Stumbling and Mumbling

Blair: victim of the myth of leadership

Polly expresses a widespread view about Blair - that his reputation has been destroyed by Iraq.
Assume, for the sake of argument, that this is true. No-one's pointed out an implication of this - that Blair has been the victim of the myth of leadership.
In theory, he need not have become identified with Iraq. He could have taken the view in 2002-03 that he had no mandate for war and that, war being a public good (or bad), it was a suitable subject for a referendum. Had he held such a referendum - and campaigned on the grounds "I reckon there's a decent case: what do you think?" - he would not now be discredited by the (perceived) failure of the Iraq  policy.
He never did this, because he believed in the need for "strong leadership", rather than in full democracy.
But this belief is pernicious, and not just to Blair's reputation:
1. The notion that there are special individuals with superior insight and inspirational skills is an exaggeration. Such people do exist, but they are rare, and it's foolish to assume that they'll be around - and identifiable in advance - just when you need them.
2. Central authorities do not necessarily have more knowledge than dispersed crowds. We don't need inquiries into "intelligence failures" to tell us this. Hayek pointed it out decades ago.
3. "Leadership" drains people of energy and initiative by fostering the expectation that leaders can solve their problems: Jeffrey Nielsen describes how in this book. There's something inconsistent about New Labour's stress upon responsiblities and empowerment on the one hand, and its acquiescence in the leadership myth on the other. 
However - and this is why I say he is a victim - Blair was by no means alone in believing in the leadership myth. Pretty much everyone else does. The vast majority of those who criticize his Iraq policy do so not because they wanted a referendum, but because they wanted him to be like Chirac, and lead opposition to it - but this is leadership all the same.
Blair's "tragedy", then, has been to be trapped into a myth; "leaders" can be enslaved as much as followers.
More tragic still, he'll not be the last to be so trapped.

Managerialism, professionalism and virtue

There's a common theme linking the shame of the 15 navy hostages, Jamie's talk of "institutional rot" and Theodore Dalrymple's complaint that good honest public servants have been supplanted by bullying toadies.
What we're seeing is the demise of autonomous professionals, who puruse internal goals.
Put it this way, traditionally armed forces have been distinguished from others by their courage and stoicism - the virtues necessary for success in battle. Today, they think they can blub like the rest of us, and pursue the external goal of cash rather than the internal goods of valiant solidering.
Likewise, teachers once pursued and imparted a love of learning for its own sake. Now they teach to the test and bully students into mere presenteeism.
Similar things can be said for civil servants and doctors.
In all cases, the goods of excellence - goods which are internal to particular practices - are being supplanted by the goods of effectiveness, the lust for mere money and power. In this MacIntyrean sense, Bryan Appleyard is precisely right - it's the death of virtue.
What caused this? You'll not be surprised that I reckon the root of the problem is managerialist ideology - the belief that all organizations can be managed from above by leaders. Though New Labour has pursued this ideology aggressively, it imported it from hierachical capitalists who have long recognized that the way to improve profits is to destroy craft traditions.
However, what might surprise you is that I reckon there was a bit of truth in the managerialist assualt on professional autonomy. Soldiers were sometimes bullies; teachers sometimes pederasts and alcholics, doctors arrogant charlatans (sometimes whilst being good soliders, teachers and doctors).  And "professional judgment" can sometimes mean mere guesswork.
What's offensive about managerialism, however, is that it overweights this small truth and supplants professional judgment with spurious judgments of its own.
Worse still, there's a nasty totalitarian strand in managerialism - the belief that all areas of society should be subordinated to a single organizing ideology.
And worst of all, there's something deeply ignoble about the goods of effectiveness. There's nothing more pathetic or contemptible than seeing a grown man lust for money and power. Managerialism seeks to impose this contemptibility upon us all.  And it seems to be succeeding.

Big government=bad government

Government has become so incompetent that it cannot even give money away. That's the message of this report from the Environment, Food and Rural Affairs Committee, which reckons the failures of the Rural Payments Agency could cost £500m.
The report says:

A culture where ministers and senior officials can preside over failure of this magnitude and not be held personally accountable creates a serious risk of further failures in public service delivery.

This, of course, is not a forecast - we've already had countless failures in public service delivery.
What's the solution? Wat advocates more Tesco government.  But this raises the question: if ministers are only appointed after they've proved their competence, how will we ever fill the jobs?
I suspect all this merely vindicates the prediction made by John Stuart Mill back in 1848 - that big government is bad government:

Every additional function undertaken by the government, is a fresh occupation imposed upon a body already overcharged with duties. A natural consequence is that most things are ill done; much not done at all, because the government is not able to do it without delays which are fatal to its purpose; that the more troublesome and less showy, of the functions undertaken, are postponed or neglected, and an excuse is always ready for the neglect; while the heads of the administration have their minds so fully taken up with official details, in however perfunctory a manner superintended, that they have no time or thought to spare for the great interests of the state, and the preparation of enlarged measures of social improvement. (Principles of Political Economy, Book V, Ch11 para 8)

I'd like supporters of Polly Toynbee to note the last clause. If they do, there's a faint chance that thinknig about the role of government might progress more in the next 159 years than it has in the last 159.

