The global financial system teeters on the edge of collapse because European politicians refused to tell citizens of their crumbling economies that they could no longer guarantee them “la dolce vita” — the sweet life — they had come to expect.
Top executives at Olympus, one of Japan’s leading companies, resign in shame after acknowledging that for nearly 20 years they used a complex accounting scheme to hide billions of dollars in speculative trading losses.
A revered coach and a respected president at Penn State are fired because they were more concerned about protecting their own reputations, and that of their school, than protecting young boys from a sexual predator.
And a former governor, senator and head of Goldman Sachs resigns as chief executive of MF Global after misappropriating $600 million in client funds and bankrupting the broker-dealer with overleveraged bets on European sovereign bonds.
Welcome to this week’s exciting episode of “Failures in Leadership.”
Leadership is difficult to define but easy to notice when it’s gone missing. Surely any definition of leadership includes the instinct for seeing the big picture, the ability to get people to acknowledge unpleasant reality, and the willingness to take the personal risks necessary to secure the common good. By that definition, the world would appear to be suffering from a profound leadership deficit.
In hindsight, it seems perfectly obvious what should have been done in each of these instances. Everyone knows it’s crazy to play Russian roulette with the nation’s economy or a company, university or industry. Except that they did.
Why?
“At the time, it seemed like we didn’t have a choice,” says the Demi Moore character in “Margin Call,” a new movie about the recent financial crisis, as she recalled her firm’s fateful decision to disregard warnings about a mortgage market crash.
“It always does,” replies the Stanley Tucci character.
I’m guessing that’s how it seemed at the time to the political leaders of Greece and Italy, who couldn’t imagine a world where public employees couldn’t retire at 55. Or the top brass at Olympus, who couldn’t imagine the shame of reporting huge trading losses. Or coach Joe Paterno, who couldn’t imagine allowing a moral stain on his stellar record. Or Jon Corzine, who couldn’t imagine clients would mind his using their money for just a short while to keep the firm afloat. They each had a choice, and they made the wrong one.
To politicians in Washington, it now seems they have no choice but to stick with their party as one more blue-ribbon panel — the congressional “supercommittee” — tries to come up with a bipartisan compromise to rein in the runaway federal budget deficit.
For reasons that have mostly to do with ideology and political gamesmanship rather than economics, Republicans have been insisting on a plan that relies solely on cutting spending on domestic programs and entitlements. They offer Americans the promise of growing our way out of the economic hole we now find ourselves in simply by repealing regulations and lavishing more tax cuts on corporations and those heroic “job creators” in the million-dollar bracket.
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