Popular non-fiction writer Malcolm Gladwell spoke to the Hopkins commumnity at Shriver Hall last Tuesday about the current recession.
Gladwell's explanation of the financial crisis focused primarily on a failure of experts.
"So overcome was I by the seriousness of this stage, that I decided to choose a serious topic," Gladwell said.
"A few weeks ago a friend of mine that works at Wall Street told me: 'They're back.'"'What do you mean 'they're back'?' I asked.
"'The bankers,' she said,. 'They're just the way they were two years ago; they seemed to have come out of this unscathed.'
"At that point it occurred to me that we bungled this whole financial crisis, we failed to use this opportunity to extract the proper lessons," Gladwell said.
President Ron Daniels first introduced Gladwell, the "Aha! author," with an anecdote about Gladwell's inspiration for his second book, Blink.
Mistaken for a rapist in the same vicinity, Gladwell was apprehended by New York City policemen, but instead of getting angry, Gladwell wrote a book.
"When Malcolm talks, people listen," Daniels said.
Daniels then joked about their common motherland, Canada.
"[H]e tells me he's going long on the Canadian dollar and he's making a lot of investments in Canada," Daniels said, referring to Gladwell, but then shifting to their distinctive Canadian view of the world, "we think the world is basically a good place."
"It was once said that 'most people are experience-rich, but theory-poor,'" Daniels said. "Gladwell helps craft the framework upon which we can understand what happens around us."
Gladwell started his talk by relating a humorous story. He told about how, before college, he sustained a eye injury and was taken to a specialist. The doctor, Dr. Pear, misdiagnosed it as a brain injury so severe that Gladwell would not be able to attend university.
However, Gladwell did attend and four years later, when he had successfully finished his degree, Gladwell's father was sure to send the doctor an invitation to the graduation ceremony.
"Thereafter, whenever I do something which is even remotely noteworthy, my father makes sure to write a short note to Dr. Pear," Gladwell said as the audience laughed uproariously, "and I'm just sorry that Dr. Pear didn't get to see this [referring to the event]."
After warming up the crowd for a few minutes, Gladwell turned to the more serious topic of his talk - the global financial crisis of last year.
Incorporating the theme for the 2009 MSE lecture series of inter-generational change, Gladwell attempted to untangle the lessons of the financial crises in the hope that the next generation may learn from them.
"I want to ask the question: What can your generation learn from my generation's mistakes?" Gladwell said.
"What ought we have extracted from this extraordinary disaster . . . that seems to have already been swept away?"
Gladwell quickly made a disclaimer that he knew nothing about finance and so, while the talk was about the financial crisis, he would not be expounding on derivatives and the like. Instead, he asked the audience to explore the crisis using psychology.
"This was a crisis that was caused entirely by very, very experienced, very, very smart people. Now that's odd, because normally when we think of massive screw-ups and failures, we think of them as being caused by people who have some obvious flaw."
Gladwell then cited examples of some well-known character flaws, including Hitler's megalomania in World War II and Stalin's insanity, leading to the atrocities he committed.
Yet, if you were to have a car accident tonight, Gladwell said, we would first investigate possible events that precipitated the accident - were you driving too fast? Were you tired? Were you texting? Were you drunk?
"You would never say that the reason you crashed was that because you are a good driver," Gladwell said.
And yet, that is the situation we find ourselves in after this financial crises, Gladwell argued. The people that caused it "were not drunk, they weren't texting while they were trading." They were smart, capable people. "And yet, they failed."
Gladwell sees this as a curious condition which he dubbed "expert failure." He foresees expert failure will become more common as the world grows in complexity and we cede more power to small groups of people.
Gladwell then proposed to explain the phenomenon of expert failure by using an example from the field of the military - the Battle of Chancellorsville during the American Civil War.
The Battle of Chancellorsville took place in the spring of 1863, when the Confederate and Union armies were entrenched on the two banks of the Rappahannock River. At this point, the Union army had lost to the Confederates four times in a row and morale was at an all-time low.
In an effort to revitalize their efforts, President Lincoln placed General Joseph Hooker, a cocky but competent man, as the head of the army.
Hooker quickly whipped the men back into shape and established the first known military intelligence division.
The intelligence he gathered showed that Hooker's army had Lee's army outnumbered two-to-one. Knowing this, Hooker decided to surround Lee's army, with the logic that Lee had no alternative but to retreat.
"Hooker stood up in front of his men the day before battle and said 'God Almighty could not prevent me from victory tomorrow,' and all of his forty thousand men stood up and cheered," Gladwell said.
