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Friday, December 30, 2011

Democracy Deficit in the E.U.’s State-Rights Federalism: The Debt Crisis

Holding back additional transfers of governmental sovereignty from the state legislatures to the E.U.’s legislative chambers not only inevitably pushes power to non-democratic E.U.-level  institutions, notably the ECB; the democratic basis even at the state level can be compromised.

The complete essay is at Essays on Two Federal Empires.

Wednesday, December 28, 2011

Rolling the Dice: The E.U.’s Financial Regulatory Agency (the ESMA)

Even though the European financial sector integrated significantly during the first decade of the twenty-first century, the E.U. Government’s regulatory infrastructure and content did not keep up. As in the U.S. until 1933, state regulation carried the bulk of the weight. As the twenty-first century notably differs from the nineteenth, the relatively integrated financial sector in the E.U. means more risk is entailed in continuing to rely on state regulators. This is not good news for David Cameron, who in late 2011 tried and failed at a European Council meeting to hold strengthened enforcement of state-deficit limits hostage by demanding protection for state-level financial regulation over federal regulation. Like South Carolina was in the nineteenth century, United Kingdom was decidedly in the states’ rights camp as late as a decade into the twenty-first.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon. 

Monday, December 26, 2011

Russia’s Common Economic Area: Not Another European Union

On January 1, 2012, a new version of the common economic area between Russia, Belarus and Kazakhstan came into effect. The three countries had already founded a customs union in 2007. As of the end of 2011, Kyrgyzstan and Tajikistan were still in talks about joining as well. Putin insisted that integration with the E.U. could take place by 2015. I cannot help but wonder if E.U. leaders were aware of this possible union of unions. It could be argued that Putin was making several category mistakes.


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Saturday, December 24, 2011

Toward a Definition for Ethical Leadership: Disabusing the Pessimists

One consultant suggests that “the definition of leadership ethics is still unclear; its scope is broadening, making it a moving target.” This is not good news for the topic. Fortunately, the field may be making the task of definition unduly arduous. Scholarship is needed to ferret through the debris so a concept of ethical leadership can be constructed that is both academically rigorous and of use to practitioners, whether in advising and “doing” ethical leadership.

The complete essay is at "Toward a Definition for Ethical Leadership"

Thursday, December 22, 2011

ECB Loans: A Backdoor Bailout?

On December 8, 2011, the ECB announced that it would loan 489.2 billion euros (c. $640 billion) at 1% interest to 523 E.U. banks for a three-year term. Carl Weinberg, chief economist at a consulting firm, said that by making the move, the ECB had “shown a path toward averting catastrophic collapse in Europe.” The move has been likened to that of the Federal Reserve after the collapse of Lehman Brothers in 2008. It was hoped that the E.U. banks would use the money to buy state bonds—particularly those of Spain and Italy, which were not able to “directly tap” ECB funds. According to Investor’s Business Daily, however, early signs pointed to bank declining to purchase the riskier debt. While understandable given Angela Merkel’s objections to the ECB serving as a backdoor bailout of profligate states over their heads in debt, the ECB’s refusal to put conditions on how the loans could be used may have undercut the central bank’s effort to relieve bank liquidity (and state debt) problems in the E.U.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.





Decadent Management: Burger King Dethroned

When a major company like Borders or Pan American declares it is going out of business—bankruptcy being all too often just a way to force creditors and unions to renegotiate—the public is often stunned. Indeed even a week before such an announcement, managers can assure customers under the veneer of an expressionless face or even a comforting smile—that the company is focused on “driving strong expansion in its many markets around the world” and will “strongly position” its brand. Driving expansion? Strongly positioning? An astute person will instinctively detect the scripted, vacuous jargon as the patina of a rather strange, if conformist, mentality that presumes to invent or misuse words with impunity, as if from a superior position in society. The quoted expressions are from Miguel Piedra, a spokesperson of Burger King, reported in a Wall Street Journal piece on Wendy’s being “positioned” to replace “the King” as number two in sales. If Piedra’s bureaucratic response is not enough of a red-flag, a visit to a Burger King restaurant might give the impression of a company that—absent the cushions of name recognition and capital—is on the verge of going out of business.


The full essay is in The full essay is in Cases of Unethical Business: A Malignant Mentality of Mendacity, available in print and as an ebook at Amazon.com.



Leadership vs. Management: Change vs. Constancy?

In the "leadership vs. management" dichotomy, "management focuses on getting work done on time, on budget, and on target--in other words, steady execution and control--while leadership focuses on change and innovation." However, this contrast of implementation and innovation is a different dichotomy. Abstractly speaking, a category mistake may be involved in this false dichotomy. Change would be occurring in the execution of an innovative vision. In the realm of change alone, formulating and selling it can be distinguished from making the change. Therefore, the “leadership vs. management” distinction does not reduce to “change vs. status quo."

Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 

Wednesday, December 21, 2011

Cult of the Leader: The Case of North Korea

Baudrillard writes of "hyper-reality," which arises when productions—perhaps created by publicists and other spin doctors—become the reality that is taken seriously at the expense of the originals.  The modern art of Andy Warhal provides an analogy. His portraits are not exactly pure "copies" of the originals, so his way of depicting reality should not be identified as the definitive truth. Such “hyper-reality” can become the stuff of leadership. DePree (1989, p.19) writes that the first responsibility of a leader is to define reality. According to Nanus (1992, p.61), “leaders create realities through the force of vision.” The reality envisioned is a social reality. Although it can include the leader, the content of the vision is usually distinguished from the messenger.

Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 


Sources:


DePree, M. Leadership is an Art (Doubleday, New York, 1989).

Nanus, B.: 1992, Visionary Leadership: Creating a Compelling Sense of Direction For Your Organization (Jossey-Bass: San Francisco).


Thursday, December 15, 2011

Leadership in Europe: A Recipe for Reducing Legal Uncertainty

Concerning the legal environment of business, the lawyers who teach as full-time instructors in American business schools affirm that managers would rather have a challenging environment that they know than one that is characterized by headlines such as, “Legal Uncertainty Imperils EU Agreement.” At the E.U.’s parliament, which represents the E.U.’s citizens, the president of the European Council, Herman Van Rompuy, said in the wake of the agreement, “An intergovernmental treaty was not my first preference, nor that of . . . most of the member states . . . It will not be easy, also legally speaking. I count on everybody to be constructive, bearing in mind what is at stake.” Meanwhile, the Wall Street Journal was also reporting that investors were “largely dismissive” of the Council meeting  at which the extra-E.U. agreement on strengthening the enforcement mechanism of state deficit and debt limits had been reached at the end of the previous week. Alan Brown, chief investment officer at Schroders Investment Management, which had at the time almost $300 billion under management, said of the results of the Council meeting, “Yes, it was what I expected, and yes, I was disappointed.” Schroders was backing up this view with a modest bet against the euro. Relatedly, Barclays was forecasting the currency to fall from $1.30 on December 13, 2011 to $1.25 by June 2012. Besides the pessimism on the “intergovernmental treaty” as well as a possible increase of funds from the $500 billion cap on the agenda at a Council meeting in March 2012, the sheer uncertainty described by Van Rompuy lowers the value of the announced agreement and the outlook concerning the viability of the euro as well as the E.U. itself.



