Friday, December 6, 2002

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The postmortem on Paul O'Neill

Paul O'Neill has resigned as Treasury Secretary.

What to make of his tenure? The most positive spin the Bloomberg piece can put on it is that "O'Neill's assessments were often accurate even if they weren't always politically savvy." As someone who worked at Treasury during his tenure, and someone who wholeheartedly agreed with him when he opposed the steel tariffs, I'd judge him a little more harshly.

O'Neill fundamental strengths were his intelligence and his willingness to say what he though even if it roiled markets and politicians. His fatal flaw was that he knew he was intelligent, and therefore never considered the possibility that he could be wrong. Also, saying what you think is not the most useful skill for a job that requires a fair amount of tact. Since O'Neill had no political ambitions, his incentive to correct these flaws were nil. Therefore, he never learned on this job.

This led to three substantive mistakes. First, he believed that all aspects of government can be run like a business. Now, some aspects of government can, but by design, democratic governments operate differently from firms. His exasperation about this was palpable from day one.

Second, O'Neill never really understood the international dimensions of his job. The purposes of the G-7, one of the most successful forms of international policy coordination that exists, eluded him. The statements he made about the Brazilian and Argentinian economies were factually wrong and politically inane.

Third, O'Neill doesn't know squat about politics. He considered this a virtue, as someone who could speak truth to power. But politics does matter. Without an understanding of the way the process works in Washington, nothing substantive can ever get accomplished. In the end, because of his multiple gaffes, O'Neill had successfully alienated Congress, Wall Street, the G-7, the financial press, and the bureaucrats in his own department. It takes real effort to simultaneously piss off that many groups.

O'Neill is a man of extraordinary gifts. Unfortunately, those gifts had nothing to do with being a good Treasury Secretary.

posted by Dan on 12.06.02 at 10:21 AM


Can you forward this to Paul O'neill.

As an Australian I had lost my respect for the USA until today.

Today I heard O'Neill talk about providing clean water, health services and economic assistance to the rest of the world. This is the way to win a war on terror.

I have been amazed to see a country claiming to be Christian show such a babarian attitude to the rest of the world. Where was the forgiveness, the sharing of a second coat, turning the other cheek, praying for your enemies, loving others as youself etc.

I know America has seen a terrible event, although most of the world has experienced many events, and I understand the need for security, but seperating yourselves and becoming paranoid is not the answer.

I hope there are more people like O'Neill who can instill a different attitude and give us a chance to create a better world.

posted by: Jeff Connell on 12.06.02 at 10:21 AM [permalink]

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