The Role of Regulations in the Free Marketplace!

I smiled to myself when I heard a so-called political Independent and small business owner comment on a national television newscast that he just wanted government out of ours lives.  I think he was nervous and just parroted an empty political slogan.  More disappointing still was that the interviewer didn't probe.  Most newscasters doesn’t these days.

In regular surveys to determine why businesses lay off workers, only 13% cite regulations as a major factor. The percentage has not increased in the past few years, according to a column last month by conservative David Brooks.  He notes that only 0.18 percent of the mass layoffs last year were attributable to regulations.

Even free-market zealots admit that many businesses, thanks in part to strong lobbies, do not charge the true price for their products.  For example, long-haul trucking does not pay the true cost of the public highways they chew up.  Utility and cable companies claim it is too expensive to bury power lines, but they don't factor into their expenses the cost to the public of things like hacking street trees to death.  Outdoor billboard companies, whose only value is parasitic on public roadsides, chop down publicly owned trees (or illegally poison them) without paying the true value or replanting and never shoulder the cost of the scenic easements they destroy.

Regulations, if done properly and evenly enforced, are merely a means of adding what economists call corrective pricing or market value to compensate for spillover effects like these which are called externalities.  Coal-fired power plants don't pay the true cost they levy on the public because conservatives have blocked putting a price on carbon.  Automobile companies became conscious about safety and fuel efficiency because regulations made them realize that by failing to do so they were levying a huge spillover cost on the public.

The gentleman I noted at the beginning of this blog wanted government out of his life but I assume that didn't mean he wanted the air he and his customers and his grandchildren breathe or the water they drink or the food they eat to be unsafe.  I assume he didn't want to go without roads or streets or public safety or consumer protection from loan sharks.

Ultraconservatives argue that the votes individual consumers make in the free marketplace are a better way to make decisions about these things than might be made by representative democracies prone to winner-take-all decisions largely controlled now by special interests.

But the reason we have a mixed economy is that few of us want to wait for good roads, national defense, public safety, consumer and environmental protection and good public health until businesses react to the votes consumers make with their purchases.  And few of us are naïve enough to believe that we still wouldn't be subject bottom feeders.

As Brooks wrote in his column, as a reminder to other conservatives, especially those prone to hyperbole:

“There are two large lessons here. First, Republican candidates can say they will deregulate and, in some areas, that would be a good thing. But it will not produce a short-term economic rebound because regulations are not a big factor in our short-term problems.

Second, it is easy to be cynical about politics and to say that Washington is a polarized cesspool. It’s true that the interest groups and the fund-raisers make every disagreement seem like a life-or-death struggle. But, in reality, most people in government are trying to find a balance between difficult trade-offs. Whether it’s antiterrorism policy or regulatory policy, most substantive disagreements are within the 40 yard lines.”

And as far as fearing the person Newt Gingrich loves to mischaracterize as a socialist and the most dangerous President ever?

Conservative Brooks points out in his column that “Nineteen-eighty-eight, under Ronald Reagan, 1992, under George H.W. Bush and 2008, under George W. Bush, were monster years for new regulations. In his first years, Obama has not increased regulatory costs more than Reagan and the Bushes did in their final years.”

Insights Into Apparent Callousness Among Conservatives

I suspect a lot of Conservatives reacted to news reports and infographics that more than 46 million Americans now live in poverty about the same way some of their ultra-conservative-faction Tea Party members did during the recent debate by cheering pulling the plug on anyone who is dying but that doesn’t have health insurance.

Even if a subsequent attempt to balance perception of that event is accurate, flippancy and conservatism go back a long way including Lord Tommy Dewar’s famous early 20th century quip that “if we are here to help others, I often wonder what the others are here for.”

While it would be much too easy, even as a politically moderate Independent, I have too many friends of that persuasion, who are compassionate, to brush all Conservatives off as heartless.

My friends may not go as far as one Conservative commentator did while referring to some as having “no sense of moral decency” but even they would agree there is some truth to the perception that many Conservatives seem callous and recently I’ve come across several possible explanations.

