The Steering Committees

I first saw this joke in the nineties:

A Japanese company and a North American company decided to have a canoe race on the St. Lawrence River. Both teams practiced long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile. The North Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.

The senior management of the American company investigated the outcome. They found the Japanese had 8 people rowing and 1 person steering, while the North American team had 8 people steering and 1 person rowing. So the American company management hired a consulting company and paid them a large amount of money to recommend a solution that would avoid a defeat next time.

The consultants advised that fewer people should be steering the boat, while more people should be rowing.

To prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder.

It was called the “Rowing Team Quality First Program”, with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices, and bonuses.

The next year the Japanese won by two miles. Humiliated, the North American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments in new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year’s racing team was outsourced to India.

This joke became popular because so many people in so many companies could relate to it. Its popularity is evidence of how accessible its themes were. So think about stacking up all these companies, and you have an economy. The people steering the boat are typically middle-class people. In real life they sit at desks in an air-conditioned office building. In real life, the person rowing the boat is often hourly and may have to punch a time clock.

There are many middle-class jobs that are more about steering than rowing:

• The gatekeepers are the people who can say no, but they can’t say yes — at least not the final yes. If you want to create value, you have to get past the gatekeepers to do it. The attractiveness of being a gatekeeper is that you don’t have any risk as long as you say no. Therefore, gatekeepers only open the gate if there is no way they can be second-guessed.
• The auditors come around to tell you how you did it wrong. Auditors do not produce any value themselves; their role is to find fault in what others do. I’m not talking about auditors who work for accounting firms and who inspect the financials of publicly traded companies; they provide essential transparency for investors. I am discussing people who have built jobs out of setting standards without ever having to deliver value in conformance to those standards themselves. They have wired themselves into situations where others are accountable to them but they are accountable to no one. Great work if you can get it.
• The expeditors appear to be very necessary, because they are overcoming all this friction in order to help the actual doers get things done. The expeditors know how to get past the gatekeepers and satisfy the auditors so that the people actually producing and selling can be left in peace to do so. Many expeditors are very good at what they do, and in the current climate little could get done without them. Unfortunately, they have had to specialize in these very unnecessary skills at the expense of skills for delivering value directly.

Much of what we know today as middle-class Corporate America consists of gatekeepers and auditors obstructing the delivery of value and expeditors overcoming the obstruction in order to permit any value to be delivered. But as there are more people working relative to the overall wealth being created in the American economy, there is not enough wealth to sustain the middle class. Wages are labor’s share of wealth production; with less production, there is less to share. This is the undiscussable fact in the decline of the middle class.

The evidence of decline is certainly there, and easily found:

http://www.dailyfinance.com/2013/02/06/middle-class-decline-infographic/

http://www.cnbc.com/id/100485257

http://www.dailyfinance.com/2012/09/13/the-real-source-of-the-middle-class-money-woes/

One would never recognize this problem when looking at gross domestic product (GDP). This is because it is actually a measure of spending, with the assumption that corresponding value is being created. One only has to walk around workplaces that are described by the allegory above to realize that assumption is no longer valid. The gatekeepers and the auditors get paid; those payments are indistinguishable from payments to productive people when totaling up GDP. We are actually flying blind in terms of how much real wealth our economy creates.

I recall an incident when I worked in a manufacturing facility. I was in a meeting, sitting with eight other people in an air-conditioned conference room, where there was nothing settled, nothing finalized and no actions identified. On the other side of the wall was the factory floor, where hourly employees who were tethered to their workstations until break were producing the wealth to pay for all this. I wanted to go out to the floor and apologize to these people for having participated in this waste that their efforts were carrying.

One has to feel sorry for the expeditors, because they are the first people to find themselves without chairs when the music stops. Upper management thinks that they shouldn’t be necessary, and they have a point. But, having tolerated all the other people who are in the value-prevention game, the expeditors have been made essential. When expeditors get laid off, they are usually blindsided; they rightly thought they were vital to “getting anything done around here.”

The middle-class bubble is going to pop, because all these middle-class jobs are not creating enough wealth to perpetuate themselves. We are already approaching the endgame.

Uncompromising Republicans

The Republican party is in the midst of some overdue self-examination, trying to decide what it wants to be about. On May 26, former Senator Bob Dole gave his opinions on Fox News. He had some valid points:

DOLE: I know, but it’s going to have to work or the country is going to suffer. And the American people, I think, are partly at fault. You take a survey and they say cut spending, 83 percent, maybe, or whatever. But if you cut something they have an interest in, they’re over you like a wet blanket.

They surely don’t want to cut Medicare or Social Security —

CHRIS WALLACE: They want to cut somebody else’s program?

DOLE: Yes. If you leave me — exempt me, I’m — I’m all for you.

