Did ordinary Americans question the wisdom of George W. Bush's call for an Ownership Society or even question what it meant? Simply assuming that “ownership” makes life better. While “better” means different things to different people, most would agree that if it doesn't include making our lives less risky and day-to-day living more secure that it wouldn't be better.
In Blowup, Malcolm Gladwell tackles risk in the modern world. It's a fascinating read for many reasons beyond the scope of this diary and as such is recommended. What I want to highlight from it is 1) systemic risk 2) how people perceive risk and 3) what do they do.
Modern systems, Perrow argues, are made up of thousands of parts, all of which interrelate in ways that are impossible to anticipate. Given that complexity, he says, it is almost inevitable that some combinations of minor failures will eventually amount to something catastrophic.
A mostly forgotten fact is that It's A Wonderful Life was a box office flop. One reason for that may have been that it presented a contemporary story that was out of date. Potter was as out of his time as alcohol bootlegging gangsters were in 1946. New Deal banking legislation had made the deposits in George Bailey's Building and Loan safe. What was contemporary in the story was the simplicity and stability of community based savings and loan companies. Nobody got rich off those companies. Unleashed to become complex and pots of gold, they went kaboom. As Elizabeth Warren has said,
Late 1980s, savings and loan crisis—should have been a warning.Moving on to a second point made by Gladwell:
But the basic idea, which has been laid out brilliantly by the Canadian psychologist Gerald Wilde in his book "Target Risk," is quite simple: under certain circumstances, changes that appear to make a system or an organization safer in fact don't. Why? Because human beings have a seemingly fundamental tendency to compensate for lower risks in one area by taking greater risks in another.He uses the example of anti-lock braking systems that weren't used to reduce accidents but were used as permission to drive more recklessly. Not so different from what Americans did as they began to see the values of their homes quickly increase.
When complex systems fail:
...bafflement that so much could go wrong for so little apparent reason. There was no one to blame, no dark secret to un-earth, no recourse but to re-create an entire system in place of one that had inexplicably failed.Couldn't the initial public response to the financial meltdown have been described as bafflement? Quickly followed by fear because well, that's what we're always told we're supposed to feel when things go wrong. Anger slowly set in when there was someone to blame – the government for bailing out the crooks on Wall Street.
Over the past forty years, banking and investing has become freakishly complex, mostly thanks to deregulation. Far beyond what an ordinary person can and wants to comprehend. A house (and low taxes) is what makes sense to them. That's their ticket into the ownership society. They wanted into the game where everybody is winning. The desire never more so then when the barriers to sitting down at the gaming table seemed to magically disappear and the winnings were larger than ever.
However, when GWB said, ownership society, he didn't mean Tom, Dick, and Harry, but his kind, and his kind know how to play the long con. And part of the long con is lulling the mark back to a state of confidence by investigating and fixing what what went wrong. Again from Gladwell,
But what if the assumptions that underlie our disaster rituals aren't true? What if these public post mortems don't help us avoid future accidents? Over the past few years, a group of scholars has begun making the unsettling argument that the rituals that follow things like plane crashes or the Three Mile Island crisis are as much exercises in self-deception as they are genuine opportunities for reassurance. For these revisionists, high-technology accidents may not have clear causes at all. They may be inherent in the complexity of the technological systems we have created.What if all our assumptions about the value of home ownership to an economy and individuals are all wrong?