Enron and Arthur Andersen partially selected evidence by transferring debt to partnerships that were off the books. Consequently, the picture of Enron available to outsiders, the public, and, in many cases, to the creditors and banks was skewed toward a more favorable picture than was justified by the reality. And as we have learned from the aviation example in the introduction, reality has a tendency to come crashing in on our fantasy world. Reality asserted itself on Enron, just as it always does.
Principle: Truth will out.
From which follows:
p. 205
Lesson: Concealing the truth from yourself or others tends to give only short-lived temporary benefits. Reality usually asserts itself, often quite harshly. Don’t lie.
Accounting, like every profession, is an art in which considerable judgment is involved. By its nature, business activity is exceedingly variable. No single set of accounting rules could ever perfectly describe every situation. In practice, accountants must use their judgment. Good accountants may (and often do) disagree about the specific treatment of certain transactions. Always, however, accountants are expected to be able to justify their decisions, often by reference to GAAP.
By what criteria will the accounting judgments be judged? By the evidence, of course. But what if the evidence has been destroyed? The criminal indictment of Arthur Andersen for fraud would require proof beyond a reasonable doubt, whereas a civil trial on the same issue would require proof by a preponderant weight of evidence. Either way, criminal or civil trials would require analysis of evidence.
But where is the evidence? Nowhere. That was the trouble. The evidence no longer exists. It has been destroyed by shredding. Because the evidence is so important in reaching reasonable conclusions about what happened, destruction of evidence is itself a crime.
Thus, Arthur Andersen was indicted not for poor accounting but for obstruction of justice because it destroyed crucial evidence. All that is now required for conviction is proof beyond a reasonable doubt that the evidence was destroyed with the intention of thwarting justice. The jury concluded that that was true and convicted the firm. Because of the criminal conviction, the firm lost its license to do public accounting. Arthur Andersen is now defunct. Reality, that harsh jade, had her revenge. Arthur Andersen as a licensed public accounting firm is no more.
Recall that a tautology is a circular argument made by repeating the same meaning twice. Repetition of the same statement is even worse and not a reasonable argument. Repetition, rather, indicates the absence of a reasonable argument. Some people like to have their ideas reinforced by repetition. Other people just like to hear themselves talk. Either way, repetitions are ineluctable tautologies easy to spot, often mere assertions like: “That’s the rule”; “It’s against company policy”; “That’s the way we do things around here”; “Like it or lump it”; “It’s tradition”; “I talked it over with the staff and we all came to that conclusion”; and so forth.
p. 206 The full exchange in repetition tautology looks like this:
Nurse: Patients are not allowed out of their rooms during doctors’ rounds.
Patient: Why are we not allowed out of our rooms during doctors’ rounds?
Nurse: It’s the rule.
The nurse’s explanation is not a clarification or elucidation of the reasons for the prohibition. It is merely a restatement of the rule in a different form. The nurse’s second statement says nothing new and is off the point and tautological. The patient would have a right to reply:
Patient: I asked for the reason for the rule. All you did was tell me the same thing twice. I already know that we are not allowed out of our rooms during doctors’ rounds. I want to know why.
Nurse: Ward policy.
Patient: (now exasperated): I asked for a reason. And all you are doing is feeding me bullshit.
Arguing off the point gives the appearance of reason but is really just a rationale thinly disguised. It is an attempt to thicken proofs that demonstrate thinly.
Take the woman who says, “Don’t touch me. I’m a Catholic.” That the lady doesn’t want to be touched cannot be doubted. But that she is a Catholic is not a reason that she should not be touched. Her failure to stick to the point is the mark of a confused thinker who is distracted (or is trying to distract) from the relevant issue. We have already mentioned other forms of diversion arguments that are non sequiturs, including argumentum ad hominem and argumentum ad verecundiam. Both of those assert false reasons and distract us from the truth.
Force is not a reasonable argument because it is not based on evidence.
At this point, I should mention a very common diversionary argument resorted to by the crude at the earliest instant and as a last resort by the more intelligent, an argument that neglects most or all the evidence and is therefore the extreme example of partial selection: argumentum ad baculum, the appeal to force.
Violence is off the point and is no substitute for reason. Bloody p. 207 teeth don’t prove anything (except damage). They certainly don’t prove anyone right or wrong. Argumentum ad baculum is the gravest error in human thought, wherein the argument has degenerated into a fight. Might doesn’t make right, despite the maxim to the contrary. Because someone defeats another person by force, that doesn’t mean he was right or wrong, noble or ignoble, supported by God or by the devil, and so forth. It doesn’t even mean that he was the strongest, smartest, or luckiest. It merely means he won the battle, no more and no less. Why he won would have to be established by evidence. In general, when someone resorts to violence or the threat of violence, she has thereby admitted that she has lost the rational argument and resorts to desperate measures rather than admit defeat.
Principle: Resort to force is not a rational argument. It is quite the opposite, the epitome of irrationality. War is always an acknowledgment of failure, the worst solution.
From which follows:
Lesson: Use violence as a last resort and only when desperate.
