From one of my comenters.
the chief anti-libertarian human tendency is the wish to minimize risk by distributing it which leads to all the “too big to fail” and social security and regulatory boondoggles. The bigger and richer the society the easier it is to fulfill this wish at least in the short-medium run
This sounds like the problem of the “complacent class,” as reviewed by Walter Russell Mead or Edward Luce.
Perhaps this is overstating the point a bit. When I buy car insurance I don’t feel like it is my “chief anti-libertarian act of the year” or anything… but is it?
Maybe it is. After all, driving without insurance is a crime in most jurisdictions.
What he is referring to is the tendency to off-load downside risks while imternalizung supposed benefits.
It is unlikely your insurance company is willing to be your rube unless the government is involved.
Picking up on Tyler’s topic with your focus on education, Arnold, it seems that the unobservable behind stagnant or falling educational attainment is complacency. As a teacher I see it in the form of disengagement everyday (noting that its also due to the nature of state-led compulsory schooling). We can talk all we want about institutional reform, but the one thing we have most control over, and which is most effective, is the self. I made brief remarks on this from an Australian perspective today on my blog:
https://educationreformaustralia.wordpress.com/2017/02/20/complacency-and-educational-attainment/
As per your post, perhaps complacency is endogenous to the institutional structure.
It isn’t just dissemination of risk. Complacent means a variety of inappropriate ways of handling of risks and trade-offs.
There are three different things going wrong with our collective approach to risk, all of which are due to state intervention in the affected domains.
The first holds risk is certain areas steady, but allocates wealth to those areas above the optimal amount. The second increases risk above optimal, and the third decreases it below.
The first problem is when the taxpayer is put on the hook for bad luck. That resembles compulsory insurance, and so not awful in theory for rare, fixed-sum payments like paying a pension into extreme old age or replacing a car or house because of an incident. The trouble comes in when one is dealing with widely-used and theoretically unlimited-sum expenses like health care or education which are already far out on the diminishing returns curve. This doesn’t affect risk, but creates more spending than is optimal.
The second problem is the ‘public put option’ that leaves the taxpayer holding the bag for bad bets and bad behavior. The issue is the creation of a poisonous combination of moral hazard, the psychological tendency towards risk compensation, and the prospect of emotional blackmail / social extortion. It incentivizes recklessness and more risk than optimal for individuals and organizations, and leads to TBTF, bail-outs, and so forth.
Finally, there is the reaction to a legal and political systems that threatens completely disproportionate liability or personal repercussions in response to incidents, the immediate cost of which is not distributed and instead tends to land on one particular party.
Entities facing these consequences foster hypersensitive, risk-averse, and zero-tolerance cultures, which makes everyone worse off. That’s how we end up with the book’s example of new playground construction which is a lot duller and also more expensive than it used to be, or ought to be. It’s also how we end up with inefficiently large security expenditures and degrees of state intrusiveness, or a drug-delaying FDA.