Government - Risk Article

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Risk Anatomy

Risk | Fear | Ecosystem | Market | Government | Firm | Cartel | Individual | Trust | Audit | Complexity | Prisoner’s dilemma | Transaction | benign | brutish Navigation: Risk taxonomy | Rumsfeld’s taxonomy

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(a) Any kind of government is a tacit acknowledgment of Hobbes model.
(b) But government also arises naturally from nature – it is a form of bulwark against the vicissitudes of nature – but the dynamic is different.
(c) Corporates are by their nature voluntary associations that arise, in theory, through fair exchange between willing parties (or through deception and sleight of hand), governments arise by force. The most primitive form of government is the silverback gorilla. Or the king.

(i) Primitive government the interest of the individual (King) and government were perfectly aligned. Royal Beneficence to the serfs always had the ulterior motive of ensuring loyalty.
(ii) Treachery is the expression of another individual organising against the king – to marshal a stronger force, and thereby overthrow the king.
(iii) If the king is the dominant tribe member, treachery usually involved collaboration. In this way a single controlling will tended to be diluted. A single gorilla can fight of competing males, one at a time. But his tribe size is naturally limited.
(iv) An aspiring king therefore forged alliances and entered mutual, consensual relations with armies, servants, Lords, the point being to defend basic military preeminence in the region.
(v) The more syndicated the control became, the more concessions the King must grant to his governing coalition. In this way absolute power transmogrifed into government for the people. The king gradually ceded power to his majesty’s government, to the point where the current monarch has no real power at all. Power shifts between the parties with all kinds of fear and loathing, but as long as her maj stays above it all, everybody is happy to leave her be.
(vi) As absolute power became more devolved so it began to depend on coalitions, cartels and cooperations.
(vii) The same dynamic – the iterated prisoner’s dilemma - pushed two very organisation types (the gorilla and the deal maker) in the same direction – collaborative organisations leading to the betterment of all
(viii) In HMG we see the same dynamic at play – the greater good (govt mandate) versus interest of the individual.

(d) through Government operates to foster competition – antitrust regulation – and stifle it – intellectual property law
(e) long concatenated chains of bureaucracy which function in practice entirely opposite to how they are meant to operate in theory, because each of the links in that chain is an individual, whose primary concern is SELF preservation and SELF advancement, rather than the advancement of the firm in the abstract.

(i) The main practical role of these chains is to parcel up and syndicate risks as follows:
(1) Low risk items can be kept and accepted.
(2) High risk items are
(a) Escalated (upwards)
(b) Assigned (laterally)
(c) Socialised (into a community – a mixture of escalation and assignment. Socialisation transfers individual responsibility to a committee or group (opco, steerco) which like the firm itself is a FICTIONAL ORGANISM having no separate moral agency, but it is treated as having one by all the individuals subject to it (or who sit on it).
(ii) The socialise, collectivise and, if sophisticated enough, diffuse altogether, individual responsibility.

(f) Escalation: shunting the ultimate responsibility for the decision a long way up the chain where

(i) there is additional pressure to deny the error at all
(ii) where the error cannot be denied, there is sufficient removal from the actors to sidestep direct Sanction (on the escalatee)

(g) Assignment

(i) Across functions

(h) Socialisation
Rule : do not induce insecurity in your own boss, unless you can decisively act on it. If your boss thinks you are a support, you are safe. If your boss thinks you are a threat, you can be whacked at any excuse.