Mysteries, Puzzles, Enron and Confusing contracts

Mysteries and puzzles are very different.

Puzzles are solved by finding out more information – so if you want to find a terrorist, knowing what part of which mountain in which country he is hiding in will help. Mysteries carry with them an intrinsic amount of ambiguity, uncertainty and incomplete information, so that resolution is not so much dependent upon the information available as the skills of those interpreting the available information. Mathematically, a puzzle might be like a solution for simultaneous equations while a mystery might be more like a series of Nash equilibrium points for dynamic, changing and uncertain variables linked by equally dynamic and uncertain functions.

Malcolm Gladwell, author of The Tipping Point, Blink, New Yorker columnist... TEDster and pretty cool thinkerI was thinking (in response to Malcolm Gladwell’s article in The New Yorker) about how Enron was more a mystery than a puzzle. Skilling was convicted on fraud charges on the basis that he had not disclosed “sufficient” information, yet all the information had already been disclosed – the problem was that it was so complicated that nobody could understand what was written. Certainly the disclosures were complicated, yet it does seem strange that when the right person loses money because they didn’t understand what they were doing with their money they are able to take advantage of the criminal system to exact vengence on those that created the offered the opportunity to invest.

Australia is no better. Our Commonwealth Bank (amongst many other institutions) offers small business owners the opportunity to receive payments via credit cards. They charge a reasonable fee for this service, yet they offer the merchant virtually no security for the merchant. Their simplest form allows a merchant – such as a small mailorder company – to simply submit the credit card number and expiry date to the provider. Provided that the twenty digits are valid and that account has available money in the account, the money will be received in your account the next morning. A merchant can collect the security codes, the signature, the address and even take a photocopy of the cards themselves, and yet cannot validate any of this information. Yet the bank doesn’t warn its customers of this – it is certainly contained within the Terms and Conditions amongst the other few hundred pages, but the information is not presented in a useful manner.

I believe that many modern contracts are invalid.

Contracts require a variety of elements to be satisfied. Throughout most of the world, a signature on a contract makes that contract binding – it is assumed that you have read, understood and accept the terms and conditions provided in writing. But do you really? I recently signed a document that I am told was a form of lease: but it was all in Chinese. Is that contract binding? Is the license agreement that you skimmed through or skipped altogether when you installed you last piece of software really binding on you?

Sure, according to the law as it is today, once you sign something it’s binding. Yet should it be? Those of you thinking that “the law is the law” perhaps forget how recently it was that we invented such concepts, and that it is policy – most often driven by commercial demands – that generate the policies that we come to take for granted and assume to be universal.

In the evolving world in which we live, let’s remember that we can make the future how we like. Let’s remember that when we can think of a way to make things better, we can share that message and see it realised… that the future is being created all around you – right now.