The compromise conundrum.

Wage compromises are not a solution in unforgiving markets.

When stances are stubbornly held in adversarial relationships annual compromises in wage negotiations amount to nothing more than temporary patchwork and ultimately simply become untenable.

Management will adjust to the compromise by cutting costs deeper, and workers return to their positions bruised, bloodied, seething with resentment and waiting anxiously to learn whether they will be the next to be turfed out of a job.

The writing has been on the wall for a long time in the mining industry, one of the country’s biggest employers and a hotbed of distrust and violent confrontations, exacerbated in no small measure by union rivalry and by the fact that investors have to seek high returns in a volatile environment with a naturally depreciation asset. In time, a mine simply dies when it runs out of payable reserves. Paradoxically, the only certainty one can establish in such an environment is through flexibility. In turn, flexibility simply cannot accommodate rigidly held demands, assumptions and unrealistic expectations.

It is further severely threatened when extreme if not outrageous positions are taken at the outset of an obscene haggle. This week’s opening gambit by the National Union of Mineworkers was for a 60% pay hike and by its rival AMCU for 100%. It is by far the most extreme demands yet that the industry has had to face and comes on the back of highly costly, violent and disruptive action that has had the industry staggering for months now.

In addition, the relentlessly tightening pincer of a decline in commodity prices on the one hand and rising costs on the other is having devastating effects on global mining with many mine operations facing closure. While some argue that this is a time for compromise on all sides, it could also be argued that it is the time to fully re-examine a wage pricing model that is deeply flawed to begin with.

That model has created the ever widening gulf between employer and employee, between capital and labour, between executives and average worker. On the one hand we have had the industry pleading its cause through some stark reality check figures outlined by Moneyweb Mining Editor, Geoff Candy that put the cost of producing one ounce of gold and replacing that ounce with a new one at between $1,250 and $1,500.

Then we had Labour correspondent Terry Bell earlier defending a double digit pay increase on the basis that “the wage deals struck by most workers over the past five or six years, let alone over a longer period, reveal that these workers have effectively become poorer; that their disposable income has bought less and less as each year went by”.

Mining, like few other industries, has very limited choices. It is not the place where you can bring your needs and wants to the “market”. That market is unforgiving, overwhelming and absolutely dictatorial.

Ultimately it is so with all markets. The ultimate paymasters of profits, wages and all benefits are the end buyers, not management, unions, or the outcome of “negotiations”, belligerent or otherwise, between the beneficiaries.

Wealth distribution has always been secondary to wealth creation. Yet, under the veil of being “market driven” we have made the secondary market the primary one, arguing that collective coercion on the part of labour; kowtowing remuneration committees on the part of executives, shareholder value on the part of capital, and tax decrees on the part of state, represent true value and contribution to the end buyer.

We are being pushed by reward, not being led by contribution. It is in line with the flawed economic construct we have developed over decades that panders primarily to our selfish needs and wants rather than our natural and instinctive desire to do something meaningful for others, the ultimate source of meaning and contentment.

But even that would be tolerable if those markets that should guide wealth distribution were unfettered and functional; where rewards at a general labour level were not determined by panga wielding mobs, unrealistic expectations and rigid legislation; where at executive level they were not the outcome of smoke and mirror board-room lotteries to create 50-60 times pay differences between highest and lowest; where productive capital is not seduced by quick and short-term returns either in flaky financial instruments or by neglecting other constituents; and where taxes were aimed primarily at enablement and not dependence.

Only a truly functional market for skills, qualifications, experience and aptitude can be an appropriate guide to pay differences and how the labour share of wealth creation should be subdivided. The overall strategic pillars of sensible distribution are meeting the legitimate expectations of all of the stakeholders and encouraging continued contribution. But even then, the actual amount has to be aligned to wealth creation itself and each reward ultimately sanctioned by those who pay for it, the end user or customer. If the recognition of value added by the end buyer is volatile according to changes in supply, demand and prices, then rewards themselves have to be flexible and constantly aligned to those changes.

That would be a purist market view – perhaps not attainable for decades to come. But what we now have is broken and unsustainable.

Moods and measurements.

Having our economic destiny driven by manic-depressive markets.

There’s been much talk again recently about what drives what in economics: the immeasurable or the measurable, the way we calculate or the way we behave; the way we think or the way we feel.

