Government continue to expand. The projects continued during that years, you had Democratic Congress is before those here so when you have a republican president with the Democratic Congress it tends to perpetuate. Reagan halted that. Theres an interesting argument about how much he reversed it. He did not really shrink government. The federal government was about the same size when he left office when he was elected. The government stopped growing. He gave rise to a movement that still holds to his fundamental belief that is the modern conservative movement. I think you could argue that since 1980 we have been living in the age of ragan. Just as republican president s were republican president s in a liberal in a liberal area before that the democratic president s have been democratic president s in a largely conservative era since then. I think changing the direction of government, challenging the role of government, stopping the growth of expansion of government and the way he did was what he set out to do. It was an enormous project. I think he was effective at it. If you think which president really changed the country, i would say fdr and reagan in the 20th century. Thank you. [applause]. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] in a recent article for the Washington Post magazine, justin moyer reports on across the country who have taken across the about reading a biography about every president. 27yearold andrew reviews president ial biographies on his blog, the president s project compares the term of a president to a baseball season. In no president has won 162 games and no president s have one zero. Bob timmerman, 50yearold. Bob timmerman, 50 your old librarian who completed his reading challenge in one year comments that you would think they would have to be the most selfish persons of the world but they were all sorts of insecure. Investment banker steve floyd blogs, at best president ial bios. Com reads biographies about president s and expects to complete his reading after four years and 200 books by president s day 2016. For those looking to partake in their own president ial biography challenge, justin suggests suggests the times book american president series. This series begun by author and continued by Princeton University professor offers short biographies of nearly every president. The most recent focus is on Ronald Reagans tenure. You can read the full article on Washington Post. Com and book tv has covered numerous president ial biographies. You can watch the others on our website, book tv. Org. [inaudible] [inaudible] i think we are ready to go. Over the past year we have been having a series of talks on how do we deal or do not deal with complex systems. When i got a call from greg to talk about his new book it was something i was interested in. Im going to just a few words. Greg is chief economics commentary for the wall street journal. The book is a foolproof. We have copies out there if you want to buy them. The subtitle is how safety makes us dangerous in danger makes a safe. You spent part of our time. Two months. Actually writing the book. Its actually great to have people back as people are struggling and trying to write references and then something valuable pops up. Its great to have you back. So we are going to have greg go through the book a bit about the primary ideas he sees, inclusions, recommendations so everyone has a base to talk afterwards about the book. When weird done well make the slides available to people. So we will start and take a look at the slides. Thank you very much. I want to express my gratitude for the Wilson Center for having been my home for a few months. There is actually early in my research then and the time i spent here was the most productive i spent writing the book. Partly partly because i was surrounded by interesting people. I had a quiet office and i have an Amazing Library here where you can borrow any book from the library of congress. I know we live in a digital digital year but it theres nothing quite like having a an actual book from 100 years ago. The library of library of congress is an amazing public good for someone like me who is exploring so many different disciplines. It was nonparallel and equal resource. Thank you for having me. And thank you for having me back. I am delighted to talk to you about the product of all the research i spent here. My book is called foolproof. It began with my own aspiration of how we had a Global Financial crisis. A sense of guilt because i myself have been covering economics for 20 years. I was caught completely unaware of the crisis. I thought we had actually solve the problem that would lead to that sort of event. Upon reflection reflection i realize i was exactly the problem. That i was one of the people i would write about her interview had simply felt that we had solved all the problems and not allow this to grow. That is how the book began. Its a similar phenomenon across all aspects of the environment and technology. It has interesting implications for us about how we think of society and safety, the pluses and minuses of taking risk. To give you back to the beginning, stability and terms of safety encourages us to take more risk. It made up of the case on conditional risk that makes us worse off, but there is a tradeoff there. Limited to one type of risk often causes another type of risk to emerge somewhere else. We are are not watching for it and that can