Both parties have been pandering to that sentiment, but the Republicans have to take responsibility for their own part in it.

However, Dole does not offer a workable way forward:

I think they ought to put a sign on the national committee doors that says closed for repairs until New Year’s Day next year and spend that time going over ideas and positive agendas.

This gives us some insight into the mental models of a man who quit the senate in 1996 to focus on running one of the most tepid, colorless, uninspiring presidential campaigns of all time. The Republican party doesn’t have the rest of the year to shut down, go into its collective head and find itself. There are political decisions being made today and tomorrow. It would be irresponsible to vacate and take no position while the party works out its process.

Then came the softball:

WALLACE: You describe the GOP of your generation as Eisenhower Republicans, moderate Republicans.

Could people like Bob Dole, even Ronald Reagan, could you make it in today’s Republican Party?

DOLE: I doubt it. And I — Reagan wouldn’t have made it. Certainly Nixon couldn’t have made it, because he had ideas and, we might have made it, but I doubt it. I mean —

WALLACE: Too moderate? Too willing to compromise?

DOLE: I just consider myself a Republican, none of this hyphenated stuff. I was a mainstream conservative Republican, and most people are in that category.

Let’s take Nixon first. Nixon was a huge disappointment for conservatives. He created the EPA, implemented wage and price controls and provided public policy continuity from Lyndon Johnson’s Great Society. His one great insight was bridge building to the People’s Republic of China.

Reagan is another subject. Prior to 1980, conservatives were so marginalized that it was easy to keep a coalition together. Reagan took conservatism to the next level, but in doing so he also made it harder to keep the coalition running. As one faction begins to see its way to realizing its agenda, the other factions who object to these goals rebel against it and the coalition begins to fray.

A more honest moment occurred later in the interview:

Newt [Gingrich] is a brilliant in many respects. He’s the kind of a guy that can lead the revolution, but he can’t lead after he succeeds. It was always what he did, what Newt did.

And I was a tax collector for the welfare state. Well, I don’t have any quarrel with him now.

Because that is the exact back-of-the-business-card description of what Bob Dole was: a tax collector for the welfare state.

The Republican Coalition

The Republican Party currently has these principal factions:

• Right-corporatists, heirs of Nixon, want to continue the realization of the corporate state. Their differences from the left-corporatists in the democratic party are principally the goals, the people doing the administration and the groups who get to benefit.
• Right-libertarians, who are seeking social liberty, a laissez-faire economy and a non-interventionist foreign policy. Their foremost representative has been Ron Paul.
• Right-evangelicals, whose politics are informed by the moral principals they obtained in their understanding of their faith. They want society organized along the lines of these principles. Their focus tends to be on social issues above economic issues.
• The Wets, like the Tory Wets of 1980s Britain, just want to be in office and fear that taking any stand will alienate voters and marginalize them. Bob Dole is a Wet.

Up to now, the Wets have been in control; this makes sense, as they have the best political instincts. Partnering mostly with Right-corporatists, they have been setting the Republican agenda.

In a 2006 article, Amy Sullivan wrote:

Like an abusive boyfriend, Republicans keep moderate evangelicals in the coalition by alternating between painting their options as bleak and wooing them with sweet talk. You can’t leave me-where are you going to go? To them? They think you’re stupid, they hate religion. Besides, you know I love you-I’m a compassionate conservative. The tactic works as long as evangelicals don’t call the GOP’s bluff and as long as Democrats are viewed as hostile to religion.
“Why Evangelicals Are Bolting the GOP”  (http://www.beliefnet.com/News/Politics/2006/03/Why-Evangelicals-Are-Bolting-The-GOP.aspx)

Republicans keep libertarians in the coalition with the same “where are you going to go?” logic. The Democrats are pinkos, they think you’re evil, they hate liberty, they would have you getting permission from a government agency to go to the bathroom. It depends on Democrats being viewed as hostile to liberty and personal responsibility.

The problem is that the Republicans have become Democrats Lite, with 65% less distribution of patronage. We don’t need this. If we like what the Democrats are about, we can vote for actual Democrats. The current choice is no choice at all.

However, any attempt to transcend this situation is politically problematic. The success of any of the coalition partners will frighten the others:

• The right-corporatist agenda alienates the libertarians, as it is the antithesis of individual liberty. The evangelicals distrust the right-corporatists, knowing the latter will embrace any social change without question provided they can make money off it.
• The libertarians threaten the right-corporatists with disruption of their arrangements for keeping order and allowing those on the inside to stay on the inside. The evangelicals do not agree with the libertarians that people should be able to live their lives as they please.
• The evangelical agenda, where personal freedom is restricted by religious principles, is anathema to the libertarians. The right-corporatists privately see the evangelicals as crackpots who threaten to destabilize a perfectly good scheme for making money with their social issue crusades.

