Tuesday, April 18, 2006
THE SYNDROME OF THE “ESSENTIAL MAN”
Prepare for another wild ride... starting with the previous topic, but veering in some other directions for a while...
Some of you have commented upon Donald Rumsfeld’s response to the Generals’ Revolt, in which he firmly dismissed any possibility of resigning the office of Secretary of Defense. He admits that there have been problems and miscalculations and failures – many – worthy of deep criticism. Yet, he insists that his leadership remains badly needed.
Instead of joining the back-and-forth hatefest at its superficial (and least interesting) level, let’s dig a bit. Inherent in everything that Rumsefled is saying appears to be one core assumption -- that there aren’t any other qualified conservatives – untarnished by scandal and failure – who are capable of doing his job.
In other words, despite taking responsibility for AbuGhraib and failed intelligence and mangled war planning and losing the confidence of the Officer Corps, he remains the “essential man.” Impossible to replace, even by another, similar conservative.
Notice how I expressed it. Of course, many of us would like to see neocon leadership replaced at the top of our republic. This movement has acted as if they had a “mandate” to utterly transform America, despite having “won” disputed and at-best profoundly narrow electoral victories. A troglodytic and roughshod era of rationalization and contemptuous dismissal of all dissenting thought.
But I am not going there right now. Instead, let us perform another of our patented thought experiments.
Let us assume, for a moment, that DR and his movement do have a “mandate.” A blank check from the American people to pursue a general line of policy called “neoconservatism” – including all of the adventurism and romantic Platonism that comes part and parcel with the Straussian worldview.
Even if his movement had such a mandate, that is irrelevant to the issue of whether or not Rumsfeld should resign. For what he is actually claiming is that he – himself – is not replaceable even by some other neocon who has a top defense background and is politically compatible!
In other words, his own movement has such a paucity of talent that it cannot step in with another highly qualified person who can pursue conservative policies WHILE soothing the trainwreck of morale within the Pentagon and across America at large.
Let’s take a moment to delve into the implications of this dogged stand. Whether we call it “stalwart and determined” or “obstinately power-grubbing,” there are even deeper levels that merit exploration.
How likely is it that any human is well-qualified to judge his own status as an “essential man”?
It is true that history shows some examples of fellows who resisted all external pressures to step down, knowing with brilliant sureness that they had a vital and historic mission. Almost certainly Abraham Lincoln was right, when he took this stance. Arguably, FDR. And yet, knowing humans as we do – especially their most dismal habit of self-serving delusion, should we not have the reflex of holding this kind of self-appraisal in… well… suspicion?
Should not one of the traits of an honest and mature man be to recognize this delusional habit, and worry about it? The way that George Washington did, when he resigned paramount power – several times – and set the Great Example?
Sure, a certain bullheaded determination is essential in politics. But there are ways to compensate. To ensure accountability. To (above all) provide that your institution and constituents get the benefit of the doubt, and not you. The nation and not the leader. When overwhelming evidence suggests that maybe a guy should go… shouldn’t he go?
You see the same classic syndrome across the entire CEO caste, driving up compensation/pay/stock-option rates toward the moon, as chummy fellow members of the caste vote each other outrageous pay scales, justified on what basis?
Why, it seems always to be a variant on (surprise!) the old Essential Man thing!
So let’s veer aside for a moment and ponder this version of the syndrome. The CEO variation.
Start with basics. These guys believe in capitalism, right?
All right, then. The core assumption of capitalism – and I believe this too - is that high rates of return will normally attract new talent to a field! Right? Imbalances and shortages should be self-correcting.
Specifically, if a shortage of good managerial talent stimulates high market prices for managerial talent, then, within short order, new managerial talent should commence to train itself, ramp-up, then compete (presumably fairly) and innovate until there is so much of it around that the shortage is eased. Whereupon, anomalously high premiums will no longer have to be paid.
In other words, the predicted curve is that a brief period of elevated CEO pay should soon give way to a talent migration that causes a surfeit, even a glut of skilled executives, easing the shortage and causing pay rates to drop.
Isn’t that the fundamental premise? Isn’t that the absolutely basic article of capitalistic-freemarket faith?
