If you can't score a touchdown, move the goal post

Have you bought any food lately?  How about gas?  Have you filled up your tank?  Of course you have.  And, it’s getting a bit more expensive, isn’t it? 

Take a look at this chart of inflation over the last 70 years.

So, why do we keep hearing that inflation is under control? 

Listen carefully the next time you hear it.  They’ll say, “Core inflation excluding volatile food and fuel prices” is under control or something like that.

If you can’t score a touchdown, move the goal post. 

There’s more.  The chart above shows the Consumer Price Index (CPI) which is the measure of inflation we have all grown up with.  However, the boys and girls over at the Federal Reserve have decided to use Personal Consumption Expenditures (PCE)as a measure of inflation (starting in 2000).   Here’s how the two compare.

So, what’s the difference?  In simple terms, the CPI measures the change in prices of a fixed set of goods and services – bread, clothing, gasoline, etc.  The PCE fiddles with that calculation a bit.  For example, if you bought a new computer a few years ago for $800, you got a certain amount of processing power, memory, ports to plug stuff into and so on.  If you spend $800 today for a new computer, you would get more of all that stuff.  Or, to put it another way, buying the same processing power etc. today as you did a few years ago costs less.  PCE averages that lower cost of the same features into its index holding down this particular measure of inflation. 

The Full Employment and Balanced Growth Act of 1978 established two goals for the Federal Reserve:  reducing unemployment and reducing inflation.

If your goals included holding down inflation like the Fed Chairman, wouldn’t you prefer to use PCE?

If you can’t score a touchdown, move the goal post. 

In fairness, a lot of economists think PCE is a better measure inflation.  But, out here in the real world where the cost of gasoline and food has been moving up steadily over the past five years or so, I don’t really care what they think.

So, what should we make of all this?

Perhaps the best perspective is provided Dylan Grice, author of the Edelweiss Journal.  He tells us “inflation is not measurable”.  He tells policy makers that “trying to control a variable you can’t measure (inflation) with a tool you don’t fully understand (money) in a complex system with hidden, unobservable and non-linear interrelationships (the economy) is a guaranteed way to ensure that most things which happen weren’t supposed to happen”. 

And, when was the last time the government’s forecast for economic growth came true?

WHO WILL LEAD?

The 10 best... er, the 7 leading... oh, whatever

My brother Chris exhorted me to write about the 10 (or X) greatest leaders of our time… or some time. He told me that I too often write about the failings of our institutional leaders.   I should write about the good guys for a change, he says. 

I thought about it for a while and decided to reject the idea. Why?  Because it’s been done (and done and done).  Time magazine created a list of 100 Most Influential People in the World.  How can I top that?  The Harvard Business Review tells us that to be a better leader is to have a richer life.  HBR exhorts us to “be real”, “be whole” and “be innovative”.  Am I going to quibble with Harvard? 

Beside, in this world of cable news, the Drudge Report and hyper-partisan politics, someone would attack any name I could come up with.  After all, even great leaders are only human.  And, there will always be someone in the media who can identify their all too human faults.  Indeed, being named a great leader might be the equivalent of the Sports Illustrated curse.  Get your picture on the cover and you’re heading for a fall. 

But I thought about Chris’s idea anyhow.  It’s too compelling.  Maybe I could come up with a month-by-month example for the year 2013.  December:  Mandela... 

The best writers in the world have eulogized him and who do I think I am anyway?

In November, we paused to reflect on the 50^th anniversary of the Kennedy assassination.  JFK was a great leader for his generation.  His inaugural appeal to “ask not what your country can do for you; ask what you can do for your country” was a perfect message for the WW II generation who had lived through the pain of the Great Depression and the suffering of the big war.  His call to the nation to “commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth” not because it was easy but because it was hard resonates even today.

Yet, historian Paul Johnson paints him as a womanizing lout who was addicted to painkillers in his book, A History of the American People.

Is nothing sacred?

So, how do we define leadership in this new millennium?  How can we identify exemplars without fear that they will be brought down by the cynical human urge that too often rules the day?

