Connections - Kant to Hilter

I have enjoyed a number of shows from an older British TV program called Connections.  Recently, I watched a very interesting episode titled "Deja Vu".  In it, the narrator outlines the historically influence of Kant on Hitler through environmentalism.  Humboldt, greatly influenced by Kant, started the environmental movement after traveling throughout South America and the Caribbean.   Humboldt's ideas were mashed with Darwin's theories to argue for supreme human genetics.

While certainly the connections displayed in this show are often weak if not nebulous (as I believe these may have been), it was good to see even that weak connection between Kant and Hilter.  Peikoff so eloquently demonstrates in the Ominous Parallels, that the connection runs much, much deeper.

Update: According to commenter Tom, I changed Humbert's name to Humbolt (thanks Tom).

Tools versus ideas - the role of inventions in changing society

In the history of information systems post, I outlined my goal with introduction to information systems class that I'm teaching. One module I'm particularly proud of is the one on "Tools versus Ideas" lecture. In this lecture, I start with the question "Which of the two, tools or ideas, is more fundamental to changes in business and/or society?" After spending a few minutes getting student feedback, I provide my answer through analyzing six different historical cases at the societal level. These six are:

1. Invention of writing
2. The Greeks
3. Emergence from the Dark Ages
4. Invention of the printing press
5. The industrial revolution
6. Invention of the electronic computer

For each of these cases, I explore the causes and effects. For example, the invention of writing is largely credited to be a solution to ever growing cities around 4000 BC. With improved irrigation and better farming techniques, more food was produced by fewer farmers, allowing people to migrate to cities. But with larger cities came larger bureaucracies and more commerce. In order to manage the increased complexity of the information flow throughout these cities, people start using a standard form of communicating with pictures and symbols.

Yet, even with the advent of writing, society did not change much. Empires became larger, but they were still despotic. Whoever had the strongest mob following him ruled the land. The invention of writing did not fundamentally change how society operated.

Compare that with the Greeks. What was fundamentally different about the Greeks? Why did this one culture discover the beginnings of science, philosophy, literature, great art, and a systematic study of history? And the answer lies with the Greeks unique ideas. The Greeks worshiped man. The believed that each individual man should become the best that they could be, physically, but more importantly, mentally. It was this respect for individual achievement and reason that fundamentally changed society as we know it.

The rest of the cases highlight this same theme. The inventions did effect society, but merely accelerated the transmission of ideas already present. When it accelerated the right ideas, such as when the printing press allowed more scientific and secular writings to be printed leading to the reformation, scientific revolution, and enlightenment, society started to change for the better. But if ideas are bad, such as the despotic form of government, inventions like writing did not make life any better or more enjoyable.

The major take away from this module is that information systems are only as good as the ideas that they transmit. The old notion "garbage in, garbage out" applies to any information system and its application to individual changes, business changes, or societal changes. Ideas matter! They matter far more than the tool. But once the right ideas are discovered, tools can accelerate the transfer of those ideas. Knowing which tools are right for which job is an entirely different subject and is the focus of the remainder of the semester.

History of Information Systems

Over the past 4 years, I have taught one class more than any other, Introduction to Information Systems. At every university I have taught this class (4 different ones), it is a core class for all undergraduate business students. While I agree that this class is essential for business students, I believe there is a general failure in how these classes are generally structured. Bill Gates is noted for saying that information systems are the "digital nervous system" of a business, but how can this essential system be portrayed to students in an effective way?

Many professors hate teaching this class. Reading through numerous textbooks for the introductory class gives a clue why. The textbooks bombard students with lots and lots of facts, like the difference between systems software and application software or what is a decision support system or name some hacking techniques to break into a computer. What is missing is a focus on integrating these facts into usable principles for utilizing and enhancing information systems for improved organizational performance. While most professors understand these principles, they feel it necessary to ram tons of facts down the throats of students and then ask the students to regurgitate the facts without applying them. For the professors that do ask them to apply the facts, most students are not equipped to do so. Without a focus on principles, most students are clueless on how to apply new technologies for business success. The professors certainly are not inspired. So there is little surprise that they cannot inspire their students.

To overcome these limitations, I have been redesigning this class to better highlight the principles of information systems. At first glance, the case study method offers a means of introducing facts by allowing sufficient discussion and contemplation to integrate the facts into usable principles. However, this method suffers from an over abundance of complexity. Often its is difficult for students to easily grasp the principles because there are often two or more different principles involved, complicating the issue. While I still use case studies, it is something that I utilize only after I have established the principles.

Instead, I have turned to history. It was amazing to me, that after I had completed my PhD in information system, I had no idea about where computers originated. To understand why computers are an integral part of business, its important to understand why they were introduced in the first place. By focusing on the historical aspects of computing, a bigger picture emerged about why they are so effective and popular. It also allows the instructor to focus on principles one at a time by picking historical examples the best exemplify its effects. It explains why in the 1940s, why 4 computer systems were invented independent of each other. It explains why IBM was so successful with the mainframe, but not nearly so successful with personal computers. It helps explain what email, cell phones, and Facebook have in common.

