America’s Rising Tide of Incompetence, part 2

Complex systems can’t be maintained by incompetent people.

WHEN EXPLICIT EXCLUSION is used to eliminate groups like White men from selection processes, it is done subtly. Managers are told to sequester all the resumés from “non-diverse” candidates — that is, White males. These resumes are discarded and the candidates are sent emails politely telling them that “other candidates were a better fit.” While some so-called “reverse discrimination” lawsuits have been filed, most of these policies go unreported. The reasons are straightforward; even in 2023, screening out all White men is not de jure legal. Moreover, any member of the professional managerial class who witnesses and reports discrimination against White men will never work in his field again. 

Even anonymous whistleblowing is likely to be rare. To imagine why, suppose incontrovertible evidence was produced that one’s employer was explicitly excluding White male candidates, and a lawsuit was filed. The employer’s reputation and the reputation of all the employees there, including the White men still working there, would be tarnished. That said, we can expect to see more lawsuits from men who feel they have little to lose.

This “Ask, Tell, Make” framework, under various descriptions, is the method by which individuals with a vested interest in “more diversity” push their organizations toward their preferred outcome. Force begins requesting modest changes to recruiting to make it “more fair.” Force ends with the heavy-handed application of quotas and even exclusion. The American system is not a monolith, however, which means that the strength of the push and its effects on competency is not distributed evenly.

Competency Is Declining From the Core Outwards

Think of the American system as a series of concentric rings with the government at the center. Directly surrounding that are the organizations that receive government funds, then the nonprofits that influence and are subject to policy, and finally business at the periphery. Since the era of the Manhattan Project and the Space Race, the state capacity of the federal government has been declining almost monotonically.

While this has occurred for a multitude of reasons, the steel girders supporting the competency of the federal government were the first to be exposed to the saltwater of the Civil Rights Act and related executive orders. Government agencies, which are in charge of overseeing all the other systems, have seen the quality of their human capital decline tremendously since the 1960s. While the damage to an agency like the Department of Agriculture may have long-term deadly consequences, the most immediate danger is at safety-critical agencies like the Federal Aviation Administration (FAA).

The Air Traffic Control (ATC) system used in the US relies on an intricate dance of visual or radar observation, transponders, and radio communication, all with the incredible challenge of keeping thousands of simultaneously moving planes from ever crashing into each other. Since air controlling is one of the only jobs that pays more than $100,000 per year and does not require a college diploma, it has been a popular career choice for individuals without a degree who nonetheless have an exceptionally good memory, attention span, visuospatial awareness, and logical skills. The Air Traffic Selection and Training (AT-SAT) Exam, a standardized test of those critical skills, was historically the primary barrier to entry for air controllers. As a consequence of the AT-SAT, as well as a preference for veterans with former air controller experience, 83 per cent. of air controllers in the US were White men as of 2014. 

That year, the FAA added a Biographical Questionnaire (BQ) to the screening process to tilt the applicant pool toward “diverse” candidates. Facing pushback in the courts from well-qualified candidates who were screened out, the FAA quietly backed away from the BQ and adopted a new exam, the Air Traffic Skills Assessment (ATSA). While the ATSA includes some questions similar to those of the BQ, it restored the test’s focus on core air traffic skills. The importance of highly-skilled air controllers was made clear in the most deadly air disaster in history, the 1977 Tenerife incident. Two planes, one taking off and one taxiing, collided on the runway due to confusion between the captain of KLM 4805 and the Tenerife ATC. The crash, which killed 583 people, resulted in sweeping changes in aviation safety culture. 

Recently, the tremendous US record for air safety established since the 1970s has been fraying at the edges. The first three months of 2023 saw nine near-miss incidents at US airports, one with two planes coming within 100 feet of colliding. This terrifying uptick from years prior resulted in the FAA and NTSB convening safety summits in March and May, respectively. It seems unlikely that they dared to discuss root causes.

Given the sheer size of the US military in both manpower and budget dollars, it should not come as a surprise that the diversity push has also affected the readiness of this institution. Following three completely avoidable collisions of US Navy warships in 2017 and a fire in 2020 that resulted in the scuttling of USS Bonhomme Richard, a $750 million amphibious assault craft, two retired marines conducted off-the-record interviews with 77 current and retired Navy officers. One recurring theme was the prioritization of diversity training over ship handling and warfighting preparedness. Many of them openly admit that, given current issues, the US would likely lose an open naval engagement with China. Instead of taking the criticism to heart, the Navy commissioned “Task Force One Navy,” which recommended deemphasizing or eliminating meritocratic tests like the Officer Aptitude Rating to boost diversity. Absent an existential challenge, US military preparedness is likely to continue to degrade. 

The decline in the capacity of government contractors is likewise obvious, with the largest contractors being the most directly impacted. The five largest contractors — Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman — will all struggle to maintain competency in the coming years. 