cause a problem later on. In individuals, when they try to take care of themselves with some sort of device or innervation, or practice they may have unintended consequences that put everybody else in the society at risk. These are all ways that safety and stability can have unintended consequences and it can do the opposite. The story begins a century ago when there is a of forces that came about that persuaded americans that they could take more control over the economy and environment and make ourselves better off. One of them was a growing backlash against Capital Access in the gilded age. Theres also scientific and social science knowledge that convinced us, so we had the tools to manage the economy and the environment. Alfred marshall in the late 18 hundreds that was the first book to actually take a scientific approach to the study of economics. The American Society of forresters and others were all created around that time. Woodrow wilson, the first president who only had a phd. He was a big believer in the Scientific Management of government. There is up and again and persuaded leaders in the country that we did not have to put up with these panics any longer. If we created a central bank we could prevent financial crisis afterward. A senator in 19 oh eight said it is the duty of the United States to provide a means to create a panic that shaped the american republic. It was an interesting character because he was a Small Committee banker in oklahoma. He had actually seen his father economically wiped out and his own bank was a most destroyed in 1891 so hes speaking for personal experience so this created a support within Congress Political appointee should be in charge. This wasnt the only thing in the progressive era that pushed us toward a greater drive for control of our surroundings. In 1910 there are the worst fires in the history of the nation at the time. Up until 1910, most americans and settlers excepted fires as a natural conscience of living on the frontier. In fact they were routinely use of fire to clearly infer agriculture just as indians have done many years before the europeans came. This destroyed a great amount of forest land and it created a conviction, not just from industry that they wanted the trees for lumber and paper and roosevelt who wanted the trees were force. They had to control fire. Gifford who was a confidant of Teddy Roosevelt in the first director of the u. S. Forest service declare that forest fires max of the u. S. For service only five years old made its mission at that time to depressing off fires. They had a policy, 10 00 a. M. Policy that once a fire was detected it had to be under control by 10 00 a. M. The next day. This is an early poster from the 19 twenties. It symbolizes the kind of attitude the Federal Reserve was tried to convey to the public. It was this mighty bowl of funds that would save the u. S. Economy from the perils of financial depression. Then there is a smokey bear that declaring it was the duty of americans not to allow the terrible waste of wildfire to cripple the american economy. These were recruitment and posters used during world war ii to rally civil support for the war effort. Was it successful . Well if you asked to a point of view it was successful since the fed did provide many. But they and they did suppress many wildfires. In the in the long run it had unintended consequences. We still have financial crisis like the 2007 and 2009 financial crisis. We still have wildfires. Impact wildfires in the last couple decades have been the biggest in many decades. This i would say is not because of a central theme in my book is when you look at the disaster you think of not as a product of failure but a product of success. So the financial crisis was because of the bed bed success. In my book one of the things i pursue is where are these philosophical approaches coming from. I attribute what was coming in from the school of to eliminate instability and disaster from our lives. You can find elements of this in economics, science and and biology hubley people and the environment always adapt. If you try too hard to control your environment and the economy and eliminate threats you will cause unintended consequences. That might be worse than the problem. In writing this book i was fascinated by the different Belief Systems that both of these individuals have. I cannot align myself completely with one or the other. And i was very suspicious of the Federal Reserve intervening. In 2007i became an i became an engineer because i was so oppressed by what the fed had been doing. I think it may be wellequipped to two evaluate the plus and minuses. Thinking about the economy for a moment. The 25 years if you look at the grade lights of the recession, the. We had from here we had a lot of recessions. There is not a lot of accumulation of debt. Starting in 1982 we had a. That economist later called the great moderation where the fed basically brought inflation under control and made recessions milder and less frequent. So we have a recession in 1991, recession in 2000. In 1991, recession in 2000. Those with the twomile this. That encourage people to take on more debt and believe that house prices another things would never go on. After all you are not going to have a severe crisis in the economy. That created the conditions for the crisis and the worst recession of the postwar period. At the same thing happened by a regulatory