One possible insight into those who are truly callous is that a pivotal “switch” may not have been flipped in childhood as described by Dr. Jim Taylor’s excellent new book for parents when he wrote that:

“…even if children are predisposed to compassion, what begins as an egocentric stage can turn into an entrenched attribute if that genetic switch isn’t turned on. And the way parents ensure that the switch is flipped is by sending children messages that discourage selfishness and encourage compassion.”

Another insight may be that Conservatives seem to be far more likely to be “declinists” by nature or more likely to fall under the spell of others who are. According to journalist Alan W. Dowd, who documents that America has been viewed as in “decline” a good portion of the last 300 years.

I’ve primarily been moderate and Independent politically since coming of age, but growing up in an ultra-conservative Republican household, by age 15 the first political books I read were John Birch Society-inspired paranoid-declinest-readers such as A Texan Looks At Lyndon, subtitled “a study of illegitimate power” and A Choice Not An Echo. Books like these probably pushed many of us toward becoming Independent and/or Liberal.

But judging from a recent infographic documenting the economic prosperity from ‘47-‘79, during my first 30 years of age and the economic regression from ‘80 until the present, the past 30 years, a period dominated by conservative politicians including the “Great Communicator” President Ronald Reagan, it seems stagnation, if not relative decline, may actually correlate closely with conservative viewpoints and policies.

It is important to note that correlation is not necessarily causation but after thirty years it is clear that the conservative inclination shows no sign of pay-off, no matter how many times it continues to be rebranded. In fact those who are so ready to preach the politics of “decline” in the Republican presidential primaries may find that their approach has actually led to the stagnation of the past thirty years.

Another insight into why so many Conservatives seem callous can be found in the research findings reviewed in the book American Grace: How Religion Divides and Unites Us when authors Drs. David Campbell and Robert Putnam write:

“Experiencing a loving God is associated with high trust in one’s fellow mortals, whereas experiencing a judgmental God is associated with low trust in other people….Religious liberals…are among the most socially trusting of Americans, whereas religious conservatives more often experience a judgmental God, and they are among the least trusting of Americans, especially if they are not observant.”

Contrasting those believing in a Judgmental God vs. a Loving God may in part also explain why conservative Republicans felt comfortable taking two-thirds of the budget cuts in its recently House-passed “Pathway to Prosperity” budget out of “programs that serve people of limited means” according to the Center for Budget and Policy Priorities while including the notation below appearing on page 25 that the budget will:

“ensure that America’s safety net does not become a hammock that lulls able-bodied citizens into lives of complacency and dependency.”

To me that sentence reflects what many would call a lack of “social trust” including Conservative author and columnist David Brooks in his book The Social Animal where he writes:

“Without social trust, the political system devolves into a brutal shoving match…The social fabric is based on the idea that effort leads to reward. But very often, government rewards people who have not put in the effort. It does this with good intentions…[e.g. welfare entitlement] and it does it with venal intentions [e.g. lobbyist-secured earmarks, tax breaks, subsides and corporate welfare]…

These programs weaken social trust and public confidence. By separating effort from reward, they pollute the atmosphere. They send the message that the system is rigged and society is corrupt.”

But from their research, the authors of American Grace further note that ultra-conservative, highly religious Republicans are especially vulnerable when it comes to social trust when they write:

“Fundamentalist religious views are negatively associated with social trust…Social trust increases with religious attendance but decreases with fundamentalism…Religious liberals more often experience a loving God, and they are among the most socially trusting of Americans, whereas religious conservatives more often experience a judgmental God, and they are among the least trusting of Americans, especially if they are not observant.

For highly observant fundamentalist Americans, their theology inclines them toward skepticism about human nature but their frequent attendance somehow move them to a more optimistic view.”

“Social trust” which is defined as a belief in the honesty, integrity and reliability of others - a "faith in people" is regularly benchmarked by the Pew Center and the General Social Survey. Studies also show that “social trust” correlates with quality of life and economic health.

