Leadership Void in America

[jimotis4heisman]

A Crisis of Ethic Proportions - WSJ.com

I recently received a letter from a Vanguard shareholder who described the global financial crisis as "a crisis of ethic proportions." Substituting "ethic" for "epic" is a fine turn of phrase, and it accurately places a heavy responsibility for the meltdown on a broad deterioration in traditional ethical standards.
Commerce, business and finance have hardly been exempt from this trend. Relying on Adam Smith's "invisible hand," through which our self-interest advances the interests of society, we have depended on the marketplace and competition to create prosperity and well-being.
But self-interest got out of hand. It created a bottom-line society in which success is measured in monetary terms. Dollars became the coin of the new realm. Unchecked market forces overwhelmed traditional standards of professional conduct, developed over centuries.
The result is a shift from moral absolutism to moral relativism. We've moved from a society in which "there are some things that one simply does not do" to one in which "if everyone else is doing it, I can too." Business ethics and professional standards were lost in the shuffle.
The driving force of any profession includes not only the special knowledge, skills and standards that it demands, but the duty to serve responsibly, selflessly and wisely, and to establish an inherently ethical relationship between professionals and society. The old notion of trusting and being trusted -- which once was not only the accepted standard of business conduct but the key to success -- came to be seen as a quaint relic of an era long gone.
The proximate causes of the crisis are usually said to be easy credit, bankers' cavalier attitudes toward risk, "securitization" (which severed the traditional link between borrower and lender), the extraordinary leverage built into the financial system by complex derivatives, and the failure of our regulators to do their job.
But the larger cause was our failure to recognize the sea change in the nature of capitalism that was occurring right before our eyes. That change was the growth of giant business corporations and giant financial institutions controlled not by their owners in the "ownership society" of yore, but by agents of the owners, which created an "agency society."
The managers of our public corporations came to place their interests ahead of the interests of their company's owners. Our money manager agents -- who in the U.S. now hold 75% of all shares of public companies -- blithely accepted the change. They fostered the crisis with superficial security analysis and research and by ignoring corporate governance issues. They also traded stocks at an unprecedented rate, engaging in a dangerous spree of speculation.
Adam Smith presciently described the characteristics of today's corporate and institutional managers (many of whom are themselves controlled by giant financial conglomerates) with these words: "[M]anagers of other people's money [rarely] watch over it with the same anxious vigilance with which . . . [they] watch over their own . . . they . . . very easily give themselves a dispensation. Negligence and profusion must always prevail."
The malfeasance and misjudgments by our corporate, financial and government leaders, declining ethical standards, and the failure of our new agency society reflect a failure of capitalism. Free-market champion and former Federal Reserve chairman Alan Greenspan shares my view. That failure, he said in testimony to Congress last October, "was a flaw in the model that I perceived as the critical functioning structure that defines how the world works." As one journalist observed, "that's a hell of a big thing to find a flaw in."
What's to be done? We must work to establish a "fiduciary society," where manager/agents entrusted with managing other people's money are required -- by federal statute -- to place front and center the interests of the owners they are duty-bound to serve. The focus needs to be on long-term investment (rather than short-term speculation), appropriate due diligence in security selection, and ensuring that corporations are run in the interest of their owners. Manager/agents need to act in a way that reflects their ethical responsibilities to society. Making that happen will be no easy task.
Mr. Bogle, founder and former chief executive of the Vanguard Group of Mutual Funds, is author of "Enough. True Measures of Money, Business, and Life" (Wiley, 2008).

ive been noting the "leadership void in america" for years. i read this article this am and enjoyed it.

 

[fanaticbuckeye]

is that an anti bush attack?

my "outrage" is political, social, corporate, religious, etc....

ive been outspoken and mocked on here since i joined this website for this "view"

I agree with you that leadership is lacking in this country. That is not to say that there are no tremendous leaders, but if they're out there they are not in the political realm. Which to me is where we need it the most. There are many great corporate, athletic and religious leaders, in my opinion. But where we need it the absolute most right now is governmental leadership, but it is very difficult because our country is so politically divided and I dont see much changing that right now. I hope something does (short of a war, economic or political collapse). Politics has become to polarizing.

 

[Mike80]

I agree with you that leadership is lacking in this country. That is not to say that there are no tremendous leaders, but if they're out there they are not in the political realm. Which to me is where we need it the most. There are many great corporate, athletic and religious leaders, in my opinion. But where we need it the absolute most right now is governmental leadership, but it is very difficult because our country is so politically divided and I dont see much changing that right now. I hope something does (short of a war, economic or political collapse). Politics has become to polarizing.