Another form of diversion is to refute some trivial point of an opponent’s argument and then suggest that his whole position has been undercut. Whether the argument is undercut by the discovery of some incorrect supporting statement would depend on how much the conclusion depends on the incorrect statement, not on the discovery of the misstated fact per se.
Hecklers rely on humorous objections to discredit speakers. A politician who promises a car in every garage is not really refuted by the interrupter who shouts: “I don’t have a garage.” Such statements do not contain even a hint of intelligent thought. Yet they do make the speaker look absurd. And they tend to put the speaker off balance. To reply to such stupidities usually diverts the argument off the point. To ignore such stupidities may leave the impression that the heckler is unanswerable because the speaker is deficient in some way.
Despite a vast ignorance about almost everything, people have almost no qualms about spouting off opinions that, when viewed in the cold light, are hogwash. Since almost no one has taken the time or p. 208 trouble to study issues and understand them, it is highly likely that almost no one has the authority, knowledge, or experience to speak intelligently on those issues, especially at a cocktail party or at a dinner where there has been considerable consumption of alcoholic beverages. It follows that most such publicly voiced opinions are based on inadequate, incomplete, and often erroneous information and are therefore to that extent unreasonable.
“Now that we have done the nasty, Tom, will you marry me?”
“Maybe, Lisa, maybe.”
Tom’s statement of “maybe” is a diversion away from an intelligent discussion of her question. It is a diversion designed to inspire hope, when it should—if Lisa were trained in detecting hidden meanings as we are—inspire fear.
Arguments that attempt to influence by appealing to popular sentiment such as patriotism, loyalty, tradition, custom, et cetera are known as argumentum ad populum, another diversionary argument because whether the group thinks something is not a reason
that that something is correct. A group can be right, or it can be wrong. Whether it is right must be determined by evidence, not by consensus. “It’s un-American!” “We don’t do things that way!” “Most real Americans know . . .” are phrases that distract attention from the real points at issue. It may not be American to have the government own steel mills, as was done in the USSR, but whether it is American has nothing to do with whether it is desirable.
Principle: Any strong opinion firmly held by the public is likely to be wrong at least in part.
From which follows:
Lesson: Public opinion and generally held beliefs are not reasons for or against an issue. Instead of blindly accepting received wisdom, examine the evidence. Art accordingly.
Disciplined thought requires that we face facts fearlessly and look disinterestedly at all the evidence, not just part of the evidence; that we not reject evidence because it proves inconvenient or distasteful; and that we not accept evidence because it matches our preconceived opinions. The p. 209 usual problem that prevents disciplined thought is an emotional vested interest in the outcome of our thinking. The secret workings of the unconscious mind prevent us from facing the truth and dealing with reality effectively. If we are ever to achieve rationality, we must do so by offsetting the influence of unconscious impulses. We must learn what those impulses are and in what context they are most likely to operate. And we must consciously prevent ourselves from partially selecting evidence that we like and rejecting evidence that we don’t like.
Therefore, do not lean on arguments as a drunk leans on a lamppost, for support and not illumination. Do not accept arguments because they gratify your ego, advance your position, or help you go along with the crowd.
Pay particular attention to arguments that make you feel uncomfortable or that challenge your traditional beliefs. Therein you are most likely to fall into error.
Review
Review the chapter as you did the previous ones. On the other hand, if you feel you don’t need a review, pass on to chapter 6, which discusses the interesting error known as groupthink.
If you are not sure whether you need the drill, work out the following problem. Is there a national debt?
How would you determine whether the United States of America is in debt? Why is the question important? If there were no national debt, should taxes be increased or decreased? Why? Note down your ideas before reviewing mine.
Answer: Whether there is a national debt would depend on the evidence. Currently, the government lists only its liabilities and not its assets. Thus, the calculation of how much is owed is skewed. A more reasonable approach would be to list assets and liabilities, for one would offset the other. The assets of the government are numerous and valuable. They include all federally owned land and buildings; vast amounts of intellectual property; the gold in Fort Knox; production facilities, including Pantex, the factory in Amarillo that makes hydrogen bombs; and so forth. Surely all that stuff must be worth something. Yet those assets are never considered in calculating the national debt. Instead, what is included are the outstanding financial obligations of the United States. Furthermore, p. 210 much of the public debt in the form of government bonds is actually owned by the citizens of this fair country. Can that be a real debt if Americans owe themselves? Could I list as a debt a billion dollars that I owed to myself as evidenced by an IOU that I have just written to myself?
Why would the government wish to understate its assets and overstate its debt? Has the amount of public debt ever been used to justify the high tax burden currently imposed on Americans? Could a reasonable argument be made that we are taxed to the max?
Taxes are the most important and largest single expense item of most households. This is because you are taxed on what you earn, taxed on what you buy, taxed on what you sell, and taxed on the real property you own, and your estate is taxed when you die. Further, as your pay increases, so does the tax on that pay. Considering the amounts of money involved and the long duration of our taxed life, it is reasonable to state that most people spend a considerable part of their lives working for various government taxing authorities. Now, Americans are taxed at a per capita rate higher than that at any other point in our history. It’s true that the marginal tax rate on high incomes (including mine) used to be 90 percent and that it is less now. But the average working citizen still spends more than a third of his time working just to pay his taxes. The current rate of taxation per worker in the United States far exceeds the rates imposed by Charlemagne on his serfs in the eighth and ninth century. Remember that next time you go to vote. If taxes are not a major issue to you, they should be.
