In “The Fatal Conceit” Bobo says the effort to cap executives’ compensation is a good example of an overconfidence in government to solve everything. Mr. Cohen is all in favor of sending people off to get killed. In “Britain Resolves, U.S. Wavers” he asks more troops for Afghanistan? As Barack Obama hesitates, a talk with David Miliband, the British foreign secretary, offers as good an indication as any of what the president will do. In “Changing the World” Mr. Herbert says Americans need to shake off their passivity in confronting today’s problems and believe that their actions can make a profound difference. Here’s Bobo:
Humans are overconfident creatures. Ninety-four percent of college professors believe they are above average teachers, and 90 percent of drivers believe they are above average behind the wheel. Researchers Paul J.H. Schoemaker and J. Edward Russo gave computer executives quizzes on their industry. Afterward, the executives estimated that they had gotten 5 percent of the answers wrong. In fact, they had gotten 80 percent of the answers wrong.
Fortunately, for those who study the human comedy, the epicenter of overconfidence moves from year to year. Up until recently, people in the financial world bathed in the warm glow of their own self-approval. Hubris in that world always takes the same form: The geniuses there come to believe that they have mastered risk. The future is an algorithm and they’ve cracked the code.
Over the past year, the bonfire of overconfidence has shifted to Washington. Since the masters of finance have been exposed as idiots, the masters of government have concluded (somewhat illogically) that they must be really smart.
Overconfidence in government also has a characteristic form: that of highly rational Olympians who attempt to stand above problems and solve them in a finely tuned and impartial manner. In moments of government overconfidence, officials come to see society not as a dynamic and complex organism, but as a machine, which can be rebuilt. In such moments, governance and engineering merge into one.
Examples of this overconfidence abound. But let us pick just one: the effort to cap financial compensation.
Back in the days of Wall Street overconfidence, the financial titans believed that they deserved to give each other G.D.P.-level pay packages, even though there is no evidence that such packages improve performance. Now in disgrace, Wall Street firms are rewriting their rules, but the Obama administration has decided it should take control of compensation reform. Nobody seriously believes high pay caused the financial meltdown; it was bubblicious groupthink. But cutting executive pay just polls so well.
Every great action can be done in a spirit of humility or in a spirit of overconfidence. Regulating pay in a spirit of humility would mean rebalancing the power between shareholders and executives, without getting government involved in micromanaging individual pay decisions.
But this is not a moment of humility. Treasury officials are now making individual pay-package decisions across an array of different companies — and they must have really big brains to understand the motivational psychology of all those different people. The Federal Reserve, meanwhile, has decided to police banks and veto pay deals that lead to excessive risk. Those experts must have absolutely gigantic brains if they can define excessive risk years before investments pay off.
The best and the brightest in government are now rewriting existing pay contracts and determining that certain firms will be compelled to pay much less than their competitors. They’re not leveling the playing field, as a humble government would do. They’re making it less level in complicated ways.
Reality, of course, has a way of upending finely crafted plans. The effort to cap golden parachutes in 1989 perversely caused companies to increase their golden parachute packages right up to the legal limit. A 1993 law to cap C.E.O. pay led to greater use of stock options and encouraged riskier behavior.
In advance of the current new pay restrictions, 12 out of the 25 highest-paid executives have already left A.I.G., and 11 out of 25 have left Bank of America. We’ll never know how much future talent was dissuaded from working at these ailing firms.
Citigroup used to have a really high-performing energy unit. But under the new salary regime, the bank wasn’t permitted to pay the chief of that unit what he thought he was worth. Citigroup was forced to sell that profitable unit at bargain-basement prices to Occidental Petroleum.
These rules probably won’t even have a big effect on executive wealth. They’ll just drive compensation into back channels and risk-taking into unseen parts of the market.
Again, the issue is not whether government acts, but whether it acts with an awareness of the limits of its knowledge. Sometimes we seem to have a government with no sense of those limits, no sense that perhaps government officials don’t know how to restructure General Motors, pick the most promising battery technology, re-engineer the health care system from the top, or fine-tune the complex system of executive pay.
Furthermore, when extending federal authority, the Obama folks never seem to ask how Republicans will use this power when they regain the White House. The Democrats trust themselves to set private-sector salaries and use extralegal means to go after malefactors, but would they trust a future Dick Cheney?