The folly of picking leaders

Two new papers on the economics of sport corroborate my prejudice that we shouldn't look to a change of leader to turn around a failing organization.
First is this (pdf) from Anne-Line Balduck and Marc Buelens. They asked: should a poorly performing football team sack its coach? And the answer, on average, they found, is no.
Sure, teams do better immediately after replacing their coach. But this is entirely because coaches are sacked after a run of abnormally poor results and subsequent results regress to the mean. Sacking the coach does not cause a (short-term) improvement in results. Fans of West Ham and Charlton would probably agree.
Second is this paper (pdf) from Peter Groothuis and colleagues, who studied the performance in the NBA of the top draft picks. And they found that most top picks failed to live up to their potential.  Between 1987 and 2004, only 35% of number-one picks made the top five NBA players. "When talent is thin, more false positive signals exist than correct decisions" they conclude.
Together, these two papers have an implication that might apply outside sport, to companies and politics.
This is that we shouldn't expect a change of leader - minister, chief executive - to turn around a failing organization. The effectiveness of changes at the top is over-rated. And even if a leader is sufficiently talented to be able to turn an organization around, we might not be able to spot him

The real crisis

The papers agree that there’s a prisons crisis. This is just the latest in a long series. In the last few years we’ve had an armed forces crisis, a school exams crisis, a BSE crisis and more NHS crises than you can shake a stick at, to name but a few.
This raises the question. My dictionary defines a crisis as a “time of extreme danger.” So why does mismanagement, which seems ubiquitous, so often lead to extreme danger?
It’s not just journalistic hyperbole. The disease was identified by Michael Oakeshott in his essay, Rationalism in Politics.
The rationalist, he said, believes in the “politics of perfection” – that all the public’s needs can be filled by the application of reason:

That anything should be allowed to stand between a society and the satisfaction of the felt needs of each moment in its history must appear to the Rationalist a piece of mysticism and nonsense. And his politics are, in fact, the rational solution of those practical conundrums which the recognition of the sovereignty of the felt need perpetually creates in the life of a society. Thus, political life is resolved into a succession of crises, each to be surmounted by the application of reason.

The “crisis” in our prison, then, isn’t that there aren’t enough prison places. This fact is mere routine mismanagement.
Instead, it’s that the rationalists’ claims to fill all our needs are shown to be fictions. The true crisis, then, is that our rulers’ claim to legitimacy – their pretence to competence – is undermined.

Lord Browne's alpha

Lord Browne, who's resigned as CEO of BP, has been described as "the greatest businessman of his generation."
You'd expect, therefore, his contribution to BP shareholders to be obvious. But it's not. I ran a quick regression of BP's monthly returns since Browne became CEO in June 1995 upon the All-share's returns. Doing so produces an alpha of 0.43, with a p-value of 33.5%.
That suggests there's a fair chance that BP's true stock-specific returns under Lord Browne were zero.
And this is the most friendly interpretation. Regressing BP's returns upon All-share returns and changes in the oil price cuts this alpha by three-quarters, to 0.132, with a p-value of 73.7%. Throwing in other risk factors - value stocks, sterling, small caps - doesn't much change this picture. In some regressions, alpha's a little negative, in others a little positive. In all cases, p-values are high.
The obvious reading of the data, then, is that it's quite likely that Lord Browne has made no material contribution to shareholder wealth, because BP's returns can be explained by macroeconomic risk factors.
Now, there's no doubt that - until recently at least - Lord Browne was one of the most esteemed of British bosses. So, if even he cannot make a clear contribution to his business, who can?
Of course, you can quibble endlessly with this. What's the counterfactual? Is alpha a relevant measure of CEO performance? and so on.
But the message seems clear. It's hard to identify CEOs' performance.
This is one reason why I say managerialism is an ideology; the claim that managers can  (except in rare cases) make a big difference to an organization doesn't leap out of the data.

Why can't Gerry Robinson fix the NHS?

