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A Word About Accountability and Leadership

Making Chris Cox Walk The Plank For Wall Street's Sins

A lot of conservatives are up in arms about John McCain’s call for the firing of Chris Cox as SEC Chairman due to the collapse of numerous Wall Street firms on his watch. There is a more than fair argument against McCain’s position: that Cox is a smart, capable conservative and expert in the area who hasn’t really done anything wrong, or at least hadn’t until the recent move against short sellers (I don’t buy that Cox is above criticism, but I don’t think this mess is in any way his fault). But there is also a case to be made for the emerging McCain leadership style. As McCain explained today:

Dwight David Eisenhower, when he was commander and he was in charge of the largest military operation in history, the invasion of Normandy. He went to his quarters the night before the invasion and wrote out two letters. One of them sent a letter of congratulation, a messgae of congratulations to the brave Americans who landed in Normandy and made the most successful invasion and partly brought about the beginning of the end of World War II. The other letter he wrote out was his resignation from the United States army, taking full responsibility for the failure of that invasion.

My friends that kind of accountability and responsibility is missing in Washington today and that’s why I believe the chairman of the SEC should resign.

That’s McCain’s view in a nutshell: you produce results, or you step aside, regardless of how well you performed your duties. You own your watch. It’s a decidedly military outlook, as befits a man who spent so many years in the Navy. It’s perhaps an odd way for McCain to approach leadership – in his book Faith of My Fathers, McCain movingly recounts the bitterness he inherited over how his grandfather was scapegoated unfairly by Admiral Halsey for a mistake Halsey himself made in steering the fleet too close to a storm, mistreatment that McCain ascribes as a possible cause for the elder Admiral McCain’s fatal heart attack on his return from the war.

I don’t, personally, think that this unforgiving, only-results-matter management style is the best possible way to run an organization in terms of motivating people, and neither is it really a good or fair way to treat subordinates, but it’s one well-established leadership style, and it’s been successful for plenty of people in business, the military, politics and sports. Certainly it’s a sharp contrast to President Bush; while Bush has sacked a lot of people (including Harvey Pitt, his first SEC Chairman who was also just in the wrong place at the wrong time), he’s nonetheless frequently found himself in trouble for leaving loyal but incompetent subordinates in place too long after they became obvious political liabilities. McCain is sending a message: the likes of Mike Brown, Alberto Gonzales and Scott McClellan will not be left in their jobs in his White House. Loyalty will give way to accountability.

On a purely political level, in the real world of politics, there’s a case to be made about being unsentimental about letting people go when they represent a serious political liability. I wouldn’t blame Bush in the least, for example, if he sacked Cox regardless of the merits of his job performance. Political leaders fight for a cause, and that cause is bigger than any one man. A politician who errs on the side of scapegoating people who through no fault of their own preside over disasters is going to do better in the long run than one who fights till the last dog dies for friends he can no longer afford. It’s an ugly business but it must be played to win in the real world.

This is a management style that suits McCain, an old man who is likely to serve only one term and already has an impressive collection of enemies. It’s a style that’s also well-suited to McCain’s running mate, Gov. Sarah Palin. One of the recurring themes in Palin’s various jobs is that she fires a lot of people – people who don’t agree with her policy goals, people who don’t follow her orders, people who oppose her in public, people who are too close to corrupt interests or political foes. This is, again, a good way to make enemies who compile vendettas against you – it was her firing of an agency head who was publicly insubordinate that led to the ‘Tasergate’ investigation headed by a representative of the Obama campaign – but removing the people who are not 100% with you is the one best way to impose your will on an organization, a task that’s famously difficult in large public bureaucracies. That was how Rudy Giuliani ran New York, and why he delivered results as an agent of change. A McCain-Palin Administration may not be the friendliest workplace, but the one thing it won’t do is let the grass grown under its feet as far as holding subordinates accountable.

COMMENTS

  • Doc_Holliday

    I can’t ad much to your piece but I can make a few comments. I think the worst part of the McCain call out was the timing, I think on Wall Street it looked like he panicked. And of course Obama, who was rooting for stocks to fall, has picked up this meme.

    The other thing is McCain needs to show a little tact. He seems to enjoy calling out Bush administration personnel to be fired publicly, ala Rummy. This sort of reminds me of how Eliot Spitzer rose through the ranks on the scalps of others.

    The difference between McCain and Spitzer (who had designs on the presidency), is that Spitzer tried to ruin people, where McCain only has called for them to be fired. I am sure Rummy is doing better financially today than he was in government, and the same would hold true for Cox if he was let go.