              Federalismus in Action: Jose Barosso of the E.U. Commission and Angela Merkel of Germany / NYT

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Monday, December 12, 2011

The Visible Hand: Markets Forging a Stronger E.U.

Joschka Fischer, a former foreign minister of the state of Germany, said the agreement under which 17 state governments accept more oversight and control of their budgets by the European Union “was a big step, which was pushed on the Europeans by the markets.” Such pressure was necessary, given the conflict of interest bearing on state officials working at the federal level on a deal that would add a new competency to the E.U. “(I)n the end,” Fischer added, “the markets have limited the options of the political leaders, especially of Merkel, and pushed her into giving more support for the euro.” Giving more support for the euro meant giving more power to the E.U. at the expense of the state-level where Merkel has most of her power. From this vantage point (i.e., the power that state officials have at the E.U. level), it is amazing that the E.U. has been able to acquire any additional competencies.


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Sunday, December 11, 2011

Carbon-Dioxide Emissions amid Global Warming: A Species’ Death-Wish

Global emissions of carbon dioxide from fossil-fuel burning rose 5.9 percent in 2010, the largest amount on record, according to an analysis released in early December, 2011 by the Global Carbon Project. According to the analysis as reported by the New York Times, “the increase, a half-billion extra tons of carbon pumped into the air, was almost certainly the largest absolute jump in any year since the Industrial Revolution, and the largest percentage increase since 2003.” 

The full essay is at "Carbon Emissions: A Species' Death-Wish."

Monday, December 5, 2011

The Democracy Deficit in Nominating Presidential Candidates

“Newt Gingrich is up, Herman Cain is out, and the attacks are getting sharper as the GOP primary campaign enters the final month.” The final month, that is, before “Iowa launches the contests that will choose the challenger to President Obama.” This has the ring of before time began, or before the beginning. That anything is decided before the beginning may seem metaphysically impossible even if it applies politically. One might demur, claiming that anything without a foundation ought not to be able to exist, let alone to stand. Can Americans borrow anything from the E.U.'s presidents that might improve how the U.S. president is selected?

The full essay is at Essays on Two Federal Empires.


Sunday, December 4, 2011

A Dilemma for the E.U.: A Convention or an Amendment?

In November 2011, European leaders began to talk about amendments to the E.U. that would “change the fundamental structure of the union.” Complicating the talks was ambiguity concerning the nature of the E.U. itself at the time. Foremost among the changes being discussed was the idea of a form of centralized oversight of the budgets of the state governments, with “sanctions for the profligate.” The existing E.U., while more than the American Articles of Confederation, was at the time found to be insufficient in keeping the debt crisis from spreading from state to state and engulfing the union itself and its currency. “The survival of the euro zone is in play,” one senior European official said. “So far it’s been too little, too late.” In this respect, the pressure for “ever closer union” was like that facing the Americans in the mid-1780s. Because the nature of the union was itself an issue, a convention composed of delegates—not state officials—directly elected by the people for the purpose might seem best suited. However, I contend that while rethinking the E.U. was not without merit at the time, the specificity of the planned amendment argues against the idea.


Saturday, December 3, 2011

Fannie and Freddie: Lavish Corporate Lifestyle

Fannie Mae and Freddie Mac spent more than $640,000 to send 100 employees to a mortgage-industry conference in Chicago in the fall of 2011. According to a letter from the Federal Housing Finance Agency, which oversees Fannie and Freddie, the spending included nearly $342,000 for travel, food, hotel and meeting-room space. Incredibly, $74,000 was spent on four invitation-only dinners for mortgage-lending companies that are regular customers of Fannie and Freddie. Because Fannie and Freddie “dominate the U.S. mortgage market, purchasing and guaranteeing about 70% of new loans from mortgage lenders,” who in turn thus have few alternative potential buyers, managers at Fannie and Freddie still felt the need to wine and dine their customers under the subterfuge of valuing “face-to-face meetings with customers as a way to understand their needs,” according to the Wall Street Journal. Apparently the folks at Fannie and Freddie were not familiar with customer surveys or even the telephone. Instead, Freddie spokesman Doug Duvall bragged, “[We were able to meet] with our lender customers in a cost-efficient way. In just two days we held approximately 200 meetings.” Undoubtedly some of those “meetings” were held at the dinners, each of which cost the taxpayers $18, 500.

The $640,000 spent on the conference can be racked up to the lack of competitive pressure facing a government-owned organization that is close enough to the private sector to want to enjoy perks that are no doubt common on Wall Street. In other words, while it might be less bothersome to us to see stockholders’ money spend on corporate luxuries, it is not clear that Adam Smith would feel very comfortable amid modern corporate capitalism (and he did include a role for government in his economic theory).

The particularly sad thing about the lavish spending by managers at Fannie and Freddie is that those agencies had been firmly opposed to refinancing the mortgages of borrowers “under water” since the collapse of the housing bubble. Over 3 million foreclosures had taken place in the three years since September 2008. The luxury amid harm bespeaks such inequity that even underlying societal values may be at issue—namely, I should be able to eat, drink and be merry while people I don’t know lose their homes. Beyond the ethical problems with this attitude, it evinces a pathology—that of malignant narcissism and perhaps even sociopathy. It is interesting (i.e., convenient) that no terms could be given up on even the questionable (i.e., the producers’ role) mortgages, while plenty of money was available to be spent on lavish dinners ostensibly for guaranteed customers. The managers at Fannie and Freddie could not very well say that they could not afford to relax some of the overly-stringent terms of the ARMs in the sub-primes (and Alts). In fact, given the roles of policy makers and mortgage producers in enabling the housing bubble with questionable mortgages, a moral obligation exists for the government (and the related agencies) to act so as to obviate the foreclosures (which would have obviated the need for TARP for the banks, as the toxic assets were based on the bad mortgages in default). Had the managers at Fannie and Freddie recognized this point rather than stood on sanctity of contract, the Obama administration might have found a way to compensate the two agencies for doing so—perhaps even throwing their managers a lavish dinner at the White House.



