Power Dynamics. The Meyers Piece

¶ … power dynamics. The Meyers piece about TARP discusses how Congress essentially ceded power to the banking industry and is now attempting to regain some of that power. The Carleo article discusses the nature and ramifications of power relationships in the workplace.

These articles both serve to illustrate the importance of power relationships in our lives. There are instances where, as Carleo outlines, power relationships can be crucial to the success of the organization, but can also have a strong impact on a personal level. Managing one's position politically is critical for success in the business world. Congress failed with regards to TARP because it lost sight of how its actions were going to change the power dynamic.

What we can see from these pieces is that each author has a baseline understanding of the nature of politics and power. Put together, these pieces serve as an indictment of the political system. Congress, in its rush to put TARP together, did not follow the eight traits of strong leadership that Carleo outlined. As a result of this failure, they ceded power to the banks. The banks, for their part, did a masterful job of controlling that relationship. Recall that Wall Street was urgently calling for action. Stock indexes were collapsing and credit was tightening. The banks cried for money. It was, therefore, Wall Street that established the nature of their power relationship with Congress.

This power relationship can be characterized as Congress holding the formal power and Wall Street holding the informal power. The holder of the informal power was able to skillfully wield it, causing the holder of the formal power to misuse that power to the benefit of the holder of the informal power. This relates directly to the core of Carleo's article - that the politics is the pursuit of individual goals without regard to the organization's goals. Congress failed miserably in its recognition of the differing goals. Wall Street, of course, is pursuing individual goals of securing funding for bonuses and organizational goals of returns for shareholders. These are not at all the same goals that Congress was pursuing. Wall Street therefore became a political actor, acting in its own interest without regard to the organization (the nation). The guardians of the nation's interest - Congress - failed in their duties. In particular, they failed to identify the sources of formal and informal power. They underestimated the strength of Wall Street's informal power, which derives from the investment holdings of millions of Americans, who in turn elect Congress. Had Congress recognized that powerful source of leverage that Wall Street had over them, they would have understood their situation better.

Carleo also debates how those on the weak side of power relationships should behave. She puts forth the idea that often those who do not have the strongest source of power (employee) will often go along with what those with power believe because it easier to do so, and overall a much lower risk option. We can conclude from the actions of Congress that they are the weak actor, bereft of power relative to Wall Street. Yet, in a traditional employer-employee relationship, the boss is the actor with the formal power. Yet Congress is the actor with formal power, but instead acted as though they did not. In this way, Congress and Wall Street have a power relationship opposite to that of a typical employer-employee relationship.