Where Leadership Comes From Jude Wanniski April 20, 2001

Memo To: SSU Students
From: Jude Wanniski
Re: Where Leadership Comes From

In the last few weeks, because of the incident involving our “spy plane” along the China coast, I’ve written several “memos on the margin” involving our evolving relationship with the People’s Republic of China. Because my analytical perspective has been unconventional, essentially defending China’s position, I’ve gotten an unusual amount of e-mail. Much of it IS favorable, but at least as much has been angry, practically accusing me of treason for taking sides with the dictators of the PRC and the “butchers of Beijing.” One especially angry letter accused me of having business deals with China or maybe even having “a Chinese sweetheart.” It is incomprehensible to them that I really might think the leaders of China are not such bad folks.

This brings us to this week’s lesson, about where leadership comes from. Where political leadership comes from is the primary question, but the path to leadership is really the same whether you are in business or in politics or in the arts and sciences. What makes an “opinion leader?” What makes a “community leader?” In every case, there is a self-selection process that always precedes an individual’s selection by the group or by the community of interests. That is, out of the group, a person has to exhibit leadership qualities before he or she is noticed by others in the group who know they themselves are not cut out to be leaders. Any group that has group objectives must first find a leader to organize the effort. In the smallest group -- a family unit -- it has traditionally been the man, the husband, father and breadwinner who has been the leader. In a smoothly running family, the wife has served as vice president and chief counsel, whose opinion is sought and taken seriously by the man of the house. At times, though, we hear of men who don’t measure up to the needs of the family, at least when it comes to the group objectives, and we learn that the wife and mother “wears the pants in the family.” There’s no reason why women cannot take the lead. History finds many Queens who did as well or better than their male contemporaries in leading their nations.

In the largest family unit on earth, which is in fact China and its 1.2 billion citizens, the leaders are chosen by methods different than ours. Technically speaking, the Communist Party rules the nation, but in a more fundamental sense, the people of China only select leaders whom they believe will advance the interests of the Chinese electorate. These are not necessarily the most intelligent or the “best” in some sense of talent. The “captain” of a baseball team is rarely the best player on the team, the one who concentrates on his individual performance, but the player who is attentive to the collective interests of all the players, each of whom know he will look after them in the small ways that make up a team.

The leaders of the People’s Republic of China were once little boys and little girls and now they are grown men and women. They are where they are because they first were self-selected, showing an interest in the collective interests of their neighborhoods, then their communities, then their provinces, then the nation state. The leaders of China are major league, heavy hitters, proven in the intense competition that produces the best of the best. Are any of them “great leaders?” That we don’t yet know. We know Mao Tse-tung was a great leader and we know Deng Xiao-peng was a great leader, the first bringing order out of the post-WWII chaos, the second cutting loose from Mao’s failed communist experiments. Americans are taught that Mao was a bad guy, because so many Chinese suffered and died when he was at the top, but the people of China have continued to respect his memory. His portrait hangs in a place of honor in Tiananmen Square.

It never occurs to most of us that there was great suffering and loss of life under the leadership of Abraham Lincoln. That’s because we have placed the political forces he faced in context and celebrate him as a hero. There are still a great many Americans whose roots are in Dixie who do not appreciate Lincoln the way most Americans do. There are different cultural strands in that part of our country which still reflect the sting and humiliation of defeat passed on from father to son, for generations. If I had been a Mississippian last week, I would have voted to remove the Confederate stars and bars from the state flag, but then I was born in Pennsylvania and raised in Brooklyn. Yet frankly I was pleased to see that native Mississippians voted two-to-one to retain the flag as it is. I could put myself in their shoes and see why I would have voted with them. It also is easier for me to see why different parts of the United States and different parts of the world select different kinds of political leaders. While the people in those place have different immediate needs that might be similar to the rest of the people of the region or the world, they also have to live with their history.

Our system of government was designed carefully by our Founders to accommodate the first nation in world history that began as a state. Because the New World was stitched together from different people and different cultures of the Old World, there was a “state” here before there was a nation -- a “state” being a task-oriented institution, a nation being a cultural whole. It was the “state” that brought forth a new nation, and the Founders had to design a Constitution that would make our diversity work. So we have particular institutions that check and balance each other, an Electoral College that can elect a President who defeats a competitor who gets more votes, and layers of local, state and federal courts that adjudicate the incredible complexities in so diverse a culture. Why can’t the Chinese be as we are? Why can’t they scrap their system and import ours?

A few years back, I’d actually recommended something like this to the people of Mexico, in an essay I wrote for one of their important newspapers, El Economista. But Mexico’s federalism is already close to ours, with individual states that are semi-autonomous. If we take a long view, we have to ask why Mexico remains a poor country when the only reason other than political structure that can explain it would be racial inferiority. We quickly can toss the latter idea out for the same reason we can eliminate it as a consideration for all the poor countries of the world: Take a Mexican out of Mexico and plop him down in California or Minnesota or Texas, and within a generation or two or three -- the time it takes to absorb the cultural texture of the new home -- their children and grandchildren will be enjoying great success. No, the answer does lie in political structure: How is the system arranged by which superior political leaders can be found? I’d concluded back when I wrote The Way the World Works, that all of history demonstrates that mankind since Adam and Eve has been searching, through trial and error, for such systems, and that the march of history can be interpreted in that analytical framework. There was a time when it seemed absolutely true to the people of the time that monarchy was as good as it gets. A nation could tax itself to provide all the resources necessary to keep a family, a dynasty, in the lead, knowing how important education was if the nation were to be successfully led. It was really only in the 20th century that a majority of mankind could read and write. With the spread of literacy, the pool of available leaders expanded, and monarchy became obsolete as an organizing principle.

