There’s a national park close to my house that has a large lake and all the swimming accoutrements left over from the 1970s. It’s a nightmare for any “safety Nazi.” The water is very deep. A diving board is very high and slippery, even slightly broken. There is no lifeguard on duty. If you dive incorrectly and get the wind knocked out of you, you could easily drown. The distances in the lake are deceiving. The shore looks closer than it is. If you are swimming in the middle of the lake, and find yourself tired out, there’s no hope.
Older people reading this are thinking: “So what? This sort of thing was everywhere when I was a kid.” True enough. But younger people today know nothing of this environment. Today, every playground is hyper-safetyized. Danger has been nearly eradicated. Swings don’t swing high. The movements of all playground equipment are severely restricted. Swimming pools are getting evermore shallow. Diving boards aren’t even allowed in many subdivisions.
It’s suggestive of a gigantic cultural shift, one backed by thousands and millions of government regulations, with more on the way. The drive is to create an entire world around us that is all about safety so that we can be coddled in every conceivable way, a world that never gives rise to that inner feeling of possible danger and, therefore, self-responsibility and internally driven caution.
It is all about which parts of the brain are fired up when we go about any of life’s activities. If we have institutions to protect us and eliminate all risk and all genuinely experimental play, we no longer have a sense that risk even exists or how we should respond to it.
I dove into the lake of danger the other day and felt it, that sense that I had better make the right decisions here or I’m a goner. It’s an unusual feeling. I admit that I found it initially alarming. But after you get used to it, it’s invigorating. It makes you feel as if your fate is in your own hands. You must be wise. You have to take account of unknowns. You have to think, prepare, be cautious, and calibrate the payoff relative to the probability that something could go wrong. Once you do that, lo! It is fun and wonderful.
How is it possible that anyone today is even allowed near this lake? I’m not entirely sure, but I suspect that it remains untouched by regulatory trends because it is federally owned and therefore inevitably neglected. No one cares about this space. So long as the workers get paid, and the safety Nazis are not out picketing and screaming about it, the place retains that old-world sense of real life. (No surprise that this place is enormously popular among young students.)
The impulse to create environments that are hyper-cushioned and protected does not prepare anyone for effective functioning in real life. That’s because this type of environment has nothing to do with the real world. No matter how much we regulate, manage, create safety nets and otherwise build systems that remove obvious dangers from the word, the structure of the universe guarantees that the future is always unknown. Uncertainty does exist and cannot be eradicated. Change happens, and we have to be prepared to adapt to it. Nothing that happened in the past can necessarily be repeated in a changed future.
This is especially true in the economic environment. In a growing and developing economy, there is no stasis. Nothing is the exactly the same one day to the next day. There are constant changes in prices, resource availabilities, consumer tastes, worker availability and, especially, in technology. If a system cannot accommodate these, it is useless.
In a growing economy, there are profits and losses, success stories and bankruptcies, amazing triumphs and terrible losses and, most of all, there are surprises around every corner. Every day is an opportunity for something newer and better.
The government talks of stabilization, but there is no stability in a developing economy. Change, change and more change is the central character. Institutions rise and then must be torn down and replaced by new institutions.
This is the core of what builds a great civilization. It is not safety and stability but open-endedness, the opportunity for discovery and reinvention — that is the driving force of social and economic development. This also happens to be the very thing that bureaucracies and regulations oppose. They shut opportunity and constrain innovation. They tend to want to preserve what is outmoded and put fetters on what is emerging.
But here is the irony: If we think of history as the competition between controlled safety under despotic rulers and open-ended uncertainty under freedom, societies that embrace freedom win out every time. Freedom leads to growth and long-run triumph.
In the 20th century, we saw many experiments with the closed model that used the state to try to guide societies toward a certain end. This necessitated the constricting of experimentation, trial and error, human liberty and self-responsibility.
The experiments went by various names: socialism, fascism, New Dealism or whatever. But they all failed. There were many reasons for the failure, but a main one was that they put down the ability to dispense with things that were no longer working and experiment with new approaches that may or may not work.
Daniel Cloud, author of The Lily, the e-book of the week in the Spy Briefing Club, explains that every truly successful society must have two features.
First, it must have some system in place for getting rid of laws, institutions, production processes and patterns of living when they are no longer working. That means that human volition must be unleashed in the context of personal responsibility and private property. People, and not bureaucracies, must be empowered to be the primary decision makers, because only acting human being can be truly adaptable to change.
Second, there has to be a system for new institutions and innovations to make further innovation down the line ever easier. Each step down the path to social advancement has to enable the next step to be less costly and more rewarding. In this way, innovations are not dead ends, but tools that inspire evermore progress.
This is another way of saying that capital, the tools that make other tools, is indispensable for serious economic development. But that also means that capital must be in private hands — owned and controlled — from which it can be applied in ways that embrace the unknown future with an eye to trial and error.
If you think about the government’s response to the 2008 financial meltdown, it has pursued a course that is exactly the opposite of what you want in a growing economy. It saved unprofitable institutions. It tried to restore the status quo ante in the housing market. It tried to cushion the needed shift in labor resources. It tried to reverse history and make things as they were, spending and creating many trillions of dollars to do it.
But things can never be as they were. The crisis was an opportunity to clear out what was not working and inspire the creation of new institutions that would work. In the digital world that the government (mostly) does not control, this happens every day. But in the physical world that the government does control, policy intervened to prevent the clearing out of the bad and the emergence of the new.
It is hardly surprising that we are left with a terrible and grinding stagnation, with no end in sight. The government has tried to turn the entire macro economy into a massive safety zone for everyone. Indebted consumers, bloated corporations, coddled and overpaid workers, subsidized sectors and dependent financial institutions are just supposed to keep on keeping on. It’s as if the government tried create a modern kid’s playground of perfect safety and predictability, a place where all that happens is preapproved and nothing unexpected ever takes place.
It’s been tried before. It might sound like a good idea, but the result is catastrophic for the social order.
What economic actors really need is an environment much more like the national park lake I went to. There is danger and risk. There is no lifeguard on duty, and everyone knows it. Everyone feels it. This inspires individuals to take responsibility, to feel that sense of awesome adventure, to carefully calibrate risk and reward and to try to things that test the limits. In the end, as the students who frequent this park can tell you, a society like that hones skills and inspires the imagination; in the end, it is also a heck of a lot more fun.
