Could it be that the missing part of the jigsaw is our attitude towards risk? Nothing ventured, nothing gained, as the saying goes. Many of the achievements of the Golden Quarter just wouldn’t be attempted now. The assault on smallpox, spearheaded by a worldwide vaccination campaign, probably killed several thousand people, though it saved tens of millions more. In the 1960s, new medicines were rushed to market. Not all of them worked and a few (thalidomide) had disastrous consequences. But the overall result was a medical boom that brought huge benefits to millions. Today, this is impossible.
Pointer from Tyler Cowen.
I think that the problem goes beyond rational risk aversion. One of the findings in behavioral economics is that people exhibit loss aversion. That is, they will avoid rational risks because they regret losses much more than they enjoy gains. It seems probably to me that government agencies exhibit at least as much loss aversion as do individuals.
When the risk of loss is high, nearly certain, we will take extraordinary risks. (The lesson from watching The Knick.) That we so rarely face such risks is progress but makes taking greater risks less likely. The greatest risks we take now are those we accept without thought, like climate change.
Do your think more has been written about the risks of doing something or the risks of doing nothing on global warming?
Maybe you’ve got a government agency filled with bold ambitious people with big plans. It’s raring to go! And the White House thinks, “This isn’t going to help our political agenda.” And the Gallop pollsters report that “American voters are convinced that one government agency is spending a quarter of our Federal budget and they don’t like it!” And OMB bureaucrats say, “If we give in on this big idea from that agency, those people will spend a lot of money. And then they’ll just turn around and ask for even more money to follow up their success. Stop this insanity NOW!.” And Congress listens to the agency and decides, “Great idea! But we’re never going to let the White House claim credit for it, so this has to be canned for 4 or 8 more years.”
And newspapers across the country and internet pundits right and left decry the agency’s lack of vision and inability to move forward.
Not that any examples come to mind, of course.