I hope they know what they’re doing. Because when a future Cheney comes into office, I’m pretty sure he’ll be coming after columnists’ salaries first.
Damn. It appears Bobo realizes how useless he is… Here’s Mr. Cohen:
In Afghanistan there’s the United States, Britain and then the rest. Britain has lost 85 soldiers this year, more than all other European NATO allies combined. For both countries the annual death toll has been rising steadily since 2006, and with it the drumbeat of public opposition to the war. In all, more than 1,100 U.S. and British troops have died.
Special relationships are forged in blood; the U.S.-British bond is no exception. So, as President Obama hesitates, his decision on American troop levels ever “weeks away” as the weeks pass, the British view of the war offers as good an indication as any of what Obama will do. An hour-long conversation with David Miliband, the British foreign secretary, suggests reinforcements are on the way.
When I asked if the mission needed substantially more troops, Miliband said, “What I think that you can see from the prime minister’s strategy is that we believe in serious counterinsurgency. Counterinsurgency is a counterterrorist strategy.”
He continued: “The Taliban has shown what it means to provide safe space for Al Qaeda.” Describing the fights against the Taliban and Al Qaeda as “distinctive but related missions,” Miliband said “the badlands of Afghanistan and Pakistan are the incubator of choice for international terrorism,” adding that, “Ceding ground happened in the ’90s and then we all know what happened.”
That’s a clear rebuttal of the ever-larger school, most often identified with Vice President Joe Biden, advancing the view that Al Qaeda is the real threat, the Taliban much less of one; and so the United States should not commit more military resources to a nation-building struggle in Afghanistan that’s an expensive diversion from core U.S. strategic interests.
Wrong. Counterinsurgency in the “Af-Pak” theater is indeed a counterterrorist strategy. I see no workable distinction.
As Prime Minister Gordon Brown has noted, three-quarters of all terrorist plots uncovered in Britain in recent years had links to Islamic extremists in Afghanistan or Pakistan. The defense of the West begins in the Hindu Kush and Helmand. Would-be bombers must be kept off-balance. To believe otherwise is wishful thinking.
But of course the campaign has to be smart. Miliband identified several things that have to change, among them governance, outreach and military strategy.
Whatever Afghan government emerges has to be “credible,” where Hamid Karzai’s administration has not been, and provide a new “offer to the Afghan people of security and economic development.”
Miliband also called for “serious outreach to the insurgency to divide it,” estimating that “70 to 80 percent of the foot soldiers are recruitable.” The choice they are being given now is “fight or flight” where it should be “fight, flight or flip” because “an enduring settlement must be a political settlement in which conservative Pashtun nationalism has a place.”
That’s critical. The Taliban are a Pashtun movement. Pashtunistan straddles the porous Afghan-Pakistani border. Afghanistan has always been ungovernable without a Pashtun buy-in. Pakistan’s strategic interest in that buy-in is non-negotiable. These are basic — but long ignored — building blocks of successful strategy.
Finally, Miliband argued for a different focus to military operations. “Occupying land for the sake of occupying land is not what counts,” he said. “It’s population. You need to make sure the major cities are secured and Kandahar is vital.”
These were the convictions behind Brown’s decision earlier this month to send 500 more British troops to Afghanistan, bringing the contingent to 9,500 — a decision the prime minister expected to be “consistent with what the Americans will decide.”
The reinforcement was about one quarter of what British generals had requested. In the U.S. case, Gen. Stanley McChrystal has asked for about 40,000 more troops. Doing the math on a “consistent” basis suggests a substantial American reinforcement short of McChrystal’s request will eventually be announced by the White House.
I asked Miliband if Obama’s protracted ponder worried the Brits. Miliband pondered in turn before saying, “No, I think it’s a measure of the seriousness with which he takes the decision.”
O.K., but I still worry. If counterinsurgency is counterterrorism, if this theater is the “incubator of choice,” if McChrystal is the most lucid product of America’s crash post-9/11 course in counterinsurgency, then Obama should step up.
Beyond Kabul I got these two nuggets from Miliband. Asked how worried he was about an Israeli military strike on Iran, he said: “I don’t provide a running commentary on other countries’ concerns or policies, but we are one hundred percent committed to a diplomatic resolution.”
