Risks

The theme that I see that joins the news stories of the day is risk. What are the risks? Who bears them?

One of the many ways in which George W. Bush made me uncomfortable was that his views of risk were completely foreign to me. Any risks he had taken in his entire life were risks he had sought on his own. He lived a live highly insulated from external risks. I see that in the Kennedys, too. They were insulated from risk but, perhaps because they were so cosseted, thirsted for it.

That, too, is one of the reasons I’m uncomfortable with Donald Trump and even with Democratic presidential front-runners. They have practically no experience outside of government or with government handmaiden industries. Naturally, they look for government-based solutions. The reality for most people is that they bear a lot more risk in their lives than that.

One of the ways of telling the story of the U. S. economy over the last 50 years is that risks have been shifted from employers to employees. That’s true except in the government sector in which neither politicians nor government employees bear risks. All of the risk is borne by the taxpayers.

Every part of the United States has its own risks. In St. Louis, where I grew up, there were risks from tornados, thunderstorms, hurricanes, drought, earthquakes, flood, and even the occasional blizzard. Living in Southern California carries substantial risks from earthquakes, fires, drought, and mudslides. There’s either too much rain or not enough. Living anywhere along the coast carries risks of sea and storm. In the North there are nor’easters; in the South hurricanes.

Who should bear the risks? I think that people who make the choices should also bear the risk. I shouldn’t be asked to indemnify Californians against the risks of earthquakes; Californians shouldn’t indemnify Chicagoans against snowstorms. In the case of emergency we should offer assistance but such assistance should always be limited in scope and duration.

When the well-to-do move to the coast, they assume not only their own risks but also those of the less-than-well-to-do who serve them. That’s a practical necessity. If they don’t like it, they shouldn’t move to the coast. It’s a lesson that anyone who grows up in sight of the Mississippi understands: don’t build in the flood plain and for goodness sake don’t encourage people to build in the flood plain.

What about other countries? Again, in the case of emergency we should offer assistance. It’s the right thing to do but that assistance should be limited in scope and duration. There’s a simple reason for that. Permanent assumption of risks conveys ownership including ownership of future risks.