approach of finance. Although we have almost forgotten in the 1980s many barb ranks were at the brink of collapse. So they required to make the banks more stable and the money would not cause them to default on their debt or they would be able to repay depositors it would come out of the shareholders capital in the bank would survive. Over this. Right until the crisis you see Bank Equity Capital rising. This had unintended consequence. When bank were supposed to hold more equity they have to share the prophet around among more shareholders. That meant lending opportunities migrated away from banks to other to what we call shadow banks. Companies like Lehman Brothers and others. As it became safer they became less important. By the time of the financial crisis you had all of this lending and leverage outside of the banks where you were not aware of how big and potentially dangerous it was. Another phenomenon can be observed in natural disasters. It seems for the last decade we have one after the other disasters. Hurricane katrina, hurricane rita, the earthquake in japan, the hurricane joaquin. This tells you that we are seeing evermore billiondollar disaster. If i put the total price of the disaster up there youd see large spikes. Theres a lot of concern that this is the consequence of global warming, special in terms of letting and hurricanes. Their Scientific Incentive that a warming climate can contribute to Severe Weather events. That is not the primary reason why the disaster cost is going up. The main reason is because we are putting more wealth on the coast. Right where they are most wonderful to mother nature. In fact they are vulnerable to disaster for the same reason they are when youre close to water it helps your transportation, cities like new york, amsterdam, london and tokyo are so close to the water. Its good for transport links. People just like to live next to water. Its temperate and pleasant. The floodplain is floodplain is where the soil is riches. Thats good for agriculture. This poster chart shows you the buildup of this value of structure and the hundred year floodplain of new york city. As you can see by nearly based on economic develop and is guaranteed that is storm hitting out would be more costly than the last. It was called the great new england hurricane. This is an interesting picture. Let me walk you through it a little bit. Lot of Lower Manhattan built on landfill thats true of a lot of coastal cities because these became such routable places to work, land was reclaimed from the sea to expand the possibility of putting people in productive places. If you look at the red line, its a little faint but its the original outline of Lower Manhattan. Everything else was landfill. Look at look at the blue area, thats the area that was flooded by a super storm sandy. You can see how closely they match each other. What that tells you is new york city was basically inevitable that they would be flooded this way because they have been courting disaster since the moment it was founded. One of the reasons of this is because new york city becomes wealthier and more profitable its almost inevitable that another hurricane will come along and be more damaging than sandy. Remember remember new york is in a unique location where once or twice every 50 years a very large hurricane that may not be intense but is very wide can hit that city in such a way that it does immense damage. Talking about forest fires it tells you how much force fire we have had over the last 2000 years. This is based on things like the amount of charcoal sediment that can be found on lake bottoms, how thick the bark is on old trees that are been around for thousands of years. They basically made a record of how much fire we have had, it has gone up and down tracking how hot and dry the climate is because we have had records of those things. The last century is an anomaly where we saw how climate gets hotter and drier in the amount of fire went down. The the reason why as we were suppressing fires. Theres almost like an amount of fuel out there waiting to be burned that has not been burned off. So when you see that this years going to be one of the worst wildfire seasons in american history, part of the stories warming climate but the other part is we have naturally suppressed the amount of fire that would come along and those kind of conditions. We know fire has valuable properties. It takes away some of the dead tree matter on the floor of the force. It kills off the young week trees and allows the strongers to survive. By interfering with the process we created the eight worst fires later on. For technology the notion that given ourselves that make us safer might make us take more risk is very intuitive. In 1975 and economist named sam claimed that he did a study and purported to find that when people wear seatbelts they drove faster. While the number of driver death went down the number pedestrian deaths went out. This is controversial. The upshot of all this research is the best we can tell safety belts do save lives. We do not lose more lives away reckless driving as a consequence of people wear the belts. But, other research i found that with antilock brakes theres been counter studies that say antilock brakes do not reduce the number of accident. People appear to drive differently, at least in the early years of antilock brakes. Theres a study found that cars with intellect bracts trip brakes had fewer