Asked about a Mideast peace, he said, “It’s very stalled and that’s very dangerous.” He said Israeli settlements must stop, calling them “illegal” and “an obstacle to peace.” He said: “I profoundly believe that Israel’s security depends on a two-state solution and I think that a Palestinian state on the 1967 borders plus or minus agreed land swaps, with Jerusalem as a shared capital, and a fair settlement of the refugee issue is the right basis for Israel’s future as well as the Palestinians’ future.”
I have not heard President Obama be quite as candid. It would help.
Now here’s Mr. Herbert:
One of the most cherished items in my possession is a postcard that was sent from Mississippi to the Upper West Side of Manhattan in June 1964.
“Dear Mom and Dad,” it says, “I have arrived safely in Meridian, Mississippi. This is a wonderful town and the weather is fine. I wish you were here. The people in this city are wonderful and our reception was very good. All my love, Andy.”
That was the last word sent to his family by Andrew Goodman, a 20-year-old college student who was murdered by the Ku Klux Klan, along with fellow civil rights workers Michael Schwerner and James Chaney, on his first full day in Mississippi — June 21, the same date as the postmark on the card. The goal of the three young men had been to help register blacks to vote.
The postcard was given to me by Andrew’s brother, David, who has become a good friend.
Andrew and that postcard came to mind over the weekend as I was thinking about the sense of helplessness so many ordinary Americans have been feeling as the nation is confronted with one enormous, seemingly intractable problem after another. The helplessness is beginning to border on paralysis. The wars in Iraq and Afghanistan, nearly a decade long, are going badly, and there is no endgame in sight.
Monday morning’s coffee was accompanied by stories about suicide bombings in the heart of Baghdad that killed at least 150 people and wounded more than 500 and helicopter crashes in Afghanistan that killed 14 Americans.
Here at home, the terrible toll from the worst economic downturn since the Great Depression continues, with no end to the joblessness in sight and no comprehensible plans for fashioning a healthy economy for the years ahead. The government’s finances resemble a Ponzi scheme. If you want to see the epidemic that is really clobbering American families, look past the H1N1 virus to the home foreclosure crisis.
The Times ran a Page A1 article on Monday that said layoffs, foreclosures and other problems associated with the recession had resulted in big increases in the number of runaway children, many of whom were living in dangerous conditions in the streets.
Americans have tended to watch with a remarkable (I think frightening) degree of passivity as crises of all sorts have gripped the country and sent millions of lives into tailspins. Where people once might have deluged their elected representatives with complaints, joined unions, resisted mass firings, confronted their employers with serious demands, marched for social justice and created brand new civic organizations to fight for the things they believed in, the tendency now is to assume that there is little or nothing ordinary individuals can do about the conditions that plague them.
This is so wrong. It is the kind of thinking that would have stopped the civil rights movement in its tracks, that would have kept women in the kitchen or the steno pool, that would have prevented labor unions from forcing open the doors that led to the creation of a vast middle class.
This passivity and sense of helplessness most likely stems from the refusal of so many Americans over the past few decades to acknowledge any sense of personal responsibility for the policies and choices that have led the country into such a dismal state of affairs, and to turn their backs on any real obligation to help others who were struggling.
Those chickens have come home to roost. Being an American has become a spectator sport. Most Americans watch the news the way you’d watch a ballgame, or a long-running television series, believing that they have no more control over important real-life events than a viewer would have over a coach’s strategy or a script for “Law & Order.”
With that kind of attitude, Andrew Goodman would never have left the comfort of his family home in Manhattan. Rosa Parks would have gotten up and given her seat to a white person, and the Montgomery bus boycott would never have happened. Betty Friedan would never have written “The Feminine Mystique.”
The nation’s political leaders and their corporate puppet masters have fouled this nation up to a fare-thee-well. We will not be pulled from the morass without a big effort from an active citizenry, and that means a citizenry fired with a sense of mission and the belief that their actions, in concert with others, can make a profound difference.
It can start with just a few small steps. Mrs. Parks helped transform a nation by refusing to budge from her seat. Maybe you want to speak up publicly about an important issue, or host a house party, or perhaps arrange a meeting of soon-to-be dismissed employees, or parents at a troubled school.
It’s a risk, sure. But the need is great, and that’s how you change the world.
