I am a last-minute fill-in for Brink Lindsey at this event discussing the new book by Megan McArdle. The book is about failure, which is a fascinating topic. My talk should begin shortly after this post goes up. I will try to say that the best way to deal with failure depends on the institution.

An individual needs to fail with a fallback position. Megan discusses this in terms of job search and in terms of living within your means so that you can deal with illness or loss of a job. She also discusses the forgiving nature of the U.S. bankruptcy code.

A small startup firm needs to fail quickly. Find out that you need to rethink your concept after you have test-marketed a prototype that you built in three months, not after you have spent two years in stealth mode trying to implement your grand design.

A large, established firm needs to fail gracefully. Be able to kill the project without killing the company. You might think of Coca-Cola’s recovery from New Coke, but the real graceful failures are the ones we never even hear about. A large firm that fails ungracefully is denying that it is in trouble (Megan uses the example of Dan Rather and Mary Mapes of CBS News, who put out a story based on a forged document and just refused to back down from the story.)

Government cannot do any of these things well. Think of Obamacare. Fallback position? None. Quick failure? No, it is going to be long and drawn out. Graceful failure? No, it is a big, ugly failure.

At one point in Megan’s book, she writes,

There is a scientific name for people with an especially accurate perception of how talented, attractive, and popular they are–we call them clinically depressed.

For government, I think that the only solution is clinical depression.