Can Gerry Robinson fix the NHS? asked the BBC. A better question would be: can anyone fix the all-compassing managerialist ideology that asks such stupid questions?
Sure, waiting lists were a little lower in a few specialisms after he arrived. But as John Crippen says, these reductions were small, and achieved at a cost which the programme tried to gloss over.
But these achievements in no way vindicated Sir Gerry’s claim that “the NHS just needs managing in a day to day way.”
The thing is, all the ideas for cutting lists came from the staff: consultants, nurse-consultants and (yes) junior managers. As Sir Gerry said, “the staff have the answers.” His contribution was not to bring any skill or know-how, but merely to do what anyone with a camera could do – to focus attention onto the question. As one nurse told him: “you made a difference by making us sit down and talk about it.”
In other words, the progress that was made came from empowering staff, not from bringing better management. As the hospital’s CEO said, “I’ve done little but give permission.”
But of course, one can give permission simply by getting out of the way. Which raises the question: couldn’t the NHS be better run simply by increasing the degree of worker control?
The BBC, of course, never asked this question. Nor did it ask, until very hurriedly at the end: how can we improve efficiency by changing incentives? As one consultant said, efficiency’s greater in the private sector because time is money there.
Instead, the BBC’s presumption was the purely managerial one that the NHS could be fixed if only the right man were in charge. Hence the several sly ways in which the existing CEO, Brian James, was made to look inferior to Sir Gerry, despite being – in Sir Gerry’s words – “unquestionably one of the better managers in the NHS.”
This presumption, though, is merely the fundamental attribution error. What it doesn’t realise is that, had someone like Sir Gerry become a hospital CEO, he would have become as bound by red tape and bureaucracy as Brian was. Office determines character more than character determines office.
If the NHS is to be fixed, it requires changes in power structures and incentives. The BBC’s managerialist ideology means it missed these issues.

Hierarchies and information loss

Yet again, there's a cock-up at the Home Office. And yet again, no-one wants to see the real problem - that such failures are inherent in the very nature of hierarchies.
This latest mess wasn't cleared up because ministers just didn't know that the problem existed:

To the best of our knowledge this matter was not brought to the attention of the home secretary or his ministers until today, otherwise it would have been highlighted when he listed the reasons why the department's systems and procedures were not fit for purpose," said a Home Office statement last night.

However, this inability of bosses to understand their organization isn't merely a personal failing of Reid. Hierarchies, by their nature, don't use information efficiently. Underlings don't want to admit their failings. They don't want to make work for themselves or cause trouble with colleagues or other departments. They don't want to bother bosses with what they regard as trivia. They might not understand the significance of the partial, fragmentary information they possess. Information cascades, groupthink and the heuristic of social proof can all systematically mislead bosses and underlings. And, of course, people only tell their bosses what they want to hear.
The upshot of all this was described by Kenneth Boulding:

There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds.  This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.  In the most extreme form of this view, we can suppose that the role structure and communication network of an organization determine the inputs to each role so completely that there is virtually no freedom of decision at all, and that no matter who is the role occupant, the decisions will be much the same.   

And here's the tragedy. In the 40 years since Boulding wrote these words, we seem to have learned nothing. We still presume that rigid hierarchies, unmitigated by competition or by co-operation, are an efficient way of delivering government services, if only the right people are at the top.
When will we learn?

Managerialism vs the rule of law redux

Shuggy, Kamm and Finkelstein are all good on Blair's shameful decision to abandon the rule of law.
What they don't emphasize is that the move is a natural consequence of Blair's managerialist ideology.
The thing is, the law embodies not only the wisdom of crowds, but the wisdom of ages. One virtue of rules is that they recognize that we don't possess the judgment or knowledge to maximize outcomes in each case, so we should instead follow general principles. Here's Hayek in The Constitution of Liberty (p159):

The idea that each conflict, in law or morals, should be so decided as would seem most expedient to somebody who could comprehend all the consequences of that decision involves the denial of the necessity of any rules. Only a society of omniscient individuals could give each person complete liberty to weigh every particular action on general utilitarian grounds.

It's the essence of Blair's managerialism, however, that there are just such "omniscient individuals", and Blair happens to be one.
As I've said before, there's a conflict between managerialism and the rule of law. So Blair's decision, whilst shameful, is not surprising. 

Management as ideology

John Reid gives us a beautiful demonstration of how management has become an ideology rather than technique.
He's talking about a "strategy" to fight terrorism. But just two days ago the National Audit Office reported that the Home Office didn't even know how many people worked for it.
Which raises the question. What's the point of talking about "strategy"? If you have no grasp of the basic facts of your organization, what hope can there be of implementing any strategy successfully?
But the question misses the point. As this book marvellously shows, management - especially but not solely in government - is no longer a narrow, useful, technique of organizing resources. It's an ideological exercise - the manipulation of symbols with only a weak relationship to reality,  which serves the function of giving the impression that one is in control.
If Reid talks enough about strategy, he'll give the impression of doing something useful, of deserving his power. And in the managerialist's world, impressions are all that matter, as these legitimate their power.