My husband is an arborphile (as am I, though to a lesser degree). Part of the reason that we both love the US so much is because of the vast areas of wooded wilderness that are still scattered across this immense country. J strives to have an encyclopedic knowledge about trees, and he's relatively good at identifying the various species of evergreens and deciduous trees.
So one of his biggest pet peeves is the devastation that has been wrought by invasive insects on his beloved hardwoods (maple, poplar, birch), specifically, by the Asian long-horned beetle. And in the great tradition of irrational patriotism, he has extended his hatred of the specific to a broader hatred of the general. At this point, if it destroys his beloved forests, it must be an Asian invasive species (which, it goes without saying, must be eradicated).
So yesterday, I showed J this NYT article about a menace that has been destroying millions of acres of pines out in the West: the mountain pine beetle. Without even glancing at the article, his immediate retort was "I bet it's from Asia."
At which point, your Chinese-born blogger went berserk and declared him a "Bug Racist."
Just for those who have no interest in reading the article, it turns out that the mountain pine beetle is indigenous, but has been seeing exponential growth due to, among other reasons, "softening" weather conditions in the West (i.e. less cold). Thank you global warming.
This morning, as I was just about to enter my place of work, a worker who had been loading stuff into a ginormous truck parked near the back entrance of the building dropped an entire crate filled with what looked to be mugs. My last glance at the scene as I entered the building was a sidewalk full of smashed ceramic, with the lone intact mug drifting into traffic.
I was thinking at the time that the worker was probably not going to be held liable for destroying the mugs. When I used to work retail, if one of my girls (I was an assistant manager) accidentally ripped or stained or otherwise destroyed a piece of clothing, we had a checklist to go through: see if it is salvageable at the retail level, salvageable at the outlet level, or marked for destruction (total loss). To some extent, this is risk distribution at the most micro level. I imagine that in a less industrialized society, if you break the wares of your employer, you might see your pay docked until that cost is recouped by the employer. Now, every company probably budgets a certain percentage of their costs to cover these incidents (which are then spread out via increased costs to their customers or decreased pay to their employees - but basically spread out to a broader group of people).
Generally speaking, I like the power of risk distribution. Given how random some acts of destruction can be, it seems somehow unfair (I know it actually isn't: this is an emotional, rather than rational, response) that the burden would be so heavy on someone who just got the short end of the luck stick. In large organizations with at least one shared goal (I think it is safe to say that w/in one organization, most of the employees/managers have the shared goal of the organization doing well), having certain of these risk costs born by the collective organization makes sense (partly because it is only pennies for the individual, and partly because there is probably some administrative efficiency to be gained to not have to police and keep track of these risks and their costs).
It is amazing, however, that when you extend the risk sharing beyond a single organization and out to disparate groups that have basically no shared goals, how destructive the sharing can be (relative to the benefits of sharing). And of course, I'm talking about the asset backed securities (and their extended family of derivative securities). These were the ultimate expressions of risk sharing. As this entertaining (and highly recommended) article by Michael Lewis (or Liar's Poker fame) points out: "big Wall Street investment banks took huge piles of loans that in and of themselves might be rated BBB, threw them into a trust, carved the trust into tranches, and wound up with 60 percent of the new total being rated AAA." Mathematically, it was possible to take a huge pile of dog shit, carve it up, and come out with 60% gold. Amazing.
Of course, this was only possible because the company doing the carving was not keeping any of the risk in-house. They were using their mathematic models to convince the ratings agencies to grant the gold standard to the top tranches of CDOs based on BBB rated MBSs, and then, as quickly as possible, moving those securities off their own books.
It's like this: if you knew that you had a worker (who you cannot fire) who has the weakest arms in the world and his job is to load breakable goods into trucks, would you internalize the cost of the goods he might destroy or would you go out and find an AIG to insure against him?