But it is not what we’ve observed. Not at all. Instead, the pattern across the last two decades has almost perfectly matched what you see when insatiable demand meets an absolutely limited supply. Like the limited supply of Da Vinci paintings, or Stradivarius violins. Or seven foot centers who can both rebound and pass accurately from mid-court.
Members of the CEO caste seem to be saying “we are actually mutants, like pro basketball players. No matter how much we are paid, the pool of skilled corporate administrators will remain fixed and small. Market incentives – even astronomical ones - will never augment supply. All companies can do is bid up CEO pay in order to hire the few mutant managers away from each other, just like sports teams!”
Well? Is that not EXACTLY the logic implicit in the CEO compensation spiral, as we see it endlessly accelerating skyward? The justification for taking billions away from research, from reinvestment, from worker benefits and from dividends for smalltime stockholders? So that top managers can move around like football free agents, playing rapid musical chairs and games of golden parachute?
Hm. Interesting proposition. Mutants. Like Sports stars. (In which case, are we best served coming up with some kind of league-wide reserve clause, hm? Don’t some of these same guys own sports teams and cry for caps? For cost controls? Oh, but then let’s also leave off the whole youth factor. They seem also to be saying that in this field, unlike any other across all of human endeavor, youthful brilliance is entirely irrelevant. Hm. And double hm.)
Alas, there is a problem. In sports, there are explicit performance metrics that can be applied, in order to determine who are the top fifty or so mutant-level -- and thus irreplaceable -- athletes in a given sport. But in business, tremendous effort is made to obscure and obfuscate every performance metric. Correlations with stockholder return or rates of innovation or long term company health are vague, at best. The one correlation that seems always to affect pay is how well you manage to pack the Board with your pals. And that is a dead giveaway. Because truly superior men would be ashamed of having to use tricks like those. They would refuse.
Here’s an example offered by John Mauldin: “John Walter joined AT&T, but after nine short months he was out of a job. The complaint was that Walter "lacked intellectual leadership." Walter got $26 million for that little stint in a severance package. That's what you call really beating time. Of course, a few of us might have another word for it -- and for AT&T.”
And yet, let’s reiterate the irony -- these same guys sing the praises of capitalism as a perfect mechanism for swiftly correcting imbalances of supply and demand! It always works, they say. Well, except where you just gotta have mutants. Amazing.
Just for the record, I most definitely believe in competitive markets and have said so countless times. Indeed, my aim during this aside is to point out a hypocritical betrayal of markets by those who most vocally claim to be defending them. In fact, there is a business correlate with the kind of price curve that we have seen in the area of CEO compensation. You’ll see a similar curve in a market for a commodity has been cornered so that production is controlled by a small, collusive group, in order to create artificial scarcity. Think diamonds.
And no better example is served (as we return full circle to the earlier topic) than the situation we observe with Defense Secretary Donald Rumsfeld.
The man who oversaw our humiliation in not one, but two catastrophic Asian land wars, who supported Saddam for decades, till the maniac slipped his leash, who participated in the incredible Blunder of 1991, who later perceived Saddam bulging with hair-trigger WMDs, who suppressed military counsel about troop levels, who confidently predicted we would be greeted by the Iraqi people with “kisses and flowers,” who sanctioned torture, who declared “mission accomplished” while predicting a short happy transition to peace and democracy in Iraq, who oversaw the worst decline in our state of readiness in generations and has alienated most of the Officer Corps and most of our allies…
…now appears to be claiming (without offering a scintilla of evidence) that he is such a superior manager of our nation’s defense that there are no possible replacements. None at all. Not even from the pool of experienced and well-respected conservatives. (e.g. some retired general?) (Er, some other retired general?)
Look, there are many ways to look at these things, but I always try to ask… ”what are you REALLY SAYING?”
And what this “essential man” seems to be saying is “you must continue to put up with all my failures, arrogance, bullying and unending chain of mistakes. Because my political faction cannot find anyone else to bring forward. Nobody else who might – while lacking my heavy burden of liabilities – actually do a better job.”
It’s all the same dreary rationalization – and hearkens to the pattern that really destroyed markets in most cultures, for 4,000 years.
A market for a commodity has been cornered and production controlled, in order to create artificial scarcity. But this market – for managerial talent – must be opened and freed, if our civilization is to prosper.