• Marco Annunziata

What's The Worst That Can Happen? (Why Leadership And Expertise Matter)



In 2016, US voters picked as Republican nominee and later as President Donald Trump, a non-self-made real estate tycoon and reality TV host.


In 2018, Italy’s voters awarded the largest number of votes to the populist Five Star Movement led by Luigi Di Maio, a college dropout whose career had peaked selling drinks at the Naples soccer stadium.


In 2019, Eurozone politicians chose as new ECB President Christine Lagarde, former French Finance Minister and IMF head, with no experience or expertise in monetary policy and central banking.


It seemed like a good idea at the time, every time. After all, things were going relatively well.


So in the US we thought, traditional politicians are all the same, this guy will disrupt the system—what’s the worst that can happen?


In Italy we thought, traditional politicians are all corrupt, this guy is different and he promised us universal basic income—what’s the worst that can happen?


In Eurozone capitals we thought, the ECB has already done enough, this woman is a great diplomat and communicator—what’s the worst that can happen?


What’s the worst that can happen? Well, you might end up facing a true crisis.


In the US, Trump’s initial response to the Coronavirus outbreak was hesitant, downplaying the risk, and his reputation for erratic behavior contributed to undermine confidence. You could see the difference in last Friday’s press conference, where the President lined up credible experts and made it clear they were now guiding the response.


In Italy, government officials’ initial response consisted in photo-ops in schools and in bars, aperitivo in hand. Soon afterwards they panicked, shut down the entire school system and then the entire country.


In Europe, Lagarde’s performance at Thursday’s ECB press conference was incompetent and irresponsible. She seemed unaware of the gravity of the situation and of the impact her words would have on markets, and focused on lecturing governments and distancing herself from her predecessor Draghi (the one who saved the Eurozone in the 2012 debt crisis) rather than instilling confidence. A stronger-than-expected package of policy measures was wasted by her tone-deaf narcissistic performance.


It appears obvious now that these are not the kind of people you want to be in charge when a true crisis happens.


Good leadership matters.


Expertise matters.


Over the past several years, people have lost confidence in “the experts”. With good reasons. Too many experts have gone along with the game of the hyperbolic statement guaranteed to get you invited on the TV shows and to get more clicks on Twitter. Several experts have sold their reputation to a political cause. I don’t trust the experts either, and I am one of them.


But in a situation like this, expertise matters. Even if they don’t understand enough about this virus yet, the true experts understand a lot more than you and me, our friends on Facebook or the politicians. Following their advice gives us the best chance to limit the damage of this outbreak.


Similarly, having an experienced central banker with deep economic expertise at the helm of a central bank helps—again, Exhibit A is Draghi vs. Lagarde.


The experts need to do better: behave like experts, don’t try to grab the headlines, give sensible advice, admit how much you don’t know and what the margin of uncertainty is.

But we all need to recognize that when it comes to the crunch, expertise is our best asset, expertise gives us the best chance.


Good leadership backed by expertise is also an insurance policy.


In a world that is increasingly globalized and buffeted by greater economic, financial, geopolitical and technological volatility, we are likely to see more frequent severe shocks. And one day, the worst that can happen might happen.


Let’s keep that in mind when we choose our leaders.

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@ 2018 Annunziata + Desai Advisors, LLC