It clearly is much more than chicken or egg, and regular readers to The Human Touch will know which side I favour – the title of my column says it all. But then I must concede that I am a product of an age when things were relatively stable, our serenity rattled mostly only by the threat of a nuclear 3^rd world war.

Exchange rates were fixed. Even our money supply was disciplined to how much gold we had in our vaults and changing our exchange rate was a huge political event – “devaluation” implying weakness, mismanagement and instability. At the time a 5% devaluation was “groot skande”; a 15% downward adjustment to the dollar a threat to popularity at the polls. No wonder politicians handed the whole sorry affair over to “the markets” where currency values can move by more than that and both ways within weeks, with only obscure blame on domestic management, but mostly on the pretext that “it is not I that am weak, but he that is strong!”

Remember “Decimal Dan, the Rand/cents man”? At that time you could buy a British pound for R2 and $1½ dollars for R1. It was weird. At home you were poor, but when you travelled you felt like a king among paupers – that’s if you could afford the flight, both physically and financially. My first flight to Holland on a Trek Airways DC-4 took nearly a week – I still remember it as being a lot longer, those propellers no doubt having made a permanent contribution to my chronic tinnitus.

Interest rates were even more tightly controlled. You could not change the bond rate without parliament getting involved. As a young bachelor I remember well the scramble for a fairly abundant supply of “rent-controlled” apartments. We had control boards, which occasionally would challenge Economics 101 by putting up prices because there was a product surplus, but somehow always managed to maintain food supplies at affordable prices. Inflation in the happy hippy 60’s was a term mostly only academics used.

It was a time of oppressive economic controls. Paradoxically it was also a time of great self-control and self-discipline. Many of us compiled budgets with our first pay cheques. An intriguing entry I found under “income” in one of my first monthly budgets was: “Found in pocket = R1”. Of course, detractors from this seemingly idyllic picture can rightfully counter that we had a laager economy, a terribly misguided ideology, and were totally out of step with both what was right and with what was happening in the rest of the world.

So before a warped nostalgia takes me to a point where I lose my conviction born in the 70’s that the markets have a certain magic, that they make better decisions than corrupt governments, that they are better informed than a handful of self-serving bureaucrats and that freedom of choice in all our affairs is worth defending to the death, I need to chant my favourite mantra: “perfect markets perfectly reflect all our imperfections.”

There’s been increasing vindication for the view that moods drive markets and that behaviour drives systems, structures, institutions and ultimately our economic destiny. Our “leading indicators” are no longer restricted to scientific data but include many mood measurements such as opinion surveys and confidence indices. At the same time, there’s been growing scepticism about measurements – not only their veracity but whether we are, as Einstein might have asked: “counting what counts; and ignoring what does not count.”

Without doubt the two are linked, but moods affect the interpretation of measurements, even if they are accurate and valid, and in turn influence the markets to achieve an outcome which comes close to self-fulfilling prophecies. Going back to when most will not remember, and when many of us foolishly believed that economics was an exact science, there were really only two groups who one listened to for market forecasts: the fundamentalists and the chartists. The former, especially economists were great at hedging their forecasts with “on the other hand”. Charting was often viewed as a bit of hocus-pocus. Still, their pretty pictures had sufficient following to influence outcomes.

Today we have the quaint distinction between traders and investors – the former being mood merchants and the latter mostly herd followers trying desperately to maintain the courage of their convictions. When they can’t do that and succumb to the traders’ trumpets they become their fodder, caught in the cappuccino froth.

Traders (we used to call them speculators) need bi-polar markets. They thrive on mood-swings: the sharper and shorter the better with the best players making much more money on panic than tortoise moving confidence. And if they can’t peddle that panic, they are not beyond colluding to rig important triggers like LIBOR. Now driven, as opposed to simply using nano-second electronic trades they are ready to pounce on the slightest differential between trading platforms.

Now all of that would be fine, if speculators were not so many and did not have such an inordinate impact on very important prices and rates that affect the real economy and our economic destiny. Consider McKinsey Global Institute estimates that put the “value” of annual financial speculation at $1.2 quadrillion – 15 times more than the $80trn annual value of Gross World Product.

There’s a first for me! I have never written “quadrillion” in an article before!