Perhaps I should focus on the ingredients that make a great leader.  Business Insider lists the “10 Behaviors All of the Greatest Leaders Have in Common”. 

10??  Are you kidding me?

First, we must realize that no one exhibits all 10 behaviors of great leaders.  And, even those who come close are subject to the inconsistencies of their humanity. 

Oracle President Mark Hurd reduces the list to 5.  To be a great leader, he says you must be good at: 

1) Getting the strategy right.

2) Executing that strategy.

3) Putting the right people in the right places.

4) Managing dual priorities that others see as conflicting.

5) Keeping everyone focused on what matters.

Well, that might work for the shareholders.  But what about the rest of us?  Apple’s late founder and CEO might be the best example of a leader who fits Hurd’s model but if you were one of the folks who helped him start the company and later got screwed out of your stock options, you might not think of him as a great leader. 

Consultant and author Don Schmincke of Saga Leadership simplifies it further.  He would tell you it’s all about “the story”.  Leadership requires that we commit to a common cause that’s bigger than ourselves by creating a compelling story.  And, it requires that we gain the commitment of others to that bigger thing by consistently telling and living that story.  As author Simon Sinek so eloquently puts it, “it’s not what you do; it’s why you do it”.

For JFK, it was to inspire a nation to make the sacrifices necessary to do great things – a moon shot, civil rights, the Cold War.

For Steve Jobs, it was a commitment to elegant design.

For Nelson Mandela, it was to succeed as a nation after a century of repression. 

Each of them told a compelling story to an audience for whom the message resonated.  Each leader had failings as human beings.  Each could be (and has been) criticized for their personal and professional failings.

And, yet each is a great leader in his own right. 

Sorry, Chris.   I can’t come up with a list of 10, or even 5 of the greatest leaders. Each of us responds to different messages in different ways.  If I am a cynic, perhaps it’s because I grew up in the time of Eisenhower and JFK.  It was a time when the nation had common cause, when corporate leaders saw themselves as having responsibilities toward their communities, including their employees. 

Common cause seems to be a thing of the past.  Yet, people – whether as citizens, shareholders or employees – crave leadership.  So, I still have to ask…

WHO WILL LEAD?   

Are we celebrating Christmas or celebrating our humanity?

Among my parents best friends when I was growing up were the Jewish family across the street. 

There was a running joke about the “Hanukah Bush” they put up every year at Christmas time.  I didn’t quite get the joke at the time; but it was clear that our Jewish friends were celebrating Christmas.

One might wonder what Christmas means in a secular society?  And, what did it mean to our friends who weren’t Christians?

In western society, there is a common bond that is best expressed and best celebrated at this time of year.  Responding to a blog post titled “How Non-Christians Deal with Christmas”, a reader named Safiq Ali Patel said, “I come from a mixed Muslim, Christian and Jewish family. I celebrate Christmas because I like the theme of love, peace, joy and goodwill to ALL men. God didn't come to earth just for Christians...”

Mr. Patel expresses the best of the western Christian tradition, a tradition expressed in terms of “humanism”, a philosophy that emphasizes the value of people both individually and collectively.  The tenets of humanism can be traced to the ancient Greek philosophers and they re-emerge throughout history. 

Many associate humanist philosophy with atheism but it might better be associated with separation of church and state.  Persecution of those who do not embrace the religion sponsored by the state has resulted in the death and torture of thousands throughout history.  During the Spanish Inquisition, Tomas de Torquemada, the inquisitor-general, is said to have executed over 2000 Spaniards.  Ironically, this was done in the name of Christianity.

The modern interpretation of humanism is “human rights”, a set of principles outlined in the Universal Declaration of Human Rights in 1948.  These concepts are powerfully attractive, not only to us in the West but also, to people the world over. The concept of self-rule, championed by Jefferson and Voltaire, is fundamental to the Arab Spring.  Although European in concept, these ideas now form the basis on which the international community judges nations. 

The Christian values of tolerance and love for our fellow man are powerfully attractive to Christians and non-Christians alike.  People of all faiths can embrace the annual celebration of Christmas.  People respond to the sense of charity, love and forgiveness espoused by Jesus Christ because those values and the emotion we attach to them are fundamental to us as human beings.  