In a column a couple of weeks ago entitled The Vigorous Virtues Brooks further comments on the importance of social trust but chastises the current Conservative and ergo Republican positions as inadequate:

“Finally, there is the problem of the social fabric. Segmented societies do not thrive, nor do ones, like ours, with diminishing social trust…government may have helped undermine personal responsibility and the social fabric, but that doesn’t mean the older habits and arrangements will magically regrow simply by reducing government’s role.”

It does appear that Brooks, as a compassionate Conservative, is in the minority both in his ideology and in the Republican Party. It is not at all clear from everything I’ve read that compassion as a value can be learned by an adult if “the switch wasn’t flipped” in childhood or that there is room for compassion in a worldview based on a Judgmental God.

Nor is there any evidence that empathy and compassion can come from reading first-hand accounts of poverty like Joe Queenan’s article this month entitled The Inconvenient Truths About Poverty.

As you’ll note in one of the first reader comments at the bottom of the article

At 12:05PM on 6 September 2011, jr wrote:

“this article is 100% bunk. the tv producer was correct. do you expect to live in a world that there is no differentiation between rich and poor? if so you are living in fantasy land. why would anyone strive to be successful if laziness would suffice? this is just more of the distribution of wealth bs as touted by the liberal democrats in power. it results in buying elections by paying the poor to stay unemployed and receive govt. assistance.”

As for me, I’m far more persuaded by a comment posted by Jay Zenner, a friend who blogs at Springtree Territory, when I first blogged about Queenan’s article:

“I guess there's more than one type of poverty. Besides financial poverty there's intellectual poverty and spiritual poverty. None of them are ennobling and all major religions and Rotary preach providing help to break the ‘vicious circle’ Queenan mentions...for all types of poverty”.

5 Ways To Improve Regulations But Only Demand Creates Jobs

Even Conservatives know that all of the talk about dismantling regulations, including the EPA’s, is just political opportunism and so do the associations and politicians using it as a “straw man” to rile small business owners, primarily to build membership and get votes.

Effective solutions are almost never “either/or.”

Savvy small business owners, such as thousands with whom I worked  during my now-concluded career in destination marketing, agree with economists who in a Wall Street Journal survey, agreed that the drag on job creation is a “dearth of demand.”

The same held true in an association survey of small businesses last month that ranked government regulation well below “poor sales” as the biggest problem.

Growing small businesses has always been about getting the cash register to ring, not regulations.

Clouding perspective, though, are millions of individuals now masquerading as so-called small businesses but as a scam to deduct expenses off their income taxes.

One, who recently crowed about paying for a new pick-up by deducting hundreds of miles racked up while commuting from his “second home” to where he works in the city of his primary residence.

It reminds me of a story about an FBI agent investigating illegal activity in a North Carolina county who conceded that it would be impossible to find a jury to convict because “people there don’t think it is illegal to rip off the Federal Government.”

I’m sure this sense of entitlement is, in part, behind the rationale of a proposal by moderate Republican presidential candidate Jon Huntsman Jr. to entirely strip away $400 billion in annual loopholes and deductions and corporation welfare.

As Conservative columnist David Brooks reminded Republican leaders last week:

“Job creation was dismal even in the seven years before the recession, when taxes were low and Republicans ran the regulatory agencies.

As economist Michael Spence has argued, nearly all of the job growth over the past 20 years has been in sectors where American workers don’t have to compete with workers overseas.

Meanwhile, middle-class wages have been stagnant for a generation. Inequality is rising, and society is stratifying. Americans are less likely to move in search of opportunity. Social mobility has been flat for decades, and American social mobility is no better than European social mobility.

Some of these problems are exacerbated by government regulations and could be eased if government pulled back. But most of them have nothing to do with government and are related to globalization, an aging society, cultural trends and the nature of technological change.”

President Obama is much more prescient than either extreme with his plan to dramatically streamline regulations announced week before last.  Countering what we’ve come to expect from the negativist echo chamber of '”cut, cut, cut” by Tea Party sycophants, Conservative Brooks reminded us all that:

“It will take an active government to reverse this stagnation — from prenatal and early childhood education straight up through adult technical training and investments in scientific and other research. If government is “inconsequential” in this sphere, then continued American decline is inevitable.”

