Greg Ip’s entertaining and thoroughly researched new book explores a paradox: Safety is dangerous and danger safe. One might expect to hear this from an obscure monastic hermit, perhaps, or a hippie with a bumper sticker proclaiming that not all who wander are lost. Instead, it comes from the chief economics columnist for the Wall Street Journal. What gives?
Ip pursues a wide-ranging thesis: "The history of civilization is the history of us trying to foolproof existence, to create safety and stability out of a dangerous and unstable world." Civilization, government, and economics all aim to create stability. Their efforts are helpful because it gives individuals the ability to pursue higher-order activities than, for example, scrounging for food or constantly defending one’s family from predators. However, Ip warns, stability "may also be illusory, hiding the buildup of hidden risks or nurturing behavior that will bring the stability to an end." In other words, stability breeds instability.
In fact, when the mechanisms that ensure stability push chaos and disorder elsewhere, the forces of chaos often regroup and assert themselves again. "Our environment evolves, and successfully preventing one type of risk may simply funnel it elsewhere, to reemerge, like a mutated bacteria, in more virulent fashion." Defeating chaos isn’t always possible, or even optimal. Indeed, to push the danger away can actually allow it to grow stronger.
Take forest fires. Conventional wisdom in the twentieth century dictated that forest fires should be put out as soon as possible. Not only did the destruction of the forest pose a danger to human life but it "was essential to economic progress" because the forest can be used for industry and tourism. But forests needed fires to clear the debris that litters their floors. Moreover, it has only been in the past century that the climate has gotten hotter but the "natural tendency of the landscape to immolate" has been taken away. By trying to control the chaos that intermittently and temporarily is unleashed in forests by fire, human beings have contributed to massive, often uncontrollable forest fires over the last fifteen years.
"The global economy in 2008 was like a forest that hadn’t burned in decades; it was choking with the fuel of leverage, risk, and complacency." The era between 1980 and 2008, the Great Moderation, was controlled by the "global fire brigades"—the Federal Reserve Bank chief among them. By tweaking interest rates, the Fed was able to stave off recession and financial crisis. However, the long period of low inflation and stable growth led to diminished fear, which laid the groundwork for the global financial crisis of 2008. The behavior of those running investment banks changed because of the safer environment created by the Federal Reserve during the Great Moderation. With the feeling of safety came complacency. With complacency came a lack of caution.
We need fear to prevent disaster but, when no disaster faces us, we lose our sense of fear. How should we manage this delicate tension between living a life dominated by fear, on the one hand, and being completely ignorant of risk because we do not possess fear? For Ip, there are "two schools of thought. One...I call the engineers…; the other...I call the ecologists…." While engineers aim to solve problems to make the world safer and more stable, ecologists are skeptical of man’s ability to permanently solve problems. The underlying difference between them is that engineers imply that chaos and disorder can be banished forever whereas ecologists tend to think that there may be "unintended consequences that may be worse than the problem we are trying to solve."
This implies that the ecologist holds man’s role in lesser esteem than the engineer. Indeed, "[e]ngineers will always be tempted to intervene, trusting in their ability to make it right." But what the ecologist lacks in esteem for man’s power he makes up for in wisdom about how to use the power man does have. In a word, the ecologist’s vision of the world is built on prudence—the wisdom about how to manage, rather than try to abolish, the panics, disasters, and chaos that come his way. The ecologist possesses no utopian visions about what the world will look like after all chaos is banished. By facing the inevitable disasters that will come, he learns more effectively than the engineer how to deal with them.
In the end, "the engineers and the ecologists in their different ways embody the best of civilization….we can take the best of both." Foolproof is the beginning of what should become a longer conversation about how to meld the best tendencies of engineers and ecologists. Such a project would be beneficial for people of all political stripes and managerial styles.