Source:
Alan Zebel, “Fannie, Freddie Spend $640,000 on Conference,” The Wall Street Journal, December 1, 2011. http://online.wsj.com/article/SB10001424052970204397704577070752397313184.html?mod=googlenews_wsj



Thursday, December 1, 2011

Conflicting Business Models at Singapore’s Airport

Singapore’s Changi may be “the world’s most fabulous airport,” according to Scott McCartney of the Wall Street Journal. To be sure, the airport’s amenities are amazing. How they are operated, however, detracts in certain respects with the goal. “We wanted to transform the way travel is done and create a stress-free experience,” Foo Sek Min of the airport’s management said. This goal dovetails with the airport being “a key economic development element” for Singapore. Accordingly, the state-owned company that runs the airport receives “plenty of government support.” In line with these goals is a business model that is long-term oriented? Rather than trying to “nickel and dime” customers so as to minimize the funding from airlines and the government while maximizing revenue on a daily basis, resisting such urges in order to provide a truly stress-free experience is more consistent with the goals. To the extent that Changi provides such a business model, other industries (and airports) might follow suit—revolutionizing (or at least challenging) what had come to be the dominant business mentality by the second decade of the twenty-first century.

I contend that a stress-free experience in a pure (and realistic) sense does not include feeling manipulated or pressured to do or buy something. More concretely, paying for X and Y during one’s stay brings with it stress. Even the thought of one’s credit card or cash balance brings with it some stress. To be stress-free, an experience should not include even the thought of money—much less using it. This is where Changi falls short of its own mission: to attract more flyers to the airport and ultimately to (indirectly) add positively to Singapore’s economic development.

Not charging for the local bus tour that for immigration purposes is considered within the airport is perhaps the epitome of how the stress-free and economic development objectives dovetail with a business model. The lack of stress that comes with not having to do anything but get on the bus and take in the sights could lead to interest in investing in Singapore in some way. Indeed, potential business deals may even be negotiated during the tour as tourists chat. The lack of stress (i.e., lack of demands) on the people using the airport can thus benefit Singapore down the line, whereas charging for the tour, collecting the fare, and having the passengers go through immigration would hardly be conducive to a mood to invest or even visit Singapore.

In a general sense, charging for each service in order to (ideally) cover the airport’s operating costs on a daily basis is eons away from the business model that is oriented to long term investment even with regard to particular services. Having the roof-top pool free to customers who stay in one of the airport’s in-transit hotels while costing people going through the airport $11 not only adds to stress monetarily, but also insinuates an insider/outsider exclusivism that is not going to endear the travelling public to Singapore, whether to visit or invest in economically. Similarly, having a four-story amusement-park type slide “tied into retail” at the airport by requiring users to show a receipt from an airport merchant showing roughly $8 or more in purchases or else you can only ride the bottom one and a half stories of the slide evinces a pettiness that even in itself gives rise to stress in others—not to mention the stress involved making sure your receipt is “enough” as your kids pull at you demanding a FULL ride. Feeling manipulated to buy something at the airport’s “mall” would just add to the stress. Considering the limited cost of the slide and how eliminating the financial “rules” and price itself would make a huge difference in terms of stress (both for the employees and the public), one might wonder if the stated goals are authentic, or even known by the managers themselves. This is not rocket science, after all.

My favorite example of Changi’s management working at cross-purposes with its own mission unnecessarily would have to be the $17 for 20 minutes—are you ready for this?—“to put your feet in a tank with tiny fish that eat dead skin.” I must admit that having only the necessary amount of skin on my feet is enticing (I usually use a file, which never seems to do the job on the hardened skin . . . which we ALL have). Still, paying $17 for 20 minutes plus the inevitable worry—what if one of the fish likes live skin too?—is not likely to contribute much to a stress-free experience at the airport.

Similarly, charging $23 for three hours in a nap room would detract from one’s ability to sleep, let alone feel rested and comfortable. What if someone oversleeps? Are they charged more (and might they miss their respective flights?), or are they woken up by a loud “stress-reducing” horn or buzzer just after 2:59?  It is no wonder the bus tour of Singapore is free—people using the airport after having their dead skin eaten off and being woken up by some noise or demand for more money after having had to deal with a child unsympathetic to the $7.50 receipt are likely to want to get away from the damn place for an hour or so. Lest the butterfly garden seem like an alternative escape (it is free), it is also apparently a smoking garden, as smoking is not allowed "in doors." There are, however, two (smoke-free) complimentary movie theatres. Even so, given the apparent thoughtlessness that has gone into some of the payable amenities, I would not be surprised if an airplane crash movie were playing.

In short, while the innovative approach at Changi airport does warrant some praise (e.g., free wifi and movies, and in general for the extent of amenities), the major incongruences within the business model show how difficult it is to fly from the dominant model to one characterized more for its long-term investment orientation to eventual pay-offs. Given the government’s involvement in the state-owned corporation, the airport’s management company should have enough cushion from competitive pressures to be able to go all-out with the new model. Either amenities like the pool and nap rooms would be free, or everyone passing through the airport would pay a general airport fee that would cover all of the perks (other than in the merchants’ stores, of course). The fee would either be low enough that it is not stressful and inconvenient (given the sheer volume) or, more ideally in terms of the new model, money would be “recouped” in future tourism and foreign investment instead of any fee on air travelers. The government’s involvement in the operating company could effectively support the longer-term and less direct financial loop, as well as buffer any “pressures” from the old model for specific charges to be added during customers’ “experience.”

Imagine the stress-relief among the flying public just in knowing that for a few hours no employee will demand money for something or other. In knowing that one doesn’t have to worry about money—even from being reminded of it in being manipulated into using it—one can spend a few hours in an oasis of sorts where “real life” is put on hold. The butterfly garden (if smoke free) intimates such an atmosphere, which the airport itself could reflect, given a conducive business model. Besides endearing the travelling public (and the employees!) to the airport “experience,” Singapore itself would surely benefit in the long term, and not just economically. Unfortunately, this takes faith, which the extant business model does not allow for, at least in terms of the requisite patience.

So my verdict on the most fabulous airport in the world—which, admittedly, I have not seen in person—is: so close and yet so far. The sad thing is, the airport’s management need not be so far from their own objectives; we are not talking about rocket science here (and yet to business schools it probably is). Given the gravity of the “maximize daily revenue” business model that assumes that a constant focus on getting and an uncompromising rigidity are necessary in dealing with customers, a rocket—rather than merely a jet—is undoubtedly necessary to travel to the sort of business model that I have in mind, and not just for airports. If I am correct in this, then business schools are perpetuating the problem in their training rather than teaching alternative business paradigms. That dog is chasing its own tail.

Behind the new model hinted at (but not achieved) by the example of Changi airport is the basic feeling that life doesn’t have to be as hard as we make it. We don’t have to check receipt totals before letting a kid slide down a slide. It is as though managers set up jungle-gym bars right in front of themselves (and their customers) and then convince themselves (and others!) that the equipment must be navigated in order to get to the other side. Moreover, managers seem to have great difficulty simply in relaxing enough to play and enjoy other’s playing. Beyond the greed and urge to manipulate others (i.e., selfishness), the modern managerial mentality is too constricted, even as it paradoxically assumes that societal rules do not apply to it. So, for example, we have managers redefining words such as “guest” to suit a business interest; the rest of us are somehow obliged to recognize the validity of the misuse as a legitimate use, as in “customers are guests” (who must pay nonetheless). It is as though managers as so fixated on manipulating others without any limit or external constraint that the too-serious creatures cannot let themselves or other people simply enjoy something without required procedures and an immediate monetary exchange. The new model rejects the typical managerial mentality as too petty—too small.