From my personal experience, here are five ways to streamline and improve regulations but to create jobs, we need to stimulate demand:

• Prohibit involvement by special interests/lobbyists in the writing of the “rules” for implementing regulations.  Far more than regulators, these interests bully and contaminate the process with unnecessary self-serving technicalities, making the process far more onerous on others.

 

• Prohibit legislative bullying and interference with the executive branch.  The stupid things bureaucrats do are more often the result of brow-beating and intimidation and threats from powerful individual law makers.

 

• Build performance indicators and accountability into the “rules” so that regulations flex and adjust to achieve the best interests of both the general public and business and this includes speeding up the entire decision-making process.

 

• Empower public servants to make on-the-spot, common-sense and practical adjustments to the enforcement of regulations so they make sense and achieves the ultimate objective.

 

• Equip and motivate regulators with the ability to explain in easy-to-understand terms the purpose of the regulations.  Eliminate the obfuscation born from a “CYA” culture bred through special interest bullying and self-serving ridicule in the news media based on poor reporting.

The Infrastructure of Poverty

While poverty is a deep concern to me, I may often fit Joe Queenan’s description below whenever I try to blog about it:

“This is compassion by anecdote, as if warm feelings or righteous indignation ever helped anybody. The professionally compassionate, the industriously empathetic, never, ever get things right; the textures of poverty forever elude them.”

But Queenan, a humorist and critic, actually did grow up in poverty.  It is part of the most recent book of his that I’ve read entitled Closing Time, a memoir published last year.

The article he published this month in The Rotarian magazine, entitled The Inconvenient Truths About Poverty, is truly a must-read for everyone along the entire ideological spectrum.

Queenan is an equal opportunity critic and his brief article isn’t really just about the “industriously empathetic” such as myself.  His article is also about those who have hardened their hearts, to use a religious reference,” to those in poverty.

I haven’t been able to get the following description of poverty out of my head (don’t be tempted to skim it, please read the entire quote, then go back up, open the link and read his entire article):

“The philosophical infrastructure of poverty is rooted in an interlocking series of self-fulfilling prophecies. Poor people eat bad food, drink bad beverages, and ceaselessly make bad decisions, and these counterproductive activities are then used as an indictment of their moral character. Thus, the poor become the architects of their own destruction. Poverty is a dunce school where the old teach the young how to make bad decisions. Adults who have bad eating habits, adults who smoke, adults who have substance abuse problems teach young people how to acquire these bad habits. They lead by example. The acquired bad habits are then used as an indictment of the poor children when they themselves come of age.”

It’s primary campaign season and we can all identify with Queenan’s comment that “every time you think you have heard the dumbest thing you are ever going to hear in your lifetime, somebody steps right up to the plate and hits the next pitch 400 feet farther than you’ve ever seen anyone hit it before. A lot of these people work in television.”

Conservative, moderate or liberal, you’ll be well-served to open the link to this article and read it.  For the most part, it seems that the vast majority of elected decision-makers and policy-makers have little or no first-hand experience with poverty.

Many on the right seem blind and insensitive and even idiotic when it comes to solutions to poverty.  Many on the left, ironically, seem much too conservative and wedded to solutions that no longer seem to be working.

As an Independent, I listen carefully to thoughtful voices on the left and many on the right such as David Brooks who wrote last week that solutions “cannot be done by government alone, but they can’t be done without leadership from government.”  He further noted that the “current Republican policy of negativism, cut, cut, cut is not enough.”

To me, the American way is to once again embrace, with vigor, F.D.R.’s vow of “bold, persistent experimentation…to take a method and try it: If it fails, admit it frankly and try another but above all, try something.”

Everyone concerned about poverty would be well served to seek out the perspective of people such as Joe Queenan who have actually been poor even if the truths are inconvenient and run counter to many commonly-held beliefs.