However, Hooker and the Union Army were defeated.
Gladwell went on to explain that many historians and military buffs pick apart the details of the subsequent battle between Hooker and Lee to understand why Hooker, so well positioned, failed.
To Gladwell, however, the speech and attitude Hooker embodied the day before his ill-fated battle clearly portends his failure the next day.
"To me that speech captures everything we need to know," Gladwell said.
He then described a study conducted by a psychologist where he analyzed the effect of information in people's ability to make more informed decisions. What he found was that greater amounts of information did not significantly improve decision-making outcomes.
However, it did make the participants more confident in their equally wrong answers. The result: increased information, similar understanding of concepts, but greater confidence in their understanding.
Gladwell concluded that when making difficult decisions, extra information is not helpful. Gladwell also cautioned that while experts are good at what they do, "they think they are really, really good," which leads to overconfidence.
"Incompetence is the disease of idiots, but overconfidence is the disease of experts," Gladwell said, "I mean, incompetent people make mistakes all the time, but they are incompetent."
Americans have conflicting ideas on overconfidence and incompetence, Gladwell said. We tend to track down incompetence and remove it.
Yet, we tend to like overconfidence even though it is vastly more dangerous. The night before a surgery, not many people would prefer their neurosurgeon to be honest with them concerning the risk of their surgery, Gladwell argued.
"Incompetence irritates me . . . overconfidence terrifies me," Gladwell said.Gladwell spoke about former Bear Stearns CEO Jimmy Cayne and his reaction to the demise of his institution. Instead of acting to save his business, Cayne was off playing golf and bridge while his company was on its deathbed.
By the time Cayne realized the gravity of what had occurred, the only solution that occurred to him was to ask Hopkins graduate and current Treasury Secretary Timothy Geithner for a bailout. Geithner refused. Cayne called Geithner a prick.
Cayne's display of "Hooker confidence" was not an anomaly, Gladwell said, Hooker, Cayne and others like them are "of a piece."
"When we are faced with the hardest problems, our job is not to encourage the expertise of our experts, it is to encourage [their] humility," Gladwell said.
When asked to clarify his word choice of "overconfidence" in place of "arrogance," Gladwell explained that experts can fail despite lacking the apparent character flaws that arrogance implies.
People that excel in what they do are invariably pushed into a gap between what they think they know and what they know, Gladwell argued, citing doctors as an example of overconfidence in the absence of particular character flaws.
But Gladwell is profoundly pessimistic about the prospect of overcoming overconfidence, despite much research done on the problem.
In addition, Gladwell had wonderful advice for aspiring writers: "The problem of writing is not writing, it's what you write about."
He explained the importance of mastering some rare skill outside of writing before focusing on improving the quality of the writing itself.
Senior Dea Levy was really excited to see Gladwell speak. "He spoke exactly the same way he writes," Levy said. "He's one of the best speakers we've had."
"I am always disappointed when a friend hasn't read his books," junior Ben Greenfield said.
MSE chair Dan Fair said the MSE staff were inspired to invite Gladwell to speak after reading his work for the Introduction to Business course provided through the Entrepreneurship and Management minor.
"Gladwell symbolizes exactly what we aim to do at MSE: He is a person that can bring together students, faculty and community members and engage them in an interesting topic," Fair said.
Sophomore Julianne Monthiak even invited her middle school teacher, George Paull, who had first introduced Monthiak to Gladwell's work, to the talk. Paull drove down from Philadelphia specifically to see Gladwell speak.
The MSE series works to further Hopkins's goal of reaching out to the Baltimore community by opening the MSE speaker series to anyone in the Baltimore community. While the staff have been trying to get Gladwell to come speak for some time, their hard work finally paid off last spring when Gladwell agreed.
"Speaking to college students is fun," Gladwell said, "I hope students came away with some sense of the importance of humility and the importance of psychological ideas when making sense of the world."
Malcolm Gladwell's unique insights are a product of a unique upbringing. Being born in the United Kingdom but raised in rural Ontario enabled Gladwell to cultivate his ability to analyze events with an outsider's perspective. Gladwell was also surrounded by independent thinkers at a very early age - his mother was a psychotherapist and his father a mathematician.
Currently, Gladwell is working on a project exploring the societal effect of how people behave under the influence of alcohol, based on the work of anthropologist Dwight Heath.
In his talk, Gladwell mentioned how his mother once told him that "The essence of good thinking and good writing is clarity." Gladwell did well by remembering that.
