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  • In his inaugural address,

  • Barack Obama appealed to each of us to give our best

  • as we try to extricate ourselves from this current financial crisis.

  • But what did he appeal to?

  • He did not, happily, follow in the footsteps of his predecessor,

  • and tell us to just go shopping.

  • Nor did he tell us, "Trust us. Trust your country.

  • Invest, invest, invest."

  • Instead, what he told us was to put aside childish things.

  • And he appealed to virtue.

  • Virtue is an old-fashioned word.

  • It seems a little out of place in a cutting-edge environment like this one.

  • And besides, some of you might be wondering,

  • what the hell does it mean?

  • Let me begin with an example.

  • This is the job description of a hospital janitor

  • that is scrolling up on the screen.

  • And all of the items on it are unremarkable.

  • They're the things you would expect:

  • mop the floors, sweep them, empty the trash, restock the cabinets.

  • It may be a little surprising how many things there are,

  • but it's not surprising what they are.

  • But the one thing I want you to notice about them is this:

  • even though this is a very long list,

  • there isn't a single thing on it that involves other human beings.

  • Not one.

  • The janitor's job could just as well be done in a mortuary as in a hospital.

  • And yet, when some psychologists interviewed hospital janitors

  • to get a sense of what they thought their jobs were like,

  • they encountered Mike,

  • who told them about how he stopped mopping the floor

  • because Mr. Jones was out of his bed getting a little exercise,

  • trying to build up his strength, walking slowly up and down the hall.

  • And Charlene told them about how she ignored her supervisor's admonition

  • and didn't vacuum the visitor's lounge

  • because there were some family members who were there all day, every day

  • who, at this moment, happened to be taking a nap.

  • And then there was Luke,

  • who washed the floor in a comatose young man's room twice

  • because the man's father, who had been keeping a vigil for six months,

  • didn't see Luke do it the first time,

  • and his father was angry.

  • And behavior like this from janitors, from technicians, from nurses

  • and, if we're lucky now and then, from doctors,

  • doesn't just make people feel a little better,

  • it actually improves the quality of patient care

  • and enables hospitals to run well.

  • Now, not all janitors are like this, of course.

  • But the ones who are think that these sorts of human interactions

  • involving kindness, care and empathy

  • are an essential part of the job.

  • And yet their job description contains not one word about other human beings.

  • These janitors have the moral will to do right by other people.

  • And beyond this, they have the moral skill to figure out what "doing right" means.

  • "Practical wisdom," Aristotle told us,

  • "is the combination of moral will and moral skill."

  • A wise person knows when and how to make the exception to every rule,

  • as the janitors knew when to ignore the job duties in the service of other objectives.

  • A wise person knows how to improvise,

  • as Luke did when he re-washed the floor.

  • Real-world problems are often ambiguous and ill-defined

  • and the context is always changing.

  • A wise person is like a jazz musician --

  • using the notes on the page, but dancing around them,

  • inventing combinations that are appropriate for the situation and the people at hand.

  • A wise person knows how to use these moral skills

  • in the service of the right aims.

  • To serve other people, not to manipulate other people.

  • And finally, perhaps most important,

  • a wise person is made, not born.

  • Wisdom depends on experience,

  • and not just any experience.

  • You need the time to get to know the people that you're serving.

  • You need permission to be allowed to improvise,

  • try new things, occasionally to fail and to learn from your failures.

  • And you need to be mentored by wise teachers.

  • When you ask the janitors who behaved like the ones I described

  • how hard it is to learn to do their job,

  • they tell you that it takes lots of experience.

  • And they don't mean it takes lots of experience to learn how to mop floors and empty trash cans.

  • It takes lots of experience to learn how to care for people.

  • At TED, brilliance is rampant.

  • It's scary.

  • The good news is you don't need to be brilliant to be wise.

  • The bad news is that without wisdom,

  • brilliance isn't enough.

  • It's as likely to get you and other people into trouble as anything else.

  • (Applause)

  • Now, I hope that we all know this.

  • There's a sense in which it's obvious,

  • and yet, let me tell you a little story.

  • It's a story about lemonade.

  • A dad and his seven-year-old son were watching a Detroit Tigers game at the ballpark.

  • His son asked him for some lemonade

  • and Dad went to the concession stand to buy it.

  • All they had was Mike's Hard Lemonade,

  • which was five percent alcohol.

  • Dad, being an academic, had no idea that Mike's Hard Lemonade contained alcohol.

  • So he brought it back.

  • And the kid was drinking it, and a security guard spotted it,

  • and called the police, who called an ambulance

  • that rushed to the ballpark, whisked the kid to the hospital.

  • The emergency room ascertained that the kid had no alcohol in his blood.

  • And they were ready to let the kid go.

  • But not so fast.

  • The Wayne County Child Welfare Protection Agency said no.

  • And the child was sent to a foster home for three days.

  • At that point, can the child go home?

  • Well, a judge said yes, but only if the dad leaves the house and checks into a motel.

  • After two weeks, I'm happy to report,

  • the family was reunited.

  • But the welfare workers and the ambulance people

  • and the judge all said the same thing:

  • "We hate to do it but we have to follow procedure."

  • How do things like this happen?

  • Scott Simon, who told this story on NPR,

  • said, "Rules and procedures may be dumb,

  • but they spare you from thinking."

  • And, to be fair, rules are often imposed

  • because previous officials have been lax

  • and they let a child go back to an abusive household.

  • Fair enough.

  • When things go wrong, as of course they do,

  • we reach for two tools to try to fix them.