front end collisions and more rear ends. That something similar with the google cars theyre getting hit from behind. In football a hard helmet were introduced in the 1940s and fifties. It helped reduce reduce things like broken teeth and noses. But it also encouraged coaches to teach their players to use their head as a weapon. In the next few decades a sharply incident like broken next and quadriplegics because one of player spears another they put all the pressure on the spinal column and i can be very interest. They have not been able to prevent players from continuing to be able to use the helmet to the head as a weapon. Thats major reason major reason why concussions remain a problem in football. Helmets are so effective at inflating the head from pain but the player can only help himself from using that as a weapon on another player. And the purpose of a derivative in a bank or hedge fund to ship their risk to someone else. Doing so it takes them taking on bigger risk. A few years ago when airbus was flying from Rio De Janeiro from paris and it disappeared in a thunderstorm. It took french investigators years to find the wreckage on the seafloor and bring it up. One of the mysteries was as they listen to it it was clear that airplane was very sophisticated and it was designed not to stall. If the pilot takes it to steep climb of stall warning will go off. And though technology will supposed to prevent that from happening. However what the pilot didnt realize while he was find the plane was that the information had frozen out because of the weather. Then the play now can all. Stall warning sounded in the cockpit they could hear that on the black box they could hear say stall and the pilot ignored it. Why is that we dont know because he did survive. We think it is because he was convinced that these airplanes were not supposed to stall so it mustve been a false morning. Another source of unintended consequence of safety is the fallacy of competition. This is the idea and the belief that was good for the individuals good for everybody. You one to go to movie and you want to see better so you stand up so thats good for you but nobody else sees better. It appears in many aspects of economic and technological environmental safety as well, i read he gave an example of antilock brakes which encourage harder breaking. Financial derivatives, for example many banks and the American Financial crisis wanted to have more lending and purchase more subprime mortgages and so they bought insurance policies in the form of derivatives from Companies Like aig. This did make the big marseille safe but it shifted the risk to aig. Aig thought theres very little risk in the mortgages based on the history of housing prices. What. What did it realize is by making it safer for banks to purchase a make these mortgage songs bankston more of it so theres more risk rising in the system because banks all believe that they have protected themselves from the risk not realize that collectively it was rising in the system. When the system came undone aig found that it had written insurance policies it can no longer honor. It was almost guaranteed the event insured against it would happen. Another example is antibiotics. Discovered in the 1920s and isolated, they were miracle drugs. We all now know that more use of an abaya excretes resistance. It turns out antibiotics are in terribly clever. They exchange bits of dna and require resistance property from each other. Within years penicillin being introduced resistant strains were appearing in hospitals. Its an interesting chart that shows a very strong positive correlation between the use of antibiotics on the right side and the prevalence of resistance on the left side. The thing about mercer, this kills more than 10000 people per year. Results in more than 80000 infections. You may have heard a new york giants player who is at risk of losing his foot to mercy. This is a manmade problem we bought upon ourselves because of the excessive use of antibiotics. The belief that by making myself safer ive made everybody say. So what should we do . You can throw up your hands and say this is a civilization or dilemma. We cant cant stop ourselves from being safer and more stable. We cant stop these catastrophes for coming along. I concluded that with the not a good way to finish a book. So i thought very hard about the lessons that we have learned that actually can do some good. The the fact of the matters despite my preoccupation, the world gets better all the time. We are living longer we are more prosperous, we have fewer people dying from natural disasters, fewer people are dying in car accidents. We must be doing something right. What we learn from that . First of all, the second part of my books title is how danger can make a say. I love this because as a journalist you like to read about plane crashes and people who operate the airlines who complain that we only write about the plane crashes but we dont write about the thousands of planes that land safely. So this time i wanted to find out how safe it is to fly. You have a kid in massachusetts is two and a half more to win the megabucks jackpot lottery then will die by getting on the flight. Youre more likely to grow up to be president than to die in your next light. This has not been matched and other technologies. Since the 60s it has grown much more rapidly in automobiles. Why is it . When i when i studied the second