Hostage To “A Faction With No Sense of Moral Decency”

I learn or unlearn and relearn best by looking at an issue through the lens of someone opposed to that issue.  I’m sure my co-workers and friends always found it annoying.

I picked up the habit around the dinner table growing up.  Usually we were asked not only about our day but about something new we learned.  If we sounded too convinced, we were usually tested to see if there were any alternative viewpoints.

That may be the reason I always had research ready to justify decisions when I was first given executive responsibility in my early 20s.  I already understood that my opinions alone were not sufficient to steward the resources of others.

Playing a game of partisan “chicken” over the national debt limit isn’t new in my lifetime, but in the past when either party opposed it, you always had a sense they knew what was best for the country.

My favorite resource on the consequences of not raising the debt limit comes from an excellent explanation found by clicking on Third Way and illustrated here for non-readers or folks who always use the excuse that they don’t have enough time.

But yesterday conservative columnist David Brooks in a piece entitled The Mother of All No-Brainers put a spotlight on the faction he believes is holding the Republican Party and the nation hostage. He begins by crediting his party for negotiating to erase the debt, most of which was actually accrued on their watch as I’ve seen documented.

Then he zeroes in on the tiny but vocal faction that is placing such a huge “uncertainty tax” on the nation both in the Congress and in state legislatures across the country:

• “The members of this movement do not accept the logic of compromise, no matter how sweet the terms…

 

• The members of this movement do not accept the legitimacy of scholars and intellectual authorities…

 

• The members of this movement have no sense of moral decency.  A nation makes a sacred pledge to pay the money back when it borrows money.  But the members of this movement talk blandly of default and are willing to stain their nation’s honor.

 

• The members of this movement have no economic theory worthy of a name…

 

• But to members of this movement, tax levels are everything.  Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation…

He goes on to speak about independent voters such as me, in particular I believe he means post-moderns:

“If the debt ceiling talks fail, independent voters will see that Democrats were willing to compromise but Republicans were not.  If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused the default.  They will conclude that Republicans are not fit to govern.

And they will be right.”

The Moral From Two True Stories Of Need

I heard two accounts last week that could be an advertisement for a relatively new book The Social Animal: The Hidden Sources of Love, Character, and Achievement by David Brooks which I’m already re-reading for the third time.

Recently a friend of mind struck up a conversation with a newcomer she met in Durham’s new, award-winning Durham Station Transportation Center only to learn that this community had the dubious honor of being chosen from among several on the East Coast by this newcomer only because it afforded better subsidized housing and welfare benefits.

That’s, of course, not the intent of safety nets and examples such as this person not only fuel insensitivity to and stereotypes of the poor that are held by far more than just Tea Partiers but they can inure those of more fortunate means to the incredible stress currently felt by low income households as benchmarked in a poll released last week by the Pew Center.

Then later that same day, another friend told me the story of a young woman who just graduated from high school even though she has grown up in poverty far deeper and more pervasive than many of the 1 in 4 children who are now living in that condition.

Years ago she took the initiative to master technical skills so she could work her way through secondary school. At the time I heard her story she was living with another of my friends after being kicked out at the home of a sibling where she’d been since, for a variety of reasons, neither parent had ever been capable of fulfilling their legal obligations to this kid.

Still she fought through the adversity to graduate and earn a scholarship to college this fall only to discover she couldn’t make the deposit necessary for housing because the place where she worked had suddenly closed without warning or payment of her earned wages, leaving only a “For Rent” sign in the window. Now she has overcome that obstacle too, just as she has far too many others in a life so young.

Years ago, of her own volition, she reached out and built a long-distance relationship with a disabled grandparent in another part of the state who hadn’t been in her life previously. She has now chosen to go to a college in a school in that city so can go over and help her sightless grandmother out when needed.

While far too many young people her age and younger seem overindulged, bored and unable to weather simple setbacks or disappointments or homesickness or peer pressure, this kid has already shown incredible grit and determination and willpower and resolve while going without the most basic support system.

