Not much, actually. But not nothing, either.
There’s a minor brouhaha at the American Economic Association’s American Economic Review – the top peer-reviewed journal in modern economics. The details of the brouhaha aren’t important for my purposes here (although you can read about them in this post by Harvard economist George Borjas ). Suffice it to say that a lapse in judgment regarding the acceptance of a paper for publication calls into question, at worse, the ethics of a co-editor of the AER or, more likely, the soundness of that co-editor’s judgment.
After the discovery of the co-editor’s lapse in judgment (or ethics), the leadership of the AER (which ultimately is that of the American Economic Association) jiggered a few cosmetic fixes. But no serious action was taken. Here’s George Borjas (from the same blog post  linked above):
What’s the bigger scandal? The fact that [co-editor] Hoynes did not recuse herself from handling the paper initially? Or the fact that the AER’s leadership has not really addressed the ethical lapse involved? As is much too common these days, when important people do something wrong, heads no longer roll. Would anyone be surprised if any day now the people involved issue a generic non-apology apology telling everyone that it’s time to move on? As someone else famously said: What difference, at this point, does it make?
The most common explanation for why heads do not roll in such situations is that the heads belong to powerful people who use their power and influence to unjustly shield themselves from the consequences of their actions. This explanation surely is valid. (Power does indeed make those who have it ir-response-ible. Powerful people do not have as much need as do the rest of us to respond fully and frankly to the consequences of their actions; whatever responses are necessary are largely absorbed by other people.)
But I believe that there’s an additional factor at work that protects the heads of the powerful from rolling. That factor is the widespread myth that all order is imposed from on-high, top-down, by “leaders” without whom a country or government or an organization such as the AEA would crumble chaotically into ruin. The heads of wrongdoing little people – non-“leaders” – can roll, for the rolling of their heads does not threaten to dislodge from power the persons whose conscious direction and inspiration are necessary to keep the order orderly.
There is perhaps a greater willingness to tolerate ethical lapses, poor judgment, and other spasms of misbehavior in “leaders” out of fear that, were the “leaders'” heads to roll, the processes or organizations that they “lead” would roll along with them. The few who are bad must be protected for the benefit of the many who are good.
Yet in most cases the members of the current crop of “leaders” are not nearly as essential as they are believed to be. While the identities of the leaders of organizations such as Apple, Inc. and the American Economic Association are more important to the success of those organizations than are the “leaders” of countries – organizations have purposes, countries do not – few individual leaders are absolutely essential. Even in organizations, much of the order is formed spontaneously from the bottom up, and not consciously from the top down. Even organizations have spontaneously formed resiliencies that ensure against collapse if the President or the CEO or the Chairman or the Archbishop is removed suddenly from power.
This truth is even more sure for so-called government “leaders”: the societies and economies that these people pretend to consciously direct – and, as I say, are widely but mistakenly believed to consciously direct – are in no way really dependent upon these “leaders'” supervision and direction. If Obama, his entire cabinet, and all 535 members of the U.S. Congress each today resigned and stole off to a Tibetan monastery and credibly promise never to return, American society and the American economy would go right on chugging (likely even better, in my opinion). Even the American government (not to be confused with America) would, after some adjustment struggles, be restored to pretty much what it was before the mass exodus of its previous “leaders.”
The irony is that, if it were true that order in organizations and society is strictly and solely dependent upon the conscious decisions and direction from the top of “leaders, then these “leaders” should indeed be held to a higher standard – ethical, intellectual, and experiential – than that to which we in the hapless masses are held. Yet the fear that ‘rolling the head’ of this or that “leader” will unleash disorder keeps these “leaders” held to lower, not higher, standards.
Market competition – that is, the combination of consumer sovereignty, freedom of entry and exit, entrepreneurial energy, and working capital markets – disciplines the market organizations we call “firms.” This competition holds these organizations as such to high standards, and this process puts strong pressures on current CEOs and other business leaders to in fact work hard in the roles that they play for the betterment of their organizations. But even here, if a firm fails, for whatever reason (and as many do), the economy at large keeps right on humming along.
Political power, alas, while it gives to its holders virtually none of the ability that they and other think they possess to direct society and the economy productively, does give to them the ability to damage society and the economy. (For an extreme example today, look no further than Venezuela .) The best way to deal with this reality is not simply to hold politicians to higher standards  (although that would be fine as far as it goes); it is, rather, to greatly diminish the power of the state.
(I thank Ben Zycher for alerting me to Borjas’s blog post.)