Saturday, December 31, 2016

Politics, The Type II Risk, And Our Chosen Outsider

     As we embark upon a new year, several large changes to national politics and the international environment are already upon us. The incoming Administration will need to “hit the ground running,” with little experience of the machinations to be harnessed and tamed. To keep his campaign promises, President Trump will be compelled to confront the internal dynamics of the government he’ll preside over. For one whose life has been spent in the private sector, some of those dynamics will prove unpleasant, even intolerable.

     I have no idea whether risk analysis is widely or narrowly studied, but I do know that one giant category of risks, which the late Aaron Wildavsky called “Type II risks,” is insufficiently appreciated by many in the political sphere. The general ignorance of this important category makes me wonder whether courses in risk analysis – if there are any; that’s something else I don’t know – are worth anyone’s time.

     First, some terminology:

  1. Type I risks are direct threats to persons or property.
  2. Type II risks arise from erroneously prioritizing Type I risks.

     Some persons illustrate the Type II risk by citing a famous fable from Aesop: “The Boy who cried Wolf.” In the most popular version of this tale, the Boy, eager for the attention of his elders, twice cries “Wolf!” when there is no wolf in sight, thus persuading the Villagers that he’s a liar. Consequently, when the Wolf really does show up, the Boy’s cries are not heeded. Depending on who’s mangling this fable, either the Boy’s flock of sheep is decimated and scattered, or the Boy himself is eaten.

     However, the above is not a genuine Type II risk. It’s a case of communications degradation by false reports. The true Type II risk arises from assigning a high priority to the mitigation of a trivial Type I risk, such that resources and motivation are expended pointlessly and become unavailable to meet more serious problems.

     Innumerable cases of the Type II risk infest our public policy. The drive to remove “every last molecule” of some substance designated a “pollutant” from our air or water is a good case. Another is the drive to expand a welfare program or other “social service” so greatly that no one who’s imaginably eligible for it will be left out, even if that means frittering away money and effort on far more persons who are completely ineligible. Other cases can be found in the proclamations and activities of every department of the federal government. The common factor is always the squandering of resources on a trivial risk, such that those resources will not be available to meet problems of far greater magnitude.

     In a sense, the exhaustion of government resources on trivial Type I threats is what passes for job security among bureaucrats. They create Type II risks to assure their continued employment and the multiplication of their numbers. That the expense, both of the efforts to alleviate the trivial and of the continued expansion of the bureaucracy to meet “new” threats, falls on the private citizenry and its commercial institutions is not a coincidence.

     Not everyone wants to be “more important,” in some sense, than he is at present. However, they who go into government, whether as elected officials or employees, appreciate the power of status within the State as a guarantor of their prosperity and security. In light of this incentive, the late C. Northcote Parkinson posited that “Officials want to multiply subordinates, not rivals.” For it is the depth and volume of the “tree” of persons accountable to an official that constitutes the prima facie measure of his status.

     One of the most direct routes to expanded responsibilities is the fabrication of risks within one’s existing sphere. Official Smith must meet certain prerequisites before undertaking this task:

  • Smith must already have an area of responsibility;
  • That area must be imprecisely defined, with its refinement part of Smith’s authority;
  • Smith must acquire a reputation for expertise in that area, such that disputing with him is discouraged.

     In the usual case, Smith’s superiors will not be averse to the expansion of Smith’s responsibilities. After all, his subordinates are theirs as well. However, officials at Smith’s level in the hierarchy will feel threatened by Smith’s efforts. Their most common response is to attempt to expand their responsibilities as well.

     The longer this goes on, the more rarefied and trivial the “new” risks become. The department as a whole clamors for ever more men and money. Other departments growing in response to the same dynamic will be doing the same, of course. Intensifying competition for the government’s finite pool of resources will compel the legislature to act in its turn:

  1. To seek additional revenue;
  2. To borrow;
  3. To reassess government priorities.

     As we know from experience, governments find courses #1 and #2 more palatable than course #3. By following those paths, all the resources that can be coerced out of the private economy will be consumed...which won’t dampen the bureaucracies’ cries for still more.

     The risks entailed in the above process remain formless until two things occur:

  1. The expansion of the resource pool becomes politically or fiscally impossible;
  2. A new and genuinely important (i.e., Type I) threat materializes for which resources are lacking.

     When the first condition arises, the competitors for status within the government will turn on each other, for the private cow has no more milk to give. Intra- and inter-departmental conflict sharpens and becomes visible outside the corridors of power. Actual sabotage of official by official, and of department by department, swiftly proliferates. Elected legislators and executives are drawn into the fray. The press starts nattering about “gridlock” and “nonfunctional government.”

     When the second condition arises, the State must address the new, important threat lest it totter and fall. As that would involve the termination of less important undertakings, those officials whose statuses are endangered are likely to feel panic. More often than not they resort to propaganda efforts: attempts to inflate the importance of their “work,” as perceived by their superiors and the world beyond. Only after any possibility of continuing the status quo has vanished will reallocation be undertaken and the trumpetings cease.

     The incoming Trump Administration and its (nominal) allies on Capitol Hill face the following Type I threats, among others:

  • Terrorism;
  • The debt / deficit crisis;
  • The enervation of the military;
  • The tidal wave of illegal immigration;
  • The unemployment / underemployment crisis;
  • The tottering-unto-collapse of our alliances and allies.

     There are others, but those are the threats of greatest magnitude. Not one of them is being effectively addressed today. All of them materialized and went unaddressed because of the prioritization of trivia. The federal government already consumes about a third of the nation’s economic resources. In all probability, it cannot seize more without fatal consequences for the economy. Therefore, Washington will be forced into a reassessment of priorities.

