How the very things we create to protect ourselves, like money market funds or anti-lock brakes, end up being the biggest threats to our safety and wellbeing.
We have learned a staggering amount about human nature and disaster -- yet we keep having car crashes, floods, and financial crises. Partly this is because the success we have at making life safer enables us to take bigger risks. As our cities, transport systems, and financial markets become more interconnected and complex, so does the potential for catastrophe.
How do we stay safe? Should we? What if our attempts are exposing us even more to the very risks we are avoiding? Would acceptance of danger make us more secure? Is there such a thing as foolproof?
In Foolproof, Greg Ip presents a macro theory of human nature and disaster that explains how we can keep ourselves safe in our increasingly dangerous world.
Ip, chief economics commentator for the Wall Street Journal, takes on the well-intentioned but flawed impulse to completely safeguard oneself from disaster. In his opinion, the universal urges to achieve success and seek safety often lead to failure and danger. When peril is recent or vivid in memory, people are more cautious: for example, Wall Street brokers who have not gone through a crash are likely to take more risks, and often return better results, than those who have. But the longer the time between one danger and the next, the less urgent the drive for caution. Ip ties many of the catastrophes of the last 10 years to this phenomenon and suggests that the world's increasingly interconnected transport, finances, and communications also have increased risks. He sees the impulse to "make things bigger and more complicated" as one that conflicts with the urge to ensure safety. The best solution would be a happy medium between safety and risk, but humans have consistently failed to find this balance. Tackling subjects that include forest fires, Paul Volcker's economics, and savings vs. debt, Ip entwines economics and psychology to show how to "maximize the units of innovation we get per unit of instability." This is a thoughtful, entertaining read for those interested in the inner workings of global risk management.