I suspect that many elderly people on their death-beds shake their heads as if in achieving distance from us they have suddenly been freed in the awareness that the world is much more petty in what it takes as important and necessary that it knows. We moderns, complicit stewards of the hegemonic business model, micromanage ourselves right out of life experience itself, and we even impose our modern sickness on others. Then we act surprised when they get annoyed at us!

It is like the steward on the Titanic who (in Cameron’s film at least) shouts (little men do that), “You’ll have to pay for that!” to the young couple just after they have broken through a wall to escape the rapidly rising water. Everything must be paid for. No free ride, even on the Titanic on its way down to the darkness. This is the modern dogma that has been instilled in all of us, and we are utterly ignorant of the fact that it is exceedingly petty and narrow-minded even in its ideal. In the movie, the steward gets hit (justifiably) by the hero.  In cheering this, we, the audience, feel the hero’s natural reaction is our own, vicariously. We regard it as a valid verdict on the extant business model that stood for modernity itself back in 1912. A century later, that model had become the default—“the way the world is.” Even so, this need not have been so. Modernity could have developed differently than it did. The example of Changi airport hints at a better alternative in terms of business models. So in advertising a “stress-free experience” only to undercut it by demanding money for various “amenities” and making explicit (or creating) different classes of customers (which is also a theme in Titanic), the managers running Changi airport deserve annoyed customers and charges of insufficiency and even outright hypocrisy. Even so, we can take the Changi example as at least pointing to a different alternative.

Source:

Scott McCartney, “The World’s Best Airport?” The Wall Street Journal, December 1, 2011. 

Tuesday, November 29, 2011

An American President Meets the E.U.: Corrective Exigencies of a Debt Crisis

Political protocol can take some time to catch up to changed political realities. For over two hundred years, it has been assumed that U.S. presidents have met with their counterparts in E.U. states such as Britain, France, and Germany. During the European debt crisis, the New York Times reported, “in numerous private conversations and increasingly forceful public statements, [American] policy makers are urging their European counterparts to take big steps and move fast to reassure markets.” It was undoubtedly assumed that the counterparts were at the state level in the E.U., rather than in E.U. governmental institutions. So how are we to situate Barak Obama’s meeting on November 27, 2011 with José Manuel Barroso, president of the European Commission; Herman Van Rompuy, president of the European Council; and Catherine Ashton, the European foreign policy chief? 

                                                                   Doug Mills/NYT


Monday, November 28, 2011

A Syrian Offensive: Taking on International “Enforcement” of Human Rights

In Geneva on November 28, 2011, the Independent International Commission of Inquiry on Syria presented its report, which had been requested by the UN Human Rights Council. According to the report’s summary, the “deteriorating situation in the Syrian Arab Republic prompted The Human Rights Council to establish an independent international commission of inquiry to investigate alleged violations of human rights since March 2011.” The Commission interviewed 223 victims and witnesses. The Commission was able to document “patterns of summary execution, arbitrary arrest, enforced disappearance, torture, including sexual violence, as well as violations of children’s rights.”One might suppose that the Syrian government would have been seeking to placate the international organization and other governments.

The full essay is at "Taking on International Enforcement."


Source:

Neil MacFarquhar and Nada Bakri, “Syria Calls Arab League Sanctions ‘Economic War.’” The New York Times, November 28, 2011. 



Tuesday, November 22, 2011

The Supercommittee’s Failure: Obama’s Too?

In the wake of the failure of the joint congressional committee that was tasked with coming up with a proposal to reduce federal deficits over a decade by $1.2 trillion, Michael Bloomberg, mayor of New York City, said at a news conference, “It’s the chief executive’s job to bring people together and to provide leadership. I don’t see that happening.” The mayor may have been wrong. Take the word executive: literally it is to execute, or implement, which implies management rather than leadership. Put another way, implementation depends on a goal already established, presumably by a leader. To lead is to formulate a vision of social reality that is an ideal, and thus consisting of goals rather than actualities, and then to persuade others to accept that social reality. Once the directionality is established, the means, or strategies, can be executed by managers (i.e., those who manage the implementation).

Even Dan Pfeiffer the White House communications director at the time, may have conflated management with leadership in remarking, “A president’s job is to lay out a plan and then rally the country to that plan.” The word plan is key. A plan is a means to get from here to there. It is therefore not the same as a goal, which is only an end-point. So once again leadership, which is oriented to formulating and selling a vision, is being conflated with strategy, which belongs with management, which implements goals by making and executing plans. Pfeiffer went on to refer to the president’s $3 trillion deficit reduction plan, whose specificity renders it clearly within the executive purview of the chief executive, rather than the leadership function of the president. Whereas to preside is literally to sit before (from the Latin), which is consistent with formulating and selling a vision, to execute is to draw up (or have drawn up) specific plans and negotiate on the basis of them.

The U.S. Presidency is a strange bird in that it contains, among other roles, the leadership of presiding and the management of executing. It is no doubt a tricky business balancing these two hats (among others, such as commander in chief). If the chief executive gets too caught up in negotiating particular plans that require legislation, his leadership function can suffer, as can the separation of powers that is vital to the proper functioning of the U.S. Government. That is to say, if the chief executive becomes the chief legislator through his minute legislative-committee involvement, he has gone far beyond the minority role represented by his veto pen. That veto is a check on congressional legislative power rather than an encroachment on Congress’s main function. Therefore, the chief executive should not have been an active part of the “super-committee” on the deficits.

The plans that the chief executive draws up should be oriented to the post-legislative implementation, or enforcement, of legislation, with only advice given to congressional committees as per the minority role of the presidential veto. In a sense, the American President is both before and after the Congress; the leader’s vision is as though the tip of an arrow pointing where the country is to go, whereas the executive’s plans are means of implementing legislation, which is ideally in line with the leadership vision’s goals and principles. Admittedly, in a governmental system of separated powers, the broad directions and principles, strategies as laws, and executive plans are not necessarily in sync. Perhaps this is reason enough for the U.S. President to keep straight the distinctive functions of leading and managing.


Source:

Jackie Calmes, “Obama Weighed Risks of Engagement, and Decided to Give Voters the Final Say,” The New York Times, November 22, 2011. 


