Last week we looked at the transformational leadership of President Obama. We introduced the three acts of transformational leadership 1) revitalization or recognition of the need for change, 2) creation of a vision for change, and 3) institutionalizing of change (Tichy & Devanna, 1990). We learned that during the election the nation slipped into an economic decline bringing about act 1. Obama successfully created a vision for change during the election and the electorate responded to voting him into office.
However, after taking office he began to have trouble implementing his policies, causing the vision for change to diminish in the eyes of the people. People still want change but the changes proposed by President Obama are not the changes the people were looking for.
This week we will look at another transformational leader who took office in a similar situation but with different results. This leader is the 40th president of the United States, Ronald Reagan.
When Reagan took office in 1980, the nation was experiencing 14 percent inflation and unemployment at almost 10 percent (Kudlow, 2004). This situation violated the traditional laws of economics which believed that the rate of inflation and unemployment have an inverse relationship. This means that as one increases the other will decrease. A new term “stagflation” was coined to explain this unusual economic condition. Because of stagflation many, including then President Carter, believed that the nation’s best days were behind it and that we would never again experience the greatness we once did.
Foreign affairs were also a mess with the Russian invasion of Afghanistan followed by the hostage situation in Iran (Kudlow, 2004). The nation was weak militarily as well evidenced by the failed rescue attempt in Iran known as Operation Eagle Claw (Pierre). Similar to conditions present when President Obama took office, the state of the nation at the time produced the recognition of the need for change.
In his acceptance speech at the Republication Convention in 1980, Candidate Reagan began to unveil his vision for the Nation. He chastised the current administrations belief that the nation’s best days were behind it and instead shared a vision of a nation that once again would be great. He reminded the nation that Mr. Carter told the American People to trust him. They did and found themselves out of work and with their savings devoured by inflation (Reagan 2020, 2006).
The electorate bought into the vision and elected Reagan to office in an historic landslide (Leip, 2005). However, would President Reagan be able to implement or institutionalize the changes he was proposing? The answer lies in the results.
When Reagan left office in 1989, the nation had experienced 35 percent growth or an average of 4.5 percent. Inflation had fallen to 1 percent and unemployment had fallen to 5.5 percent. The economic growth was not just in numbers but Reagan’s economic policies produced real growth evidenced by the emergence of new industries in computing, software, communications, and the Internet. Reagan’s foreign policy also laid the groundwork for the collapse of the Soviet Union and the end of the Cold War without even firing a single shot (Kudlow, 2004).
Critics of Reagan’s policies cite rising deficits and claim this represents failure of the policies. However, the budget gap between the deficits and Gross Domestic Product (GDP) was at 2.5 percent of the economy and remained unchanged throughout Reagan’s term. Since statistical data must always be compared with the context of the population as a whole, it is statistically sound to conclude that the deficit relatively remained unchanged (Kudlow, 2004).
The contrasting difference between the leadership styles of Reagan and Obama lye in whom they believe has the power to bring about change. With Obama, it is the central government. He believes that it is the responsibility of government to mandate change through legislative and judicial fiat. They view the individual as unable to make the necessary changes without the help of government. They handle the resistance to change by ignoring it hoping that once the changes are made, the people will learn to accept them. Perhaps this philosophy is at the root of the difficulties Obama is having in implementing his vision.
With Reagan, the philosophy is to empower the individual through tax cuts and reduced governmental regulation. This provides individuals with the capital needed for real economic growth and frees them of the chains of excessive governmental regulation. This bottom-up approach made acceptance of change much easier since individuals knew they were free to pursue their dreams and goals. This unleashed the creativity of the American People leading to the innovations in computing, software, communications, and the Internet.
The lesson learned here is that institutionalizing change is much easier and meets with less resistance when it is done by empowering individuals rather then forcefully mandated by the state. This is because an empowered people will come up with creative ways to solve problems where as state control monopolizes the creative means and cheats the nation of the creative force of an empowered people. What is lacking today in America is a transformational leader to empower the people and unlock their creativeness.
Next week we will be looking at the world’s most successful transformational leader of all time so I look forward to meeting with you through this medium next week. I also urge you to tell your friends and invite them to become followers of this blog
References
Kudlow, L. (2004, June 10, 2004). Reagan's link. Retrieved January 4, 2010, http://www.nationalreview.com/kudlow/kudlow/200406100915.asp
Leip, D. (2005). 1980 presidential election results. Retrieved January 4, 2010, http??uselectionatlas.org/RESULTS/national.php?year=1980
Pierre, T. (). What was Operation Eagle Claw, the failed rescue of American Hostages in Iran?. Retrieved January 4, 2010, http://middleeast.about.com/od/usmideastpolicy/f/me090413c.htm
Reagan 2020 (2006). Acceptance of republican for president at te 1980 Republican National Convention in Detroit, Michigan. Retrieved January 4, 2010, http://reagan2020.us/speeches/nomination_acceptance_1980.asp
Tichy, N. M., & Devanna, M. A. (1990). The transformational leader: The key to global competitiveness. New York: John Wiley & Sons Inc.
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