“Ask me to explain things like derivatives and I'll look blankly at you,” Freeman says of his ability to understand the financial crisis. “My credentials in economics, negotiation and law should qualify me to speak, but often the news leaves me slack-jawed with confusion. Bring me to a panel discussion, and I'll ask dumb questions,” he writes.
But instead of wanting his students to avoid ever asking a “stupid” question, Freeman encourages them to ask more. “In short,” Freeman says, “I am a role model. I want them to join me in the fight against the fear of looking dumb. Overcoming that fear can save them from serious traps.” Failing to ask the right questions — no matter how embarrassing — allows us to be overwhelmed by jargon and complex terms, making us more susceptible to questionable practices, Freeman says.
The value of unabashed critical thinking seems especially important in the midst of the financial crisis. In a recent piece for Portfolio, Michael Lewis chronicled the success of hedge fund manager Steve Eisman, who scored big in the years leading up to the financial crisis by betting against the banks. Eisman, famous among colleagues for his skeptical nature, became suspicious of the financial underpinnings of mortgage-backed securities when he realized that not even the banks themselves could grasp the investments’ complex nature.
Freeman communicates this point to his students through a classroom exercise that penalizes them for failing to ask “dumb” questions. Freeman describes the exercise:
Students pretend to be teams of entrepreneurs, preparing extensively. I walk into class in the role of a corporate executive and give each team a complex investment offer. Secret: My character wants to take over their businesses, using charm, jargon and complicated terms. If they understand my offer, or admit to themselves they don't understand it, they’ll walk away. Yet, it’s easy to con a third to a half of them into fatal deals.
Professor Seth Freeman is currently working on a book, Promises: Making Commitments More Reliable in Business and Beyond.
Photo credit: e-magic