That's rather the point of the video, isn't it? BP are the ones who were all "¯\_(ツ)_/¯ ... sorry".

This event and others like it happened because someone thought it was worth the risk for money.

Actually a lot of people did; the company, whose major decision-makers will only be concerned if it affects the value of their beach properties, and even then may not notice.

The government, which for various reasons allows the exploitation of natural resources like this. Those reasons range from direct cash deposits in offshore accounts, to the general notions of what's "good for the economy" held by our corporate-entertained politicians.

Environmental risk management should be done with zero regard to the likelihood of said risk; assume it *will* happen and work from there.

But no, that's sandal-wearing, beard-and-vegetable-growing lib*/greenie/hippy talk.

OK, had a chance to watch the start of the video again to remind me of the context, and thought of some other ways to look at it.

1. You could, if you were particularly heartless, look at it as the individual failures of the people who borrowed money they had no hope of repaying. That I consider this a rather unfair way of looking at it is unlikely to stop the usual suspects from actually voicing this opinion.

2. You could look at it as a failure of risk management. Each individual player understood that there were risks involved, but each thought that passing the risk along to the next person would avoid the risk being their own! Nobody understood that they were creating a risk to the entire system.

3. You could also look at it as a failure of regulation. I am quite astounded that, amidst the sea of fraudulent activity by banks and their agents, there were no charges laid against anybody for the activities that brought about the GFC. The regulations also, in some cases, prevented banks from taking sensible steps to avoid default. Once the loans were bundled together, rules 'protecting' investors by preventing discounting were actually what caused the investors to lose their shirts.

4. You could look at it as a failure of business: In many cases, the folks who had been encouraged to take out these dodgy loans were actually going along just fine until the banks increased the interest rates. There was, therefore, a huge missed opportunity for someone to buy these loans in default at a discount, and let the homeowners keep paying the introductory rates that they quite clearly had been managing quite well.

If you live in a country that has ghetto people, you should get a gun unless you don't care about risk management and black swans (outlier events which have unacceptable outcomes when they do occur).

As far as home invasions go, this "brutal" one was extremely tame: http://videosift.com/video/Home-Invasion-in-Millburn-NJ-caught-on-nanny-cam-brutal

@enoch let me see, charity = helping people (preferably) in need. Disaster relief = helping people in need (due to some disaster). Help me understand why I can't compare the two.

@dgandhi did FEMA do such an amazing job after Katrina that I don't know about? Because there's a very long article on Wikipedia detailing all the criticisms, somebody should remove it.

Government is not wasteful just for being large, it's wasteful for being a monopoly. It's so easy to conceive of the evils of a single corporation becoming a monopoly, but when it comes to government, the issue strangely never comes up.

I understand that's most likely because we can't avoid government being a monopoly, it's the nature of the beast, but that doesn't mean we shouldn't try to make it smaller.

You bring up good points about division of labor. What about competition, does that matter in modern society or will that also be overlooked?

If we use this $35B figure, which is allegedly what government needs to do disaster relief work poorly, can't we bring it down by subtracting all the money wasted, or will the private corporations have to operate at the same level of exorbitance?

Does it have to be a single gigantic institution, why can't smaller organizations be triggered in unison by a big disaster?

Also, why does it have to be entirely non-profit, what about the insurance business, doesn't it revolve around risk management and dealing with unlikely events like disasters?

Yes, we pay for a disaster relief infrastructure, but we don't have a choice in the matter, and that knowledge is what makes FEMA a disaster. In our moment of most dire need, we can only count on FEMA and nothing else. They abuse their privilege by being wasteful and inefficient.

Governments are not the only organizations capable of preparing and dealing with disasters, and they're very far from being the best at it.

I'm terribly late to the party, but I can't resist commenting here. This is a wonderful post with loads of great ideas and comments. I'll go bullet style like all the cool kids are doing.

* Taxation of individuals, and more to the point enforcement of individual tax laws, comes down to prioritization. Morally, it may feel better to want the IRS to tackle the super rich, but financially, it is in fact more beneficial to audit those less capable of evasion. If the IRS can spend $5k to get $10k from several individuals, that is fiscally more useful than spending millions going after one individual that can indefinitely avoid settling up. Corporations, on the other hand, are another matter entirely. Corporations are given the rights of citizens, like free speech, due process, etc., but are not expected to fulfill the same obligations in terms of taxes, being honest with law enforcement, being eligible for military service, voting, etc. That's a whole other can of worms opened up by the SCOTUS back in the 1800s. The answer lies in removing the citizen like rights of corporations, but that's not going to happen in our lifetimes.