concluded it is exactly that people are so aware of the hazards of flying that the industry, the regulators, they make it go to such likes to make it safe almost extraordinary lengths. For example no airplane has yet crashed from a volcanic ash cloud but there have been scary close calls. When a volcano erected in 2010, they shut down the entire north atlantic for five days. Luckily i was somewhere else but there a lot of people were vacationing and their plans were disrupted. The total cost of those 5 billion in lost economic output. That tells you how far we are willing to go to prevent access accidents and aviation. We are collecting information from pilots about the near misses that they had, they publish them every month. A bit of advice, if you have a fear of flying, dont read this. The stories are pretty hairraising. Theres one like a guy said in a congested airspace that was thing you can do is turn the runway after takeoff and thats what i did. Why, i dont know. But they collect these reports and they publish them. Everybody reads these and they get a little scared and they realize this is something they need to be aware of. The system works because people are not punished for doing this. The pilots colonies anonymous lines and after nasa they burn all of the identifying information so theres no possible way this information can be used in a regulatory or legal proceeding. It works. People and aviation in aviation are aware of the dangers of row men. Its not because pilots themselves are intrinsically careful. When commercial pilots fly their own airplanes we take more risk. There is a pilot who is flying for eastern airlines, he had to pilot a jet from tampa to new jersey. He lived nearby tampa and he would commit with his own airplane. It was foggy and he was actually late. He attempt the landing and deep fog, he half stillborn come back again. The tower warns him and he tries it anyway he accidentally lands on a taxiway instead of a runway and he climbs with the 747. He dies in the explosion. A few people on the commercial people in the commercial airliner injured but not her. Heres the thing, the rules that govern how commercial flights would not allow him to land. The environment actually does limit but it does work. Another thing is putting space between you and the source of danger is almost foolproof. Space between water and are building this safe. Space your home away from fire is better than fire prevention. Space between your house and the force makes it less likely unless urgent to suppress the fire. If youre caught in turbulence of an air plank, dont worry youre miles away from the ground youre not good to crash. Make sure you have your seatbelt on because your head could hit the ceiling. Do your homework. Im a a big believer in research. We can study how things work and what things dont work. Require an airs airplane seats for let babies would say very few lives because there so few accidents. However a a lot of people cannot afford the ticket and are more likely to crash and die on the highways. Motorcycle laws, the helmet long, bicycle helmet laws are good law. If you you have laws that require the people are less likely to ride their bikes so they dont get the cardiovascular benefit of riding their bikes. Theyre more likely to drive cars that cause congestion. Drivers are less aware of the presence of a bicycle. And then that does but the more risk. We should not try to eliminate disaster crisis altogether because sometimes the risk that bring about crisis also have positive benefits. This is a chart that compares the growth of india. They had a very repressed Financial System and therefore no financial crisis. It also had less investment and economic growth. It has a much more open economy. The mother of all financial crisis and 97 and 98. As you can see, the eight. As you can see, the Financial System allow the level of investment and risk taking that allow them to grow faster than india did. So we should not aim for zero Crisis Society will lose some benefits. The same history of energy. People have a fear of Nuclear Meltdown than accidents. It is potentially possible, it is potentially possible, although highly unlikely that a nuclear mecca could kill thousands of people but farmer people are dyed in accidents relating to natural gas. Things like the train that derailed in quebec that killed 47 people. This is an even include other deaths due to pollution in the air. Millions of people may die each year because of student particle matter in the air by coal, oil, gas, and wood. Nuclear hazard is. Nuclear hazard doesnt bring any of those risk with it. So people like the germans and japanese totally overreacted to the hiroshima accident because it has my final lesson is that its okay to have little disasters because the trains us to be ready and aware of the large risk around us. It makes big disaster less likely. Allowing cities to occasionally flood so they can bounce back more quickly. New york city is requiring New Buildings to take their electrical and move it to the second floor so that the building will not be can lately knocked out by the next hurricane. Duncan antibiotic every time your your kid feel sick that way youre less likely to add to the resistance in those antibiotics will be effective to you when you really need it. The Financial Sector lets have a system that has the biggest banks to fail so we dont have to bail them out. So those my final