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Why a CEO shouldn't run the NEC

For all his flaws--and there are plenty of them--Larry Summers will be missed when he leaves his post as the director of the National Economic Council. He doesn't have the best record on politically correct viewpoints. He has been called alienating, strongly opinionated, and difficult to work with by his peers.

But whatever you may think of Summers--and he has drawn sharp criticism from both the right and the left--he is widely credited with helping the president stave off another depression, and his gravitas and intellectual heft when it comes to economics will be extremely difficult to replace.

That's why the Obama administration's consideration of a corporate executive to fill the role is such a head scratcher to me.

The chatter following the news of Summers' departure is that Obama would like to replace Summers with a CEO to help mend the relationship between his administration and big business. Anne Mulcahy, the retired chairman and chief executive of Xerox, has been mentioned. So have Citigroup's Richard Parsons and GE's Jeffrey Immelt.

I have enormous respect for several of these executives. But none of them are remotely close to being economists. Mulcahy did an extraordinary job turning around Xerox when she became CEO (and has some smart lessons for leaders that Ezra Klein points to here). While she is seen as a frontrunner by some, she spent her entire career at the copier company, much of it in top human resources and sales roles.

Dick Parsons has some experience in Washington and has served time as chairman or CEO of two banks, but he is a lawyer, not an economist, by trade. Jeffrey Immelt may run the country's largest industrial giants, giving him a close read on the nation's economy, but his performance running the conglomerate has been lackluster, to say the least.

Some are even saying former advertising agency and Kraft executive Ann Fudge is a candidate. On what grounds? Her knowledge of consumers' cheese habits?

With Austan Goolsbee promoted to run the Council of Economic Advisers following Christina Romer's departure, some may argue Obama will be more free to select a less wonky choice for the NEC directorship. And indeed, Summers' replacement should be a better manager of the economic policy process than Summers was, listening to others in meetings in addition to advising the president.

But I have to agree with Reuters' Felix Salmon, who argues that "of all the positions in the White House economic team, one would expect the NEC director to actually be an economist." I find it hard to believe that there aren't plenty of intellectually brilliant economists who are also great managers. They may not be big names that send a coded political message, but they would have the right credentials.

The temptation to send a signal when filling such an important leadership role is a risky one. One sees it all the time: rather than simply picking the best person for a job, leaders make political decisions on who will ruffle the fewest feathers or send the right message to their employees, their investors or their constituents. There are a select few who can serve as both ambassadors to the cause and brilliant operators or intellectuals who fill the need. They are a rare breed, and the president--or any leader--should be careful about trying to find people who can do both.

By Jena McGregor

 |  September 22, 2010; 11:09 AM ET |  Category:  Change management , Decision-making , Federal government leadership , Government leadership , Leadership advice , Presidential leadership , Succession planning Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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Our economy is in free fall. We're in the middle of another great depression. The true unemployment figures are over 20 percent and rising.

Summers bailed out his buddies on Wall Street - the same ones who caused the crash dealing in derivatives. The rats are leaving the Obama Administration in record numbers - abandoning a sinking ship.

Posted by: alance | September 22, 2010 10:20 PM

The overriding reality is that our economy faces problems on a scale that we have not known at least since the end of World War II. These problems were not caused by the mistakes of any particular economist. But the reality is that economics provides no solutions to them. The fact that there is so much disagreement between different economists about appropriate policies to deal with these problems should make the limited value of economics clear to everyone. It probably is reasonable to say that no business CEO has the right skills to replace Larry Summers. But there appears to be nobody in the administration with the skills of a business CEO who advises the President at anything like the level of Larry Summers' position. That problem may be the bigger one than replacing Larry Summers. The fact of the last seven years has been close to disastrous results from government economic policy. That history plus the magnitude of our current problems suggests that some kind of major restructure is needed in our government's approach to economic policy. Any realistic approach to a more competitive American economy is going to require more cooperation between the federal government and private business. The apparent fact that the tone of the President's attitude rather than its substance has widened the divisions between government and business particularly suggests that the President needs more contact and more input from those who have the experience of managing a global business.

Posted by: dnjake | September 22, 2010 4:12 PM

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