    I am all for accountability, and sometimes political appointees need to fall on their sword for the administration. But McCain does not want to look like he is going off half cocked, and he could use a little bit of tact and try a few back channels from time to time.

  • Moriah

    And you are very correct, the accountability issue is something that McCain has been very consistent on. One point I noticed with the speech seemed to be that he suggested the role model for accountability is someone who praises the entire operation (the individual soldiers, for example) for the successes, but takes personal responsibility for the failures that occur under their watch. (Instead of the reverse, taking personal responsibility for the successes while blaming the failures on underlings.)

    I do have a question that’s slightly off-topic. My understanding of most people’s opinions of Scott McClellan were that he messed up on loyalty, not accountability.

    If you don’t mind discussing it, I’d be interested to see your opinion. Is it because he had to be asked to resign when it came out that he had relayed a lie to the press?

  • cdm

    … and on other fact lends me to believe McCain may be right on Cox: the position is autonomous, which brings with it the rare privilege in Washington of operation outside the interference of Congress.

    The responsibility that comes with that is to make sure the ship doesn’t run aground, and what we saw with the short selling earlier this week was a mini run on financial companies. The primary responsibility of the SEC is to prevent a run on the street. Everything else is secondary, and a distant second at that.

    • CK_MacLeod

      As to your last sentence: EXACTLY. I’ve been trying to explain this to fellow conservatives who sympathize with Cox since yesterday. At base, the only reason that there is an SEC is to prevent the kind of situation that we’re now in.

      It’s not like there weren’t warnings about excessive leveraging and reliance on derivatives. If coping with the situation was too much for Cox or any one man to deal with, it was his job to tell us. Now, if we’re going to fix it – including by restoring confidence in the total financial system – there are a lot of good men in both parties who will be prepared to resist, who will have their firm friends and their firm excuses – Chris Dodd comes immediately to mind. If we’re goint to get sentimental about “one of ours,” then we’ll never get at any of theirs.

  • ColoradoRedSt8

    Whatever, the debate is moot. ABC News just reported that, while the SEC chair is appointed by the president and confirmed by the senate, the president cannot summarily fire him. Procedurally impossible.

    Anyway, McCain just backed down from his statement and said instead that Cox should “resign.”

    I agree with you that CEOs or politicians should not hesitate to fire at will – sends a strong message. I do think, however, that it sends a bad message to fire people for reasons that aren’t performance, or merit related. It sends the message that you don’t care about competence, you only care about loyalty. Loyalty matters, of course, in some contexts (families, the mob, etc) – but in the government, I would prefer my tax dollars paying the salaries of talented appointees who aren’t morons, not cronies.

    • CK_MacLeod

      … but I don’t pretend to be an expert. Real legal experts, with the McCain campaign and not, have offered contrary opinions – including that the issue had actually “settled” in McCain’s favor.

      There must be 50 ways to fire your SEC chair. “Fire” and “ask for/demand resignation” amount to the same thing. Anyway, it’s hypothetical. McCain’s not the President, and Cox is not his SEC chairman.

      Even if the big bailout works, these events are not going down the memory hole anytime soon – or shouldn’t be allowed to do so even if somehow it becomes possible. “Scandal” doesn’t begin to address what’s occurred. I’m not sure that it wouldn’t be in McCain’s and also the country’s interest to turn it into THE issue of the election, to go after all of the powers that be, Republican as well as Democrat – up to and including Barack Obama and his friends – with both barrels.

      Maybe those 80% wrong track numbers were more right than a lot of us realized. If we don’t have it working for us, it will sooner or later overwhelm us.

  • lonebeagle

    The Japanese have a similar tradition that’s in line with McCain’s philosophy. If there is a disaster then the head of the organization takes the responsibility and resigns.

    When a Japan Airlines jet crashed years ago in Japan killing over 500 people in the single deadliest plane crash in history, the president of the airline resigned even though the fault for the crash was with Boeing whose faulty repair caused the structural failure that resulted in the disaster.

    This current financial disaster is of historic proportions and those in responsible positions in the government should resign because this happened on their watch. It’s the only honorable thing to do and you can’t fault McCain for his beliefs.