Boeing, one of only two firms globally capable of mass-producing large airliners, has a particularly striking crisis unfolding in its institutional culture. Shortly after releasing the 737 MAX, 346 people died in two nearly identical 737 MAX crashes in Indonesia and Ethiopia. The cause of the crashes was a complex interaction between design choices, cost-cutting led by MBAs, FAA issues, the MCAS flight-control system, a faulty sensor, and pilot training. Meanwhile, on the defense side of the business, Boeing’s new fuel tanker, the KC-46A Pegasus is years behind on deliveries due to serious technical flaws with the fueling system along with multiple cases of Foreign Object Debris left inside the plane during construction: tools, a red plastic cap, and in one case, even trash. Between the issues at ATC and Boeing, damage to the US’s phenomenal aviation safety record seems almost inevitable.

After government contractors, the next-most-affected class of institutions are nonprofit organizations. They are entrapped by the government whose policies they are subject to and trying to influence, the opinions of their donor base, and lack of any profit motive. The lifeblood of nonprofits is access to capital, either directly in the form of government grants or through donations that are deemed tax-deductible. Accessing federal monies means being subject to the full weight of US diversity rules and regulations. Nonprofits are generally governed by boards whose members tend to overlap with the list of major donors. Because advocacy for diversity and board memberships are both high-status positions, unsurprisingly board members tend to voice favorable opinions of diversity, and those opinions flow downstream to the organizations they oversee.

Nonprofits — including universities, charities, and foundations — exist in an overlapping ecosystem with journalism, with individuals tending to freely circulate between the four. The activities of nonprofits are bound up in the same discourses shaped by current news and academic research, with all four reflecting the same general ideological consensus. Finally, lacking the profit motive, the decision-making processes of nonprofits are influenced by what will affect the status of the individuals within those organizations rather than what will affect profits. Within nonprofits, the cost of incompetent staffers is borne by “stakeholders,” rather than any one individual.

While all businesses subject to federal law must prioritize diversity over competency at some level, the problem is worse at publicly-traded corporations for reasons both obvious and subtle. The obvious reason is that larger companies present larger targets for EEOC actions and discrimination lawsuits with hundreds of millions of dollars at stake. Corporations have logically responded by hiring large teams of HR professionals to preempt such lawsuits. Over the past several decades, HR has evolved from simply overseeing onboarding to involvement in every aspect of hiring, promotions, and firings, seeing them all through a political and regulatory lens.

The more subtle reason for pressure within publicly-traded companies is that they require ongoing relationships with a spiderweb of banks, credit ratings agencies, proxy advisory services, and most importantly, investors. Given that the loss of access to capital is an immediate death sentence for most businesses, the CEOs of publicly-traded companies tend to push diversity over competency even when the decline in firm performance is clear. CEOs would likely rather trade a small drag on profits margins than a potentially career-ending scandal from pushing back.

Whereas publicly-traded corporations nearly uniformly push diversity, privately-held businesses vary tremendously based on the views of their owners. Partnerships such as the Big Four accounting firms and top-tier management consultancies are high-status. High-status firms must regularly proclaim extensive support for diversity. While the firms tend to be highly selective, partnerships whose leadership is overwhelmingly White and male have generally capitulated to the zeitgeist and are cutting standards to hit targets. Firms often manage around this by hiring for diversity and then putting diversity hires into roles where they are the least likely to damage the firm or the brand. Somewhat counterintuitively, firms with diverse founders are often highly meritocratic, as the structure harnesses the founder’s desire to make money and shields them from criticism on diversity issues.

The most notable example of a diverse meritocracy is Vista Equity Partners, the large private equity firm founded by Robert F. Smith, America’s wealthiest Black man. Robert F. Smith is one of the most vocal advocates for and philanthropists to historically Black US colleges and universities. It would be reasonable to expect Vista to prioritize diversity over competency in its portfolio companies. However, Vista has instead been profiled for giving all portfolio company management teams the Criteria Cognitive Aptitude Test and ruthlessly culling low-performers. Given the amount of value to be created by promoting the best people into leadership roles of their portfolio companies, one might imagine this to be low-hanging fruit for the rest of private equity, yet Vista is an outlier. Why Vista can apply the CCAT without a public outcry is obvious. 

The other firms that tend to still focus on competency are those that are small and private. Such firms have two key advantages: they fall below the fifteen-employee threshold for the most onerous EEOC rules and the owner can usually directly observe the performance of everyone inside the organization. Within small firms, underperformance is usually obvious. Tech startups, being both small and private, would seem to have the right structure to prioritize competency.

The American System Is Cracking

Promoting diversity over competency does not simply affect new hires and promotion decisions. It also affects the people already working inside of America’s systems. Morale and competency inside US organizations are declining. Those who understand that the new system makes it hard or impossible for them to advance are demoralized, affecting their performance. Even individuals poised to benefit from diversity preferences notice that better people are being passed over and the average quality of their team is declining. High performers want to be on a high-performing team. When the priorities of their organizations shift away from performance, high performers respond negatively.

This effect was likely seen in a recent paper by McDonald, Keeves, and Westphal. The paper points out that White male senior leaders reduce their engagement following the appointment of a minority CEO. While it is possible that author Ijeoma Oluo is correct, and that White men have so much unconscious bias raging inside of them that the appointment of a diverse CEO sends them into a tailspin of resentment, there is another more plausible explanation. When boards choose diverse CEOs to make a political statement, high performers who see an organization shifting away from valuing honest performance respond by disengaging.

