Economic leadership vs. popular leadership

It was Barack Obama’s clear social-demographic advantage – the support of a “minority” (Hispanics, African Americans and women) turned a “majority” – that brought on his reelection.

Binyamin Netanyahu, too, is likely to earn reelection by virtue of the social demographics of the “rightist bloc” that supports him.

Obama will be remembered in his first term as a “popular” leader – a politician who championed compromise, espoused cooperation, and sought the kind of commonality that usually rests on the lowest shared basis. Obama made no meaningful breakthrough in his first term in office; he played the role of conciliator and mediator. Even in these functions, he posted no glittering success abroad or in “domestic” issues vis-à-vis the Republican majority in Congress.

Popular leadership and economic leadership inherently conflict. The former rests on short-term calculus and immediate gratification of the public’s wishes; the latter hinges on long-term vision and the choice of lengthy demarches at the expense of popularity and fast-and-easy public gratification.

A true and stable economic agenda is based on long-term thinking and processes that take time to pay off. The electorate cannot always see or understand the long-term utility of a given economic policy. The problem in an economic debate is that it hits everyone’s pocket, meaning that every citizen has an opinion about it, but it comprises a set of complex parameters and entails economic knowledge that rank-and-file citizens rarely have.

As a case in point, consider the issue of reforming and competitivizing Israel’s ports. Such a reform requires the restructuring of port workers’ remuneration so that they will generate more output by working longer hours more efficiently. In the short run, it’s an unpopular cause to tackle because it involves layoffs, wage cuts and heightening of expectations.

Farther out, however, streamlining the ports will lower unloading costs, reduce import prices and cut export costs to make Israeli goods more competitive in international markets. This is a long-term process that entails a short-term “price”; as such, it will not earn its engineer any popularity despite its necessity.

There you have it: the electorate is unlikely to award “extra credit” for a complex economic agenda.

If so, what image should a head of state seek – the Homo Economicus or the popular?

A LEADER who knows that his/her term in office is in the public’s hands must weigh the merits of a popular strategy – showering voters with pleasing promises – against those of a responsible one. The dilemma takes an especially trenchant turn at election time. To curry favor, candidates for leadership have to appeal to the lowest common denominator. Conversely, leaders who wish to offer an economic vision and spearhead genuine, meaningful economic reforms may have to wipe the “nice guy” smile off their faces.

It takes a broad range of skills and capabilities to be head of state. Generally, such a person focuses on three main areas of activity that may not necessarily be related:

1. Vision and national leadership – leading the public at large, offering the public and the state a vision, mobilizing the citizenry behind confidence in their leadership, and playing the role of “national patriarch.”

2. Political leadership – guiding a party through the political maze, taking political initiatives, and “cooking deals” in the corridors with politicians at various levels.

3. National CEO – managing and carrying out the state’s affairs and keeping all those campaign promises.

Few are the leaders who can display strong prowess in all these arenas concurrently.

DURING HIS first term, Barack Obama proved his strength as a visionary. However, he displayed weakness as a political leader by failing to pass through Congress the gamut of programs he had promised his voters. He also showed weakness as a national CEO whose task it is to implement his programs.

Obama’s political history thus far has no chapter in which he surmounts the obstacles by really “getting something done” and managing an organization at the macro level.

Like Obama, Netanyahu is known as a public leader and a visionary. Moreover, Netanyahu is gifted with political leadership strengths that allow him to attain his political objectives time after time.

As finance minister, unlike Obama, Netanyahu proved himself to be a “doer” and economic leader who made tough decisions and carried out economic moves even if they entailed cutting living flesh to the bone.

Before being elected to his first term, Barack Obama persuaded the public that “Yes we can” – that he had a vision.

Once in office, however, he failed to elevate his vision to the practical plane.

The necessity now is to focus on defining and implementing the contents of the vision: “What is it that we ‘can’?” Obama needs to realize that if meaningful economic reforms are to go ahead, his neutral, popular positions have to go. The two might coexist at a time of economic strength and efflorescence.

However, given the state of the global and, particularly, the American economy, Obama should stop being the nice guy. He should take an example from Netanyahu and become an economic leader.

In his most recent term as prime minister, Netanyahu reinforced his stature as a popular leader. In the next term, however – which is also shaping up as Netanyahu’s – the balance for the Israeli economy needs to tilt toward “economic leadership.” To bring this about, Mr. Netanyahu should recruit executives graced with leadership, professionals who will forego “popularity” and be men and women of vision and action – people who, acting on his and Israel’s behalf, will take unpleasant but essential measures for the Israeli economy today.

Dr. Hana-Muriel Setteboun is vice president of Business Development and Finance at FK group, Israel.