Monday, November 21, 2011

The African Customs Unions and the E.U.: On Currencies

The East African Community (EAC) is Africa’s “most advanced regional trade bloc,” according to the Wall Street Journal. As of the journal’s report in late 2011, the EAC was already a customs union that guaranteed the movement of goods and the right to work across Kenya, Uganda, Rwanda, Burundi and Tanzania. The parliaments were working at the time on synchronizing immigration and tariff laws. “We want to develop this corridor vigorously and collectively,” Mugo Kibati, director of a Kenyan government program, said. The journal notes, however, that the EAC and other trading blocs in Africa, such as the Southern African Development Community, were “backing away from one prominent aspect of Europe’s economic union: a common currency.” Aside from any vague similarities that the fiscal differences between Greece and Germany may have to those between Zimbabwe and South Africa, the currency question itself is out of place for a NAFTA-like trade agreement.


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Should the E.U. Represent Its States at the UN?

In 2010, it was proposed that the E.U. have an increased role at the UN in order to boost Europe’s profile as major player at the international level. One proposal would have given the E.U. the powers enjoyed by fully-fledged UN members, such as the right to make proposals and submit amendments, the right of reply, the right to raise points of order and the right to circulate documents. While there is no demand in the draft for a more prominent seating position for the EU, it was possible that the E.U. could have been moved to the center of the UN’s assembly chamber. Wherever the E.U. would have been situated, additional seats alongside a new European UN ambassador would have been made available for High Representative Catherine Ashton, the E.U. Foreign Minister, and her staff. Experts believed at the time of the proposal that such a role for the E.U. in the General Assembly would not significantly enhance the E.U.’s ability to influence policy at a UN level; instead, the proposal would have provided an opportunity for the E.U. to portray itself as a unified power on the international stage.
 

The complete essay is at Essays on Two Federal Empires.

Saturday, November 19, 2011

On the Role of the European Central Bank in Ending the Debt Contagion

According to the Wall Street Journal, “That the [ECB] has been forced to step into the power vacuum left by a fractious political class underscores the increasing centrifugal forces unleashed by the debt crisis.” Yet that pressure was being applied to the central bank to issue Eurobonds and buy more state government bonds in spite of the objections of German officials suggests that there were also centripetal forces acting on the center at the expense of the state capitals, even Berlin. It is important to view the E.U.’s “management” of its debt crisis through the prism of the history of European integration since the Shuman Plan in 1951, which called for ever closer union so as to obviate war and give Europe a stronger economic and diplomatic power in the world. The history of the European project can be characterized as a series of fits and starts, punctuated by momentary crises—each proffering potential ruin to the union itself. For example, France’s veto of Britain’s accession as a state must surely have struck some people as portending the end of the EC—the forerunner to the E.U. Yet from the vantage point of 2011, the conduct of the accession seems a mere hiccup on a much longer road of hills and valleys. Regarding the extent of integration by 2011 (e.g., monetary union), the question is whether European efforts to come to grips with the contagion of over-burdened state debt signify merely another valley, or an inherent contradiction or fault-line in the E.U. itself. Whatever the answer, the outcome will no doubt come about incrementally, as one might expect from E.U. history.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Tuesday, November 15, 2011

The Market Mechanism: Complicit in E.U. Debt Crisis

According to the New York Times, “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany.” In going through these culprits and how they interrelated, it should not be lost that the market mechanism itself can be held as suspect, for at the very least it enabled the furtive games to be played for far too long. Indeed, the market itself did not do a good job for years in providing accurate risk-return relationships.

The full essay is in, "Essays on the E.U. Political Economy," available at Amazon. 


Monday, November 14, 2011

Monti and Papadernos in the E.U.: Leadership in Technical Expertise or Democratic Deficit?

“The moment of truth has come.” This was said by the head of state of the E.U.’s third largest state, Italy, in a televised address just after Berlusconi had resigned as the prime minister. Although the statement could be interpreted as referring to the need to reign in the Italian profligate system of public-sector patronage (which includes private contractors), Giorgio Napolitano could also have been referring to the credibility of his state at the E.U. level. “We need to restore confidence with investors and European institutions,” he continued before turning to the more tangible point that the state would need to refinance nearly 200 billion euros in government bonds before May, 2012.



                             Monti and Barroso                                    John Thys/Agence France-Presse/Getty

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Sunday, November 13, 2011

Contagion Beyond the Headlines: Portugal and Eastern Europe

The E.U. states of Greece and Italy were grabbing headlines during the first two weeks of November 2011, given the dramatic resignations of Papandreou and Berlusconi. The only other state to get some attention was France. The Wall Street Journal noted on November 12th that concerns had been quietly building about France. According to the paper,“French bond yields rose to four-month highs, one day after Standard & Poor's Ratings Services erroneously issued a message saying it had cut France's triple-A credit rating. The yield on France's benchmark 10-year bond climbed 0.02 percentage point to 3.46%. That was 1.66 percentage points over yields on comparable German government bonds. France now has the highest government bond yields among its triple-A-rated peers in the region.” However, it seems overly dramatic to say that a .02 percent increase evinces a climb. Moreover, 3.46% is well under 7 percent, which is the level that was presumed at the time to signify the need for a bailout. Relative to the changes in the Italian yield, those of the French bonds could be viewed as relatively moderate, The French yield was still closer to that of Germany. Although not a red herring, the concern over France masked some real sleepers that were poised to take a hit in 2012. 



Eclipsed by the headlines, Portugal’s expected GDP for 2012 was revised downward by the E.U.’s executive branch in November from the May estimates of around -1.8% to -3% with an expected unemployment rate of nearly 14 percent. The 2011 numbers were also revised downward, from about -1.9% to around -2.1 percent. Meanwhile, Portugal’s semi-sovereign 10-year bond yield was at just over 12 percent, well over Italy’s “point of no return” rate of 7.5 percent, which was hit for a day during the second week of November. With an expected contraction of 3% in 2012 and a 12% yield in November of 2011, Portugal could be expected to face stronger head-winds in being able to make its interest payments in 2012. I suspect that the press had become so captivated with the circus of personalities in Greece and Italy that the iceberg lying in front of Portugal was simply not seen.

Besides Portugal, some of the states in Eastern Europe faced icebergs of their own—though not necessarily of their own making. These too were receiving too little press coverage in November of 2011. Specifically, the state leaders of the “euro zone” had decided in October to give the “zone’s” major banks until the following summer to raise their capital reserves. With that amount of time, the banks could avoid issuing new stock (which would dilute the holdings of their existing stockholders) and get the added reserves together by cutting back on lending to Eastern E.U. state governments instead. Morgan Stanley figures that Poland, Romania, and Hungary are most vulnerable to a loss of “euro zone” bank lending. Roughly 1 trillion euros of “euro zone” bank assets were in Eastern Europe at the time of the change in governments in Greece and Italy. Hungary’s exposure was the largest, with loans held by the banks amounting to about 37% of GDP. According to the Wall Street Journal, any hit to the E.U.’s eastern states, whose economic growth had been powered the global recovery, would only worsen the E.U.’s economic outlook and its ability to service its debts. That is to say, enabling the “euro zone” banks to raise additional reserve capital by reducing lending rather than raising equity may have been in the banks’ interest, but choking the eastern states could already in November be expected to make it more difficult for Greece, Italy, and Portugal to service their respective debts from reduced economic output in 2012. 