* Welfare serves the dual purpose of helping those who have been screwed over by circumstance and those who have been screwed over by the system. It is something that the vast majority of right wingers will claim is better served by private charities, which are invariably faith based. Even AA is a religious organization. And every person that subscribes to a faith of one sort or another will tell you that nearly all charities are faith based. You know why? Because its virtually impossible to get non-profit status and wide recognition for an organization unless it is faith based. That historical/cultural bias is reason enough for me to justify a secular/communal charity system.

* Conventional nuclear power is great, assuming it is done safely. That's the problem, though - is it economically viable to maintain conventional nuclear power plants safely? None of the arguments I've seen on either side of the issue really deal with that aspect. It basically comes down to a matter of risk management, which TEPCO clearly failed at. Implementing conventional nuclear power safely requires a really absurd amount capital, but it may be economically smart at a large enough scale. Figuring out the economics of safe nuclear power is way above my pay grade. Ultimately, I believe it is something humans are quite capable of doing, but is there enough political will to do it properly?

* Free markets are awesome! Don't confuse free markets with capitalist bullying, though. A free market assumes that everyone in the market has the same information as everyone else. That's the only way it can actually be free. As soon as one party manipulates the information available to others, the market is no longer free. That applies to everything from snake oil remedies to irresponsible mortgages. A free market doesn't mean a market free of regulation, it means one in which everyone has equal access to the marketplace, producers and consumers alike.

* Small government, or even no government, is ideal because ideally everyone thinks like you do, and has exactly the same minimal requirements that you have. In the real world, the needs of individuals in very large social groups are immensely varied. You may live your whole life without ever needing the services of a fire department. You may not ever need to protect yourself from a psychopathic killer. Hell, you may run your own website from your home and never do more than walk your kids along a deer path to a private school near you. But you are a part of a society. Your kids' teacher may live 50 miles away and need to travel along paved roads to get to that wonderful school. The web of internetworked computers upon which your income relies was first conceived by people working at public institutions. The smallpox vaccination you got as a kid was developed by a tax funded group of doctors. The nuclear power that you want to support would never have been possible without vast amounts of federal funding. Bureaucratic and corruption waste is not unique to government, and any properly organized system can minimize waste. It's not the idea of government, but its implementation that makes it wasteful. Corporations are no more immune to that waste than any other collective. It's true that waste is easier to identify and possibly eliminate in smaller systems, but very large organizational systems are required for big results like space travel, vaccinations, and imperial domination.

* Do not confuse religion with spirituality. Religion is about dogma and social control. Spirituality is about one's connection with the universe. If your neighbor believes in a grey bearded man in the sky that created everything 6000 years ago, it doesn't necessarily have anything to do with his desire to eliminate the teaching of evolution from public schools. He may use the former to justify the latter, but the two are not really connected. If someone comes to your door offering a deeper connection with the universe around you through Jesus, you can listen politely, tell them that you are already plugged in, or whatever. If someone comes to your door to tell you that you and your family need to behave in a certain way, you can tell them to fuck off with a quite clear conscience.

I don't think any of these ideas are young or old, but it does take some time to refine them into something coherent. I'm 41 and I barely know what coherent or consistent means. One last thing to remember is that you are not who you were 10 years ago, or even 10 seconds ago. Every moment fresh water flows over the fall - it might look the same, but the rocks are never touched twice. (oh - now I'm just getting pretentious)

I've said it before and I'll say it again, gambling is a shitty metaphor for credit default swaps.

The only thing that credit default swaps do is create a mechanism for transferring risk. To state the obvious to obscenity, it doesn't force anyone to take that risk, certis parabis it doesn't inflate the overall amount of risk that banks or lenders take on and then resell unless there are willing 3rd parties people to take on that risk from them.

The fact is, credit default swaps were a financial innovation. Anyone who makes any form of investment from 'risk-free' government bonds to venture capital is exposed to some degree of risk, and just like how most industries producing physical goods specialise in products, it makes sense that those who are particularly good at analyzing risk would be given the opportunity to analyse good investments and take on that risk for them if they were confident that they would not fail, or vice versa.

THAT was where the problem started. Simply put, the likes of AIG did not correctly factor in the probability of house prices falling. They sucked at what they were supposed to specialise in. In the end moral hazard, ultimately the critical importance of a massive international insurer among other financial firms in keeping the world economy puttering along was what required them to be bailed out.

