BackUPA: History versus expectations
Inability to communicate clearly to citizens has cost the UPA dearly
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Invoking history to judge one’s performance is the stuff of scriptures or in more recent times of soap operas. So it was curious that at his press conference last week Prime Minister Manmohan Singh lamented that “history", would judge him better. Singh, an acclaimed economist who taught international trade at the Delhi School of Economics, may well have been referring to the “time lag" effect in economics wherein we see a delay between an economic action and a consequence. It’s this that makes the effect of policy more difficult to quantify because it takes time to actually kick in.
And he may have a point. While the scams in coal block allocation, telecom spectrum, Commonwealth Games contracts aren’t just about corruption but also about potential value destroyed and growth percentages shaved off, it is only with some degree of hindsight that their true import may be clear to us. Much as the National Democratic Alliance (NDA) government found in 2004, its performance lauded today for economic growth was actually nixed by an electorate. Indeed, the United Progressive Alliance’s (UPA’s) smooth ride in its first five-year tenure owed much to the momentum built by the NDA government.
Accountability to the people in the short term or long term: it is a question asked more frequently in the corporate world where the whole bugbear of quarterly results and guidance has driven companies to despair with the practice of issuing earnings forecasts gaining ground in the second half of the 1990s, after the US Congress passed the Private Securities Litigation Reform Act of 1995, protecting companies from liability for statements about their projected performance. It led to short-term performance anxiety with quarterly results and guidance becoming an end in itself. More recently, corporate leaders have questioned their value with former General Electric CEO Jack Welch telling Businessweek Bloomberg: “Any fool can deliver in the short term by squeezing, squeezing, squeezing. Similarly, just about anyone can lie back and dream, saying ‘Come see me in several years; I’m working on our long-term strategy.’ Neither one of these approaches will deliver sustained shareholder value. You have to do both."
Of course, running a country is more akin to managing a university endowment with its focus on longer term sustenance. Eventually those charged with leading a nation have to be judged on less flimsy grounds than their ability to offer freebies and draw instant whistles.
World Bank economist Richard J. Carroll in his book, The President as Economist: Scoring Economic Performance From Harry Truman to Barack Obama, rated American presidents based on their showing on various economic parameters. In his ranking, Presidents Harry S. Truman, John F. Kennedy, Lyndon B. Johnson, Dwight Eisenhower and Gerald Ford ranked first through fifth. Truman’s first-place finish, wrote Carroll, was mainly on account of the vast improvement in fiscal indicators such as unemployment rate, annual productivity growth rate, average trade balance, tax revenue as a percentage of GDP, etc.
What’s interesting is that Ford is ranked higher than Bill Clinton, Ronald Reagan and George Bush (both father and son). And yet, in 1976, Ford, who defeated Ronald Reagan for the Republican nomination, lost the presidential election to Democrat Jimmy Carter. Elections, then, may not be the best judge of a leader’s performance. After all, the Left Front’s shocking destruction of West Bengal’s productive capability did not lead to its rejection by the electorate until there was a viable alternative.
Where Singh has erred clearly is in his inability to share the vision or the game plan he has pursued with the people who elected him. As with companies, so with countries, citizens tend to ask for more information from their leaders when times are bad, because they want reassurance. Last year, Wharton School management professor Michael Useem spoke to a group of CEOs to figure out whether they had changed their managerial style to address concerns resulting from the recession. Most of the managers said they spent more time talking with investors, analysts and their directors.
A country is not a company. So you expect the leader running it to signal his commitment to creating long-term, sustainable value for its citizens. But even that is a message that needs to be conveyed periodically and clearly. If indeed Manmohan Singh believes he helped steer India through a sticky economic situation brought on by global factors onto a path of sustainable growth for the future, he needed to have articulated it at each stage, not waited for the terminal months of his tenure to throw it as an emotional afterthought.
Will history be kinder to Manmohan Singh than journalists? Tell us at views@livemint.com
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