It would have been wiser on the journalists’ part to put France in perspective and take a look at Portugal and Eastern Europe than to have fixated so much on the plights of Papandreou and Berlusconi as they struggled to maintain power only to ultimately lose it.

Sources:
Matthew Dalton, “Europe Slashes Its Growth Forecast,” The Wall Street Journal, November 11, 2011. http://online.wsj.com/article/SB10001424052970204224604577029442286713940.html

Kelly Evans, “Eastern Europe Vulnerable in Debt Crisis,” The Wall Street Journal, November 11, 2011. http://online.wsj.com/article/SB10001424052970203537304577030422025545822.html

Neelabh Chaturvedi, Stelios Bouras, and Liam Moloney, “Europe Pulls Back From Brink,” The Wall Street Journal, November 12-13, 2011. http://online.wsj.com/article/SB10001424052970204358004577032401682551744.html?mod=googlenews_wsj


11/11/11

In Berlin at the Brandenburg Gate on 11/11/11 in 2011, costumes were the norm in the evening as revelers celebrated the numeric convergence. I suspect that unlike the Chinese, the Europeans were struck by the convergence itself, rather by any good luck attached to the numerology. I myself was struck by the convergence alone. Both at 11:11am and 11:11pm, I was surprised that other Americans around me seemed to be either ignorant of the alignment or utterly indifferent to it. It occurred to me that just as a given time-date system is artificial, so too are human cultures—which include political and economic values that are stitched together by leaders who peddle meaning to the masses. Both our systems and our ideologies are all too limiting, yet we can find meaning in them. Perhaps this is ultimately why we have them and the leaders that trumpet them or suggest new ones. I contend that 11/11/11 too plays into the human instinct for sense-making, especially in terms of visual and cognitive symmetries.

At 11:11am on 11/11/11, I limited my “celebration” to sending out some emails to some friends and a general tweet to mark the moment for posterity; curiously, the people around me did not seem aware of the convergence. At 11:11pm, I was at a bar/restaurant listening to a band of old geezers play classic rock (and, sadly, a few Jimmy Buffett songs) from the 1970s. The only convergence in the 1970s was inflation and unemployment in the double-digits. In spite of my protestations, even the people I sitting with seemed utterly indifferent to the coming convergence—even as I took off my watch for emphasis! Still nothing—like watching a train go by on its own momentum. A few people across the room were checking their cellphones and blackberries, but, alas, for more pedestrian purposes than to keep an eye on the coming cosmic convergence. As I rather blatantly went to the lighted doorway to better see my watch at “the moment,” I felt utterly alienated from my own people. It was a case of the one and the many.
When the moment came, as I watched the five numbers on my digital watch all briefly display “11,” I felt like I was on Mars enjoying the thrill of my own private “Earth” moment while the Martians continued to sip their red brew. No, I was not drinking so I did not really think I saw aliens (they are all in Arizona, after all). Rather, I was struck by the divergence in values even amid the convergence in numbers. There wasn’t even a clock in the room! Had I been the manager there, I would have tried to arrange a date-time digital “clock” on a screen. Would the people have counted down the seconds? Would they have paid any attention to it? Walking back to my seat, I wondered whether I wasn’t some reincarnated European reborn in the Midwest as some bizarre joke from Descartes’ divine deceiver, or perhaps I was over-estimating the Europeans’ interest in the convergence. Perhaps it’s simply that I’m too innately unique—a man destined to forever be without a country.
About thirty minutes after 11:11pm, I was chatting with a middle-aged man who had been fired as a band teacher at a local high school. Our conversation came around to political economy. “Greed is good,” he stated in perfect seriousness with his eyes as though bullets aimed directly at me. I reacted as if I had been stunned by a taser gun. No wonder the guy’s students obeyed him. As for the gaping inequality in wealth in the U.S., he insisted that people should be allowed to accumulate without limit—even when they already have tens of billions of dollars. “That’s what America is all about,” he nearly shouted above the din of the band. How dare this even be questioned! The man was indeed voicing values held by enough Americans that he was expressing a major strand of American culture that I could not dismiss as an aberration or quirk. When I claimed that representative democracy itself could be at risk if private wealth gets even more concentrated in a few hands, he replied that the rich would never let America be ruined because they have a vested interest in the system. “The rich created this system,” he reminded me. Sure enough, the delegates at the U.S. constitutional convention in 1787 were creditors deeply concerned over Shays’ Rebellion over debt that had just occurred in Massachusetts a year earlier. That the debtors had fought in the war without being paid yet they still had to make payments on their farm debt made no nevermind to the “Founders.” Was American founded by selfishness and greed? The former band teacher replied, “Yes, of course” as if there were no a thing wrong with that. I was absolutely stunned. I felt like I had been transported to Mars. I countered that even if a bunch of rich guys founded the United States, greed can result in people acting against their own self-interest, paradoxically as they are narrowly obsessed with it. “America can collapse from its own weight on top,” I added as though it were a fact. As I said this, I had already concluded that I was horribly at odds with a major plank in the American lexicon—namely, that economic liberty should not be limited, even at hundreds of billions of dollars being held by one person. In fact, the lack of limit, even when a constraint would be for the good of the system itself, is held by many as a virtue—something to be proud of. That a signature of greed is its lack of limitation is no problem because greed itself is a virtue. I found myself as though I were visiting another planet, though this time without even my own private amusement in watching 11’s match up on my watch. Beyond the cultural ideology, I saw in the leader of the band a sordid selfishness that could only be utterly unapologetic given its nature. All I could say was, “Well, we just disagree. Have a good night. Nice to have met you.” I wondered if the rest of the world had come to say the same thing to the American “tourist” (i.e., ideology) even while admiring our political stability and wealth.
Of course, people can get carried away not only with power and money, but also with convergences such as 11:11 on 11/11/11 in terms of luck, causality and metaphysics. In this respect, American culture is more solid than, say, that of the Chinese. As David Hume argues, we do not understand causality as much as we think. Hence, superstition is as though a perennial temptation—especially in religion, where the lapse is almost always invisible to the beholder. In numerology, the number one represents a beginning or gateway. Having several number ones presumably reinforces the validity of the “beginningness” quality. In other words, the “vibrational frequency of the prime number” increases its power such that its attributes are multiplied.  In the case of the number one, the attributes of “new beginnings” and “purity” are significantly magnified in power in 11/11/11, presumably reaching its zenith at 11:11 (a.m. and p.m., or just once on the 24 hour clock). The fallacy, which I suspect took hold in China, is to say that the increase in power means that there is more apt to be a beginning empirically and even metaphysically. We can resist this temptation to get carried away with even rare line-ups in our own systems, which, after all, are artificial because they are invented and instituted by people. In other words, even though it is a human instinct, sense-making need not over-flow and eventuate into metaphysical significance. We cannot say that acknowledging 11/11/11/ opens up a gateway in one’s life. Rather, a person can actively start something irrespective of the numbers, even if only by spotting and seizing an opportunity.
A numeric alignment can hold its own significance within its own system for the human mind. That is, the significance can be felt even as it is known to be contrived and thus arbitrary from outside the system. As I stood in the lighted doorway waiting for my watch to briefly line up its various numbers to 11:11:11 on 11/11/11 as the rest of the room was fixated on the band (or the walls, or themselves), I presumed no metaphysical significance at all in terms of some beginning about to occur in my life; rather, it was the convergence itself—the fleeting and rare alignment—that galvanized my interest. The sudden turn from 1999 to 2000 was a similar sort of significance in terms of numbers in a particular dating system. People did not need to presume the issuance of a new era or good luck to get excited at 11:59pm on December 31, 1999 about the next minute being so different. Yet was it? Something can be felt as significant even as it is known to be arbitrary, yet such significance can be easily relegated.
Admittedly, it was more difficult to get excited about New Years’ Eve in 2005 or even 2010, given the significance of 2000. Similarly, on 11/11/11, a sense of complacency could have set in regarding convergences of ones. The year 2011 alone contained an extraordinary number of them:
1:11:11 on 1/1/11     
11:11:11 on 1/1/11      
 1:11:11 on 1/11/11     
11:11:11 on 1/11/11     
 1:11:11 on 11/1/11       
11:11:11 on 11/1/11
1:11:11  on 11/11/11      
11:11:11 on 11/11/11 
However, how many of these did the average person observe? I myself completely missed 1:11pm on 11/11/11 even though I was fixated on 11:11am and 11:11pm. I must have been “out to lunch” at 1:11pm. Although it would be 100 years before 11/11/11 would happen again, it would be “only” 10 years and a few months before 2:22pm (forget 2:22am!) on 2/22/22. Technically speaking, missing a “2” (2/ rather than 22/) means that the multiplied power of the “2” will be somewhat less. Trinitarians will have reason to get excited over 3/3/33 at 3:33pm, which will be the day after Ash Wednesday in 2033. However, the number of 3’s is one less than the number of 2’s in 2/22/22. Barring significant life-extending advances in medical science, 11:11 on 11/11/11 in 2011 was the best it could get in terms of the number of numbers in a numeric date-time convergence for those adults who happened to witness that convergence.
That this topic holds any significance whatsoever is I suspect due to the propensity of the human mind to seek and admire order. In terms of symmetry alone, the eye naturally gravitates to 1111111111 rather than 1645564336. The gambling machine that has three windows with a variety of pictures spinning around, we are naturally astonished when the same picture is shown in all three windows. Even so, three lemons does not mean bad luck any more than three apples means good health in the coming year. 11/11/11 is not an alignment by chance, even if the Gregorian calendar itself need not have been adopted when it was. Even so, the planned or arranged alignment, being both of, is inherently pleasing to the eyes and holding significance to the mind, especially if the convergence is rare and fleeting. It is as though everything makes sense, but only for a moment and then it is past. In fact, it is this basic feature of the mind—that which I call the sense-making instinct—that is the basis and appeal of a leader’s vision to followers and an organization or society as a whole. The social reality that is formulated and preached is like a series of ones in a chaotic world of fractal order and disorder.

