It's interesting how certain quotes find a new life in events that follow later, and with them, I suppose, the people that spoke them. Today quotes4all.net was featuring a quote by the late Douglas Adams, author of The Hitchhiker's Guide to the Galaxy, which might as well have been made yesterday about the BP oil spill):
“The major difference between a thing that might go wrong and a thing that cannot possibly go wrong is that when a thing that cannot possibly go wrong goes wrong it usually turns out to be impossible to get at or repair.”
I've been listening to the audiobook of The Big Short recently and am about halfway through it. It explains a lot about the specific reasoning that led to the recent financial collapse. A lot of it comes down to the notion that some banks could not conceive of the notion of something really bad happening, so they operated on the notion that the insurance they were selling was free money (that is, they were selling insurance on something they'd never have to pay out for), so they priced it very badly. From the audiobook:
“Theirs was a union of the weirdly like-minded. Ben shared Charlie and Jamie’s view that people and markets tended to underestimate the probability of extreme change. But he took his thinking a step further. Charlie and Jamie were interested chiefly in the probabilities of disasters in financial markets. Ben walked around with some very tiny fraction of his mind alert to the probabilities of disasters in real life. People underestimated these too, he believed, because they didn’t want to think about them.”
A lot of what seems to drive the world these days is an addiction to money and power. There is no rational reason for any single individual to need as much money or power as they seem to have amassed, and it seems to be that what goes along with that is an increase in “betting,” even irrational betting. Digging a well or making money on the stock market seems to be almost secondary to the drive to take ever bigger risks, often at the expense of others. Maybe it's about the adrenaline rush. Maybe it's about the fame of doing something others haven't. Maybe it's just the multiple levels of detachment between the person making decisions and the person affected.
I hope you can see the connection I'm making. The BP oil spill was not inconceivable. The company just refused to conceive it. The financial problems with banks were not inconceivable. The banks just refused to conceive them.
I don't know what is required to get this under control. More regulation of businesses? Capping the size of businesses? What I do know is that less regulation and leaving companies to their own devices is not the answer. Rachel Maddow put it well recently when she said:
“At the core of the ‘I hate government’ sentiment that’s very fashionable right now is a sort of nostalgia or maybe fantasy about not having government at all, about free people, free families, untaxed, unconstrained by external authority, living according to their religious beliefs and the motivations provided to them by the free market—which, you know, when you put it that way, it sounds kind of bucolic and awesome, right?
“When you see it in action in a country that hasn’t had a government in about 18 years, it actually looks like this. This is Somalia. From which NBC’s chief foreign correspondent, Richard Engel, has just recently returned. ...”
The report by Richard Engel she was leading in to paints a grim picture. And yet she's right. It's scarily like the kind of world Libertarians seem to want to paint for us, not in effect but in structure. And yet it's the structure that leads to the effect.
As a source of ideas, maybe the Libertarian party still offers some interesting food for thought. Sure, all other things being equal, if we have a choice between a big government solution and a small government solution that are both guaranteed to work, why spend the extra money? But the Libertarian party goes farther than that, and here I part company with them. They paint an image in which small government is a virtue in and of itself, and independent of consequence. This has never been more clear than in this quote from Rand Paul about the oil spill:
accidents just happen...”
Rand Paul's words stunned me as Michael Dukakis stunned those who might have otherwise been his supporters in his response to a question about the death penalty in a 1988 Presidential debate. The level of intellectual detachment from reality was shocking.
Sometimes indeed, accidents do happen. But the BP oil spill was not one. And neither was the financial collapse. These were the results of allowing companies to do as they please without fear of the consequences. The companies should have known there would be consequences. So should we have. The system must be reformed to acknowledge that.
As noted before, I'm not making a specific proposal about what needs to happen. I'm just noting the obvious—that the problem here was not “too much government” and that no push toward “less government” is going to make this kind of thing less common. That's not the opinion of someone who's a die-hard proponent of big government, just the common sense observation of someone who understands cause and effect. I think the applicable quote for that is this:
“When the cat’s away,
the mice will play.”
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This is part one of a two-part series.
See the continuation here:
Renouncing my Status as a Republican Wannabe