Financial history expert Silber recapitulates a course in risk assessment, showing that generals and politicians no less than investors “take daring chances” in the absence of other options.
There are upsides when people are willing to game the chances of “downside protection,” writes former NYU economics professor Silber. For example, patients with terminal illnesses are crucial to the practice of medical experimentation, since many figure they don’t have much to lose. That decision, writes the author, is very much like the star quarterback who throws what Roger Staubach christened “the Hail Mary pass.” Never mind that the risk is turned all the way up. “The Hail Mary connects less than one in twenty times,” writes Silber, “which may be okay at the end of a football game, but not as a steady diet in life.” Yet the moral equivalents of the Hail Mary are frequent in our history. Silber suggests that having nothing to lose led Rosa Parks to refuse to give up her seat on a Montgomery bus. Similarly, Woodrow Wilson sent Americans to World War I not in 1915, when it could have ended the war sooner, but in 1917, after he had won reelection and didn’t have to fulfill his campaign slogan of avoiding war. Writes Silber, sagely, “second-term presidents should come with a warning label: Do not provoke a lame duck.” Desperation will drive people to extraordinary measures, of course, including attempting to enter a country illegally and, in the case of rogue trader Nick Leeson, taking advantage of the fact that his employer, Barings Bank, “encouraged traders to become daredevils, ignoring the fallout.” (Barings collapsed in 1995.) With an eye to behavioral economics, Silber turns up a few surprises: Even though prisoners serving life sentences don’t have much incentive to behave, they “resemble members of the local chamber of commerce more than Murder Incorporated.”
A brisk look at times when it pays off to take a chance.