  • One tool we reach for is rules.

  • Better ones, more of them.

  • The second tool we reach for is incentives.

  • Better ones, more of them.

  • What else, after all, is there?

  • We can certainly see this in response to the current financial crisis.

  • Regulate, regulate, regulate.

  • Fix the incentives, fix the incentives, fix the incentives ...

  • The truth is that neither rules nor incentives

  • are enough to do the job.

  • How could you even write a rule that got the janitors to do what they did?

  • And would you pay them a bonus for being empathic?

  • It's preposterous on its face.

  • And what happens is that as we turn increasingly to rules,

  • rules and incentives may make things better in the short run,

  • but they create a downward spiral

  • that makes them worse in the long run.

  • Moral skill is chipped away by an over-reliance on rules

  • that deprives us of the opportunity

  • to improvise and learn from our improvisations.

  • And moral will is undermined

  • by an incessant appeal to incentives

  • that destroy our desire to do the right thing.

  • And without intending it,

  • by appealing to rules and incentives,

  • we are engaging in a war on wisdom.

  • Let me just give you a few examples,

  • first of rules and the war on moral skill.

  • The lemonade story is one.

  • Second, no doubt more familiar to you,

  • is the nature of modern American education:

  • scripted, lock-step curricula.

  • Here's an example from Chicago kindergarten.

  • Reading and enjoying literature

  • and words that begin with 'B.'

  • "The Bath:" Assemble students on a rug

  • and give students a warning about the dangers of hot water.

  • Say 75 items in this script to teach a 25-page picture book.

  • All over Chicago in every kindergarten class in the city,

  • every teacher is saying the same words in the same way on the same day.

  • We know why these scripts are there.

  • We don't trust the judgment of teachers enough

  • to let them loose on their own.

  • Scripts like these are insurance policies against disaster.

  • And they prevent disaster.

  • But what they assure in its place is mediocrity.

  • (Applause)

  • Don't get me wrong. We need rules!

  • Jazz musicians need some notes --

  • most of them need some notes on the page.

  • We need more rules for the bankers, God knows.

  • But too many rules prevent accomplished jazz musicians

  • from improvising.

  • And as a result, they lose their gifts,

  • or worse, they stop playing altogether.

  • Now, how about incentives?

  • They seem cleverer.

  • If you have one reason for doing something

  • and I give you a second reason for doing the same thing,

  • it seems only logical that two reasons are better than one

  • and you're more likely to do it.

  • Right?

  • Well, not always.

  • Sometimes two reasons to do the same thing seem to compete with one another

  • instead of complimenting,

  • and they make people less likely to do it.

  • I'll just give you one example because time is racing.

  • In Switzerland, back about 15 years ago,

  • they were trying to decide where to site nuclear waste dumps.

  • There was going to be a national referendum.

  • Some psychologists went around and polled citizens who were very well informed.

  • And they said, "Would you be willing to have a nuclear waste dump in your community?"

  • Astonishingly, 50 percent of the citizens said yes.

  • They knew it was dangerous.

  • They thought it would reduce their property values.

  • But it had to go somewhere

  • and they had responsibilities as citizens.

  • The psychologists asked other people a slightly different question.

  • They said, "If we paid you six weeks' salary every year

  • would you be willing to have a nuclear waste dump in your community?"

  • Two reasons. It's my responsibility and I'm getting paid.

  • Instead of 50 percent saying yes,

  • 25 percent said yes.

  • What happens is that

  • the second this introduction of incentive gets us

  • so that instead of asking, "What is my responsibility?"

  • all we ask is, "What serves my interests?"

  • When incentives don't work,

  • when CEOs ignore the long-term health of their companies

  • in pursuit of short-term gains that will lead to massive bonuses,

  • the response is always the same.

  • Get smarter incentives.

  • The truth is that there are no incentives that you can devise

  • that are ever going to be smart enough.

  • Any incentive system can be subverted by bad will.

  • We need incentives. People have to make a living.

  • But excessive reliance on incentives

  • demoralizes professional activity

  • in two senses of that word.

  • It causes people who engage in that activity to lose morale

  • and it causes the activity itself to lose morality.

  • Barack Obama said, before he was inaugurated,

  • "We must ask not just 'Is it profitable?' but 'Is it right?'"

  • And when professions are demoralized,

  • everyone in them becomes dependent on -- addicted to -- incentives

  • and they stop asking "Is it right?"

  • We see this in medicine.

  • ("Although it's nothing serious, let's keep an eye on it to make sure it doesn't turn into a major lawsuit.")

  • And we certainly see it in the world of business.

  • ("In order to remain competitive in today's marketplace, I'm afraid we're going to have to replace you with a sleezeball.")

  • ("I sold my soul for about a tenth of what the damn things are going for now.")

  • It is obvious that this is not the way people want to do their work.

  • So what can we do?

  • A few sources of hope:

  • we ought to try to re-moralize work.

  • One way not to do it: teach more ethics courses.

  • (Applause)

  • There is no better way to show people that you're not serious

  • than to tie up everything you have to say about ethics

  • into a little package with a bow and consign it to the margins as an ethics course.

  • What to do instead?

  • One: Celebrate moral exemplars.

  • Acknowledge, when you go to law school,

  • that a little voice is whispering in your ear

  • about Atticus Finch.

  • No 10-year-old goes to law school to do mergers and acquisitions.

  • People are inspired by moral heroes.

  • But we learn that with sophistication

  • comes the understanding that you can't acknowledge that you have moral heroes.

  • Well, acknowledge them.