Shareholder Revolt - Fire the CEO?

“… that government of the people, by the people, for the people shall not perish from the earth.” 

For me, the words of Lincoln at Gettysburg have always meant that, effectively, the politicians in our government that represent us work for us. 

I have likened it in this way: the U.S. government is like a corporation. At the top is the CEO (President) and his executive team (Department Secretaries) and all the managers (Senators and Representatives). Unlike a corporation, we hire (vote in) the CEO, and he/she hires the executive team. And we hire the managers. Unlike a corporation, the managers (legislative branch) act as the Board of Directors, providing advice and consent to the CEO’s actions.

Again, I want to stress that this is a concept of government that works for me, and some elements may not match up perfectly with what is taught in a Civics class.

As to my neighbors and me, we are like shareholders in the corporation/country. We rightly believe that the CEO and managers work for us. Our positive satisfaction is what they strive for and for which they are compensated. As shareholders/constituents, our continued endorsement of the job these people do is to vote them in during election time. Or the opposite, every four or six years.

In a corporation, when a CEO is making poor strategic decisions that pose an immediate or long-term threat to its success, it falls to the Board of Directors to exercise its duty and, if necessary, rein in or even fire the CEO. 

It can be sudden, and the shareholders may not participate much in the decision, but they know that the action is in their best interest. They feel that way because they have been assured that the Board is independent of the CEO. They know that the members have not been chosen by the CEO and do not act in a partisan manner toward him/her. 

So what are we to make of the current state of our government? We have a CEO that has little interest in its workings or structure. He has little concern for how much expertise his key people have in order to do their jobs. His main objective seems to be to denigrate and reverse the actions of the previous CEO. His executive team members have staffed (or understaffed) their departments with demonstrably unqualified or disinterested people. 

In an interview after the launch of his newly published book The Fifth Risk, Michael Lewis says: “I’m trying to think if there’s anybody who’s just full-throatedly enthusiastic about the enterprise he’s been charged to run. Rex Tillerson wasn’t. Defense. [Jim] Mattis. And maybe, strangely, [Steven] Mnuchin. We never hear about him. I keep getting asked what’s the source of the next financial crisis, and I don’t have an answer because I don’t know anything, but there’s one thing that’s been eating at me since this man was elected. It’s the thing that, if it happened, you’d rewind the tape like in The Usual Suspects and say, (gasps) “Why didn’t I see that coming?”

So far, there are a number of concerns that a shareholder could have when it comes to the performance of the current CEO. The cursory transition effort, as described by the Michael Lewis book, is certainly one. Lewis focuses his alarm on the aging workforce of the Department of Energy, “which is no longer attracting young people as it once did” and the risk of “responding  to long-term risks with short-term solutions.” 

Should a shareholder/voter look to the corporation’s board to address these concerns? In my take on our government/corporation, one can see that the board/legislators are aligned with the CEO/president in an alarmingly partisan way. They are supposed to work for us and listen to our concerns. Is the welfare, and possibly the survival, of the country more important than the party to which our President and legislators belong?

D. Norman

The Snake Oil Salesman Who Can’t Leave Town

Back in frontier times, in the days before the Food and Drug Administration, a colorful visitor would arrive in town. He would ride in on his horse-drawn wagon, and set up his wares. The townsfolk would soon be regaled with promises of aches relieved, as well as other miracle cures. Customers who could afford it would walk away with bottles of what often was called snake oil. 

From Wikipedia: “The snake oil peddler is a stock character in Western movies, depicted as a traveling ‘doctor’ with dubious credentials, selling fake medicines with boisterous marketing hype, often supported by pseudo-scientific evidence. To increase sales, an accomplice in the crowd (a shill) will often attest to the value of the product in an effort to provoke buying enthusiasm. The ‘doctor’ will leave town before his customers realize they have been cheated. This practice has wide ranging implications, and is known as a confidence trick, a type of fraud. This particular confidence trick is purported to have been a common mechanism utilized by peddlers in order to sell various counterfeit and generic medications at medicine shows.”

I think of this bit of history often, as the days unfold in the current administration. I thought of it as well during the lead-up to the 2016 election. The thought would always be: what would happen when people realize that many of the promises they were so taken by were not pursued, or were broken?

In the context of the story of the snake oil salesman who would make sure to be gone before the townsfolk found out that their purchase was worthless, I wondered how the current occupant in the White House would fare, since he can’t “leave town”.  He has to face the people to whom he made all these promises.

There are several ways, as we have observed. Since the 2016 election, many sources have sprung up to keep track of these ways. Most telling, a reputable news organization calculated that the President of the United States tells, on average, between 7 and 16 lies per day. And he reinforces them by repeating them endlessly, in the hopes that such repetition will convince people that they must be true. Chief among these is to assert that the reputable news organizations are “fake”, so having them say that he tells 7 to 16 lies per day must not be true.

He was recently heard to say: “Just remember, what you are seeing and what you are reading is not what's happening. Just stick with us, don't believe the crap you see from these people, the fake news." Telling so many untruths becomes a steady avalanche, making fact checking difficult. His loyal “customers” won’t even try, instead choosing to believe everything he says.

Another way is to organize rallies in friendly locations and put up signs that proclaim “Promises Made - Promises Kept”. Many, many signs. Repetition. People strategically placed for the best camera exposure perform in much the same way as shills in the snake oil salesman’s audience, who would brag about how much they were helped by the miracle product.

How promises are kept can be easily tracked. Here’s one:

August, 2016: “I'm going to be working for you. I'm not going to have time to go play golf." In my research I have found that our President has spent nearly 33% of his time in office at a golf club, usually one he owns. Another source has estimated the cost to the taxpayer has reached $77 million.

One enterprising site has taken on the task of keeping a running tab of his promises. They show a total of 174 so far, of which 21 have been achieved, 43 have been broken, 18 are in progress, and 84 have not been started. 

There are signs that unrest and doubts among the “customers” are beginning to show. Less than two months remain before the midterm elections. Will they show that there are serious doubts about the value and effectiveness of the product?

D. Norman