Everything Is Obvious_ _Once You Know the Answer - Duncan J. Watts [106]
For much the same reasons, arguments about the so-called redistribution of wealth are mistaken in assuming that the existing distribution is somehow the natural state of things, from which any deviation is unnatural, and hence morally undesirable. In reality, every distribution of wealth reflects a particular set of choices that a society has made: to value some skills over others; to tax or prohibit some activities while subsidizing or encouraging other activities; and to enforce some rules while allowing other rules to sit on the books, or to be violated in spirit. All these choices can have considerable ramifications for who gets rich and who doesn’t—as recent revelations about explicit and implicit government subsidies to student lenders and multinational oil companies exemplify.26 But there is nothing “natural” about any of these choices, which are every bit as much the product of historical accident, political expediency, and corporate lobbying as they are of economic rationality or social desirability. If some political actor, say the president or Congress, attempts to alter some of these choices, say by shifting the tax burden from the working class to the superrich, or by taxing consumption rather than income, or by eliminating subsidies to various industries, then it is certainly valid to argue about whether the proposed changes make sense on their merits. But it is not valid to oppose them simply on the grounds that altering the distribution of wealth itself is wrong in principle.
PRIVATIZE THE GAINS, SOCIALIZE THE LOSSES
Arguments about the claims that society can justly make on its members are also relevant to questions of accountability. For example, a great deal has been written recently about whether the banks and other financial firms that pose a serious systemic risk should be allowed to exist in the first place.27 Much of this discussion has revolved around whether it is the size or interconnectedness or some other attribute of a financial institution that determines how much risk its failure might create for the rest of the economy. Addressing these questions is important, if only to understand better how to measure systemic risk, and hopefully to limit it through thoughtful regulation. But it is also possible that there is no way to eliminate systemic risk in financial systems, or to guarantee the robustness and stability of any complex interconnected system. Power-transmission grids are generally able to withstand the failure of individual transmission lines and generators, but occasionally a seemingly innocuous failure can cascade throughout the entire system, knocking out hundreds of power stations and affecting millions of consumers—as has happened several times in recent years in the United States, Europe, and Brazil.28 Likewise, our most sophisticated engineering creations, such as nuclear reactors, commercial aircraft, and space shuttles, all of which are designed to maximize safety, occasionally suffer catastrophic failures. Even the Internet, which is extremely robust to physical failures of all kinds, turns out to be highly vulnerable to a whole range of nonphysical threats, including chronic spam, Internet worms, botnets, and denial-of-service attacks. It may be, in fact, that once a system has attained a certain level of complexity, there is no way to rule out the possibility of failure.29 If so, we need not only better tools for thinking about systemic risk, but also a better way of thinking about how to respond to systemic failures when they inevitably occur.
To illustrate, consider the response of the banking community to the Obama administration’s proposal to tax certain trading