Thursday, November 10, 2011

Industry Self-Regulation: Too Idealistic for Futures

At the time of MF Global’s collapse amid hundreds of millions of dollars in lost customer funds, commodities and futures trading had for decades been “largely policed by the exchanges where they trade, setting up a potential conflict of interest,” according to the New York Times. The paper continues by pointing out that those exchanges, including profit-making companies such as CME Group, the parent company of the Chicago and New York Mercantile Exchanges and the clearing house used by MF Global, “oversee the very futures firms they rely on for business.” The Times refers to this conflict of interest as one centered on industry self-regulation. 
 
The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.

The Essence of Leadership

According to DePree (1989, p.19), the first responsibility of a leader is to define reality. This might seem metaphysically esoteric, but I believe DePree hit the nail on the head. Even though far less has been written in leadership research about the importance of viewing reality and interpreting it than about traits, styles and situational factors, defining reality is the fundamental task distinguishing leadership as a phenomenon (Caldwell, Bischoff & Karri, 2002, p. 153).

 Material from this essay has been incorporated into The Essence of Leadership: A Cross-Cultural Foundation, which is available in print and as an ebook at Amazon. 


Sources:

Caldwell, C, S.J. Bischoff, and R. Karri: 2002, “The Four Umpires: A Paradigm for Ethical Leadership,” Journal of Business Ethics 36, 153-163.
De Pree, M.: 1989, Leadership Is an Art (Doubleday: NY).

Tuesday, November 8, 2011

Greco-Roman Achilles’ Heel: Democracy or Leadership?

In assessing the abilities of the E.U. states of Greece and Italy to manage their respective debt-loads as expected by E.U. leaders, the impacts from the governance systems can be distinguished from the impact from compromised or failed leadership. In general terms, a forceful, visionary leader can leverage an existing governance system to “produce.” However, it is also true that a faulty system can make transformational leadership difficult if not nearly impossible.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.


Monday, November 7, 2011

Greece & Italy: Undercutting Market Confidence in the E.U.

As a federal system, the E.U. can be expected to contain a certain amount of economic disparity. The state bond yields in October 2011, for example, were—one could say—“diversified.” Investors relishing high risk-return could partake in Greek bonds while retired investors could safely stick to the German variety. A healthy federal system proffers something for nearly every taste, while constraining the outliers for the sake of unity.


The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Sunday, November 6, 2011

On the E.U. Debt Crisis: Lessons from the Early U.S.

In the March 2, 2010 issue of the New York Times, Roger Cohen illustrates how useful EU-US comparisons can be. He is careful to compare the E.U. of his time not to the contemporaneous U.S., but, rather, to it a few decades into its founding. In other words, he corrects for the impact of time on political development. This is not to say that the E.U. in 2010 was akin to the U.S. under its Articles of Confederation. The Articles treaty evinced far less integration politically and economically. For example, whereas the Articles sported only a common council of delegates from the states, the E.U. in 2010 had a presidency (the European Council, whose president was Van Rompuy), an executive branch (the E.U. Commission, whose chief executive was Barroso), a bicameral legislature (the E.U. Council (of Ministers) and the E.U. Parliament), and a supreme court (the European Court of Justice, or ECJ). In fact, whereas under the Articles the American republics held governmental sovereignty, the ECJ held in 1963 and again in 1964 that E.U. law is supreme over state law and state constitutions. In short, whereas the Articles did not split the atom of governmental sovereignty, the E.U. in 2010 was a federal system of dual sovereignty. Like that of the U.S., the E.U.'s federal system is itself on the empire level; its republics being commensurate with the early modern kingdoms.


