Keep finding lots of really good articles on HackerNews..
This paraphrase is from http://antonopoulos.com/2014/03/02/failure-is-an-option/
Recently, the US has been infected by the “failure is not
an option” mantra, a toxic hubristic fallacy, disguised as a truism,
which promotes the idea that risk can be removed from life; that 100%
security and 100% control are possible, even desirable. Those who
attempt to remove the possibility of failure, to de-risk financial
systems, end up creating the probability of spectacular failure. By
removing the option to fail cheap and fail fast, they instead
concentrate risk and ensure we will fail hard, fail expensively, fail
across the board.
In the 1970s the US developed a policy of forestry that
espoused 100% prevention of forest fires; let’s call it “fire is not an
option”. This policy resulted in the systemic suppression of small fires
and eventually into very unbalanced forest ecosystems where fire is now
not just an option, but a certainty of disaster. We now know that fire
is a natural part of a forest’s life-cycle. Without fire, the forest
floor gets overgrown, making it a source for bigger and hotter fires.
When fires break out in a “managed” forest where fires have been
suppressed for years, they burn so hot they turn the ground to glass.
Fires that were survivable by trees are now so destructive that they
denude hills and wipe out the entire ecosystem. Our financial system has
become much like a poorly managed forest, harboring within it the
increasing probability of a systemic and destructive conflagration.
Capitalism and entrepreneurial innovation require risk, as
it is a fundamental component of business evolution. When companies are
allowed to fail, their resources get reallocated in the market, just
like a fire that converts sparse undergrowth into fertilizer for the
next generation of trees. If instead, the failed companies are prevented
from failing but are propped up to maintain the illusion of solvency,
they fester and consume more and more resources while creating greater
and greater risk. Eventually, bail-outs must be followed by even greater
bail-outs and then bail-ins. Finally, the systemic risk of
too-big-to-fail becomes too-big-to-bail and the economy suffers a
conflagration of defaults. De-risking increases the risk of failure and
turns localized risk into a systemic risk. If you stop the small fires,
you get a fire so big it turns the ground to glass.
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