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Obama: Transformational Leader or Caretaker of an Economic Mess?

June 24, 2009

So much has happened in the past 12 months. A year ago, my wife and I went on a 6,000 mile Amtrak train trip across the U.S., starting in Ottawa, Canada. We loved meeting Americans from diverse areas of the country, and the mood was not necessarily somber. The economy at that time was tipping downwards and the warnings that had been expressed by The Economist were starting to be realized. But within a few months all hell broke loose, as we all know. It almost seems like a bad dream – actually a nightmare for many Americans – as events happened at almost lightning speed. President Obama has held office for just over five months, and already he is being judged on the effectiveness of his administration’s interventions in the economy and financial system. Angela Merkel, Chancellor of Germany, is expressing serious concern over an imminent inflationary burst due to the massive amount of government spending in the U.S., as well as other G8 countries. She is urging restraint and perspective.

So where is the perspective? Human beings, despite the eager willingness to repeat the mantra of ‘learning from experience,’ never seem to get it. Much has been made of President Obama’s intelligence, calmness, bi-partisanship and political skills in dealing with the economic recession and financial crisis. It’ll be some time until the verdict is in but some observations are worthwhile at this point. Over the weekend I read an excellent essay by Kevin Baker in this month’s Harper’s Magazine. Entitled “Barack Hoover Obama: The Best and Brightest Blow it Again,” Baker argues that Obama to this point in his presidency resembles not FDR (or Reagan as others have noted) but in fact Herbert Hoover. Now some may be head-scratching or booing at this point, but Baker’s argument is compelling.

Tracing Hoover’s difficult upbringing and later business successes, Baker explains how the former president launched an aggressive assault following the collapse of the stock market. It is reminiscent of Obama’s frontal attack, except that the federal government at that time was much smaller in proportion to the economy and business people did not follow through on their promises of support to President Hoover. And although Hoover had a brilliant mind, his analytical approach to problem solving prevented him from making the necessary leap to adopting a new perspective – today we would call it thinking laterally.

FDR, who had spent years cultivating his political skills, creating a wide network and building effective communication abilities, was what I’ll call the master of the art of politics. His more intuitive approach to trying to solve the Great Depression involved trying out a collection of grabbag policies, some of which worked and others which didn’t. However, as Baker points out the policies and subsequent innovations spawned by FDR were the foundation of 20th Century American Liberalism. Obama, in contrast to FDR, is following the path of Hoover because of his unwillingness to detach himself from traditional ideologies. Like Hoover, Baker argues that President Obama “…is bound to fail.” The President faces a virtual absence of transformational ideas from within the public and private sectors, not to mention apathy from the country’s elite. In contrast, FDR was able to galvanize support from the Republicans as well as from his own party.

One of the most difficult challenges for a leader is to reconcile what Harvard psychologist and business theorist Chris Argyris calls ‘espoused theory’ and ‘theory in use’ (one’s actual behaviour and actions). President Obama’s esposed theory is that of change and a new and better America. But in reality, his theory in use is based on a mental model of status quo in America – maintain the ruling elites, bail out major companies (anathema to capitalism), and make countless decisions on highly diverse topics in such short timeframes as to completely disregard the value of perspective and wisdom – two essential competencies for a turbulent world.

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