What's an Engineer Got That a Banker Doesn't?
Many believe that tools are what distinguish man from other beasts. I would argue that equally important is the advantage of a written language and the ability to transmit knowledge to future generations by writing experiences down. Perhaps there have been sheep born with a keen sense of their environment who figured out too late they were destined for the slaughterhouse. Unfortunately for their descendants, they had no way to pass that information on and so the next generation never made a break for it because they just didn't know. When it comes to financial and political progress, it is hard to see how we are any better than the ovines.
If one looks at the progress of man over the centuries, it is clear that technological advancement far outpaces social and financial progress. A case in point is the Ponzi scheme. Charles Ponzi foisted his con on an unwary public (although Wikipedia credits Charles Dickens with inventing the concept in 1857) in 1920 and became a millionaire overnight. Bernie Madoff has pulled off an identical scheme some 90 years later. Investors behaved like sheep when it came to acting on past information. I'll contrast that with Dynamic Random Access Memory (DRAM) evolution, one of the mainstays of modern computer technology.
The DRAM was invented in 1970 by Intel and put into use with the then-nascent microprocessor chips. It was popular because it was the lowest cost storage per bit of any random access technology (and still is). It was cheaper to make because it required the fewest number of transistors per bit, so you could pack more cells in a given amount of silicon. Nevertheless, in the words of the late great Milton Friedman, "There is no such thing as a free lunch." The penalty for this storage capacity efficiency is that DRAM requires its memory cells to be "refreshed" periodically (every couple of milliseconds or so). If not refreshed they would forget whether they contained a one or zero. The need to refresh the DRAM conflicts with the need of the processor to read or write data. It turns out this was a very tricky design to make work correctly. The major issue is which process gets access when they both try and access the DRAM at the same time. Improper operation invariably causes data corruption and a system crash. Suppose this happens only once in 10 billion operations. That would mean a crash every two hours or so for a microprocessor running at a mere 5 megahertz clock rate. You get the point; this interface must run perfectly to have a useful product.
At some point in time, the major chip vendors decided to fix the problem. They were tired of lousy products being made with those chips inside. They also were tired of the time it took any particular engineering team to finish a design. It was a terrible drag on acceptance and adoption. Therefore, what they did was design and debug the "definitive" reliable DRAM interface and then integrate it into the microprocessor itself. In essence, they encapsulated the knowledge in concrete (silicon to be exact) so that no one could redesign it incorrectly. Essentially, they passed the knowledge from one generation of engineer to another in a way impossible to ignore. In less than 20 years time, DRAM interface went from a major design problem to a non-issue.
Perhaps a closer to home example is the automobile. In the 1960s (and before), a tune-up consisted of changing the spark plugs, gapping the spark plugs, changing the points, adjusting dwell and timing, and adjusting the carburetor. All went reasonably well if a good mechanic was involved, but often that wasn't the case. Moreover, performing a tune-up every 12,000 miles was required. Worse still, the car's performance deteriorated from the second the hood closed. By the time mile 11,000 rolled over on the odometer, that tune-up was really needed. Today a tune-up consists of replacing the spark plugs at 100,000 miles. This is done because the manual says so, not because the car is running worse. In essence, the knowledge of how to do a good tune-up and issuing an alert to have it performed has been passed down to the next generation by virtue of the car design itself.
In comparison to the DRAM of technology, Mr. Madoff, our case in point in the social and financial sector, pulled off a swindle 1,000 times bigger than the original. And this happened despite the fact that millions of people knew what a Ponzi scheme is and despite all the laws put in place to prevent a recurrence. Clearly something went terribly wrong in the passing down knowledge department between the generations.