Puzzles

If things go wrong with a puzzle, identifying the culprit is easy: it’s the person who withheld information. Mysteries, though, are a lot murkier: sometimes the information we’ve been given is inadequate, and sometimes we aren’t very smart about making sense of what we’ve been given, and sometimes the question itself cannot be answered. Puzzles come to satisfying conclusions. Mysteries often don’t. “Open Secrets” The New Yorker, Malcolm Gladwell (1/8/2007)

We’re finally to Jacobs’ last jeopardized pillar: self-policing by learned professionals.

Self-policing is important. We can trust that our doctors are well-trained, our engineers can design a safe structure, etc - excepting gross negligence, error, or incompetence, of course.

Business has no such safeguards. Businesspeople aren’t the learned, self-policing professionals. We rely on their accountants and auditors.

Aside from blatant dishonesty, where, in Gladwell’s parlance, information is withheld, we have new mysteries. Jacobs describes the basic problem: the breakdown in the traditional concept of capital, formerly fundamental to accounting.

You have capital assets. You have operating expenses. Traditionally, the former was “bankable,” meaning, in short, that the lender can foreclose on the asset you’ve borrowed to purchase if you default on the loan.

But now we’ve got human, social, and cultural “capital” to deal with:

These represent concepts about real and powerful assets, more indispensible for wealth creation and well-being in modern societies than traditional bankable capital. “Self-policing subverted,” Dark Age Ahead (p137)

These aren’t just smoke and mirrors, but we measure them just about as well.

How can you foreclose on someone’s education. Or, better yet, an idea.

And here I thought accounting was boring.