Explicit costs, hidden benefits

A couple of days ago, Glenn Reynolds linked to an article he wrote in August on vaccines.  As longtime readers know, this is a particular cause of mine; parents who don't vaccinate their children are able to do so only because most parents do vaccinate theirs.  (No, really, I promise--if there were polio running around wild, as there would be if all parents acted like the anti-vaccinationists--then the people taking "personal belief" exemptions would almost all be lining up at the doctor's office begging to her to give little Tinkerbell the magic shot).

But there's a deeper point to be made about how the human brain, and society, treats risk:

 Of course it is the very success of modern vaccines that makes this complacency possible. In previous generations, when epidemic disease swept through schools and neighborhoods, it was easy to persuade parents that the small risks associated with vaccination were worth it. When those epidemics stopped--because of widespread vaccinations--it became easy to forget that we still live in a dangerous world. It happens all the time: University of Tennessee law professor Gregory Stein examined the relation between building codes and accidents since the infamous 1911 Triangle Shirtwaist factory fire in New York and discovered a pattern: accident followed by a period of tightened regulations, followed by a gradual slackening of oversight until the next accident. It often takes a dramatic event to focus our minds.

The problem is that modern society requires constant, not episodic, attention to keep it running. In his book The Escape from Hunger and Premature Death 1700-2100 Nobel Prize-winning historian Robert Fogel notes the incredible improvement in the lives of ordinary people since 1700 as a result of modern sanitation, agriculture and public health. It takes steady work to keep water clean, prevent the spread of contagious disease and ensure an adequate food supply. As long as things go well, there's a tendency to take these conditions for granted and treat them as a given. But they're not: As Fogel notes, they represent a dramatic departure from the normal state of human existence over history, in which people typically lived nasty, sickly and short lives.

This departure didn't happen on its own, and things don't stay better on their own. Keeping a society functioning requires a lot of behind-the-scenes work by people who don't usually get a lot of attention--sanitation engineers, utility linemen, public health nurses, farmers, agricultural chemists and so on. Because the efforts of these workers are often undramatic, they are underappreciated and frequently underfunded. Politicians like to cut ribbons on new bridges or schools, but there's no fanfare for the everyday maintenance that keeps the bridges standing and the schools working. As a result, critical parts of society are quietly decaying, victims of complacency or of active neglect.

That argument could be made, and perhaps should be made, just as well about financial and regulatory infrastructure.  Though I'm not sure that there is any way to prevent 70-year events like the current mess, there are nonetheless decisions that seem lunatic, in retrospect.  Why were Goldman, et al, allowed to lever up 30-to-1?  Why, for that matter, did they want to?  Well, because if you've gone for a long time without any problems, all you can see about the safeguards is that they're costing you money.

The problem is that it simply won't do to say that we ought to be institutionally risk averse.  All of these arguments could be applied just as well to gay marriage or abortion law or universal health care, if you lean that way--it's no good just saying that it hasn't hurt Sweden, because the deluge might still await.

Libertarians, conservatives, and progressives all need a better metric for distinguishing between the areas where we're improving on problems, and areas where we're simply eating our institutional and cultural seed corn.  Unfortunately, trial and error may turn out to be the best we've got.