Jul 11, 2011

Half a Loaf or Half a Baby?

Given how many of our readers, in responding to our Friday post, clearly believe that “government matters,” we decided to return to the subject consuming the nation’s capital: the federal debt ceiling.

As the United States nears the deadline to raise the limit on our national debt, President Barack Obama has repeatedly been calling for compromise. Precisely because “Republicans and Democrats don’t see eye to eye on a number of issues,” Obama has said, the two parties must “step outside their comfort zones and make some political sacrifices.”

[EXPAND More]Peter Drucker believed in the necessity—and inevitability—of compromise. But he also stressed the importance of keeping it in perspective. “With strategy, one always makes compromises on implementation,” he wrote“But one does not compromise on goals, does not pussy-foot around them, does not try to serve two masters.”

Indeed, “because a compromise is always necessary in the end,” you have to know what your most important aims and real limits are. “If what will satisfy the boundary conditions is not known,” Drucker warned in a Harvard Business Review article, “the decision maker cannot distinguish between the right compromise and the wrong compromise—and may end up making the wrong compromise.”

In fact, sometimes making traditional compromises is worse than making no deal at all. “The effective executive knows that there are two different kinds of compromise,” Drucker explained. “One is expressed in the old proverb, ‘Half a loaf is better than no bread.’ The other, in the story of the judgment of Solomon, is clearly based on the realization that ‘half a baby is worse than no baby at all.’”

For politicians, who immediately tend to think in terms of political feasibility, compromise requires particularly ginger handling. Drucker cautioned, “The decision maker gains nothing by starting out with the question, ‘What is acceptable?’ For in the process of answering it, he or she usually give away the important things and loses any chance to come up with an effective—let alone the right—answer.”

What do you think: In the current debt-limit negotiations in Washington, who among the major players has the right approach to compromise? [/EXPAND]

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