Some demoralized employees — like James Damore in his now-famous essay, “Google’s Ideological Echo Chamber” — will directly push back against pro-diversity arguments. Like James, they will be fired. Older, demoralized workers, especially those who are mere years from retirement, are unlikely to point out the decline in competency and risk it costing them their jobs. Those who have a large enough nest egg may simply retire to avoid having to deal with the indignity of having to attend another Inclusive Leadership seminar.

As older men with tacit knowledge either retire or are pushed out, the burden of maintaining America’s complex systems will fall on the young. Lower-performing young men angry at the toxic mix of affirmative action (hurting their chances of admission to a “good school”) and credentialism (limiting the “good jobs” to graduates of “good schools”) are turning their backs on college and White-collar work altogether.

This is the continuation of a trend that began over a decade ago. High-performing young men will either collaborate, coast, or downshift by leaving high-status employment altogether. Collaborators will embrace “allyship” to attempt to bolster their chances of getting promoted. Coasters realize that they need to work just slightly harder than the worst individual on their team. Their shirking is likely to go unnoticed and they are unlikely to feel enough emotional connection to the organization to raise alarm when critical mistakes are being made. The combination of new employees hired for diversity, instead of competence, and the declining engagement of the highly competent sets the stage for failures of increasing frequency and magnitude.

The modern US is a system of systems interacting together in intricate ways. All these complex systems are simply assumed to work. In February of 2021, cold weather in Texas caused shutdowns at unwinterized natural gas power plants. The failure rippled through the systems with interlocking dependencies. As a result, 246 people died. In straightforward work, declining competency means that things happen more slowly, and products are lower quality or more expensive. In complex systems, declining competency results in catastrophic failures.

To understand why, one must understand the concept of a “normal accident.” In 1984, Charles Perrow, a Yale sociologist, published the book, Normal Accidents: Living With High-Risk Technologies. In this book, Perrow lays out the theory of normal accidents: when you have systems that are both complex and tightly coupled, catastrophic failures are unavoidable and cannot simply be designed around. In this context, a complex system is one that has many components that all need to interact in a specified way to produce the desired outcome. Complex systems often have relationships that are nonlinear and contain feedback loops. Tightly-coupled systems are those whose components need to move together precisely or in a precise sequence.

The 1979 Three Mile Island Accident was used as a case study: A relatively minor blockage of a water filter led to a cascading series of malfunctions that culminated in a partial meltdown. In A Demon of Our Own Design, author Richard Bookstaber added two key contributions to Perrow’s theory: first, that it applies to financial markets, and second, that regulation intended to fix the problem may make it worse. 

The biggest shortcoming of the theory is that it takes competency as a given. The idea that competent organizations can devolve to a level where the risk of normal accidents becomes unacceptably high is barely addressed. In other words, rather than being taken as absolutes, complexity and tightness should be understood to be relative to the functionality of the people and systems that are managing them. The US has embraced a novel question: What happens when the men who built the complex systems our society relies on cease contributing and are replaced by people who were chosen for reasons other than competency? 

The answer is clear: Catastrophic normal accidents will happen with increasing regularity. While each failure is officially seen as a separate issue to be fixed with small patches, the reality is that the whole system is seeing failures at an accelerating rate, which will lead in turn to the failure of other systems. In the case of the camp fire that killed 85 people, PG&E fired its CEO, filed Chapter 11, and restructured. The system’s response has been to turn off the electricity and raise wildfire insurance premiums. This has resulted in very little reflection. The more recent coronavirus event was another teachable moment. What started just three years ago with a novel respiratory virus has caused a financial crisis, a bubble, soaring inflation, and now a banking crisis in rapid succession.

Patching the specific failure mode is simultaneously too slow and induces unexpected consequences. Cascading failures overwhelm the capabilities of the system to react. 20 years ago, a software bug caused a poorly-managed local outage that led to a blackout that knocked out power to 55 million people and caused 100 deaths. Utilities were able to restore power to all 55 million people in only four days. It is unclear if they could do the same today. US cities would look very different if they remained without power for even two weeks, especially if other obstructions unfolded. What if emergency supplies sat on trains immobilized by fuel shortages due to the aforementioned pipeline shutdown? The preference for diversity over competency has made our system of systems dangerously fragile.

Americans living today are the inheritors of systems that created the highest standard of living in human history. Rather than protecting the competency that made those systems possible, the modern preference for diversity has attenuated meritocratic evaluation at all levels of American society. Given the damage already done to competence and morale combined with the natural exodus of baby boomers with decades worth of tacit knowledge, the biggest challenge of the coming decades might simply be maintaining the systems we have today.

The path of least resistance will be the devolution of complex systems and the reduction in the quality of life that entails. For the typical resident in a second-tier city in Mexico, Brazil, or South Africa, power outages are not uncommon, tap water is probably not safe to drink, and hospital-associated infections are common and often fatal. Absent a step change in the quality of American governance and a renewed culture of excellence, they prefigure the country’s future.

Finis.

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Source: based on an article in Palladium, edited by National Vanguard editors; read the full original article