In answering some of the e-mails I received this week about the communist “butchers of Beijing,” I pointed out that there are really no “communists” in China, except in the sense that there remains a communal sense of order and direction. “Communism” is an economic idea, where the means of production are owned by the community, the nation, and run by the state. There are still state-owned enterprises in China, but since early 1978 when China decided to get off the communist road and become “capitalist roaders,” the state has been trying to shed ownership a little at a time, to provide as smooth a transition as possible for the ordinary people who had come to rely upon work in the state enterprises. The dominant cultural force in China today, it seems to me, is the ancient Confucian idea, by which leaders are chosen by merit. One of the reasons why Americans seem to have a closer cultural affinity to Chinese, as opposed, say, to Japanese, is that there has been a kind of bottom-up democracy in China for thousands of years, whereas the tradition in Japan had been elitist.

We view Japan as a democracy today and call the Chinese “dictators,” because the people of Japan vote for their top leaders at ballot boxes, as we do. But Japan, like Mexico until very recently, has had one political party running the show for decades. Its system reflects a preference to operate within a one-party structure, where conflicts are resolved by consensus from the bottom up. There is not much difference in the way the Chinese resolve problems of public policy. The leaders at the top of the Politburo have gotten where they are through an internal voting process, one that actually has become more “democratic” in the last two decades, where members of the “Communist Party” who disagree on approaches to governance run against each other and are selected at ballot boxes. Until very recently, this is the way leaders were selected in the states of the Old South, where there was only the Democratic Party. Whoever won the primary contest won the general election, because the GOP could not function with the lingering memories of the Civil War and Reconstruction. The point I make is that there is no nation on Earth that picks its leaders without a system that attempts to optimize the interests of the nation.

This approach enables us to view with some dispassion the rise of Hitler and the endurance of leaders like Stalin, Castro, Khadafy, and Saddam Hussein. Endurance as a leader cannot be explained by the use of force. The Mandate of Heaven doesn’t work that way. When a Fidel Castro can remain in power in Havana for more than 40 years, he is either doing something right, or his adversaries in Florida are incompetent. My fairly careful study of Saddam Hussein’s reign, which goes back almost 30 years, reveals leadership qualities that explain why he remains popular among his own people and why it is so difficult for our government to round up a ragtag bunch of Iraqis who might form a puppet government, if we could even get that far.

Ever since I hit upon the idea that the Wall Street Crash was the result of the Smoot-Hawley Tariff Act, which had depressing economic effects on the whole world, I began to see the rise of Hitler as the result of the Versailles Treaty of 1919. The victorious Allied powers of WWI actually designed a policy to punish the German nation in a permanent way, draining resources for reparations in way that would prevent remilitarization. Adolf Hitler self-selected and got halfway up the leadership ladder out of that national distress. Then came President Herbert Hoover’s tariff, which not only sent the U.S. economy down the chute, but also pushed the already weakened defeated powers of WWI into desperate economic straits. Nazism’s advance was the direct result of these errors made by “democratic systems” designed to produce superior leadership, but which instead produced the architects of Versailles and a hapless American President. My only explanation was that the United States had not been the world leader until the baton was passed from a debilitated Great Britain, and still did not know how to think of itself as being responsible for somehow managing the world. We were still in short pants. Today, we are not only supposedly grown up, but are clearly the only Superpower, with a young President the most important leader on earth. How was he selected? In part because of the advantages the nation would get for the reasons we associate with monarchy. George W. Bush not only learned politics since he was in short pants, but had a Rolodex he inherited from his father, which supplied the money to finance his run for the presidency. He also has in his father a man he trusts in his selection of a Cabinet and in his approach to foreign policy. This is how dynasties worked as well as they did for much of history, collapsing when the original paradigm became obsolete -- as Ibn Khaldun observed in the 14th century.

There is so much to cover on the topic of leadership that I hope to return to it before this semester ends, and welcome questions and comments that might open up avenues I would not normally travel. If you have a taste for leadership, I would recommend that you buy a copy of Peter Drucker’s first book, The Effective Executive. It is really the foundation of all Drucker’s later work as a management guru, and it applies to all forms of leadership. I’d given copies of it to some of my early clients, ceo’s of Fortune 500 companies, and remember one of them telling me he found it so impressive that he put it on his calendar to re-read at the beginning of every new year. I thought of it the other day when I heard that Jack Welch of General Electric, who is by common consensus the best executive in American business, was on the Charlie Rose Show a few days ago, talking about his life experiences. At the top of his list of priorities in being an effective, he said, was picking the people who work under him. It is something he thinks about all the time, he said, the care and feeding of his team. It sounds like he read Drucker sometime in his career. Or maybe he comes by leadership naturally and was captain of his teams back when he was in short pants, chosen because he knew how to get the best out of everyone on the team..