Publications: The Cost of Ignorance

By Dr. Josef A. Mestenhauser

That is the question that we do not often ask. Instead we focus on the cost of education that is climbing and affects virtually everybody’s checkbook. Yet ignorance does cost a lot, more than most people recognize, and the Czechs could tell you a gruesome story about it. However, they probably won’t because, according to Martin Jan Stransky, this subject falls into the category of selective attention, convenient lapsed of memory, or conspiracy of silence. Stransky is the publisher of Pritomnost, originally founded by his grandfather in the 1920’s, and now one of the most respected journal.

So how much does ignorance cost? One million crowns? Hundred million? How about ten billion crowns and climbing; three billion is damage for breach of business deal, and seven more for accumulated interest, increasing by one million each day.

The case has dragged since the very early nineties when the then Czechoslovak government faced a critical shortage of blood plasma at a time when the HIV epidemics began. It decided to seek supply internationally and entered into negotiation with a Josef Stastny, a Czech with Swiss residence, who was President of a Diag Human company. A concourse was issued and his firm, together with another Swiss firm, the Connoco, and a Danish firm, Novo Nordisks competed with others. Stastny’s consortium did not win the contract, or the next concourse, and no formal contract was ever signed. However, the Minister of Health explained in writing to the Danish firm that the reason why they were also excluded from the deal was that Diag Human was unreliable and associated with illegal activities including sales of prohibited goods. IndeedGermanyrequested Interpol to issue a warrant for the arrest of Stastny, though no evidence was eventually produced. Diag Human then merged (or many been operating under two names, including the Connoco, and when it got hold of the letter issued to Nova Nordics,  began legal proceedings against the Czech government – four years later.

The chronology of this never ending case and the technology and scientific processing of the blood plasma are so complex that even a full size book by Jan Urban  under the title “Tunel plny krve” – (Tunnel full of blood) could not explain the case fully. Suffice it to say that there were a number of issues that help explain why the matter falls into the category of ignorance. First, the case persisted over a long period of time during which there were many changes, internal and external, including the split of the country and the accession to the European Union . Governments changed often and each attempted to deal with the matter separately. Secondly, the various  governments chose different channels through which to resolve the case, finally agreeing to settle it through arbitration rather than courts. This proved to be a mistake because the parties could not agree on the composition of the ad hoc arbitration commission. Thirdly, during the prolonged process various officials, including cabinet ministers, made public statements that eventually helped the Diag Human case. In short, many mistakes have been made, all based on ignorance: how to select trustful business deal; how to use proper process; who was responsible to deal with these matters (number of channels often with competing jurisdiction); how to be accountable; and how to assess whether damages were caused and if so, to what extent. The protracted case led to an impasse that was to be solved by yet another arbitration in 2008 that ruled in favor of Diag Human. Diag Human initially demanded over 500 million crowns, and continued to scale it down several, times to end eventually with a claim of 50 million crowns. Here is when the case really got murky. Diag Human considers the result of this arbitration as final and enforceable, while the Czech government appealed and thus considers the case to be still unresolved and pending. The plaintiff decided to play hardball, and started increasing the amount of damages that now stand at three billion crown with interests accumulated at seven billion more. It started to search for Czech government property that could be seized and actually attempted to obtain from aViennacourt injunction for confiscating some priceless artwork that was on loans toAustria. Other property it seeks to garnish, are the Czech Canters inNew YorkandParis, and some naval property inHamburg.

The problem is indeed ignorance of market economy, legal systems, making public pronouncements, role of consultants, lack of confidentiality, the morals of large scale awards to a single individual, lack of agreement on the process of conflict resolution, correct use of available legal remedies, and general lack of accountability of public officials. Add to this list the character of Mr. Stava, presumed to be an unscrupulous “cowboy capitalist” with criminal mind and checkered history who took advantage of the confusing politics and of incompetent officials.

My own explanation of this case is larger than the corruption and incompetence arguments. I believe that the transition to democracy was too fast and complex while people assumed that once communism was dead, everything is normal overnight. My favored metaphor for this is a story that appeared in New Yorker some time ago. It described an unusual case of a blind man who underwent surgery and as result was able to see. This would have been a very exceptional case because medical history accounts mostly of seeing people who become blind. The article concluded that the blind man’s brain was programmed to not seeing, and continued to do so even after the change. He still depended on his white cane, on touch and feel, could not distinguish three dimensional objects, could not estimate distances, and did not distinguish colors. In other words, he saw but did not see. I believe that this metaphor is suitable to explain the situation inCzechoslovakiain the early days of transition with many people still using their “cane” and not seeing even today. The cultural brain was programmed by long term communist brainwashing that hindered development of trustful human relationships. Furthermore, the regime destroyed any individual sense of accountability, damaged basic human values, prevented smooth communication, and sabotaged the structure of the government for public good. The atmosphere was full of paranoia that others are taking advantage of the Czechs. The value system became dominated by materialism and secularism that expected immediate rewards. One former cabinet minister objected to the claims of Diag Human on the ground that it was immoral to hand over such a large sum to a single individual.

My second explanation is that people underestimated the extent of the gap that developed over the 50 or so years between the constantly increasing and growing level of educational attainment in the West and the level of rationed and “planned” education determined annually by the needs of the state in which the only power that “knew” was the communist party. The gap was much larger in the social sciences and humanities and it still exists. As some social science research points out, if people do not know what exists, then it does not exist. In order to determine what was missed and lost, the Czechs and other former Soviet block countries must “catch up”; there is a new field of knowledge management and transfer that suggests that five conditions need to be satisfied in order to catch up. First, that people must be aware there is something missing; this is a sore point if you do not know what exists. Secondly they must know where the missing knowledge is. Thirdly, they must have a strategy of how to access such knowledge and fourth, they must have infrastructure into which to absorb the new knowledge. The fifth is especially important because it requires that the new knowledge be not only absorbed, but immediately used to create new knowledge. Without creating new knowledge, people may catch up to a certain level without recognizing that the Western countries continue to grow so that the catch up process is never complete thus leaving the handicapped party continually behind.

This is my punchline. How to catch up on things and knowledge that we do not know exists. My own field of international education deals with the global supply of knowledge, so that this case I am describing is a lesson not only for the Czechs, but for us as well. The Czechs are deficient on all five criteria mentioned above; we ourselves would not have a field of international education if it was not for the realization that globalization has also placed us on the list of countries that need to do some catching up. Can we stop for a minute to think of times when we have made critical decisions based on ignorance that damaged our national interest and cost a great deal of human and material resources?

A prominent social scientist, Martin Lipset, visitedPragueseveral times, and was heard to speculate that despite the velvet revolution, people of the Czech andSlovakRepublicsdo not have a chance to even catching up with the most prominent part of the outside world. Tomas Masaryk predicted after the creation of theCzechoslovakia, that fifty years will be needed to catch up with the rest of the world then. So far, the Czech andSlovakRepublicshave a bit longer than twenty years to shed the white cane and see again.

While this example provides evidence of bungling and incompetence, it would be a mistake to jump to conclusions regarding the state of affairs in theCzech Republic. I follow the news and want to end on a very positive note. There is emerging evidence that shows a substantial renewal and improvements that are beginning to take a strong hold of the public and private life. We are witnessing what some have termed the “reserve power” of the Czech that has allowed them to survive the Hapsburgs, the Nazis and the communists. But this does not eliminate the need for knowledge; if you think education is too expensive, try ignorance and see where it ends.