January 4, 2007

Brad DeLong: "Gladwell seems more than a bit thick here."

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.

My published articles are archived at iSteve.com -- Steve Sailer


Simon said...

I think you're right that Gladwell's discussion of information vs analysis was interesting and quite worthwhile, he just got the terminology horribly wrong.

As for Osama bin Laden - we know where he is, in Pakistan. The puzzle is how do we get to him (if our leaders even really want to get him), while not offending our Pakistani 'allies'. This puzzle appears insoluble. Why not offending Pakistan is the paramount consideration, is perhaps more of a mystery...

AllanF said...

Excellent catch Steve.

Even better example than chess, ask oneself, is Mr Derbyshire's favorite holiday pastime called 'jigsaw mysteries' or 'jigsaw puzzles'? :-)

They are called puzzles because all the clues/pieces are there! One hopes :-)

Conversely, Murder Mystery novels are called Mysteries precisely because the author slowly reveals clues which may or may not be relevent and often are deliberately meant to deceive. That old fav Law and Order is notorious for the prime suspect being surly and guilty acting while in fact innocent.

Anonymous said...

Steve, three days gone and your resolution to stop beating up on the kid with the bad haircut is already shattered. Maybe in 2008, huh?

Steve Sailer said...

No, my resolution to lay off Malcolm was just for the last week of 2006. And, for once in my life, I kept my resolution!

Anonymous said...

Skilling and the brass at Enron were guilty as sin and deserve to lose everything they have, just like all the poor marks at Enron who they persuaded to invest their life savings in the company even when they know the Zeppelin was imploding.

Anyone wanting to know what happened in the giant Ponzi scheme known as Enron should watch "THE SMARTEST GUYS IN THE ROOM", a documenturary (and a rare good one) about this sleazoid company that purposely caused blackouts in California so they could price-gouge the place, and utilized the EXTREMELY dishonest "mark-to-market" accounting scheme to make the company look strong to investors (literally assuming you will not only garner new investors, but new contracts and assuming that you will get to charge more and more for servicing the contracts way beyond normal inflation by predicting energy shortages and lack of other competition to challenge you, etc.) to fool would-be stock-buying-chumps and help compliant patsy accountants (Arthur Anderson).

Gladwell is easily fooled if he thinks there is anything good about the smoke-and-mirror Enron business model. The company produced NOTHING. They bought energy from company A and sold it at a mark-up to states like California. Every plant they tried to build themselves was a pipe-dreamesqe disaster. These are the same people who thought cell phone minutes should be traded as "commodities", etc.

TCO said...

Your point is inconsequential and ignores the MUCH more interesting issues at discussion. It's actually a pretty good article and at least tees up some interesting events and concepts. Lot better than the salesman PC silliness. You may be falling sway to a bit of pique and letting rivalry affect your reactions to this article of his.

In addition, I DON'T have the same impression of the mystery/puzzle debate. To me the words are similar. But regardless, Gladwell defined the terms and gave examples and then described the concept. Whether you call it analytical problems and ambiguous problems or puzzles and mysteries is just an issue of apt word choice. And not one on which I agree with you.

BTW, there are a lot of interesting things to think about wrt Enron and this article with its mystery/puzzle duality does touch on an important issue wrt Enron. It was not MERELY a fraudulent company and set of books and actors. It was also HBS/McKinsey/dotcom smoke and mirrors silliness. It was the argument of complexity and buzzwords, rather than real insights or execution. When challenged (and I did, before the bankruptcy), the actors could not adequately describe how value was created. This is not an isolated episode but a theme in American business and in human nature.

So talking about puzzle/mystery connotation is a waste.

David Hume said...


You are of course perfectly correct about the usage of 'mystery' and 'puzzle'. Well spotted.

Anonymous said...

How silly. You're obviously just severely depressed that Gladwell and Dubner/Levitt are getting all the attention. So much frustration. It's really, really sad.