Most of that trading centres in bank created I.O.U’s we call money, in the process destroying one of the four essential requirements for money: as a store of value. As a stable measurement of value it is on increasingly shaky ground, but is still holding on to its role as a means of exchange. Regarding the fourth, something you can count in (numeraire) … well you could use sea-shells or poker chips for that.

The predominantly naïve part of my character allows me to reconcile these mind boggling developments with one simple thought. Despite the froth, the underlying coffee remains. The sustainable and for me the most solid part of the economy still rests on life enriching, day to day exchanges that provide us with both means and meaning.

Let the dogs bark….the most effective counter to panic is patience.

The government debt trap.

Why Pravin Gordhan is concerned about the current state of the markets.

Those who favour aphorisms are likely to be familiar with the “10 cannots”. Despite popular belief that they were written by America’s famous statesman, Abraham Lincoln, they were apparently the work of a religious minister, Henry Boetcker.

They are worth studying and following in all of our affairs, particularly government and public. But at least two will no doubt sound very strange in our modern world:

· “You cannot bring about prosperity by discouraging thrift,” and

· “You cannot establish sound security on borrowed money.”

The world is drowning in debt and funny money and it’s a moot point whether, with all the academic postulates and hypothesis that deluge analyses of the debt of different countries, we would not conclude that they would be either insolvent or close to it if they were individuals – at least from a cash flow perspective. While comfort is often sought in the debt to assets ratio, this is pushing hypothesis to beyond credence. A grand auction of all household and national assets to cover debt is pure fiction. So we see nations trying to revert to a Boetcker like thrift or “austerity” to roll back decades of indulgence and to spark off a heated international debate about whether, in the interests of suffering and stone throwing citizens, there should not be a leaning toward “spending our way out of debt”.

There is no easy answer, particularly because it is difficult to blame the 99% for the pre 2007 financial frenzy that left only 1% better off today. For a large part, the same financial shenanigans are still being practiced and the economic cappuccino machine is still generating much froth. I have a clear empathy for the 99%, but as a product of a generation of thrift and prudence, I am strongly drawn to those qualities being the cornerstone of a solution.

Broadly speaking there are three main forms of country debt:

· personal or household,

· foreign trade and

· Government.

In South Africa all three are cause for concern. Individuals are indebted to the tune of about R1.4trn (or about R50 000 per household), with only a quarter for fixed and appreciating assets such as homes. In foreign trade of both so-called “invisibles” and physical goods, we are constantly earning less than we are spending with our external debt also at about R1.4trn. And our total government debt now stands at about the same.

Global attention, stimulated in no small measure by public unrest, is focused mainly on government or public debt. Which raises the question: how comfortable can South Africa be with its level of government debt close to 40% of GDP (the value of goods and services produced in a year)? And if we are, can it be maintained or even rolled back, or are we heading for a government debt trap?

Not quite…although we could be there soon if one interprets an analysis of government finances by South African economist Christo Luüs. His insightful and coherent treatment of the issue is a must read for anyone interested in our economic destiny and can be found at this link. He sketches five scenarios of which only one can reverse a negative trend, and is highly unlikely; and another which could maintain current comfort, but is also becoming less likely.

In short, there is a strong interaction between three critical components that feed off each other to push government debt either into an exponentially worsening trap, or away from it. They are

· economic growth, or movements in Gross Domestic product;

· the budget deficit; and

· interest payable on that debt.

If one moves in the wrong direction, the others do the same. For example, current capital outflows cause an increase in the interest burden which will force government to go into a deeper deficit to maintain spending on vital services; in turn increasing the deficit as a percentage of GDP; then increasing concern among government bond investors, forcing interest rates up further and so on. You then quickly pass a threshold where, unless some drastic event changes one of the components positively, you are caught in a vortex.

I suggest you look at his scenario 4 which is simply keeping the fiscal ship on course, and then compare that with the latest developments on GDP, inflation, bond yield movements, foreign sentiment, and politically driven expectations to draw your own conclusions.

For me there are more important issues at stake. We are at the mercy of statistics! -- a set of numbers that influences our taxes, inflation, interest rates, jobs and many more.

When that happens my little Human Touch gremlin looks for a spanner. And the first ill-fitting nut it finds is – what if the stats themselves are wrong? In one of the most important statements in years, Economist Mike Schussler wrote that the God of all stats – GDP – could be wrong and understated! Yet, apart from Stats SA’s petulant rebuttal, such an important challenge fails to even remotely rattle the overwhelming obsession with it and receives little attention in mainstream media. On top of that, even if the GDP number is accurate, there is a growing realisation that it is an imperfect measure of progress.

