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Monday, August 6, 2012

Business, Friend or Foe? TR and process improvement

George Will thinks the desertion of the most wealthy of the business wing from the progessive cause in 1912, for what has emerged as "conservatism" was a good thing that "saved the constitution." He claims:

"By preventing former president Theodore Roosevelt from capturing the 1912 Republican presidential nomination from President William Howard Taft, the GOP deliberately doomed its chances for holding the presidency but kept its commitment to the Constitution."

(source: Prior Post and Washington Post commentary:

I criticized this in my last post, but that is not entirely fair, the fact is that Taft was Theadore Roosevelt's ally until he ran against him, and that Taft, while not an exciting perfect avatar of progressive ideas, was doing a pedestrian job of trust busting before Roosevelt ran against him. By attacking Taft, Roosevelt was starting a revolution, but also was engendering pushback, and the blowback is what we call the conservative movement, which is essentially a reactionary movement designed to preserve the power and prerogatives of the immensely wealthy, but is couched on fear of the tyranny of popular executives. An article on the election of 1912 notes the point of view of those who he fought:

"Critics of Roosevelt are not quite so kind. Roosevelt had a huge ego, and his lust for power could not keep him on the sidelines. He stabbed his friend in the back and overlooked the positive sides of Taft's Presidency. Whatever the motive, the election of 1912 would begin with two prominent Republican candidates."

Source: 43f. The Election of 1912:

So, in some senses, Teddy Roosevelt broke a delicate consensus. In some ways it had to be broken because unless the power of monopolists like J.P. Morgan was challenged they'd simply keep pushing for even more monopoly and power until they completely degraded both democracy and the prosperity of the many. And there was no way to challenge this without offending the rich and powerful. But Taft was not the enemy, until Roosevelt made him one, and Roosevelts ideas might have had his support if he'd been more diplomatic. But asking the "Bull Moose" to be diplomatic was too much. Roosevelt could be dictatorial and rough with his opponents. But he missed an opportunity by splitting the Republican party. That split never healed until all the progressives were driven off. The modern republicans are the party of Hoover and Coolidge as the result, and both inherit more from J.P. Morgan and Taft than from Roosevelt, though they all give lip service to him.

Converting the Business Community back to progressivism

But the quandary remains. You'd think that business would be the most progressive community available to politicians, and indeed many businessmen are on the side of progressive causes even in this day of partisan and corrupt Chambers of Commerce and Citizens United. But they aren't. Part of this is business culture. Business folks push the myth of self-made independence. The myth is that businessmen don't get help from anyone else and reach the top by their own sweat and tears.  This myth is found on the immense amount of self-motivation and gumption needed to succeed. Most businessmen succeed by tremendous sweat equity. Even so, catch them on an effusively appreciative days and most of them will tell you how they never could have succeeded without a business angel who helped them at some point, or a lucky break on contracts or customers.  They know, better than they'll sometimes admit, that it takes a community to succeed. The current advertisement war between Romney and Obama over how much help most businessmen need to succeed represents the power of pride, and hubris over reality.

And most businessmen respect success. That is part of the myth too. They figure "if he can do it, I can do it too," and so they not only admire, but they emulate and elevate in status those who have succeeded wildly. Often, until they are caught openly admiring ruthless scoundrels without looking too carefully at the methods those scoundrels used to get their money. I don't know how many of today's criminals are yesterday's business heroes. The pattern goes back in my memory to Ivan Boesky, who as universally admired before his fall, through the dot com geniuses who openly bragged that their business money was to lose money for the business while scamming purchasers in the Initial Public Offering.  People soon forget.  The recent Facebook IPO was almost a event for event repeat of IPO's that occured before the internet bust in 2001.  Business ethics is loudly advanced in trade magazines, but is usually not enforced until a group has egg on their face and start looking for a scapegoat. I still remember reading about what a Mensche Bernie Maddoff was before his pyramid scheme was revealed. I remember the thousands of convention goers cheering wildly at the heads of Amway and their "Direct Chain" -- because American businessmen admire success, and success is hard enough that they sometimes forget their souls while pursuing it.

For that reason, historical figures like J.P. Morgan who straddle the ethics line are openly admired even as they get criticized.  And many businessmen, like lawyers, define what is ethical by the legal limits of what they can get away with.  But this also means that until a business directly is impacted by monopoly or oligopoly, and sometimes even then, small businessmen are often not only blind to, but actively in support of the business practices of their wealthy, powerful, and unethical business colleagues, even when those policies are the real cause of their own misery.  If de-regulation would make their work more convenient, they don't even think about how the banks will then set policies that put them out of business with high interest rate loans and bureaucracy that makes their elected governments look like laissez faire. Banks are businesses like their business and the businessman sees himself as a future financier.  They don't see the direct harm of monopoly, plutocracy and regular frauds and swindles until it is too late. Or they see where they can survive by going along and being complicit. Either way many businessmen who ought to embrace long time progressive causes often embrace the propaganda that defends the status quo instead.

Why that is a mistake and why there is opportunity for progressivity

But what we need to teach them is that corruption is also bad business, bad process, and that good governance is compatible with democratic republican concepts, checks and balances, divided government, and democratic concepts like direct participation, democratic controls and separation of powers.  Businesses, even more than the rest of us are sensitive to bad government because they deal with it all the time. And businessmen experience bad government often on a personal level when they go to borrow money, make payrolls, or want to add to their businesses.  For that reason most businesses are very aware of the role of good governance; good process, good procedure, good engineering, in the success of their businesses. You hear business oriented politicians such as Gingrich waxing element about 6 sigma and CMMI and applying those concepts to running government. Sometimes it seems they see process improvement as a panacea.  But genuine process improvement needs to be applied to all walks of the act of governing or it won't work. As long as the business model is top down most businesses are helped by process improvement only to the extent that the hierarchy of bosses is willing to follow the ideas. And as a result what is taught as process improvement is very project oriented but almost completely ignores concepts like sustainability, program management, or externalities. From the point of a manager the delivery of a product is the end of the process.

More reformers need to be familiar with business and business terminology if they want to enlist the extremely powerful business community and defeat the worst designs of the oligarchs who presently dominate that community.  Autocracy, oligarchy, monopoly, and the resulting tyranny and oppression are not only bad for their customers, they are bad for business.  Businessmen should realize that they can't govern a community the way they govern their shop and that separation of powers is necessary to make sure that those performing a role are accountable and don't get muddied on their behavior due to conflicting roles.  Dictators are not only evil persons but bad management.  Separation of powers allows an executive to be a dictator when executing his appropriate role and to have consent of the governed when dealing with policies that he or she shouldn't dictate.  If we can explain to people how democratic republicanism is just good process we can get a lot further with people than we presently do.

That was TRs mistake. His basic concepts were good, but not mature yet.  He saw that trust busting wasn't working because we needed to organize large systems with some kind of unified control or those systems would periodically fail. He gave up on trust busting and was in the process of wanting to switch to using a Federal Trade Commission to organize the trusts. This would not have worked because the principles of control it was based on were not (and still are not) mature enough to keep the few from optimizing the trusts at the expense of others. His ideas were good, but because they weren't really realistic enough, the business community balked at them.  The big trusts, the JP Morgans, Rockefellers, etc.... were able to take advantage of this to break up the Republicans. Because of that progressives and populists joined together in a conflictive and sometimes contradictory relationship instead of business and workers. And many businessmen went in the direction of the Tea party.

Until progressives have realistic processes and structures that meet the needs of businessmen as well as their need for regulation, our current adversarial system will continue, and the insanity of conflict will drive people apart and to extremes.  More coming.....

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