Trapped in the “zero-risk” society and how to break free

Abstract

We live in a ‘zero-risk society’, characterized by a culture that is obsessed with controlling and removing any possible risks. Obviously, one of the fundamental objectives of any civilization is to improve the safety and security of its citizens. However, we should not let the cozy comfort that comes with this progress let us fall into a doze. Human societies are intrinsically out-of-equilibrium, constantly exposed to endogenous and exogenous shocks, extreme events that may be known unknowns but even unknown unknowns. This may sound like a paradox, but, bold risk-taking is an essential ingredient of any resilient society. It is the only way to prepare for the totality of growing challenges that we are facing today. Unfortunately, the past decades have been characterized by technological stagnation, principally in discoveries and inventions, and more recently also in innovations, and by social, cultural, intellectual and institutional exhaustion. The authors attribute this to five deeper causes: (i) risk aversion as a consequence of increasing wealth and aging; (ii) increasing inequality with a growing proportion of citizens that have no or less access to opportunity; (iii) technology creating an ‘illusion of control’; (iv) herding and imitation through social media and (v) management shaped by extremes and overreaction. The only way out of this trap is to promote a culture in education where failure is seen as part of the learning process, and aggressively fund explorative, high-risk projects, encourage playful, creative, even apparently useless tinkering. Finally, incentives and rewards should promote risk-takers, explorers and creative inventors in the same way as it does with social media influencers and Hollywood or sports stars. Our analyses call for massive creations of DARPA-like institutions and bold super Apollo-like projects to break free of the zerorisk = dying societies.

Keywords: risks, uncertainty, unknowns, dragon-kings, extremes, out-of-equilibrium, risk-taking, innovation, invention, discovery

JEL Classification: D81, G32, H50, I20, I30, O30