The assessment of the budget deficit itself is arbitrary to say the least. It is based on the “primary deficit”, defined as the deficit before interest payments or debt servicing. It ignores the important distinction between capital expenditure such as infra-structure, and operational expenses such as salaries and wages. There’s a huge difference: like between paying off a home loan, and maxing out on your credit card. The one pays for future assets and is not recurring after a certain time; the other covers exponentially increasing, often inefficient running expenses. Even here, what is capital and what is operational? One could argue that education is similar to infra-structure spending because it develops people rather than structures.

Why the obsession with these questionable “debt benchmarks” – 40% for developing countries and 60% for developed countries? Developing countries need credit to develop and build. Developed countries should be beyond that and their deficits are far more likely to be based on fiscal imprudence.

When South Africa comes close to the 40%, there’s market aversion and censure. But most of the developed nations are way beyond the 60% mark: Japan 134%; Singapore 108%; U.K. 83% and U.S. 108%. Despite these unacceptable debt levels, witness how “risk aversion” caused a huge outflow of capital from emerging markets to developed countries, leaving many national economies vulnerable, their currencies clobbered, their stock markets in tatters, their debt servicing costs increased, their economic growth threatened.

Short term speculative expediency has for decades out-trumped moral legitimacy. Global capital driven by some dubious statistical triggers has become dysfunctional as a stable source of financing growth and entrepreneurship. We and billions of people in emerging economies are still exposed to George Soros’s “wrecking ball”. Of course one can defend it from a paper trader’s point of view – from the global financial institution to the hedge fund to Joe Soap at his computer. No doubt your comments will do this for me.

So be it! If we can’t attract stable capital through questionable statistics, then we have to do so through our behaviour. The pinnacle of maturity according to Abraham Maslow is the point at which “you no longer seek the good opinion of others”. In order to duck the wrecking ball we have to grow up, and fast!

That will require getting the national budget on track, at the very least eliminating that half of the deficit that cannot be attributed to infra-structure. It will mean financing more of the deficit through our own domestic and personal savings. It will mean adopting the wisdom of Boetcker and returning to those “old school” qualities of prudence, thrift and firm and moral leadership. Those are but a few that speak to our national integrity.

We can start by adopting another of Boetcker’s “cannots”, the failure of which is putting increasing pressure on government spending.

“You cannot help men permanently by doing for them what they can and should do for themselves”.

The profit conundrum.

The growing alienation between company profits and other interests in society is a much greater problem than we may think.

At the same time some long held assumptions about profit maximization are being challenged. It has become increasingly evident that the profit motive does not ensure customer care; that being profit driven is not the same as being market driven and the belief that the pursuit of maximum profit is the invisible hand that feeds all is patently wrong.

This is a simple role play that illustrates what happens when companies have a single focus on profits….

 

When billionaires pout.

How the evil of envy can consume even those who have too much.

How does one feel sorry for a man who is worth some $20bn – or to make it sound even more dramatic, about R200bn?

You don’t of course. Especially if it is Saudi Arabia's Prince Alwaleed Bin Talal, the richest man in the Arab world. He has enough self-pity to satisfy his need for attention and adoration of his copious abundance, to make our empathy as ordinary day-to-day strugglers hopelessly superfluous. The man is miffed to say the least. He’s bemoaning the fact that his real wealth is being understated by Forbes magazine in their rankings of the world’s richest people. And he is peeved enough to announce that in future he is going to boycott the magazine and its rankings.

Forbes must be shaking in their libertarian boots! Not only are they going to lose the princely weekly subscription, but he is encouraging others to follow the Bloomberg rankings which place him as the World’s 16^th richest (against the Forbes highly insulting 26^th) and has his net worth at $8bn more.

On top of that, he believes it’s an Arab thing, “designed to disadvantage Middle Eastern investors and institutions.” Take heed, South Africans! This is how you play the race card even in multi-billionaire circumstance.

Am I really writing this stuff?

Perhaps one can find cause for the prince’s puerile petulance in the fact that he is part of one of the most oppressive regimes in the world or perhaps it is because being Saudi Royalty; the prince was born with a proverbial golden spoon.