Most real leaders won't take the paycut to go to DC.

That's the problem in this country and it's only going to get worse. We look to the government for leadership instead of people or individuals taking control or responsibility locally. We have a personal responsibility thread for this exact reason.

We look to DC for leadership yet there is nothing there. We look to DC for solutions yet all there has been since the 60s is partisan bickering. The answers aren't in DC and they haven't been in DC for a while, Messiah or no.

 

[xcrunner]

Hey BuckeyeMike stole my post.

There might be a lack of leadership but I don't think that's the real problem. I think too many people look for a leader so they don't have to do anything themselves. There are a lot of problems in this world, everyone has to chip in.
I love Obama, but that's the one thing I fear from his presidency (Well, not the only thing, but one of the top ones)--That too many people view him as a savior, not someone who will HELP us. He isn't going to miraculously save everyone, he is going to help us help ourselves (hopefully- it's my opinion that he will, that's not for this thread).

So in my opinion, it's more important to focus on doing what we can ourselves. But to be fair, politicians also have to stop being corrupt, money-grubbing whores who are unwilling to do what's right because they love power and money.

 

[buckeyebri]

So in my opinion, it's more important to focus on doing what we can ourselves. But to be fair, politicians also have to stop being corrupt, money-grubbing whores who are unwilling to do what's right because they love power and money.

Excellent point and not just one that should be pointed towards politicians but also towards corporate America. And just so we are all clear I am not talking about sharing the wealth in this context, but rather about corporate ethics.

 

[MaxBuck]

Excellent point and not just one that should be pointed towards politicians but also towards corporate America. And just so we are all clear I am not talking about sharing the wealth in this context, but rather about corporate ethics.

The ever-increasing total compensation packages demanded by CEOs in US corporations from the 1980s through 2008 illustrate a failure of leadership that the American public should recognize. I don't argue that CEOs should not do very well, but the trend has been toward rapaciousness.

 

[Taosman]

Accountability has been missing the corporate world and Washington. That's a big part of the recent elections. Maybe now we will get a lot of both!

 

[Apache]

Crisis

What it really boils down to is the subsitution of greed and "my rights" compared to character and social contract. It is my humble opinion that there are a majority of people who care about right and wrong. The trouble is/are the "I don't cares." Greed, profit, and erosion of character has led to a decline in the family, education, business/economy, and our society in general. If anyone remembers the term "the Ugly American", this may be more valid at this point in American History.

But all is not lost. Good is the enemy of Great. Let us not accept mediocrity in any phase of our society or our personal lives. Stand tall America.

My soapbox is now empty.

 

[jimotis4heisman]

The ever-increasing total compensation packages demanded by CEOs in US corporations from the 1980s through 2008 illustrate a failure of leadership that the American public should recognize. I don't argue that CEOs should not do very well, but the trend has been toward rapaciousness.

dont be fooled, before the 1980s the payouts were nice and tidy also... in addition it is just not what the execs demanded, it is what we are willing to pay them. im not sure how long ago it was but i cancelled by amex card, why? simple, i no longer felt the desire to business with them. from the 75m annual payout to the ceo to what i felt was average service etc. i made a clear choice with my pocketbook. did it hurt them that one lowly customer walked away? doubtful. but if more people took note and did the same thing, sure...

Accountability has been missing the corporate world and Washington. That's a big part of the recent elections. Maybe now we will get a lot of both!

dont be fooled by a new letter next to the presidents name. the same game is being played, maybe to a greater extent...




heres another story. about seven or so (i think it was 7 years its really irrelevant) years ago i decided i would no longer accept any gifts at work. no boss' day gifts, no silly gifts from my boss, no gifts from clients. i was mocked for this, in addition to that i gave up something else. i no longer decided that i would give gifts. no more freebie hats, or shirts or golf balls, no more dinners, or sporting events or whatever. at a time when people would literally had the ability to go to strip clubs with clients and buy lap dances i said no. it cost me clients sure. but youd be suprised, i had more than one person ask me about it, and i sat them down and said hey listen, those things are unnecessary. you may see them as the "cost of doing business" but personally i see them as raising the cost of doing business, they lower your costs and help me provide you with a better product/service. i was throughly mocked for this, something im fine with. but an odd thing happened, yes i lost accounts but viral word spread, my unit grew.