After introducing the historical aspects to information systems, I have received numerous comments from students that that was their favorite part of class. While my restructuring of the class is a work in progress, I have found inspiration from many of the great articles found in The Objective Standard that have effectively utilized a historic approach to present principles. For those of you unable to take my class, I have found a number of books that have really been key to my understanding. These include The Universal History of Computing: From the Abacus to the Quantum Computer, ENIAC: The Triumphs and Tragedies of the World's First Computer, Computing in the Middle Ages: A View From the Trenches 1955-1983, and Computer: A History Of The Information Machine, Second Edition (The Sloan Technology Series).

NY Times and the housing crisis

The housing crisis according to the NY Times.

It hurts the immigrants.

It hurts the elderly.

But how did it happen? Certainly there are numerous writers and editors at the NY Times, but the overall impression I received after reviewing articles for the past hour is that the Republicans are at fault for having lax oversight of Fannie Mae and Freddie Mac. In an editorial this past September, the Editorial Board felt it compelling to blame Bush and the Republicans for the current economic mess and gave the Democrats a complete pass.

Now, I have no love for the Republicans and agree with Professor Thompson on the decline of the party. They are no longer the small government leaning, protector of individual rights that they once were (or at least approached better than any other party). However, us to blame the Republicans for the entire housing bubble begs the question, what policies led to the crisis.

While I am no expert on the current crisis nor an expert in economics, I do understand the basics well enough to realize that cause and effect can be traced if you follow the bouncing ball (in this case the historic trail).

So what is the major problem today? Too many defaults on home loans. And as the number of defaults increase, the housing prices continue to fall. As housing prices fall, more home owners with low down payments realize their home values are lower than their mortgage. Some of these home owners go into default because they cannot afford to sell.

These risky loans were not always available. Traditionally, banks stayed away from these loans. What changed?

As many liberals argue, some reductions in banking regulation during Bush's administration caused changes in banking practices, which ultimately led to today's financial mess. However, this does not make sense. In all the history of business markets, I have never witnessed a total collapse of an industry due to deregulation. At worst, I have seen problems arise when its only a partial deregulation, causing conflicting pressures on industry that takes some years to figure out, as during the energy crisis in California a few years back. But never have I witnessed an industry collapse due to total deregulation. In fact I have seen just the opposite.

Did, in fact, the partial deregulation conflict with existing policies that perpetuated the financial collapse? The deregulation helped spur growth in banks initially, but the banks were still being pressured with policies established years earlier. What were they? The answer lies in the NY Times stories.

Fannie Mae Seeks to Ease Home Buying 1994
"President Clinton is tentatively scheduled to attend the announcement. The Administration is urging that loans be more broadly available to poor and lower-middle-income Americans."

Fannie Mae eases credit to aid mortgage lending 1999
"Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."

Indeed, going back even further, the Community Reinvestment Act (CRA) of 1977 encouraged more lending to poor and minorities. Essentially, affirmative action for mortgages. NY Times has gone to bat for this act, and here, and here.

To be clear, I think it is stupid for banks to ignore qualified minorities and poor individuals from obtaining mortgages. Its the bank's mistake to make, but stupid none-the-less.

However, CRA pushed banks to make riskier loans than they normally do. It encouraged banks to make loans to applicants that did not meet minimal mortgage standards. And while there were safe guards established to limit the effects of this increased risk, the banking culture changed. Banks began taking greater and greater risks, with the thought that Fannie Mae and Freddie Mac would cover their butts if the housing market started to crumble. But that changed with the meltdown of Fannie Mae and Freddie Mac. Now the banks' saftey net was destroyed, and the risky loans they were habitated into taking starting eating them from the insides. And the rest is history.

The NY Times would like to claim that the Republicans are to blame for everything. They are wrong, although I will not give the Republicans a complete pass. They could have tried to overturn CRA. In the end, the fault lies with the failed philosophy of the politicians, a mixture of altruism, tribialism, and socialism. Both Republicans and Democrates fall victim to theses philosophies.

Decline and Fall of the Roman Empire

For the past few months I've been reading the abridged version of The History of the Decline and Fall of the Roman Empire (Penguin Classics). Its part of my new interest in history that has fueled my purchase, but the book tends to drag on in parts. So I'm torn between periods of boredom and periods of extreme fascination. Last night, I found one of the periods of extreme fascination.

Gibbon details how barbarian law differs from Roman law. It follows the fall of the Western Empire (~500 AD). My takeway was that with Roman law, while far from perfect, still had strong elements of a rule by law and at least a nod towards justice, rather than a rule by muscle. The barbarian law that took effect after Roman jurisprudence left. The barbarians worshiped strength, bravery, and fighting skills. When it came to law, what mattered was not evidence of a wrongful act, but your character. So, to be acquitted of a charge, you needed to have people stand up and vouch for your character. Depending on the severity of the crime, the more or less people that needed to vouch for your character.

And even if you committed a wrongful act, you could compensate those wrongly hurt with money and be done with it...even murder. So basically, a priced was levied on everyone's head. If you had enough gold, you could kill whomever you wanted, as long as you paid in gold.

In this one chapter, I found the evidence of the connections between several parts of Rand's politics as she described in Capitalism: The Unknown Ideal. The relationship between rule of muscle and mob rule. The relationship between rule by force and rule by faith. The relationship (or lack thereof) between rule of force and justice. The relationship between morality and politics. And why rule of force is morally evil...hence the description of this period as the "Dark Ages".

As others have said more eloquently then me, in order to understand politics today, you should study history. Here indeed is a great example.