There's a new New Yorker article by Malcolm Gladwell entitled: "Open Secrets: Enron, intelligence, and the perils of too much information," in which Gladwell makes a "semi-defense" of convicted Enron CEO Jeff Skilling.
On his blog, Gladwell goes further:
"Can anyone explain—in plain language—what it is Jeff Skilling and Co. did wrong?"
The commenters go to town on this, with economist Brad DeLong leading the charge, and piling on Gladwell even more on his own blog.
I paid a vast amount of attention to accounting arcana from 1988-2000, and very little since, so I don't have anything to contribute to the main question. I do, though, want to mention a potentially useful conceptual distinction Gladwell brings up about the difference between insufficient facts versus inadequate analysis, but, unfortunately, he botches it up in calling the former "puzzles" and the latter "mysteries."
That's largely backwards from how people normally use the words "puzzle" and "mystery," so it's just going to confuse things. Gladwell writes: "Osama bin Laden’s whereabouts are a puzzle. We can’t find him because we don’t have enough information..."
No, that's a mystery, as the term is normally used. For example, in Raymond Chandler's famous murder mystery The Big Sleep, detective Philip Marlowe is hired to find former bootlegger Rusty Regan. Marlowe doesn't have enough information to find him so he goes around searching for clues. Only at the very end does he know enough to figure out where Regan is. Similarly, according to Gladwell, we need more clues to find Osama, so his whereabouts are a mystery, not a puzzle.
Gladwell goes on:
"The problem of what would happen in Iraq after the toppling of Saddam Hussein was, by contrast, a mystery... Mysteries require judgments and the assessment of uncertainty, and the hard part is not that we have too little information but that we have too much."
No, that would be better labeled a "puzzle." Rubik's Cube is a classic puzzle: everything you need to solve the puzzle is right in front of your eyes, but it's still very hard to figure out.
The Big Sleep, like most detective stories, transforms from a mystery to a puzzle at the very end after all the clues have finally been collected and the shamus starts explaining whodunnit.
For example, whether or not Saddam Hussein had a nuclear weapons program in 2002 seemed like a mystery (we didn't have many hard facts before Hans Blix's weapons inspectors got there) , but, in truth, it was a puzzle. Gregory Cochran solved it in October 2002 on Jerry Pournelle's blog using facts from newspapers and almanacs: Saddam couldn't afford it.
As I've suggested before, Gladwell should ask The New Yorker to augment their famous fact checkers with logic checkers who would perform reality checks and point out holes like this in his reasoning before his articles get printed.
New Yorker editor David Remnick should do more to shield his star writer from his own weaknesses. Gladwell has a much more interesting mind than 99% of all journalists; it's just not a very reliable one. There's an obvious positive correlation between having lots of new ideas and having lots of bad ideas, just like baseball sluggers who swing for the fences strike out more. Gladwell is slowly making himself a laughing stock, which isn't in anybody's interest. It's time for Remnick to protect Gladwell's dwindling reputation by subjecting him to more rigorous editing.