Monday, 1 August 2011

Credibility and Power

The brinkmanship of the debt ceiling in the United States seems to have nothing to do with the public outcry over the tragic clash of high-speed trains in Wenzhou, China. But at least there are two things in common: both crises indicate how important credibility is, and how vulnerable it can be.

Government leaders, senior executives and those in power often assume that they speak with authority and thus enjoy credibility. If they genuinely believe so, they have been terribly misled by their own indulgence, if not ignorance. Business and government leaders have authority not because of their own merit, but someone has given it to them; be it the people, the shareholders or the board. Apparently the leaders have to prove to those decision-makers that they possess the capabilities and experience to qualify for the job and to exercise authority, but their mandate never comes from within.

Someone may argue that in a democracy like the United States where politicians are elected by the people, the president, senators and congressmen genuinely enjoy at least some credibility because of their popular mandate. On the contrary, an authoritarian government like China will have to work very hard to justify its existence. But this is not the point. The point is, whatever the political system may be, those in power will have to justify themselves with responsible policies and sensible decision-making founded on humanistic values.

More importantly, human beings are not rational animals as much as we believe. We are actually far more emotional than we are ready to admit. What we believe, or choose to believe, to be true is mostly founded on experience, prejudice and values rather than facts and reason. Worse still, such experience, prejudice and values are rarely developed personally but someone else's and inculcated in our minds. Too often we interpret facts in ways that are compatible with our firmly established value systems and thus seek to reinforce our vision of this world. This is why people's attitude and perceptions are often said to be the most difficult to change.

For these reasons, to justify one's authority and power, doing one's job well no longer suffice, if it ever did. Managing perceptions has become increasingly important in a world where information flow is almost unchecked. Whenever information is not available, rumours and speculations flare up. This is precisely what has happened in China for the last week or so, and on many other similar occasions as well.

Yet it does not mean the United States and other developed democracies are exempted. The difference is not whether rumours are rampant in those jurisdictions but how many and how far the rumours are taken seriously.

In fact, the credit crisis in the United States - and Europe as well - illustrates the other side of the problem. While managing perceptions is more important than ever, it does not take over the fundamental importance of getting things done and problems solved. Failure to do one's job well often denotes the fatal blow to credibility and thus power. Failure to manage perceptions effectively is far less detrimental.

As the latest issue of The Economist has pointed out, credibility of the government is founded on its commitment to honour its debts, but recent developments have shown that the commodity is eroding. Government leaders are reluctant to make bold and tough decisions to safeguard the general well-being but engage themselves in a tug-of-war that leads to nowhere. Concrete plans of economic and institutional reform never emerge. At best, short- to mid-term and temporary dosage is offered to relief the pain. Root causes of the problem remains largely unaddressed. Although President Obama just announced that a consensus has been reached, it remains uncertain whether the crisis would continue to evolve after the immediate risk is deferred but far from defused.

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