Many pundits and commentators have been taking notice of how a worrisome number of people in positions of power in advanced economies seem unable to manage their way out of a paper bag. This is taking place despite the fact that the US, EU, and UK prize having credentials, as in at least a college education, in many cases advanced degrees, and in some posts, relevant experience (expertise in a particular field). One would think that the attainment of these status markers would require a minimum level of being able to set goals, identify what it would take to reach them, and then work in systematic way towards the objective.
Let’s give some examples:
The Greece bailout negotiations of 2015. Many advocated having Greece leave the Eurozone. They were unwilling to hear that it would take a wartime level of mobilization to achieve that result without wrecking the already-crippled Greek economy. One major obstacle they reflexively rejected were the processes needed to launch a new currency. Designing it, printing it, refitting ATMs to dispense two currencies (Euros and the new drachma) or merely just the new drachma would take a year at a bare minimum. IT experts estimated that coding for a new currency would take a bare minimum of three years, not only among Greek banks but many other payment system participants.
Another was that most of Greek’s debt at that point was English law debt and so could not be redenominated as Greek currency debt by legislation in Greece. So the expected outcome of the new drachma falling in value, which would help Greece in trade, would make the debt load worse.
Yet another was that any whiff that Greece was about to launch a new currency, and presumably force-convert Euros in Greek banks to that currency, would lead to a massive exodus of funds to banks outside Greece, cratering the banking system.
The point was not simply that this idea would be extremely difficult to implement and fraught with potential downsides larger than the assumed upside. It was that supposed experts waved away the idea that this change would be hard. Surely the person saying that was a banking industry/Troika stooge, hostile to Greek interests. In other words, it was even more revealing that they were not willing to deal with the identified problems, but engaged in ad hominem attacks.
Brexit. This could be an extremely long story, but to keep it short, the Government weirdly decided to treat a non-binding, not well-articulated referendum as binding. People in the UK did know what being in the EU meant, but were not told what being outside the EU would mean (except for the red-bus lies about savings that supposedly could go to the NHS but never materialized). The failure to understand what Brexit would mean in practice allowed a group of radicals (which we called Ultras) to drive the train because Tereasa May’s snap election backfire left her with a razor-thin majority, making their votes essential to do anything.
Even over multiple extensions of Brexit deal-completion deadline, it was striking to see how few among the pols and prognosticators understood that the result of Brexit would be a hard border with the EU, and that would impose new requirements on importers and exporters, from VAT withholding to declaration forms of various sorts to even new complexities in contracting for truckers. Yet there were regular rumors that businesspeople were acutely aware of these looming demands, but were afraid to speak out because it was believed the Government would exact punishment on them in any way it could.
Again, to abbreviate and risk over-simplifying, one of the big negotiating obstacles was the so-called Irish border, as in the land border between Northern Ireland and the Republic of Ireland. Having any sort of customs process there would be unworkable due to the number of crossing points and how much casual to-ing and fro-ing across the border there was in daily life (including by cows!). But the UK was dead set against the solution of having Northern Ireland subject to EU trade rules and having only a “sea border” (BTW not all that easy either but way less bad than a hard land border). The EU rejected a porous border and Northern Ireland on UK rules, since Northern Ireland could then become a back door for all sorts of non-compliant goods to enter the EU.
It was not much covered in the press, but the UK eventually capitulated.
The Western prosecution of the war in Ukraine. We and others have written the equivalent of books on this topic. Some short examples: at the start of the conflict, the Western plan to subdue Russia rested on the belief that the sanctions would lead to regime change, and on top of that, to the extent there was much fighting, the Russian military would quickly fail or even run away (recall that was a strong belief in the planning for the super duper counter-offensive). The Russians engaged in a deliberately light-weight invasion so as to show they were serious about getting the Donbass festering wound cleaned up, but did not intend to conquer Ukraine. Their objective was to get Ukraine to the negotiating table in short order. They did look successful until the US and UK scuppered the talks.
So what happened? The West doubled down on Plan A, to no success. Attempts to do better at that, like ramp up military production, have come to very little.
Russia dithered until the embarrassing and (for Russia-friendly parts of Ukraine) highly problematic retreats from Kherson and Kharkiv. Then Russia moved forward with Plan B: its partial mobilization and greatly increasing weapons output (my impression was that that had started but kicked into higher gear as of fall 2022).
Mind you, this Russian change was not hidden. Yet the West refused to take it seriously, allowing Russia ample time to retrain the called-up reservists and then seek large-scale enlistments. Russia’s increases in output and improvements in weapons systems have not been a secret. Instead, the response has been self-deluding propaganda: that the Russias were suffering huge losses, were about to run out of missiles any day now, were having to get their munitions from North Korea, Iran, and China.
Now the press is admitting that the prospects for Ukraine are poor and the West has no Plan B.
Let’s return to the sorry state of what passes for leadership and management in the West. The conventional explanations, of late-state capitalism/neoliberalism run wild and elite malfeasance, do not seem sufficient to explain the pervasiveness and acceptance of rank incompetence. I think we need to consider other factors to get a full picture.
One that seems likely to me is devolution, used in the sense where I first encountered the term, in Fine Arts 13 in college. This was a serious history of arts course, with tough exams.
It used “devolution” to describe how technology made possible increased output at the cost of increased crudeness. The example was carved statues. In the classical Greek era, all statues were made using chisels. In the later Roman period, artists started to use drills. It was not hard to see the difference in the quality of the work; if nothing else, curls and other renderings of hair were subtly cruder with the drills.
