources into the toilet. The effects on employment in the resource industry have just begun, but the effects on the prices of resource stocks have been devastating. In case you havent noticed, equity markets worldwide are in a state of panic. Partly, the collapse of basic resource prices is responsible, but not entirely. The loss of direction in economic policy displays the same failure of leadership noted in the political arena.
Federal Reserve vacillation in choosing a definitive policy stance and communicating its direction going forward has added to the bearish movement of equities. The best characterization of the FOMC may have has been the recent translation of its acronym: the Federal Open Mouth Committee. The Fed has pulled a Lucy, as one economist has pointed out.If the Fed knows where it’s going, it hasn’t let the market in on its big secret.
Exposure of Volkswagens fraudulent auto emissions gimmick is just the beginning of a continuing set of disclosures that reek of massive failures in VWs corporate governance. The damage to the worlds second largest auto manufacturer is incalculable at this stage. The damage will not be limited to VW. The German auto industry employs one of of seven in the labor force. The consequences will be manifold. Government has failed as well. VWs contravention of environmental regulations in both Europe as well as the United States indicates the regulators on both sides of the Atlantic were asleep at the switch or perhaps suborned from their real duties of protecting the public. Public confidence in government regulation should and will fall sharply. Our trust in our governments falls when leadership fails.
Disorganized Crimes has mainly focused its attention on continued examples of corporate misgovernance in the US. However, we have always thought that corporate governance is a subset of a larger governance structure that takes account of government, the courts, and our institutional arrangements. Those institutions include what we term as the regulatory state. And, no state today, is without that panoply of regulatory bodies that effect day-to-day governance. We have all become dependent on this massive regulatory state to guard the public interest, the more so when individual shareholders cannot control the operations of the companies they own. The parallel to 2007-2008 is striking. Firms failed and the regulatory bodies failed with them. It was not a case of deregulation. It was repeated failures to apply the existing regulations. Don’t let the government deceive you by blaming the “other guy.”
What we are witnessing in the VW disaster is a twin failure: the failure of corporate governance at VW and the regulatory failures in Europe and America. The regulations are suppose to stand guard for the public. The agencies charged with overseeing compliance to environmental law have behaved as dupes over a long period. They remind us of the investors in the Bernie Madoff scandal, each relying on their friends continued investment with Madoff to assure themselves that nothing was wrong. When business leaders in public companies fail, shareholders can and now often arise to throw out failed executives. When government regulators fail even to execute their own mandates, the public interest is not only trampled but citizens lose their belief that their government will be there to act in their interest. What then
What should we make of this extraordinary regulatory failure Clearly, the leaders of these agencies have failed to lead. They are not even able to carry out the regulations they demanded to be placed on the books. It is scarcely satisfying to see these failures in virtually every country irrespective of its political ideology. No matter what the ideological underpinnings, regulatory failure is also leadership failure. It undermines our belief that somewhere, someone is paying attention to the needs of the citizens, and doing it competently, honestly and regularly.
Where does the public go from here In 1961 John F Kennedy aroused the passions of many Americans with his clarion calI: Ask not what your country can do for you! Ask what you can do for your country. The exact quote is And so, my fellow Americans: ask not what your country can do for you, ask what you can do for your country. The public needs to turn this phrase around and ask ‘What is Government, which dictates so much of my life, doing for me’ Can Government keep me safe from terror, from economic decline When I retire, will there be sufficient resources for me in my old age Will the national health plan be there when I fall ill Can government provide the moral compass to judge who are the organized criminals in our society Maybe not Maybe I ought not to trust my future to a government that seems to function in a directionless fashion headed by leaders who are leading from behind
By his speeches, and the locations of his visits, the Pope seemed to be saying, Do what you can to alleviate the suffering in the world. It is your responsibility. It struck a spiritual chord in America that our deficient political leadership would do well not to ignore. Politicians and administrators who fail to lead, lose the respect of their countries citizens. In the next emergency, if government is not respected, government can no longer lead. Who then will follow
This past week provoked me to remember the actor Peter Finch crying into the night in the movie Network, Im mad as hell and I am not going to take this anymore. People in America are mad as hell. Who can blame them
They are mad in Europe. They are mad in China. They are mad in Russia. The flood of immigrants into Europe are not only mad, they are escaping a geography that is no longer a state.
When we speak of the United States, we think of an organized polity with recognized borders, recognizable leaders who direct our attention and to whom, ordinarily, we accord our respect. That is not our present State of the Union. Today, in America we are ‘mad as hell.” Are we going to “take it anymore”