Economic upheaval creating an urgent need for leadership

When a company gets into trouble, one of its essential recovery tools is solid leadership. This goes beyond keeping employees on track.

When a company gets into trouble, one of its essential recovery tools is solid leadership. This goes beyond keeping employees on track. It includes ensuring that the other constituencies of an enterprise - customers, shareholders, communities, and more - trust that management has a clue about what went wrong and a plan to move forward.

An element of this is PR: persuasion and common sense. But without genuine leadership, all the opinion massaging in the world won't matter in the end.

As I write this, global financial markets are in a dangerous state of turmoil. Like many people who have watched the nation play roulette with its economic future, I'm not sanguine that we can avoid troubles the likes of which we haven't seen in decades.

Do we have the leadership we need? It's not evident, not by a long shot. In fact, we have leaders - public and private - who have squandered the trust of almost every constituency of the financial markets. They enabled and - through action and inaction - fueled the rigged game that now threatens to pull us all down.

We can all - or most of us, anyway - look in the mirror for some culpability. The home "buyers" who lied about incomes and knew they could only handle the loans if prices went up forever; the sleazy daisy chain of builders, real-estate salespeople and lenders who pushed loans they knew were bad; the Wall Street sleight-of-handers who created "financial instruments" they knew or merely suspected were backed by vapor; there's plenty of blame to go around.

But at the very time we needed leadership as the bubble expanded, it was absent. Now, unfortunately, when we need it most, no one believes in the people who are trying - perhaps too late - to actually lead.

Never mind starting a war and pushing its costs onto our children. George W. Bush and his administration, and the Federal Reserve officials they put or kept in office, did everything they could to non-regulate the financial markets. They even blocked state banking regulators who wanted to ensure honest mortgage markets. They held interest rates absurdly low for way too long. They refused to even question the financial sleight-of-hand from their Wall Street friends.

Congress? As usual in this decade, it was absent-without-leave when it came to actually legislating and oversight. Both parties have been pathetic.

No one should believe anything the big bankers say; they have lost all credibility. But we are still waiting for the honest CEOs, who greatly outnumber the sleazeballs, to talk turkey to the public - and insist upon honorable business practices.

One of the few outspoken leaders has been Warren Buffett, longtime CEO of Berkshire Hathaway, year in and year out among the richest people on the planet.
His annual letter to shareholders (disclosure: I am among them) has been warning about the headlong way America has been rushing toward major woes.

He has been ignored.

Real leaders are their own best PR people. Public opinion is becoming entirely clear - and correct - about the greedy, power-hungry and dishonest ones who've been running America into the ground.

Dan Gillmor is director of the Knight Center for Digital Media Entrepreneurship at Arizona State University. Send e-mail to dan@gillmor.com.

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