Not only did this change result in a reduction of skill levels, but it also may have changed aesthetics, as in produced an acceptance fo the coarser statues and a loss of appreciation for more finely detailed pieces.
To our current situation. I recall reading management guru Peter Drucker, the dean of the later industrial era in the US, worrying around 1980 about how the symbol economy was becoming detached from the real economy and he did not see how that could be reversed. He was talking not just about financialization, although that was a big part. He seemed to have an inchoate fear that the rise and increasing influence of symbol manipulators would operate to the detriment of running physical operations well.
1980 was just before desktop computing became prevalent. I was one of the last generation on Wall Street to prepare financial analyses and forecasts on green accountants’ ledger paper, ordering SEC and company records from the library, extracting numbers manually and entering them by hand, then crunching numbers with a calculator. That laborious process weirdly had an upside. All the juniors at Wall Street shops understood the ins and outs of financial statements. Computing by hand also meant you would recognize patterns as you were putting the presentations together (as well as see oddities that showed you’d made an error!).
The class after mine instead made significant use of company data printed out from Compuserve. That was known to have errors. Yet the normally mistake-phobic Goldman corporate finance department didn’t have a concern about using bad data with clients (who might even recognize some of the Compuserve mistakes), in that the view seemed to be sort-of-official corrupted information was OK. It was also clear these younger bankers wound up less technically knowledgeable.
Now consider just this first order effect. The deskilling of the work would allow more senior people to devalue the labor of the lower ranks, as in see them as not deserving of as much pay. That did not happen in investment banking; the bosses demanded more output instead. But in many fields, from computing to law, entry-level jobs were being substantively hollowed out, with fewer and fewer opportunities to learn tradecraft. This has happened as many professional firms have increased the sizes of their pyramids, as in lengthening average time to partner and/or lowering the ratio of new hires to eventual partners. While this cannot be attributed solely or even mainly to the presumed and probable actual de-skilling of lower ranks, it probably contributed.
We can see this propensity even more in hourly work, with increased surveillance and explicit productivity demands on seen-as-low-level laborers. The bosses treat them as tools, with little belief that their observations matter or that they have developed skills (beyond mastering company routines) that have much value.
A second effect has been the tendency to mistake menus with meals, which has many manifestations, such as believing that PowerPoint presentations correspond to reality. Again I saw this on Wall Street with the way spreadsheet programs made it vastly easier to run financial forecasts. Before, forecasts were generated only when necessary, such as merger modeling. The reason was they were very costly. One error would make everything to the right incorrect. I had one urged exercise where the partners had two of us (the later infamous John Thain and me) run the same computations in parallel to make sure they were done accurately and speedily.
Due to the resources and time required, anyone who prepared these forecasts thought long and hard about the underlying scenarios they were meant to represent. But when it became trivial to jigger assumptions and produce yet another model run, I saw not just the M&A bankers but even the clients treat the model as if it were the deal, as opposed to a representation of a deal. Making the numbers work, which had always been a concern, started to become paramount. I’m far from the only one who noticed this shift. Technology expert Michael Shrage, whose book Serious Play focused on how the choice of modeling approaches affected development in various industries, starting with cars. His long section on financial modeling took note of the fact that the output was taking on a life of its own, which he also recognized as not desirable.
This phenomenon, of computing and digital power reducing the cost of production and thus leading to less engagement in planning, is widespread. Look at how, when pictures were taken on film, most users would take some care before making a shot. Now one can make many images and hope for the best. Even though CAD/CAM has no doubt largely been a boon, I wonder if it too has had an effect on skills and how management views the indispenability of designers.
I’ll stop here because even though I have been noodling this notion about this idea for a while, to do it justice would take considerably more thought and research. I’ve started above with only some of the simple but telling examples from early in this shift. But as we move forward in time, behaviors society-wide have changed even more as technology has allowed for the hollowing out of service and depersonalization, from low-friction online shopping to online dating. Wonder why young people are getting less sex despite online dating allegedly being more successful than the old “get out and mingle” strategies? Might it be at least partly to the supposed increased efficiency coming at the expense of flirting skills?
The more general point, which I have yet to tie neatly into the decline of operational competence, is that the deployment of technologies has resulted in many many tasks becoming much easier. This has contributed to naive managerialism, that if a subordinate or interlocutor tells someone that a situation is difficult, it must be because they aren’t clever, or worse, are trying to con you by making mountains out of molehills. Many have the propensity to fire or otherwise sideline parties who are trying to give them a picture of unpleasant realities and instead turn to enablers. In the bad old days, there were more natural checks on this sort of behavior, since managers and executives tended to have long job tenures at one or two companies, so bad judgement would catch up with some of them. But with job-hopping, misleading accounting (like hiding losses then having every five year purges, presented as special writeoffs), highly-developed PR and stock buybacks to cover up for poor performance, accountability is virtually non-existent in the corporate arena, where measurable results are supposed to matter.
Magical technological outcomes, starting with the fact that people all over the world can plug devices into wall sockets to power them, mask all the invention and infrastructure development over many many years that made these foundational systems possible. And we’ve built even more, large and small. Too many, particularly those in high positions, seem to regard their existence as facts of nature and have become dangerously detached from what it takes to make significant changes, be it greatly increase the level and effectiveness of military production to devise integrated, effective approaches to limiting the impact of climate change and implementing them.
I hope readers will pipe up if they have seen similar cases in their fields, of certain types of technology advances having the effect of eroding executive ability to contend with new and difficult problems.