  • nobob

    I don’t get to check in often, but maybe I need a more intellectual blog. Is the takeover/bailout of Freddie and Fannie a good thing? Should WE bail out AIG? Can you please send me to a web site where I can read more? I gotta go to bed now…

  • Achance

    is a powerful motivator. The “German Choice” is the best way to get rid of a non-performing public employee whether clerk or commissioner/secretary. The head of the agency just makes it clear that if something goes wrong, he expects a public acceptance or responsibility and a resignation, else the employee gets just as publicly fired and humiliated.

    My method of choice for anything that involved some sort of moral terpitude was to simply call the employee in and tell them they had thirty seconds to resign and then they could go home and tell their wife and friends anything they wanted to about why they didn’t want to work for terrible people like us anymore. The alternative was that we’d fire them and make sure the world knew why. Most made the right decision.

    I disagree with your assessment of Palin’s dismissal of Commissioner Monegan. She tried to be too coy about it. First, she didn’t even do it herself, a courtesy any cabinet member deserves. Second, she didn’t fire him. She offered him a position with the Alcohol Control Board, a much lower position in both status and money – although they’d probably have protected his money. Rather than take the diss, he quit. I know I would have too; I’ve quit for less.

  • wolfgang

    Admiral Gormley, was replaced by his close personal friend, “Bull” Halsey, after giving the order during the Battle for the Solomon Islands, for the fleet to not stop and hunt for survivors and a generalized timidity regarding the confronting of the Japanese Fleet. The direct result of this was the loss of the Five Sullivan Brothers from the Cruiser Juneau as well as leaving the Marines fighting on Guadalcanal with little or no supplies.

    George S Patton was relieved of his command for angrily slapping two soldiers for cowardice during the Sicilian Campaign.

    General Short and Admiral Kimmel, Hawaiian commanders during the Attack on Pearl Harbor, were effectively relieved of command for the entire war.

    If, for one reason or another, men died needlessly on your watch, you were gone. Results produced counted for more than Mantra, the German and the Japanese were hard, ruthless, unyielding foes. The United States, in order to defeat them, had to be equally hard, ruthless, and unyielding.

  • septembergurl

    We have seen the Bush style of management, the Harvard Biz School model where the CEO appoints people to positions, delegates power to them and then backs them up in their policies and actions. We have seen this the last eight years. Even those who were up for the task are not always successful (not to mention the Brownies, etc), or equally important, someone can be doing a good job yet their policy or operation might fail.

    In that case, it’s pretty obviously McCain’s view that if something happens on your watch, you’re responsible for it. This is the military view of leadership, and it’s obviously based on McCain’s experience.

    The point is that he isn’t scapegoating Cox — it’s more, I think, that he’s kind of outraged that Cox hasn’t already fallen on his sword and resigned.

    Cox may not be responsible for changing the law on naked short selling — though it’s hard to see how he isn’t, since he’s in charge of regulating the stock market — but it happened on his watch so he’s responsible. End of story.

    McCain would not have waited three years to change his military leadership in Iraq, either.

    Results-oriented, yes. And it has a downside, but so does allowing peple who have failed to stay in their positions.

    • Achance

      in government is that authority is SO diffuse. Having done it, I can tell you that it is no fun to be tasked with carrying out an administration objective when the administration is saying “who me?”, you can’t get necessary resources, and most of the administration opposes you and is leaking, thwarting, and sabotaging your efforts at every opportunity. And if its successful it will be because of the boss’s brilliant plan – that boss who’ll do everything in his power to keep your name out of the paper, and if it’s a failure, it will be all yours and only your name in the paper.

      That said, I do believe that the military style is the better way, but you have to bring a responsible organizational culture into being to use it or you’re creating some powerful enemies outside the government who are really interested in going to your going away party.

      • Dan_McLaughlin

        nt

  • smagar

    McCain’s off-with-their-heads management style presupposes that there is a sufficient quantity of people out there:

    a) who are available on a moment’s notice, to replace the person you just sacked, and

    b) can step in on a moment’s notice and do well in positions of high responsibility, and

    c) are willing to put their professional and financial well-being (and that of their families) at risk by taking a job that they can be tossed out of on a moments’ notice.

    I hope that there enough Americans who fit into all three of those categories. Otherwise, McCain should change his management style if he wins the Presidency.

    The executive branch is only as good as the people in it. So…

    if good people choose not to enter the executive branch, because they can’t justify putting successful careers aside—or abandoning them altogether—to take a job which they might lose if their boss decides it would be useful to throw someone under the bus…

    …then we can’t count on having a decent executive branch, can we?

    Personally, I want the best people possible to answer the call to executive service…not the best ones we can find who make it through Filters A, B, and C, as laid out above.