thoughts. David if we can just talk about this. [applause]. One of the things they struck me when i was reading about the ecologist versus the engineer was one of the highest areas is in the for service. If i want to find engineers is the corps of engineers. Their building levees and are trying to guard the coastal towns. When i talk to people and for services theres been an awareness of this policy and the dangers of the policy. One of the things that is made it very difficult for them to reverse the policys massive intrusions into the force by human settlement. Thats right. So goes back to your space issue. So whether its a matter of engineering or ecology as a matter of policy overriding the intellectual culture of the agency. Although i would say that you cannot actually separate the two. So why are houses being able to be built near the forest. One of it is the belief that the force fire will be put out. In 2012 theres wildfire in texas near austin. Rick perry was campaigning for president the houses in that subdivision had not existed like the last time there is serious fires in that area. Those houses were put there and right next to the once because its nice to live there. And the texas were service puts fires out. So 1980 at the yellowstone fires a lot of ecologists in the for service in the park service so that they actually got rid of the 10 00 a. M. Policy in the 60s and moved to a in both National Force the National Parks of allowing natural fire like lightning started fires to burn when it was safe to do so. I was a policy in effect in the summer of 1988 when fires began outside the boundary of yellowstone. I had a long interview with the superintendent of yellowstone and he had a part in reintroducing natural fire to the National Parks. He called the staff and agreed that they should not put the fires out they should let them burp. But they they didnt anticipate was was a very dry summer and those fires grew and they got out of control. They combined into a very large complex and burned all night instead of going down at nighttime. By mid july they said we had to put the fires out but they were too large to control. Then politics came in and i look at yellowstone as the crown jewel of the park system. So journalists and congressmen were visiting their, so it was a tough time. They had to pull out the stops and put as many firefighters and people and they eventually got the fires out of under control. What we now know as one of the recent fires were so bad as there had not been severe fires in yellowstone for a century. Partly because the army of the parks were suppressed with so many fires. They actually come back a lot and you can see where the fires were but the park has come back a lot. When you see the kind of public outrage it creates a very strong Second Thought on the part of the people whose job it is to deal these fires whether they should suppress or let them burn. Think about it i can put the fire out nobody is wiser for the fact that 15 or 20 years ago. Or i can let it burn. Theres a study that after yellowstone that the for Service Temporarily suspended the natural fire policy and began to suppress all fires. The study found that more homes went up next to the forest as a result of that therefore making it harder to change the policy later on. You get this override of the policy of the general public of should we allow this or not. We have. We have the same problem with floods with Flood Insurance. They try to raise premiums but its hard to politically do that. So this issue of controlling boundaries and the fact that these systems have very different kind of boundaries. In the financial crisis let me ask you directly to bring back glasssteagall . If you go back to the crisis one of the things that struck me was they made it through somewhat was north dakota. That was was the only state that had National State bank which was set up in 1919 and the progressive era. Actually had a state bank that they separated commercial from investment. Those in interesting buffer area that was built between two out parts. It obviously the bank suffered. I actually think bringing back glasssteagall remember investment banks the issue is not that banks cannot be security dealers it was the sheer size about the banks and the socalled shadow banks like lehman, like countrywide financial, like america west, and new century. The shadow banks were growing. They had essentially prospered from some of the regulations that had been imposed on regular banks. They could do things that regard banks cannot do. We thought it. Without it was a good thing because we know from history there is a big secondary trouble but once the shadow banks became big and more leverage than the commercial banks they became the biggest threat to the economy. In fact most of the crisis is not with regular banks. So i think it is that we should not allow either securities dealer or a bank to get so large and interconnected that it can bring down the Financial System unless its bailed out. So i believe that we have done a couple things that help a lot. First of all we require higher levels of capital from our commercial bank. There is a study that capital levels of 5 of previous banking crisis would not happen. Another thing is where we have some of the Large Institutions that are not regulated like banks if you basically act like a bank where going to regulate you like a bank. So ge capital a large financial had to submit