One would think that the super wealthy would be immune to the little green monster called envy. Or was Maslow wrong in his assumption that once you have taken care of all of the “needy” stuff in your life, and you’ve reached the hierarchical pinnacle where the billionaires reside, you can focus on “self-actualisation” and blossom into the benevolent being you always wanted to be to become “independent of the good opinion of others”?

Of course, I’ve taken Maslow so badly out of context that his surprisingly many followers still today will no doubt baulk at my statement. But the point is that we all seem to harbour a belief that “I will be a much better person if I had a billion in the bank.” And in the process restrict the most valuable asset we have even as mundane middle incomers – generosity.

Unfortunately, the Prince is not the exception. While we may not be able to place CNN founder, Ted Turner, in the same category of inanity, he once said something that gives some insight into the billionaire’s kindergarten.

Recalling his decision to give half of his fortune to charity, he declared: “To be honest, my hands shook as I signed it away. I knew I was taking myself out of the race to be the richest man in the world.”

Is there really something of an obscene “race” amongst those at the top? And does this give us a different insight into the noble status of philanthropist – that it is a confession of sorts that feel they do not deserve what they have?

Personally I do not have an issue with those billionaires, including Ted Turner, who got that way by making a meaningful difference to our lives – those creators and builders that I have applauded on many occasions, and who are living proof that unimaginable rewards can be the outcome of benevolent intent and not necessarily the hunger for profit.

That is what economics and business is about!

Yet, there are countless thousands, who cannot claim the same; who must examine their state and question whether they are deserving of it. There are just too many who, by their own admission in a recent PWC survey, defend their rewards purely on the basis of “what others get”. There must be quite a few hundred South African executives (like the revered three bankers Moneyweb reported on recently) who in a moment of unrestrained swagger, can whisper to a friend or acquaintance over a glass of KWV 15 year old: “Do you know I earn more than President Barack Obama?!” Of course, if he adds up all his benefits, our President Zuma would probably be able to say the same – and that’s without his R ¼bn home!

Columnist Ann Crotty once put it incisively: ““Despite a huge amount of guff, passing itself off as insightful and expensive analysis, the key factor influencing pay was that playground whine: ‘He’s got more than me, that’s not fair.”

And that’s what they call the “executive” market!

There has been global outrage at the scourge of unbridled greed that has contaminated the ideal of free economies. But even more dangerous and threatening is greed’s evil twin and perhaps its primary source – envy.

It is self-evident that the “have-nots” who are becoming more and more agitated and restless, are primarily driven by envy and not purely by their mostly self-defined deprivation. But those “haves” who so lightly dismiss those grievances because of it, are just as guilty, if not more so. Envy among those who have little is understandable; among those who have much it is inexcusable. With the display of such puerility can they remotely qualify for the positions they hold? And should remuneration committees tolerate and accommodate even to the smallest degree such adolescent and vitriolic contamination of their processes?

Envy leads to resentment, to disquiet, to unrest, to violence. Life skills gurus will often tell you that envy is a self-concocted poison that will eat away at you.

It is equally so with a society. With wealth disparities globally being one of the most critical issues of our time, it is a frightening force that could overwhelm us all.

Power in the workplace.

This is one of my earlier presentations to companies, perhaps more relevant today. With Organised labour fragmenting, can business regain legitimate power in the workplace? As a follow up to my earlier article.

 

The labour power vacuum.

Can management restore legitimate power in the workplace?

On the surface it seems to be about some unassuming Trade Union offices at the now familiar Marikana platinum mine near Rustenburg.

But that’s clearly understating the breadth and depth of the issues at stake – issues that are much wider than even the Farlam commission of inquiry into the Marikana shootings will finally cover.

This onion in South Africa’s economy and labour relations has many layers that at their heart are challenging a myriad of assumptions, not only about organised labour but about power itself.

The first layer is about the battle for recognition between AMCU (The Association of Mineworkers and Construction Union) and NUM (National Union of Mineworkers). The mine owner, Lonmin has confirmed that AMCU now has a membership of 70% and NUM about 20%, reflecting a significant shift in representation in the last year or so, and challenging the latter’s right to office space at the mine. That’s a thin layer of onion in itself – but pungent enough to have triggered another “wild-cat” strike at the mine recently.