Key questions restated and answered directly:
Is there a national debt? Probably not. Reason: Partial selection of evidence only makes it appear that there is a national debt. In fact, a national surplus is likely.
How would you determine whether the United States of America is in debt? Answer: The usual way—liabilities minus assets equals debt. Why is the question important? If there is a national debt, we might wish to address how to pay it off or manage it. If there is a national surplus, we might want to address how to distribute it. If there were no national debt, should taxes be increased or decreased? Decreased. Why? To ease the tax burden.
6 – Groupthink
p. 211 Social influences normally shape our practices, judgments, and beliefs. A child speaks his parents’ language; a member of a tribe in Papua submits to extensive scarification of the back as altogether fitting and proper. Conformity to the group is the way of the world. But good minds working together are not likely to outperform individuals when the group suppresses productive conflict, balanced debate, and careful reasoning. When the compunction to conform to the group goes against the reality principle, away from truth and toward error, purely on the basis of what the group thinks, the phenomenon is called groupthink.
Groupthink doesn’t work because it is an error in thinking that leads away from reality toward a fake view of issues. Groupthink can lead to disaster, like the Bay of Pigs invasion and the mass suicides at Jonestown and in the Bo and Peep cult of Heaven’s Gate.
Social psychologists have identified the multiple ways that groupthink occurs. Usually, the members agree prematurely on the wrong solution. Then they give each other feedback that makes the group as a whole feel certain that it is right, making the right choice. Members discourage each other from looking at the flaws in their thought processes and usually abrogate decision making to a strong leader. As usual, reality comes crashing in and teaches the group the lesson they needed to learn: When our opinions depend on the opinion of others and not on our own considered judgment, chances are that we will be proved wrong.
The name groupthink comes from the title of a book by Irving Janis, which analyzed the errors groups make. Cohesiveness, insulation, and p. 212 stress led the groups to reach consensus early, supporting the leader in whatever he had initially proposed. Usually, the group’s leader partially selected evidence that confirmed his and the group’s opinions and failed to consider other evidence that did not support the group’s position.
In a detailed analysis, Janis reports on the Bay of Pigs fiasco: “How could we have been so stupid?” an irate President John F. Kennedy asked after his invasion of Cuba had failed miserably. The answer is the group didn’t fail because its members were stupid as individuals. No way. Not that group. The group failed because of a poor process in making their decisions, in short—groupthink.
The planners of the Bay of Pigs invasion included some of the smartest people in America: Robert McNamara, Douglas Dillon, Robert Kennedy, McGeorge Bundy, Arthur Schlesinger, Dean Rusk, and Allen Dulles. What went wrong?
Item: They all thought they couldn’t fail because they knew they were so smart. How could such a smart group not devise a smart action? This illusion of invulnerability caused them to plunge in where more considered judgment might have held back. Smart people can and do make stupid decisions. The Bay
of Pigs clearly illustrates that. What counts is not how smart or dumb you are but how right you are. And how right you are depends on how well you reasoned things through. Not opinion, not IQ, not previous experience or reputation, but reason supported by evidence controls the situation. The more cogent the reasons, the more tightly they relate to the conclusion, the more the evidence in support of the conclusion, the more likely the conclusion will be correct and reflect the truth and the reality situation. It’s that or disaster. Take your choice.
Let’s look at the Bay of Pigs decision more carefully.[1] It teaches many lessons.
Item: Individual members of the group censored themselves from voicing opposing opinions for fear of ridicule or because they did not want to waste the group’s time. In a memorandum, Arthur Schlesinger said that he considered the invasion of Cuba immoral. Yet he kept his mouth shut when he attended the meetings of the Kennedy team. Subsequently, we learned that Schlesinger kept his mouth shut because Bobby Kennedy told him to do so: “You may be right or you may be wrong,” said Bobby. “But the President has made his mind up. Don’t push any further.”
Item: Too few alternatives were considered. According to JFK, who tried to explain the mistake afterward, “The CIA gave us only two choices: p. 213 Invade or do nothing.” Whether this was in fact the case, we don’t know. JFK’s public statement to that effect certainly made no friends at the CIA. Anyway, that’s neither here nor there. The policy could have been framed quite differently by the president himself, for he, not the CIA, was in charge. Multiple options, alternatives, and other objectives could have been considered other than the black-and-white, do-either-this-or-that dilemma allegedly proposed by the CIA. Subsequently, the CIA said that the president’s team did not wish to consider or even hear about the risks inherent in the invasion. Nor did the team seem interested in detailed analysis of opposing forces stationed near the Bay of Pigs. Nor did the team want to hear the even more interesting idea that the Cuban people, most of them, supported Castro and were willing to die for his cause.
Truth, Knowledge, or Just Plain Bull: How to tell the difference Page 25
