From the by M.D. Fletcher |
July 2010 |
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In management circles, there is a thing called Theory X. This is a management style that is kind of a default position usually taken by managers that have absolutely no clue as to how to manage. A subsection of Theory X is the practice of Management by Exception. These are the type of managers that strive to have a rule for everything and these rules are always developed as management's response to some previous blunder. Somebody screws up: Write a rule. Fred comes in late: Write a rule. Fred parks in the wrong spot: Write a rule. Fred pens an unflattering comment about the Boss on the men's room wall: Write a rule. Soon, the Theory X manager's got a whole slew of random rules that do absolutely no good whatsoever other than to 1) give the Theory X manager the mistaken impression the he or she is actually managing and 2) challenge Fred to be more creative Now, nowhere on Earth is Theory X more prominently featured as a dominant management style than government. The usual response of government when something goes wrong is to write more restrictions, more regulations and more laws. The fact that there are invariably existing restrictions, regulations and laws already on the books does not faze government because government doesn't seriously think that the new restrictions, regulations and laws are going to work any better than the old restrictions, regulations and laws. Government just needs to present the public impression that government is doing something about whatever is screwed up. Government has this overwhelming need because it is perennially terrified of having to get a real job. Consequently, Theory X management behavior in government evolves into its most tangible form, i.e. legislative political theater. You see it all the time. The Sarbanes-Oxley Act of 2002 was created in response to the Enron and WorldCom scandals in which thousands of hard-working people lost not only their jobs but in many cases their life savings due to the greedy and later to be proven criminal actions of their bosses and auditors. In Enron's case, the company's top dogs went from being the darlings of the White House and major participants in the development of the nation's energy policy all the way to being the unwilling stars of network television news perp walks. |
Sarbanes-Oxley, which sought to reform corporate America by holding executives responsible for accounting fraud and requiring accounting firms to automatically assume in their audits that the CEO of the firm is an unrepentant crook, was the government's application of Management by Exception. Has it stopped accounting fraud since? Nope. After the Exxon Valdez oil spill in 1989, the government enacted the Oil Pollution Act. This legislation was intended to forever prohibit any oil whatsoever from escaping from anywhere anytime. How's that working for us? Now the cause du jour is the financial market. After we all lost our collective shirts a couple of years ago because financial institutions like AIG and Lehman Brothers bundled up a whole bunch of bogus mortgages into strange instruments called derivatives and sold these worthless Trojan horses to each other and everybody else on Wall Street thereby greatly exaggerating their equity balances and net worth. When it all came crashing down, their executives (and their auditors) were already on the beach in Barbados and the rest of us were left holding the bag. So now Congress is taking yet another crack at it with the Dodd-Frank Bill which is legislation involving financial "reform". That's all well and good - I mean Congress has to do something, right? - but will it stop the next big blowup? Whether they call them derivatives, or swaps or subprime mortgages, someone, somewhere is dreaming up another way to game the system for their own benefit and at our own peril. A bright spot in all of this, provided there is one, is the fact that a whole lot of average, ordinary people who otherwise wouldn't get involved are now very angry at the results of Management by Exception. Congress is afraid of angry people. This round of legislative political theater better be a really, really good one. |