to the Federal Reserve oversight. They discovered it was so over that they sold it off. The other thing you can do this are now a mechanism in place in the law that forces a Large Institution and you can protect a sensitive creditor like depositors and bondholders but shareholders get wiped out. The knowledge of that we hope, we dont know that hasnt been tested yet, the knowledge of that is that people could be more aware of that risk. Frankly we need to sit actually use before and has the hope for the benefits. I think one of the issues you brought up is the most Dangerous Technology is one that is never allowed to fail and fail. Yeah theres a line from that i quote from a french expert that says infinite free system becomes mute. So the issues going to be how do you certainly if you look at the airlines they went through a lot of fairly are technically to get a good safe commercial plane up. Pilots spend enormous hours of flight simulators where they get to fail. How do you create a system to allow whatever it is, banks, to actually fail softly and fail in a way that is not a bursting. I think that is the other piece. Its an overlay of political embarrassment. Thats a tough one. The natural sense of owning up to your mistakes is not human. As human beings we dont like to do that. Plus we have this reward system that punishes people who make mistakes. I think the aviation safety reporting system is a interesting template. For example a a big problem in healthcare, so people have tried to introduce medical reporting systems. Have trouble. There so many type of medical errors, second doctors and hospital people actually know the cost of medical errors but they seldom rise to the level of gravity that its worth the effort to actually read them all out. For example when you try to create Data Collection system to collect errors it was a lot of hassle. Finally theres not a legal context within the hospital sitting who can protect people from created medical errors from being sued. Getting around that issue i learned in the Railroad System for example you could argue that they could use Something Like this like the amtrak derailment. That ought to be an environment that lends itself to this type of Incident Reporting system. Thats an interesting model. I dont how know how its transferable it is. I think part of it is also thinking outside and looking at nasa. Youre right and when youre setting it up in the faa go together they concluded it could not be part of the regulator because it would discourage people from stepping forward. So then they have the power to report instances is basically like paul revere as theyre banging the bottle and warning people. It doesnt have the power to force anyone to take action. Ironically thats the beauty of it. People feel more free talking to them because they dont feel enormous consequences that the have to deal from. Lets take some questions. Raise your hand, well get you a microphone because were videotaping this. Let us know who you are, and where youre from. Although in the back. Will the greatest risk is the attempt to avoid a risk. I wonder at one point you touch upon but i dont think you talked too much over the last century theres been a massive shift from the private sector which is now localizing pay for your own mistake. To what extent is that possibly major thing . I dont know the transfer the safety that are Getting Better throughout history. There they Getting Better before we politicize this budget. It seems now the Major Political response many disasters to expand the government of association of risk which seems to be dangerous to do. This is a complicated question. Youre actually right, as a society we have given the government more more responsibility for the containment of risk. Whether its its a good thing or bad thing its a very interesting question. If you take the attitude, the freedom from Franklin Roosevelt where he basically said its part of the job of the government to save people from the horse of destitution of disaster. When he signed the security until i said you can eliminate all risk but we can take the worst risk away. So i think is a choice they made to society. It seems to be that in economics we talk about goods we buy when we become wealthier and safety is one. We give up Something Like freedom and we pay higher insurance freedoms. We think thats the price of saline safer. A lot of this can happen even in the absence of government. So they found after the introduction of motor Safety Standards in the 60s we found a decline in fatality. What helped was that the client have been emplaced years before the lock came along. Its probably the case that all federal Motor Vehicle standard to contribute to that decline most of it wouldve happened anyway because people naturally wanted more safety. Remember seatbelts were introduced originally at the industrys own initiative. So was antilock rings and stability control. A lot of these are not forced on carmakers but really were just options that they chose. Theres been a greater awareness of catastrophic risk. So until 911 terrorism risk was a writer and most insurance policies. The Insurance Companies basically didnt charge for it because they had no experience with it and didnt think it was worth having to charge it. So 911 comes along cost billions of dollars of consequences for society. Where buffetts company sustained a lot of losses and later on reflecting on the he said