Taking America's Economic Temperature

From last week --Charisma in Business

Charisma is seen as a generally positive attribute for a leader to possess, yet many studies give it a "mixed report card": finding it can have little or no effect, or worse a negative effect. Hermalin develops a model to explain why. The key insight is that presenting the cold hard truth is often incompatible with simultaneously firing up followers - a tradeoff exists between information and inspiration. In particular, a temptation exists to hide bad news behind upbeat rhetoric. Rational followers understand such appeals conceal bad news. But as long as any followers are swayed by such appeals - respond to the leader's charisma - rational followers' pessimism is tempered, and more so the more charismatic the leader. Hence, a more charismatic leader can generate better responses from all followers with an emotional appeal than can a less charismatic leader. This is a benefit to charisma. But this power has a dark side: a highly charismatic leader is tempted to substitute charm for action - she is less likely to learn relevant information and, on certain margins, works less hard herself - all to her followers' detriment.

                                                                                     --  National Bureau of Economic Research


Left over from last week is a promised evaluation of the American economy.  This is a big subject, especially big for a part-time blogger.  However, it is possible to begin a study in pieces.  Today I have chosen to begin with a report on a paper from the National Bureau of Economic Research on charisma in leaders.  Please join me in this research by following the link below.  Since so much of government these days is done on the basis of charisma, it is important to understand the subject of charisma itself.  I think you'll see why I say this by consulting the report here:


Charisma in Business