The story about Peter Bernstein is mostly about economics and financial markets: One Guy Who Has Seen It All Doesn't Like What He Sees Now. And its worth reading on that level, but in the middle there is a single sentence that gives me the shivers.
When you think about how all of this will work out in the long run, we are going to have an extremely risk-averse economy for a long time.
Here's the problem.
- The people making the decisions haven't a clue about risk; that, by definition almost, is how we got into this mess in the first place.
- They are already terminally risk averse, to the extent that they tried to drive it out of their businesses and wound up with an equally terminal moral hazard.
- In our rapidly changing environment (social, political, economic, meteorological and physical) change will be mandatory
- Those who cannot or will not change will suffer, many of them will starve.
- Any changes we make will have no guarantee of success, all innovation carries risk and the closer to the survival edge you are living, the greater the downside of failure - that's why poverty-stricken nations are also very conservative, they cling to what they know because a failed change can be literally fatal.
Now, the real question is whether we can learn from the Risk Preferences in Chimpanzees and Bonobos.
Because chimpanzees exploit riskier food sources in the wild, we predicted that they would exhibit greater tolerance for risk in choices about food. Results confirmed this prediction: chimpanzees significantly preferred the risky option, whereas bonobos preferred the fixed option. These results provide a relatively rare example of risk-prone behaviour in the context of gains and show how ecological pressures can sculpt economic decision making.
The big problem is that we are bonobos living in a world where food (and other resources) are no longer stable and dependable. So we have to start taking more and more risks at the very moment when we have spent a generation or more stamping out what we perceived as risk.
As our leaders' reactions to terrorism have shown in spades, we wouldn't know how to evaluate risk, even when it bites us on the butt.