“Grit,” the perseverance and passion for long-term goals such as hers is proven a far greater predictor of success in life than IQ or prodigy-level gifts according to study published jointly by researchers at the University of Pennsylvania, the University of Michigan and The United States Military Academy, West Point.

While this young woman has benefited over the last few weeks from the voluntary kindness of a stranger, whom I’m sure is equally impressed by her character and drive, she never plays the victim or shows an attitude or exhibits a sense of entitlement.

As one of the 12,500 young people, on average, who turn old enough each day this year to vote, she has already mastered the Character Tool Kit and she is living testament to Dr. Shelby Steele’s twenty-year classic The Content Of Our Character, published before she was born. Before her first day of college, she is already qualified to teach at The Kenan Institute for Ethics, a “think and do” tank for leadership here in Durham at Duke University.

Her example illustrates why we need to be very careful to only trim fraud and waste away from programs designed to give a hand up to social mobility for people like her and as Brooks pleaded in a February column in the New York Times, “cut wisely not stupidly.”

What true believer in the “American Dream” would hesitate even a second to voluntarily raise the tax on their income to help this young lady"?

Recent polls show that the percentage of people with libertarian views is on the rise but what they don’t realize and Brooks, a Conservative, so ably notes is that the growth of government is a result of flawed “individualist agendas” by both the right and the left when he writes that:

“these two individualist revolutions [‘60s on the left and ‘80s on the right] did not create loose free societies. They produced atomized societies in which the state grows in an attempt to fill the gaps created by social disintegration…”

Given these two examples, I choose to focus on the young, privilege-less girl as the poster child for why government must continue to fulfill its essential duty to promote and foster social mobility. It is as imperative to America’s survival as resolving the credit crisis.

This is why it is imperative that Republican leaders re-engage with bipartisanship. As Brooks noted in a debate at the American Enterprise Institute in March:

“…my problem with the Republican Party right now…is that if you offered them 80-20, they’d say no. If you offered them 90-10 they’d say no. If you offered them 99-1 they’d say no. And that’s because we’ve [Republicans]substituted governance for brokerism, for rigidity that Ronald Reagan didn’t have.

…this rigidity comes from this polarizing world view that they’re a bunch of socialists over there…I’ve spent a lot of time with the president [President Obama]…a lot of time with the people around him. They’re liberals!…But they are not idiots.

And they’re not Europeans, and they don’t want to be a European welfare state…It’s American liberalism, and it’s not inflexible.”

A Proposal To Eliminate Poverty Without Spending One Dime More Than We Do Now

“Poverty is a consequence” was the opening statement at a luncheon presentation yesterday by Dr. Michael Munger, a former libertarian candidate for Governor of North Carolina and director of Duke University’s joint Philosophy, Politics and Economics Program with the University of North Carolina.

Munger’s speech was the perfect bookend to one by Gene Nichol last fall at the same weekly luncheon.

Americans ranked “Helping poor people” the second highest area where they believe we need more government spending and Dr. Munger presented some interesting information that may explain why, in the same opinion poll, Americans also want less spent on welfare:

• In constant 2007 dollars those with the lowest 20% in terms of income in this country today have double the income they had when I was born in 1948.

• The line currently below which people are considered poor is $11,200. What some term our “welfare state” current spends $16,480 per poor person. Of course a good chunk of that feeds the bureaucracy and never makes it to poor people.

• The $550 billion the US government spends on means-tested programs to reduce poverty (excluding Medicaid spending for nursing home residents) is enough, if distributed quarterly each year directly to poor people, to eliminate poverty altogether.

• Currently aid distribution through various programs collectively reduces the poverty rate less than 1% while perpetuating a huge bureaucracy, lobbyists and political capital.

Dr. Munger believes we could do more, much more and touched on some solutions. He noted that part of the problem is that capitalism is arbitrary and cited some including what trickle-down-guru David Stockman terms today’s disemboweled, off-shored economy on Main Street.

