The Pitt Principle


So Harvey Pitt decided not to tell other members of the Securities and Exchange Commission a small detail about the man he had chosen to head a crucial new accounting oversight board, after turning his back on a far more qualified candidate. William Webster, reports Stephen Labaton of The Times, headed the audit committee at U.S. Technologies. Now that company is being sued by investors who claim that management defrauded them of millions.

And what did Mr. Webster's committee do after an outside auditor raised concerns about the company's financial controls? That's right: It fired the auditor.

Mr. Pitt's response when this story broke beats anything a satirist could have imagined. "Pitt seeks probe of himself," read one headline. Honest: Mr. Pitt's own agency will investigate how he chose Mr. Webster.

Meanwhile, what was Mr. Webster thinking? Nobody thinks he's corrupt; but having failed so spectacularly to police executives at a single, small company, how could he imagine himself qualified to enforce honest accounting for all of corporate America?

Yet it's no accident that Mr. Pitt picked the wrong man. Mr. Webster was chosen over better candidates precisely because accounting industry lobbyists a group that clearly still includes Mr. Pitt believed he would be ineffectual.

Let's call it the Pitt Principle. The famous Peter Principle said that managers fail because they rise to their level of incompetence. The Pitt Principle tells us that sometimes incompetence is exactly what the people in charge want.

In this particular case, ordinary investors demanded a crackdown on corporate malfeasance and Mr. Pitt pretended to comply. But this administration is run by and for people who have profited handsomely from their insider connections. (Remember Harken and Halliburton? And why won't the administration come clean about that energy task force?) So he picked someone with an impressive but irrelevant background, whom he could count on not to get the job done.

This principle explains a lot. For example, the Treasury secretary's job is to pursue sound fiscal and economic policies. So if you don't want that job done, you appoint a prominent manufacturing executive with little understanding either of federal budgets or of macroeconomics. He'll be just the man to preside over a lightning-fast transition from record budget surpluses to huge deficits. He'll even cheerily declare that "the latest indicators look good" just days before consumer confidence plunges to a nine-year low.

The attorney general's job is to uphold the Constitution and enforce the rule of law. So if you don't want that job done, you pick a former senator who doesn't have much respect either for the law or for the Constitution particularly silly stuff about due process, separation of church and state, and all that. He'll be just the man to respond to a national crisis by imprisoning more than 1,000 people without charges, while catching not a single person who has committed an act of terrorism not even the anthrax mailer.

The same principle can be applied at lower levels. Intelligence and defense experts should realistically assess threats to national security, and the consequences of U.S. military action. So if you don't want that job done, you place it in the hands of prominent neoconservative intellectuals, with no real-world experience. They can be counted on to perceive terrorist links where the C.I.A. says they don't exist, and to offer blithe assurances about fighting a war in a densely populated urban area when the military itself is very nervous.

But the most important application of the Pitt Principle comes at the top. The president's job is to unify the nation, and lead it through difficult times. If you don't want that job done, you appoint an affable fellow from a famous family who has led a charmed business and political life thanks to his insider advantage. He'll be the kind of guy who sees nothing wrong in seeking partisan advantage from a national crisis, even going so far as to declare that members of the other party don't care about the nation's security.

That way, a great surge of national unity and good feeling can be converted, in little more than a year, into a growing sense of dismay, with more and more Americans saying that the country is going in the wrong direction.

Originally published in The New York Times, 11.1.02