The complete essay is at Essays on Two Federal Empires.

Saturday, November 5, 2011

On the Allure of Popular Suffrage

In the European singing contest/show in which Susan Boyle competed, she lost the top spot to a teenage rap group. The method of selection made all the difference. Rather than having a three-judge panel of experts on singing determine the winner, the general public could “text” via cell phone or other device to vote. That one of the judges explicitly advocated for Boyle after her final performance (just before the voting) was no never mind to the general public that submitted a majority of the votes. To be sure, there were certainly non-music reasons to vote against her. Most notably, the suggestive comments she made on stage just before her first performance, including, “I’m 48, and that’s not my other half” (as she was swinging her hips as if she were sexy), were downright emetic, if not utterly bizarre. So it is possible that the voters put her personality defect above her excellent singing. It is also possible that the “texters” responsible for a majority of the votes simply preferred rap music. I do not like rap “songs” that include shouting and swearing; I do not even regard such “songs” as music. Otherwise, I could sing a song simply by yelling at you. From what I saw, the rap group in the competition was not swearing, but the “singing” did sound at times like shouting to me. Moreover, the group members seemed more oriented to dancing than singing. It is possible that the votes for that group went for any of the fads being represented rather than to singing per se.

A tension, or even an outright contradiction, can exist between meritocracy and direct democracy, or popular sovereignty. Plato and Aristotle both claim that there is a dark side to each system. Meritocracy can slide into aristocracy and democracy into mob rule: government by a selfish and uninformed mob swayed by the passions of the moment over even the people’s own best interests. What struck me about the results of the singing contest was that the rap singing wasn’t good singing whereas Susan Boyle sang very well, yet even so, the group won. It can be safely assumed that most of the voters probably were not experts on good singing. They were not trained to separate their own tastes from a critical perspective focusing on the singers’ voices. The judges presumably could have done this, but they were relegated to proffering their views before the voting—views that the voters could ignore without any imprecation. Indeed, the selection method itself—popular sovereignty—tacitly "disvalues" expertise. In one person, one vote, no one is assumed to be any better qualified to render a decision than anyone else. Differences in effort and talent among the electors are irrelevant unless particular voters care to take them into account.

Lest it be assumed that people in Western democracies necessarily privilege popular sovereignty or the will of the people refracted through elected representatives, it should be noted that power-elites are tacitly permitted to run our political, commercial and non-profit sectors. When Greece’s prime minister, George Papandreou, proposed a referendum in which the Greek people would decide whether to accept the latest debt-deal negotiated at a meeting of the European Council (consisting of heads of the E.U.’s state governments), leaders of France and Germany as well as E.U. appointed officials bore down on the prime minister, perhaps even undercutting his influence with members of his own party in the Greek legislature. Although defending the euro currency from a collapse assumed likely without the implementation of the latest debt deal, the E.U. leaders (including Merkel and Sarkozy) sent the message that direct democracy, ironically in Greece, could not be tolerated given the severity of the economic challenges involved. Experts at the E.U. level, such as the head of the European Central Bank, were included as the E.U. leaders met with Papandreou to pressure him to drop his proposal or change the question to being on the euro zone (rather than on whether to accept the latest E.U. debt deal). Disrespect for direct democracy, or popular sovereignty, was very much implied in the stance being taken at the impromptu E.U. meeting before the G-20 meeting. Yet strangely, the “gang” got away with it. Europeans did not stand up for the voice of the Greek people to be heard directly. Not even the Greek parliament resisted the E.U. “gang” by sufficiently backing the prime minister’s proposal. Instead, leaders of some of the E.U.’s big states and maybe even some E.U. appointed officials may even have pressured members of Papandreou’s own party to bring him down lest he not relent and do what was being deemed necessary to save the euro and the E.U. itself.  Indeed, even Papandreou, when he was caving on the referendum, betrayed his earlier appeal to popular sovereignty by stating that the referendum had value only as long as the opposition was opposing the debt-deal.

I contend that in the E.U., as well as in the U.S., all too often lip-service is given to popular sovereignty and representative democracy, when in fact people still look up to expertise. The Oscars, whose awards are decided by members of the film academy who have expertise in the various fields of filmmaking, is more esteemed than are the People’s Choice Awards. The Oscars are more likely to recognize Maryl Streep’s acting ability than is the People’s Choice.  I would argue that the results of the Oscars are more credible because expertise is not chucked for a flavor of the month. For instance, in the 2010 Oscars, Hurt Locker beat Avatar for Best Director and Best Picture. Hurt Locker was largely an Indie (i.e., on the fringes) film, whereas Avatar broke box office records and was no doubt much more popular with the general public. The Academy members were able to weight improved 3D effects, story and direction without allowing the technical dazzle to overshadow. Indeed, Avatar did receive the Oscar for its development and use of new 3-D technology, even as the members of the academy recognized that the most technologically-advanced film is not necessarily the best.

Of course, Oscar voting is not perfect. The 5000 plus membership may be sufficiently small that cronyism or, its opposite, grudges, may play a role. Avatar’s David Cameron, for example, was apparently not the best-liked man in Hollywood at the time, and his ex-wife just happened to be the director of Hurt Locker. I saw a television clip a few months before the 2010 Oscars showing Cameron being very rude to a fan who simply wanted an autograph at LAX, so I was rooting for his ex-wife and her movie even though Avatar was one of my favorite movies at the time. The lesson is perhaps that no selection process, or person for that matter, is perfect.

My point is that the case of Susan Boyle and the Oscars both point to there being drawbacks to popular suffrage. The E.U. suggests that efforts to bracket direct and even representative democracy are tolerated by the general populous even in democracies. Maybe we are not as much the democrats as we think we are. Maybe there is good reason to leave some things to experts. Even so, at least with respect to political judgment, there may be good reason not to cut off the will of the people. Hence, the U.S. has its Electoral College and the European Council appoints its president, while the U.S. House of Representatives and the E.U. Parliament have elected representatives of the people. In binding the Electoral College to popular vote, the U.S. has moved to the democratic pole, even while tolerating the influence of “big money” in politics. In looking the other way while E.U. leaders undercut state government vetoes and referendums, the E.U. have moved subtly away from the rule of law as well as democracy, even while the salience of state-level elected officials at the EU level (via the European Council) emphasizes “first order” representative democracy (over “second order” selected by the first order). Ideally, neither expertise nor the will of the people are eclipsed, with the rule of law protecting both. The E.U. and U.S. could both take a lesson.


Sources:

 Richard Corliss, “Oscar Wrap-Up: Why Avatar Lost,” Time, March 8, 2010. http://www.time.com/time/arts/article/0,8599,1970502-1,00.html

Marcus Walker and Alkman Granitsas, “Greece Blinks on Euro Threat,” The Wall Street Journal, November 4, 2011. http://online.wsj.com/article/SB10001424052970203804204577016213985874218.html