Of black boxes and sausage machines

Luke Mitchell may have identified a useful metaphor for our time in his study of the Iraqi oil industry, published in the December issue of Harper's: "The black box: Inside Iraq's oil machine."

He was trying to make sense of the processes by which oil comes out of the ground and ends up ultimately fueling someone's car or a power plant. But in a country whose main asset nowadays (never mind its earlier role as cradle of civilization) is oil, he found this remarkably difficult to do. "[I]n all my time in Iraq I would see the oil itself only once," he wrote.

He continued, "I had come to think of Iraq as a kind of black box. Not the black box engineers analyze after a plane crash ... but rather the black box engineers speak of in describing a mechanism with a known function and an unknown method. The pig goes in one end, the sausage comes out the other, and what goes on in between is no one's business. More and more of what happens in the world happens inside black boxes."

In the automobile, for instance, Mr. Mitchell explains that not so long ago anyone who cared to look could pop the hood on his or her car to get a sense of its workings. "...[Y]es, gas flowed in through this line, and these ceramic plugs probably sparked that gas, and these tiny explosions – you could practically hear the individual pistons! – were probably spinning that shaft. Now, of course, the inside of an engine compartment is almost entirely sealed off."

And it seems to take a computer to diagnose almost anything wrong with a car unless it just needs a fill-up.

"Black box" is a phrase accommodating several different meanings at once, as an office building may house several different businesses that share nothing but an address.

The black boxes of aviation, for instance, which Mitchell alluded to, contain voice and data recordings that help safety investigators determine the causes of airline crashes. By the way, these aren't actually black.

In tech-speak, "black box" refers to a device understood primarily in terms of its input and output characteristics. What goes on in between doesn't matter; we don't have to worry about it. That's the way most of us are with our cars, most of the time.

We might say there's a hierarchy of "black-boxiness." There's the car and countless other technical devices as well. For them, the B.B. standard is "you don't have to know, and isn't it great?"

An aphorism widely attributed to German Chancellor Otto von Bismarck is "If you like laws and sausages, you should never watch either one being made."

We might say the B.B. standard for a sausage factory is "you don't want to know."

In a piece in The Boston Globe a few weeks ago, Stephen Mihm of the University of Georgia posited a "black box economy." He suggested that the current economic troubles are rooted in something deeper than the usual business cycles.

"That something," he wrote, "is the immense shadow economy of novel and poorly understood financial instruments created by hedge funds and investment banks over the past decade – a web of extraordinarily complex securities and wagers that has made the world's financial system so opaque and entangled that even many experts confess that they no longer understand how it works."

He discussed the challenges all this presents for the regulators of the economy, and identifies author Satyajit Das as a "voice of concern" on the issue.

Dr. Mihm writes, "[T]ransparency isn't really what the denizens of Wall Street want, Das observes. 'The regulators keep espousing things like clarity and transparency, but it's in the investment bankers' interest to keep things opaque.' Das pauses for a moment. 'It's like a butcher. He doesn't want the buyer to know what goes into making the sausage.' "

Bismarck would have understood.