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I recently read “The Chief Culprit – Stalin’s Grand Design to Start World War II”  by Viktor Suvorov.  I picked this book up as I’m a WWII buff – for some reason really interested in the history of that period.   The intent of this book is to provide the argument that Stalin had a much bigger role in WWII than is typically thought of.  I enjoyed reading this book and thought it was well written – with solid research to back it up.

I think there are 2 main lessons from this book:

1. Things are not always as you seem – as someone may be misleading intentionally.
2. People don’t act rationally – depending on that can be dangerous.

Misleading Intentionally – things may not be what they seem

One of the major points of this author (a Soviet by birth) was that Stalin intentionally misled the world about the Soviet’s role in WWII.  The typical portrayal of the Soviets in WWII is a weak one – where they are victim of Nazi aggression – of them needing help to stand up against the Nazis.   That the reason the Soviets intially lost to the Nazis was obsolete equipment and poor leadership.

This author paints a strong portrait of how it was actually the Soviets that were prepared to invade Germany – that they were on a strong offensive footing.  Their entire industry and military allocations were designed for this – that they were close to an overwhelming offensive themselves – of the being the aggressor and not the victim.

The author then rationally explains why the Soviets were initially hurt so hard by the German invasion – that they were not prepared in any way for defense.  They were set up so strongly for an offensive operation that they were very susceptible to an attack.  That even the equipment they had was poorly suited for defense – as it was set up for offense.

So why did we have the wrong understanding for so long?  The author believes that it was intentional on Stalin’s part – to avoid portraying the Soviet Union as an aggressor.  It was an intentional deception to minimze how dangerous the Soviet Union really was.  That it was in their best interest to appear weak – when they were actually strong.

What does this have to do with business and technology?  The unfortunate reality is that sometimes another party – a vendor perhaps – may intentionally be distorting the truth.  The higher the stakes the more risk there is that this could be true.  The good news is that the technology today makes it harder in some ways to do this – as so much more information is available – provided we look at it carefully.

People don’t act rationally

One of the more interesting points of this book was that Stalin was surprised by Hitler’s attack – as it was an act of irrationality.  The Soviets knew that opening an eastern front with the Soviets was nearly an act of suicide on the part of the Germans – as they didn’t have the resources to accomplish the attack.  In fact they believe Hitler was doomed from the start – as his country lacked the natural resources to sustain a long war – especially in terms of oil.

It wasn’t that the Soviets weren’t paying attention – they had significant intelligence resources devoted to this – watching coat production, gas conversion, etc. – all items needed in order to successfully wage in winter of Russia.  Germany did not take any of the actions they were looking for.  In fact were very unprepared for a war in Russia – even though they attacked.

So again – the lesson is to not assume that people act rationally.  Maybe technology geeks like me are more susceptible to this – as we work with rational computer systems a lot (they behave predictably for the most part).  People often don’t act rationally – they will do things that they’re unprepared for, nobody expected.  Sometimes this works well – other times it certainly does not.

I read “False Profits” by Dean Baker a few days ago.  The subtitle of the book is “Recovering from the Bubble Economy” – which pretty much sums up what the book is about.   The author has some interesting opinions about what happened with the economy – and some issues he has with the economic leadership at the time.

One of the key points of the book is that the heart of the economic crisis was not derivatives, exotic loans, etc – but a housing bubble.  Real Estate simply became overvalued and when it fell it caused a ripple of consequences to the economy.  Not only was the wealth generated and lost by the housing itself – but it fed a lot of consumption in the economy that was also lost.

The heart of the problem is that no type of asset will endlessly go up – at some point it goes down.  Stocks go up and down – even if over a long time period they go up.  Housing has gone up and down over time – but the general trajectory is up.  Gold, other metals, even bonds, go up and down in value.  To assume anything will forever keep increasing signficantly is just denying reality.  But our society seemed to buy into it - as it was making us money and driving the economy.

Another interesting point the author made was how this affected the baby boomer generation –  in terms of their readiness for retirement.  I can’t back it up but he says that baby boomers that don’t own a house are actually in better shape than those who do – that too many baby boomers made their house their primary wealth vehicle – not retirement funds, stocks, bonds, etc. View full article »