Ironically though it turned out that while companies like AIG were terrible at risk management - government regulation, prudential supervision and policies for dealing with delinquent banks were worse, which ultimately meant the buck was passed down to taxpayers and so on ...

Now, how you can turn those simple facts on their head and blame a financial instrument that is designed to manage risk is beyond me.

It's like blaming a seatbelt you didn't use in a car accident.

>> ^chilaxe:You are, of course, free to leave yourself and your family open to "unforeseeable" violence. That's called unsophisticated risk management, and most humans seem unsophisticated in that way. They'd be better off sophisticated, but you can't change people.



I prefer to live somewhere where I am don't feel afraid enough to arm myself.

@GenjiKilpatrick and @shponglefan,

My statement was incomplete. It should have been: "Carry a gun, if you dislike being subject to violence by neanderthal assholes. Problem solved."

You are, of course, free to leave yourself and your family open to "unforeseeable" violence. That's called unsophisticated risk management, and most humans seem unsophisticated in that way. They'd be better off sophisticated, but you can't change people.

I think many of the shortcomings of the education system are shortcomings on the part of the academics who design the curriculums. Problem solving in the sense of how to optimally manage our intelligence would be a great thing to teach. Even PhDs don't get taught that, though.

Teaching these areas would be a great start : Cognitive science, decision theory, intelligence research, game theory, behavioral economics, risk management, cognitive bias, and rationalism.

(Wikipedia links on those subjects are here: http://www.videosift.com/video/For-all-my-Athiest-friends-on-The-Sift?loadcomm=1#comment-744091)

I also highly recommend Malcolm Gladwell's Outliers. (People who like reading books on their computer could find the PDF here)

We're all just one mistake away from having an injury for the rest of her lives. Take risk management seriously.

Higher res version: http://www.youtube.com/watch?v=eMT-5ygCxaM

>> ^longde:
Those structures did appear to be made of balsa wood.
That one inept worker and terrible infrastructure probably cost upwards of a million dollars, after they inventory everything, probably lose stuff to "shrinkage", and redo their warehouse.


That warehouse had terrible risk management, and now they paid the price.

Consider getting a pocket pistol. They're not a drag to wear, and the stakes are high, particularly for women.

Risk management deals with situations that, although unlikely, would have unacceptable outcomes (death, rape).

I don't live in a high-crime area, but it doesn't seem like careful risk management to me to not own a gun. Risk management is about preparing for extremely unlikely events that, should they occur, would have unacceptable outcomes.

Yeah, the 'personhood' model and the cognitive machine model are each useful levels of detail for the same thing... the best one to use probably depends on what your application is.

I don't blame people, though, for holding views that I think have big costs for society... I think we're all in the same trap of limited human intelligence - them more so than us - and people will change their minds in the end.

Also, the libertarian in me says that society's lack of intelligence only has a cost on us if we let it (to some degree). Turing, for example, as much as I personally admire him for his genius, chose to take certain risks, and he lost the bet.

In January 1952 Turing picked up 19-year-old Arnold Murray outside a cinema in Manchester. After a lunch date, Turing invited Murray to spend the weekend with him at his house, an invitation which Murray accepted although he did not show up. The pair met again in Manchester the following Monday, when Murray agreed to accompany Turing to the latter's house. A few weeks later Murray visited Turing's house again, and apparently spent the night there.[32]

After Murray helped an accomplice to break into his house, Turing reported the crime to the police. During the investigation Turing acknowledged a sexual relationship with Murray. Homosexual acts were illegal in the United Kingdom at that time,[6] and so both were charged with gross indecency under Section 11 of the Criminal Law Amendment Act 1885, the same crime that Oscar Wilde had been convicted of more than fifty years earlier.[33] http://en.wikipedia.org/wiki/Alan_Turing#Conviction_for_gross_indecency

You're better informed on the technology so I'm not going to argue your projections, but I wouldn't and haven't bet on them. It's funny, a basic assumption I've made in directing my life is that with a good diet and exercise, risk management and so on I'd make it to around 100, half that if I want to enjoy myself. If I thought I had a good chance (>50%) of surviving to the next millennium, say, that would drastically change almost every dimension of my life. So to that extent I sympathise with your attitude.

I disagree that calling a human a person is less valid than your input-output cognitive machine, which I absolutely accept to be an accurate description, itself no less valid than as a bundle of quarks and electrons, acting on even more fundamental mechanisms. One emerges from the next emerges from the next. Possessing a de facto consciousness I'm not too concerned with whether or why it really exists; illusory or real one seems to function as well as the other. So it's on that principle I interact with what I blindly assume are other similar minds.

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