so about a year after this i took a client to a game. i was being grilled about this, how, why, isnt tha against your views blah balh, i looked those guys straight in the eye and said hey i paid on my own dollar to do that. it was odd as they stood their in disbelief, who would do that? well i made a conscience choice to start treating my companies money like my own. since i removed the corp card, i only used it on a sparing basis, no dinners, lunches, shirts, sporting events, beer, etc. when i did "entertain" i paid for it out of my own pocket.

that idea grew on me, i enjoyed my frugal ways. what came from their was a promise to pay for the cheapest flight possible, what has ensued is many red eyes and long days. granted i wont do the deal to save $25 to have 13 connections but within reason to save all possible money. in addition i now limit my hotel bill to $85 pre tax, which typically gets me a nice hampton inn or something of that sorts during the week, limited to cheapest available car, no lunch stipen (id pay for my own lunch normally right?) no dinner stipen (same thing). this all has led to my cost cutting sharing program i have detailed here. a program that was started not long ago that should save its $1,000,000 sometime this month. using a tad of pressure and a team cooperative attitude and indivdual incentives youd be shocked what we can reduce. i give a share to each person whose idea it was and a matching share for the whole team. when cars have come up people have volunteered to go to smaller, cheaper, more fuel efficient cars, weve cut our print volume by 29% (one of the first ideas was to stop printing blank pages inbetween print jobs something wed foolishly done for years based on corp protocol), most of our employees have forgone using carwashes and cleaning services for their cars as lets face it, its a silly waste of money.

 

[MaxBuck]

dont be fooled, before the 1980s the payouts were nice and tidy also... in addition it is just not what the execs demanded, it is what we are willing to pay them...

Here's where we disagree, jo. The problem is that in upper corporate management there exists a Boys' Club of privileged B-school elite types who essentially vote one another whatever they please in salary and bonuses from the corporate treasuries. The individual shareholder can do FA about it, other than feebly spending a "no" vote against directors' recommendations on the annual report. In short, it's not what "we" are willing to pay them; it's what "they" are willing to pay themselves.

 

[Jake]

My question to you jimotis is;

Where the [censored] where you the last 8 years?
Now......... your "outraged"?

Congress, not the President, was charged with providing oversight to Fannie and Freddie. And yet, we just re-elected the idiots who presided over their demise, while lining their own pockets.

Apparently, a lot of folks misplaced their "outrage" over the financial collapse.

 

[jimotis4heisman]

Here's where we disagree, jo. The problem is that in upper corporate management there exists a Boys' Club of privileged B-school elite types who essentially vote one another whatever they please in salary and bonuses from the corporate treasuries. The individual shareholder can do FA about it, other than feebly spending a "no" vote against directors' recommendations on the annual report. In short, it's not what "we" are willing to pay them; it's what "they" are willing to pay themselves.

you have the ability to not by their products? thats why i mentnioned amex. i no longer have an amex card. heck actually i dont do business with about i dunno two dozen companies for various reasons...

and yes you mention proxies and what not, true your impact maybe be limited but dont underestimate it...

 

[generaladm]

re-niging (sp?)

You know, I had wondered for years how that term should be spelled, and what it was derived from. Somewhere I heard or read that it is really a shortened "renegotiate", so "renege" is the spelling I've seen. Not sure if the present participle would be "reneging" or "renegeing", but Firefox isn't underlining the former, so I'll go with that. I just realized that Firefox is smarter than me. Damn. Anyway, just a bit of useless information I thought I'd pass along.

 

[Gatorubet]

I blame the Uzbecks...

 

[jimotis4heisman]

You spend too much time watching "fair and balanced" Faux News!

The balance of power was shifted by "W".
We're headed back toward a balance, now.

Those complaining about the current leadership "vacuum" should take a good look in the mirror. That's where it started.
Where were all the "patriots" the last 8 years?
Where was the outrage?
Where was the anger?
Forgive me if I'm more than a little skeptical, now.

youre missing the boat. this thread isnt intended and shouldnt be about one person or a small group of person(s). if you want poli specific talk/dubya bashing head elsewhere. this thread is about society as a whole here in america and the void left at the leadership (and followship) levels. this thread isnt about "patriots" "outrage" or "anger" this thread is about doing the right thing, being ethical, going above and beyond the call of duty. not only politically (whatever youre beliefs maybe-within reason) or socially or econ or religiously or any other grouping or areas. this thread should be targeted about fostering, mentoring and developoing a sense of essentially doing the right things at the basic level. if you degenerate to the level of placing blame on one person, one party, one business, one industry, one religion you tend to miss the diversity, commonalities that make this the country i love.