AIG and the Civil War

In 1861, the American Civil War pitted the vastly more populous, vastly richer and more industrialized North against the Confederacy, which was sitting on a possibly-rebellious slave population that outnumbered their masters 10:1, and that had no navy and thus could never receive reinforcements or supplies. The outcome of this conflict was obvious from the get-go. The Union soldiers would literally be home by Christmas.

A man named George B. McClellan was given charge of the Union army to make short work of it all, after a brief battle that took the existing regional commander out of the picture. All he needed to do was take the Juggernaut union army on a three day's long march from Fort Monroe to Richmond, and all this nonsense would be over. Done and done.

McClellan, unfortunately, wound up being an awful general. He was cautious when he needed to be risky, risky when he needed to be cautious, and put his own reputation on the line less frequently than the blood of his soldiers. But personal reasons to hate him aside. He was a bad general. He drew his first major battle at Williamsburg, followed by a loss at Seven Pines, just a few miles from Richmond. His easy advance turned into a humiliating, fighting retreat that ended in the disaster of the 2nd battle of Bull Run. After this, the Confederacy was on the attack. The end result of his bungling was the battle of Antietam which managed to get more Americans killed on any singly day than any battle before or since. It did not, however, end in anything more than an indecisive draw.

With great disgust of both the people and the government at his actions, McClellan was replaced by General Burnside. Burnside set out to do what McClellan could not, beat up the numerically inferior Confederate army and actually end the war proper. The result was the battle of Fredericksburg: one of the most humiliating defeats for the Union cause of the war. Like his predecessor, all Burnside had managed to do was get a lot of Union soldiers killed for no real purpose. He also oversaw a general crumbling of the army as desertion rates soared.

Burnside was replaced by General Hooker (after whom we get the slang word for prostitute), whose own moral behavior aside, only really managed to enforce crony-ism in the army, and lead the Union to a crushing defeat at Chancelorsville, called "Lee's perfect battle". Though decisive, unlike his predecessors, he was sleazier, and a bad general, but he wasn't even all there as far as common Union ideology was concerned, once saying that "Nothing would go right until we had a dictator, and the sooner the better."

We are facing a similar type of problem today in our economic crisis. We have had a lot of CEO's, the proverbial generals of capitalism, who have had a massive amount of resources and large, powerful institutions, and one easy task: make us all some money. Economic growth should have been easy with the best people involved on the job. Like the Union generals, however, they were of dubious scruples, unclear in purpose, and most importantly, really, really bad at their jobs.

The end result, then as now, is disaster. Politicians and the populace alike are demanding the heads of industry giants, especially the ones at AIG, who have taken huge bonuses as a reward for leading our modern day Union into the dirt. It is clear with our Wall Street exec's as it was with the army's exec's back in the day that the old leadership was bad, and that new leadership is required. The question, then, is who do we get to do the job right?

When McClellan screwed it all up, they went for another general. When they got a worse one, they put another general in charge. They didn't put the army under the control of some random government bureaucrat or some other random person. They put the army in control of similar people with the same training, and the same experience, and the same expertise, and they did WORSE than the people they put in before them.

This is exactly the problem that we're having with AIG. Businesses have gone bust, the economy is tanking, and CEO's legitimately bear a big chunk of the blame. The government plan over the last year or so is to fire the CEO's and appoint a government bureaucrat because the other CEO's out there that are trained the same way and are doing the same things are still out there making it WORSE.

The problem, though, is that some random, everyday government bureaucrat is NOT going to be able to lead an army as well as a general, and they're NOT going to be able to handle a massive corporation as well as a CEO. In the end, even if they're making the problem worse, you need the same type of people who have the pertinent training and experience to be able to actually fix the problems. If specific generals and CEO's are causing problems, than those specific ones should be brushed away, but having a systemic change to hand over power to a class of people who we know are less qualified is an unjustified way of handling our anger.

In the end, Lincoln kept on picking more generals to command his army, even though it was the generals that were losing the war and destroying America. Hooker would be replaced by Meade, who beat Lee at Gettysburg but shamefully let them get away. Meade was made a subservient of General Grant, who had a vision of warfare that eventually brought about the ultimate victory of the Union army in the Civil War.

If Lincoln had decided to get rid of the commander of his army and replace him with a government appointee from the war department (or somewhere else in the bureaucracy), it is unclear what would have happened in the war. It is certain however, that it took a man who had spent his whole life in the army and had fought in the trenches and had fought his way up the rungs to the top, who was the person who had the experience and leadership qualities to be able to lead the army to victory, no matter HOW bad his predecessors had been.

Why should we expect it to be any different with our CEO's?


For further reading, click here.