It is a relief to see that the next step in the European sovereign debt saga, announced today, is not the “decisive action” that pundits had called for, but a measured response to the most immediate problems.
This distinction between control and problem-solving is one of the fundamental concepts of leadership. When things are going badly, it is a natural impulse to want to seize control — to do and decide everything yourself instead of trusting the experts to find solutions to the myriad details. But the biggest problems require the most ideas and the most action. When one hundredth of the Russian countryside was on fire, the central government did not say, “Don’t do anything till we get there.” Instead, it offered general guidance about what local authorities and individual citizens should do to respond. It deployed its own resources, including the military, in a supporting role where it seemed they might do the most good.
The problems in Greece and Italy were brought to the current point as a direct result of too much strong-willed central control. With the debt crisis in Greece, it was the European Union forcing a plan on Greece, then another plan when that one failed, and so on. The latest plan tacitly admits that was all a mistake, and turns most of the budget issues back over to Athens. The more recent and more startling budget crisis in Italy comes from political leaders strong-arming the political process to try to keep a corrupt system going. Italy’s situation will not improve until it replaces its current leaders with ones who can take a more flexible approach. The way things stand now, Italy is at risk of collapsing in a matter of weeks, long before Greece might, but when the commitment to corruption is set aside, Italy can easily find ways to keep the government and country going.
With control-minded leaders, things eventually deteriorate to the point where a more open approach is forced upon them, so that more ideas can be involved, and more complete solutions forged. This is what has finally happened in the European Union. If leaders cling to control beyond this point, then either the leaders are replaced or the whole enterprise collapses. This is the nature of the turning point we just observed in Libya and the one we are rapidly approaching on Wall Street. There was, of course, never any reason for Europe to go down that road.