they made one of the cardinal heirs in my view which is they base their willingness to sell insurance on experience rather than exposure. So theres some risk we now know that no Insurance Company can possibly survive and assume those risk. Of the federal government doesnt assume those risk then congress could grind to a halt. So we now see the government as the nature of last results. So california and florida there the insured last resort in hurricane risk. I have a fundamental problem with that rule because some of those are uninsurable. In fact the in fact the private sector overcharges for them because the rendered insolvent. What i think we need to do is get away from insurance that is actuarially assessed believe low rates. Basically subsidize with the activity. So floridians pay pay too little for their hurricane insurance a week charge too little for Flood Insurance policies. Not only do we have this inherent risk that people always live on floodplains because its prosperous to do so. But it subsidizes them to do so. We as a society decide that the federal government is the only actor that can assume some these risk that we actually actually have to at a minimum to our best to make sure theyre properly paid for take those risk. Unless there is a stated social policy goal by the federal government are taxpayers going to pay for it. Like for example example we have in the case of social security. Throughout this what im hearing is psychology more than anything else. The reporting again with the military with what we call many mouse reports were people could report anonymously and therefore not any problems in doing so. You hear air france 447 arose because to out of the three airspeed indicators failed in their known to have a freezing problem and they were supposed to be replaced according to a french director. When that happens the other pilot dumped off. The copilot probably wasnt in the cockpit. The copilot should have realized that he is now flying the plane and did not. So so we have a psychological problem in which the reliance on some safety mechanisms such as insurance of last resort makes people either neglect the fact that theyre not risk or failed to take action. So one thing that interests me is how do you address the psychological problems which run across the whole gambit of what youre talking about to talk and make people recognize risk. So the first thing we may not be able to get rid of all of them. By the way is not necessarily a bad thing. One of the reasons we try to make people safer is to make them feel better. Its not a pleasant feeling to feel like youre going to die every minute of the day. Theres a study done in israel when they ask people are you afraid of a conventional were at an attack by iran with unconventional weapons. They found a lot of people were afraid and they felt quite bad about it. The mask of different people unit gas mask and they said of course yes. In israel everyone has one a mass those people the same question and they express a lot less anxiety of the possibility of an attack. So the knowledge that there is something there to keep you safe to make you feel better and thats not a small thing. And the oregon medical experiment where people were too poor to afford insurance but not qualify for medicaid they discover that many people were not healthy or as a. They spent a lot more money. Found one important difference. A lower incidence of depression. We speculate happens is knowing you have Health Insurance you less worried about a catastrophic event ruining your. Thats the first thing. Not sure we should actually make people be afraid all the time. You know we can make people drive carefully if we put a sharp knife blade sticking out at them. I dont think thats a good way. Be always aware of your surroundings, after the air france accident theres much more emphasis on exactly the excess of trust in technology. Pilots almost never apply the flame themselves and difficult conditions. When Something Like the conditions happen they dont know what to do when they respond the same way. Part of Pilot Training this prevention training. Putting them in in simulators and trying to simulate, not hazard with the devices theyre supposed to have. I was in my honeymoon in france about 20 years ago and driving on the freeway and i remember the french Highway Department put a sign up and it says speed makes everything worse. And i thought well yes thats right if youre driving 70 Miles Per Hour we know the force of the collision will be higher than if you crush at 60 Miles Per Hour. He tried to maintain space around yourself that means less than when youre traveling at 70 then when you are 60. That reminder comes in my head all the time when im going above the speed limit. So reminding your kids always be around of cars around you. So i dont and i talk about being intelligently scared. You can do basic things that are remarkably effective at removing some of the most serious risks from our lives. Some of that has to do with spatial. The same thing with temporal space. Raw floating more decisions from highspeed computer algorithms. Could be highspeed trading, what he saw on the air france flight. So you have this compression of time that goes way beyond our reaction time. They are in fact, the necessary and hopefully that will reduce the state reactions we are talking about. But what is surprising fdrwh
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