This is further complicated by the political reality that, in the United States, there really only is room for two national parties. The Democrats have been there forever; they are the party of Jefferson. The Federalists were the party of Adams, Hamilton and John Marshall; they were off the national stage by 1820.

The Whig party, officially organized in 1833, only won two presidential elections. The party was strong in congress, where it was led by Daniel Webster and Henry Clay. Abraham Lincoln was a Whig when he was elected to the House of Representatives.

The Republican Party was founded by former Whigs along with abolitionists and proponents of economic modernization. The first known instance of self-identification occurred in a meeting in Ripon, Wisconsin in 1854. Clay and Webster had died in 1852, and there was no one to replace them.

The historical evidence shows that there has been no new national party emerging while the party it was to replace was an effective electoral force. In order for something better to come along, the Republican Party would have to die first.

The Formation of the Republican Party

As the issue of slavery grew into a crisis after the Mexican War, the Whigs attempted a series of compromises to defuse the issue. However, the issue would not defuse and was not amenable to compromise. Slavery either would exist or it would not. In their own ways, both Abraham Lincoln and Chief Justice Roger Taney recognized this. In 1857, Lincoln delivered this famous speech:

We are now far into the fifth year since a policy was initiated with the avowed object and confident promise of putting an end to slavery agitation. Under the operation of that policy, that agitation has not only not ceased, but has constantly augmented. In my opinion, it will not cease until a crisis shall have been reached and passed. “A house divided against itself cannot stand.” I believe this government cannot endure permanently half slave and half free. I do not expect the Union to be dissolved; I do not expect the house to fall; but I do expect it will cease to be divided. It will become all one thing, or all the other. Either the opponents of slavery will arrest the further spread of it, and place it where the public mind shall rest in the belief that it is in the course of ultimate extinction, or its advocates will push it forward till it shall become alike lawful in all the States, old as well as new, North as well as South.

Earlier the same year, coming at the issue from the opposite direction, Chief Justice Taney had written the majority opinion in Dred Scott v. John F. A. Sandford, in which he found that Congress did not have the authority to ban slavery in any new territory. At a stroke, all the compromises were voided.

The Whig party unraveled through the 1850s. The party ceased to have a program worth working for. It had no answers to a crisis that could not be deferred through compromise.

The Republican Party expanded into the vacuum created by the implosion of the Whigs, taking control of many northern states by 1858. The Republicans were energetic and they were about something. They had principles that they stood for. They were uncompromising. They were prepared to alienate voters rather than abandon their principles. The measure of the alienation was that Lincoln in 1860 did not receive a single electoral vote in fifteen southern states. The crisis had escalated beyond the means of politics; only war could resolve it.

The Proper Use of Compromise

I do not believe that we are at such a crisis that only violence can resolve it. However, we are coming to a crossroads. The repeated attempts to kick the can down the street are buying increasingly less time.

There is something wrong with the way in which we make our decisions. The Government listen too much to the pollsters and the party managers. The trouble is that they are not even very good at politics, and they are entering too much into policy decisions. As a result, there is too much short-termism, too much reacting to events, and not enough shaping of events. We give the impression of being in office but not in power. Far too many important decisions are made for 36 hours’ publicity.
— Norman Lamont, 1993, after resigning as Chancellor of the Exchequer

Compromise is appropriate in times of prosperity and accord. Compromise allows everyone to get along under such conditions. When you’re winning, you don’t pin your opponents to the wall, lest they remember next time when they’re winning. You leave something on the table. Properly employed, compromise prevents the development of an endless series of vendettas.

Compromise is not possible between two opposed views of human nature or what is good for the country. Either wealth creation matters or it can be taken for granted and we should concentrate on its distribution. Either rights belong to individuals, or rights belong to groups and individuals only gain access to them through membership. Either human societies are imperfect as a consequence of the human condition, and we should minimize the scope of people to make trouble for others, or human societies are perfectable and we should strive to perfect ours. There is no possibility of compromise between these views.

The question is the mastery between two wholly incompatible views of right or wrong, of humanity, of civilization and of law. It does not admit of accommodation. It can be settled only by the defeat of one principle or of the other.
— British newspaper editorial, 1916

Individuals either are personally responsible for their choices or they are not. Society either can legitimately impose standards on the behavior of its members or it cannot. Economic decisions either have real consequences or they do not. The means to satisfy all human wants either is finite or it is not.

In a time of crisis, there is no reason to follow people who just want to be in office and don’t stand for anything. We want people who really believe in their principles and are willing to risk losing office for them.

Compromise between opposing principles is not possible or desirable. If you compromise your principles, you end up, well, compromised. If you don’t stand for something, you’ll fall for anything.