He seems to agree with George Washington’s farewell-speech caution (co-authored by Alexander Hamilton) about the dangers inherent in self-perpetuating political parties given as he departed from office after his second term as the nation’s first President.

Dr. Munger is a proponent of tax reform to close loopholes. He seemed to agree that poverty is a problem of wealth and distribution, not rich vs. poor. He pointed out examples showing that the rich had merely worked the political system to their advantage and he was much tougher on elected officials for playing the politics that permits it.

Dr. Munger touched on our collective reluctance as a society to “trust” poor people to do the right thing if the funds to eliminate poverty were distributed directly.

I couldn’t help but think, as he concluded, that Dr. Munger may agree with an assessment David Brooks wrote so eloquently in The Social Animal: The Hidden Sources of Love, Character, and Achievement, published just two months ago:

“…freedom should not be the ultimate end of politics. The ultimate focus of political activity is the character of the society. Political, religious, and social institutions influence the unconscious choice architecture undergirding behavior. They can create settings that nurture virtuous choices or they can create settings that undermine them…

…You can pump money into poor areas, but without cultures that foster self-control, you won’t get social mobility….Everything came down to character, and that meant everything came down to relationships, because relationships are the seedbeds of character.

The reason life and politics are so hard is that relationships are the most important, but also the most difficult, things to understand….character and culture really shape behavior, and… government could, in limited ways shape culture and character.

…government should not run people’s lives. That only weakens the responsibility and virtue of the citizens. But government could influence the setting in which lives are lived. Government could, to some extent, nurture settings that serve as nurseries for fraternal relationships. It could influence the spirit of the citizenry…

…The social fabric is based on the idea that effort leads to reward. But very often, government rewards people who have not put in the effort. It does this with good intentions…and it does it with venal intentions…By separating effort from reward, they pollute the atmosphere. They send the message the system is rigged and society is corrupt.

…Aristotle wrote that legislators habituate citizens. Whether they mean to or not, legislators encourage certain ways of living and discourage other ways.

Statecraft is inevitably soulcraft.”

Characteristics Of A Good CEO

Even having been one for 94% of the nearly four-decade career I concluded 15 months ago, I’m still learning what makes a good chief executive.

Much more interesting and relevant, in my opinion, than surveys of what CEOs themselves think are studies that correlate CEO characteristics and successful organizations.

A book published last month by David Brooks gives a brief synopsis of three studies beginning with the 2001 best-selling study Good To Great which found that the best CEO’s were “not flamboyant visionaries,” according to Brooks, but “humble, self-effacing, diligent, and resolute souls who found one thing they were really good at and did it over and over again….they demanded discipline and efficiency.”

Brooks also cites two other studies.

One is a 47-page 2009 report entitled “Which CEO Characteristics Matter,” by Dr. Steven Neil Kaplan at the University of Chicago Booth School of Business and two other researchers which Brooks notes, “found that traits that correlated most powerfully with success were attention to detail, persistence, efficiency, analytical thoroughness and the ability to work long hours.”

But I notice the report also cites that an “important caveat is that different types of CEOs may endogenously match with different types of companies. In this case, the resulting performance may reflect company differences rather than a causal impact of CEO types.”

This was why a former counterpart in a nearby community and I would joke that I wouldn’t last five minutes as the DMO exec in his community and he wouldn’t last ten minutes in mine. In community/destination marketing at least, it is more critical that a CEO meshes well with the community and organizational culture.

Another 2001 study entitled Personality And Performance by Professor Murray Barrick now head of the Mays Business School Management Department at Texas A & M and two other researchers, according to Brooks, “surveyed a century’s worth of research into business leadership. They too found that extroversion, agreeableness, and openness to new experience did not correlate well with CEO success.”

Brooks continues that from the report “what mattered was emotional stability, conscientiousness – being dependable, making plans and following through.”

Brooks also notes that “these sorts of dogged but diffident traits do not correlate well with education levels. CEOs with law or MBA degrees do not perform better than CEOs with college degrees. Nor do they correlate with compensation packages, nor fame and recognition.”

