Principle in action, so the staff at HarperCollins, the book’s publisher, provided this pop quiz.
Richard Wagoner’s record at GM proves which Peter axiom?
- In a hierarchy every employee tends to rise to his level of incompetence.
- The incompetent supervisor evaluates input, not output.
- The habitually incompetent can, by random action, be right once in a while.
Answer: 1. Obviously. [2: Wrong. Both inputs and outputs tanked. 3: Wrong. When was he ever right?]
AIG’s bonus payments are an example of which Peter axiom?
- Super-competence is more objectionable than competence.
- Teeter-totter syndrome: the complete inability to make decisions appropriate to the sufferer’s rank.
- Peter’s Spiral: the non-progressive course followed by organizations suffering from high-level incompetence.
Answer: 3. Turbo-charged incompetence, indeed. [1: Wrong: the super-incompetent were rewarded, not punished. 2: Wrong: apparently it didn’t occur to anyone not to pay up.]
The repeated bailouts of AIG, adding tens of billions of taxpayer dollars at each round, is an example of which Peter axiom?
- Creative incompetence: feigned incompetence which averts the offer of unwanted promotion.
- In any economic or political crisis, one thing is certain. Many learned experts will prescribe many different remedies.
- The incompetent supervisor evaluates input, not output.
Answer: 3. If we keep paying them, the bailout must work. Right? [1: wrong: nobody was faking incompetence. 2: Wrong. In this case, they all seemed to agree on the wrong remedy.]
Lateral arabesque: a pseudo-promotion, often to get someone out of the way. Which is the best recent example?
- Jon Corzine moving from chairman of Goldman, Sachs to U.S. Senate, 2000.
- Jon Corzine moving from the U.S. Senate to Governor of New Jersey, 2006.
- Henry Paulson moving from chairman of Goldman, Sachs to Secretary of the Treasury, 2006.
- Henry Paulson moving from Secretary of the Treasury to the IMF Board of Governors, 2009.
Answer: 2: the same voters that gave him the first job, and soured on him, gave him the second one. [1: wrong: the voters were a new boss for him. 3: Wrong; the White House was a new boss for him. 4: Close, but not quite right. Nobody can pretend that this was a promotion.]
The efficiency fallacy: the belief that incompetence, if coordinated, equals competence. What is the best recent example by the government?
- The creation of the Department of Homeland Security.
- The naming of Treasury Secretary Timothy F. Geithner to oversee many parts of the government in managing the restructuring of the auto industry.
- The creation of the office of Director of National Intelligence.
- Too close to call!
Answer: 4. Obviously! [1: Not quite. What’s the difference between 1 and 3? 2: A good example, but is it the best? 3: Not quite. What’s the difference between 3 and 1?]
Barack’s appointment of Hilary as Secretary of State fits which Peter axioms?
- Percussive Sublimation—being kicked upstairs: a pseudo-promotion.
- Peter’s Circumambulation—a circumlocution or detour around a super-incumbent.
- Peter’s Pretty Pass—the situation of having one’s road to promotion blocked by a super-incumbent.
Answer: 1. Correct! Getting out of the Senate seemed like a good move, but now what? [2: Wrong: the super-incumbent (Barack) gave her the job, and he knows what he’s doing. 3: Wrong : the super-incumbent (Barack) gave her the job, and he knows what he’s doing.]
Which of Peter’s axioms best explains Bernie Madoff?
- Gargantuan Monumentalis: giant burial park, big mausoleum, and huge tombstone syndrome.
- Rigor Cartis—abnormal interest in charts, with dwindling concern for realities that the charts represent.
- Image Replaces Performance—a substitution technique involving smoke and mirrors.
- 2 and 3 only.
Answer: 4: Correct. At least, this explains his clients. [1: Wrong: you’re cofusing Madoff with Robert Stanford. 2: True, but not the entire answer. 3: True, but not the entire answer.]
The time you are spending on this test is an example of which Peter axiom?
- Never stand when you can sit; never walk when you can ride; never Push when you can Pull.
- Cachinatory inertia: the habit of telling jokes instead of getting on with business.
- Work is accomplished by those employees who have not yet reached their level of incompetence.
Answer: 2: Obviously. [1: Wrong! Read the book. 3: Wrong! You call this work?]
The question that every small business owner faces is whether we, and our employees, have reached the level of their incompetence. Honestly, not a day goes by that I don’t think that I have. Let’s hope that realizing it is the first step towards fixing it. 
Check your balance, review recent transactions and pay your bill on the go.