     There will be much jockeying for position as officials scramble to protect their departments and secure their jobs. There will be bloodshed – figuratively, at least – as the internecine competition between and within the bureaucracies accelerates. This itself will evoke a Type II risk: the risk that indecision and internal strife will have Washington paralyzed should a new, genuinely serious threat arise.

     Politics itself is at the heart of this risk.

     Such a condition would be easily resolved in the private sector: upper management would simply decree the reordering of priorities, including the elimination of however many ridiculous efforts and unnecessary positions might be required. Careers would be impacted and families would be disadvantaged, but such is the dynamism of the American economy that the majority of the dislocations would not last long. Within the federal government, bureaucratic inertia, Civil Service protections, and the alignment of legislators with both internal and external constituencies will work to thwart any such cleansing.

     There’s only one guaranteed remedy: the wholesale elimination of Cabinet departments and the bureaucracies that report to them. That would require unprecedented acts of Congress. The battle over any such proposal will be fought with a fury to eclipse anything in our peacetime history.

     My attention tends to go to dynamics and incentive structures. Some such always stand behind whatever “issue” is currently in the news. The ones we’ve chosen to engage with the November elections are of considerable magnitude.

     It was a choice, albeit perhaps not a conscious one. To the extent that it was conscious, it wasn’t a wholly joyous one, despite the possibility of national renewal inherent in having elevated a complete outsider to the presidency.

     The problems and difficulties we face would have pressed upon any outsider, not just Donald Trump. However, there was no possibility of facing them sensibly under an administration chosen from the political establishment – and the Establishmentarians know it.

     Establishmentarians’ Prime Directive is, has always been, and forever will be Don’t rock the boat. Now that we’ve chosen to rock it, there will be consequences to face. We’re guaranteed to dislike some of them. That won’t alleviate the strife, the anger, or the pain, so we’d better brace for them.


Historian said...


I would add to your list of 'Pressing and difficult issues' the 'Black Swan' of an EMP attack by North Korea or Iran, among other unfriendly nations. The outcome of such an attack would be catastrophic; several authors have made fictional treatises based on such an attack. One of the best is "One Second After" and another is "Lights Out."

Illegal immigration is itself an issue, but I submit that the immigration of Islamics, specifically, is also an issue. Islam is not compatible with Western Civilization.

As regards the various Federal Agencies comprising the Fourth Branch of gooberment which is strangling these presently united States, I was at a holiday party last night (Pre- New Years party) and I made the suggestion that instead of outright abolishment, that we relocate these departments. My initial suggestion was that we move the State Department to Liberia, move the EPA to Libya, move the Energy Department to Siberia, et cetera.

Now in reality, I have no doubt that the indigenous occupants of these countries would object strenuously to having their community invaded by such lowlife scum. However, we could relocate these departments to various places in flyover country where land and office space is cheap. In particular, the northern tier Midwest and intermountain West has all sorts of possible locations.

I suspect that the prospect an EPA staffer would face in relocating to Miles City Montana, let's say, using some surplus FEMA trailers for temporary office space during a Montana winter, might create an incentive to find other employment. However, it is certainly appropriate to decentralize the Federal government in the face of the expanding nuclear threat, and would certainly save a huge amount of money by avoiding further infrastructure upgrades to a heavily stressed location such as Washington DC. In an age when most meetings and communication can easily be done online, there is no justification for cramming still more function into already overcrowded cities.

This sort of indirect approach might be much more fruitful than a direct assault on departments which have long since expanded past the point of any usefulness they may have ever had.....


Dr. Mabuse said...

I just remembered an example of a Type II risk: back in 2014, a teenager was caught on video peeing into an open reservoir. The City of Portland decided to dump all 38 million gallons of drinking water in the reservoir, even though they acknowledged that there was basically no risk to health from this tiny contamination.

Francis W. Porretto said...

Wanda: An excellent example. I'm sure it involved a hideous cost to Portland, and at no measurable improvement in water quality (or anything else).

Historian: An EMP assault is indeed a frightening prospect. Along with the threat of a catastrophic asteroid impact, it belongs in the category of "Threats We Close Our Eyes To In The Hope That They Won't See Us." As for relocating federal bureaucrats to Montana, I'd keep that idea on the QT for now. We wouldn't want the Montanans to become alarmed and secede.

Tim Turner said...

Exactly. "is it worth it?"

"If we save one child." But is it worth it?

And now, you're right again. Is it worth overthrowing entire bureaucracies like the DHS or Department of Education, if significant problems can be laid on their doorstep?

But we no longer get reasoned arguments from the media about what benefits we get from a federal department, as opposed to its cost. What we get is the importance of that department, skewed statistics, and an "of course" argument that it should carry on with even more funding.

There is a popular TV show that was shown a few years ago from a Stanford class on Social Justice. Although the professor spent time talking about Adam Smith, Rousseau and others, his final lesson concluded that socialism is the answer to modern problems.

His "oh, so compelling" argument was the one about 6 people in a lifeboat with only enough resources for 5. (I'm simplifying.)

The answer is simple. You get rid of the one who can't help the most.

EPA, DHS, Education, Energy. . . they aren't helping. They are hurting.

And we're going broke. So, get rid of the ones that aren't helping the most. Period.

And, I have to mention Karl Denninger. We have to get rid of monopolies in medicine and the wrong way we're letting that entire bureaucracy overcharge for health.

Anonymous said...

I would submit that risk analysis is studied everyday by every living person on the planet. Life is an ongoing exercise in risk analysis. Some are better at it and/or learn faster than others. I'm sure to many that's just not 'fair'. As was said, life is hard but it is harder if you are stupid.