So for all the folks who strut around annual conferences to impress job search consultants in hopes of climbing the ladder of success, it appears you’re better advised after all to focus on the continuing education and getting your organization accredited while keeping an eye out for communities with the right fit.

The rest will take care of itself.

Reweaving The Source Of My Motivation!

I’m really not certain now what motivated me to go to college. “Memory doesn’t actually retrieve information. It reweaves it,” according to a new book I’m almost finished reading by David Brooks.

I remember my parents, one of whom finished high school and the other who dropped out at age 16, being insistent that I go to college. As did both sets of grandparents, none of whom had gone to college and only one of whom graduated from high school.

While I was certainly surrounded by supportive influences, I suspect from statistics that Brooks cites that applying household income averages today to my family back then, I’d have only a 1 in 10 chance of graduating by age 24.

But I did and at a time (1972) when there was little or no premium to your income if you did. But today is different.

Brooks cites statistics that a family with a graduate degree today makes an average of $93,000, a college degree $75,000, a High School diploma $42,000 and a drop-out $28,000.

It isn’t all about money, though. According to Brooks, researchers in a Minnesota study followed 180 children and their families over three decades. They were able with 77% accuracy to predict if a child would drop out of high school by 42 months of age based on social and emotional factors.

If you want to read a fascinating book about those social and emotional factors, read The Social Animal – The Hidden Sources of Love, Character, and Achievement by David Brooks.

It reminded me why my parents were emphatic that I not only attend college but graduate but it wasn’t all about income.

Having never been there themselves, my parents and grandparents saw college as a means to broaden my horizons, expose me to many different kinds of people and cultures, teach me to critically think, expose me to ideas and innovation and an architecture for making ethical decisions, deepen my compassion and empathy, hone my self-discipline and work ethic and fuel my ambition.

It also fostered my love of learning and exploration that is now making retirement so deliciously rich and rewarding.

Obsession With Bumper-Sticker Problem Solving

A decade ago a friend, who happens to be a member of the Republican Party and at the time an elected official, joked with me after some of his peers blew off some data-based conclusions and proposals.

“Too many of us Republicans,” he told me, “are obsessed with bumper-sticker problems that lead to simplistic bumper-sticker solutions.”

He went on to clarify that he wasn’t literally referring to bumper stickers. He was using the term in reference to how many people tend to short-hand complicated issues around a simplistic anecdote.

He may have been referring to the apparent anger-fix many seem to get today by demonizing terms such as public sector pensions or collective bargaining, new fence requirements for swimming pools, tenure or EPA standards.

I think that’s what Conservative New York Times columnist David Brooks meant when he cautioned lawmakers two weeks ago to budget cut wisely not stupidly and to “never cut without evaluation.” Well worth a read if you missed it.

Washington State Democratic governor’s approach of sitting down with her unions to identify cuts seems to follow that advice, while the Wisconsin Republican governor’s union-busting approach appears to do little to erase his state’s budget deficit.

Similar cuts to the Environmental Agency seem vindictive and in Brooks’ words “stupid.”

“Teacher tenure” is another bumper sticker currently being used to focus anger and finger-pointing even though the teacher’s union has called for better evaluations and a return to the original purpose of tenure.

I just now got around to reading the results of the 2010 report based on responses by 40,000 of America’s elementary, middle and high school teachers to a blind questionnaire on how best to improve student achievement. Wow, talk about an “evaluation” lawmakers should read.

Imagine that: ask teachers how to improve schools, what a novel concept! As you might expect, it was funded in partnership with the Bill & Melinda Gates Foundation (hats off to Melinda’s alma mater for just bringing a record 19th ACC Tournament Championship back to Durham, as victors over rival UNC-Chapel Hill 75 to 58 and being positioned as #1 seed for the NCAA tournament.)

The results of the survey also linked above are loaded with graphics to aid non-readers, which unfortunately describes many are who are obsessed with bumper-sticker problems and solutions.

Click on the infographic shown earlier in this blog that illustrates a handful of the results or click here. How’s that for a “bumper-sticker” summary?