The thicker layer underneath of course, is union rivalry reminiscent of the 1980’s when there was a scramble for membership by unions who had been formed after Nic Wiehahn’s famous freedom of association reforms. They in turn were in no small measure prompted by the absence of a political franchise and the belief that some form of expressing majority aspirations was needed, and that the place to do this was in the workplace. That gave an extremely risky onion layer in the form of politicising the workplace – which explains the extreme degree of political expression in organised labour in South Africa, including the tripartite alliance between the ANC, COSATU, and the SACP.

Which bring us to a deeper layer – the centralisation of power politically, economically and in the labour movement. With that centralisation comes an increasing level of interaction and collusion with other powerful constituents such as government and big business, leading to compromise and a softening of former populist and intransigent positions. On the surface this may appear to be a good thing, were it not for the fact that with greater centralisation of power, one also finds increased corruption, nepotism, very strong personal jockeying for positions and a growing degree of alienation with rank and file membership. This alienation is exacerbated by unrealistic expectations created by the power mongers themselves.

There are clear signs of a fragmentation of centralised power in the support base on the political and labour fronts. Even capital globally is experiencing a strengthening wave of resistance to the centralisation of economic power in big corporates. The chronic civil unrest that has given South Africa the dubious title of “protest capital of the world” rests on a litany of broken promises and unrealistic expectations.

Disillusionment with power and fragmentation of support amongst workers has created a vacuum that has quickly been seized upon by rival and more radical unions such as AMCU against the NUM and BAWUSA vs. FAWU in the farm-workers protests.

But even here, despite their growing membership, these alternative players no longer have the absolute support of workers, leading to an increasing number of spontaneous, wild-cat, and illegal stoppages. In response, the rival unions are again at war with their most important weapon being false promises and the further entrenchment of unrealistic expectations. In a clear attempt to out-trump AMCU, the NUM’s current wage demands in the gold and coal mining sectors must rank as one of the more outrageous leaving its mark on the financial markets.

Current labour trends, including unemployment are clearly untenable and are challenging many of our long held assumptions about collective and centralised bargaining, the Labour Relations act itself, but the most important of all, this obscene haggling based on an assumed adversarial and competitive relationship between the three economic estates of labour, capital and government – a stance that is jealously guarded by vested interests in those groups.

All of this rests on a flawed understanding of the true nature of power, which is at the core of the onion. People submit to power willingly when it is seen to have their interest at heart. That is the key condition that makes power legitimate and sustainable, and distinguishes it from control based either on seduction or coercion which is mistakenly seen as synonymous with power.

The only group that can exercise legitimate power in the workplace on a day to day, minute to minute basis is management itself. They have ultimate control of those factors that forge employee trust and loyalty. The Chamber of Mines knows this. They have the results of extensive research done in the gold and coal mining industries in the 80’s that showed that trust in the workplace was based on the care and development of subordinates at all levels of employment. In turn a key element of that was dependent on the relationship between the subordinate and the immediate supervisor.

Trade Unions and their shop-stewards simply don’t have the ability to replicate that trust. They are mere surrogates whose primary weapons are false promises, seduction and coercion. These are instruments of control, not legitimate power.

This is the messy, difficult and complex aspect of industrial relations. South African business has generally failed dismally in applying it. The pillars of power in the workplace rest much more on engagement and involvement than on incentives such as pay. The latter is seduction, not power. Threats of lay-offs are coercion not power. They are control instruments that give Trade Unions their succour.

The World Economic Forum ranks South Africa’s labour relations as the worst in the world. Large employers may have found it expedient up to now to work within a commodity expression of labour, and an assumed adversarial relationship between labour and capital. After all, with layoffs being its final nuclear device in part to protect profit maximisation, it has been dealing with labour on familiar and uncomplicated terms.

“Labour relations are at a crossroads”, says Finance Minister Pravin Gordhan. Employee engagement and involvement are the only real and tangible instruments left that can restore legitimate power in the workplace. It may be a long and hard slog, but it has to start with acceptance that the current system is simply inappropriate, untenable and unsustainable. We need reminding perhaps of how Germany and Japan were able to create sustainable and exemplary participative industrial relations out of war trauma and deprivation.

Despite its frightening features, a labour power vacuum creates an opportunity for management to reclaim legitimate power through sound servant leadership practices.

And they can do so independently of the big constituents.