The angel who announced the birth of Christ to the world said, “I bring you good news of great joy that will be for all people….”

All people…

Is the Iran deal a "Nixon goes to China" event?

Nixon and Mao

When Nixon went to China, I was on a “Med cruise”, Navy short hand for a ship’s 6-month deployment to the Mediterranean Sea.  In those days, we got our news from the Radio Room printed on a yellow roll of paper, cut to length and attached to a clipboard available for all who wished to read it.  I can only imagine that today’s naval officers are as plugged in as we are here at home. 

But, plugged in or not, U.S. moves to form a new relationship with Iran might seem as confounding as the Nixon/China foray did in the early 70’s.  Our allies in the Middle East – Israel and Saudi Arabia – are objecting loudly to recent developments.  Iran supports the Assad regime and terrorist organizations like Hezbollah and Hamas.  How can we form an alliance with them?

Let’s remember that when Nixon forged a new alliance with Mao’s China, the U.S. was still fighting in Vietnam, facing a foe that was armed by the Chinese. 

Foreign affairs are not about winning or losing wars.  Wars are costly and should be avoided.  Foreign affairs are about maintaining or disrupting the balance of power.  By winning the war in Iraq, the U.S. disrupted the balance of power in the Middle East and southern Asia.  Iran, bordered by two countries occupied by U.S. troops, moved to counter our presence by forming an alliance with the new government of Iraq and through its support of the Assad regime in Syria.  The national initiative to develop nuclear weapons capability was a way for them to establish legitimacy.  It has forced the U.S. and its allies to deal with them.

Iran has a long history of mercantilism that has yielded a well-educated middle class.  Their economy is migrating toward capitalism and is able to compete in international commerce.  They have joined the international patent system and are viewed by exporting economies in the EU as a potential market.  Ideology aside, they are a natural trading partner for the West. 

I don’t mean to take ideology lightly.  But, in the end, national economic and security interests nearly always trump ideology.  That’s why Iran will pursue these discussions with the West constructively.

Our traditional Middle East allies all have interests that are contrary to ours.  Saudi Arabia, Iraq and our NATO ally Turkey support Sunni extremists in Syria.  Nothing is cut and dry in the Middle East but Sunni extremism represents a clear threat to U.S. interests and security.  And, while Iran’s support of Syria’s Assad is seen as contrary to our interests, the stalemate there neutralizes the benefits of their alliance. 

And let’s not forget that Saudi Arabia was home to Osama bin Laden and most of the 9/11 terrorists. 

In the end, it may be that having Iran as a strategic economic competitor will be preferable to having them as a strategic nuclear competitor.  Indeed, it’s not clear that Iran ever wanted to develop nuclear weaponry.  Ever notice how they are always a few months away? 

Kerry with Iran's Foreign Minister Zarif

Of course, our most reliable ally in the region has been Israel, a country that Iran has sworn to obliterate.  But, Israel’s options are limited.  As I have written (Let Israel Do It...), Israel can’t attack Iran without the participation of the U.S. military, which is not forthcoming.  It may be that the assertions of Secretary of State Kerry are correct.  A non-nuclear Iran represents little threat to Israel.  Indeed, a strong commercial relationship with the West will make it less attractive for them to support international terrorism.

Naïve?  Perhaps.  But, many had the same view of China 40 years ago.  Is China still problematic?  Yes.  But, not nearly as much as they would have been if we were not their largest market.

It will be interesting to observe the U.S. politics over the proposed sanctions relief.  Presidents do better when they oppose the traditional politics of their political party.  Reagan signed a treaty with the Soviets to reduce nuclear arms.  Clinton reformed welfare.  But, Obama faces a more hawkish constituency among Republicans than his own party.  And, any American over the age of 40 remembers the Iran hostage crisis well. 

LEADERSHIP is about common cause. Kerry is well qualified to pursue this new balance of power but he is inarticulate.  It will be up to the President to sell this to the American public and up to his political operation to make it work in Congress.

WHO WILL LEAD?