Risk & Other Four-Letter Words

Wriston, Walter B.


Thornton Wilder wrote: "Every good thing in the world stands on the razor-edge of danger." He was right. The clear lesson of history is that individual liberty, the basic underpinning of American society, requires constant defense against the encroachment of the state. Ever since the Nobel laureate F. A. Hayek linked free markets with free men and women, the case for relieving the economy from overregulation assumed even deeper significance. A free society, if it is to remain free, requires citizens who take the risk of standing up to be counted on the issues of the day.
Over the last seventeen or eighteen years, the world produced one crisis after another, each one of which created a public controversy as to how it might be resolved. Some problems affected the region in which I live, some the emerging structure of a global financial market, and some the political alignments in the world. As these shocks rippled through our society, quite often the initial reaction was a spate of stories in print or on television suggesting that much of what we have built over the last two thousand years was about to be lost. It was not unusual to have these pronouncements accompanied by the observation that any solutions which were offered appeared
to be "risky," with the word "risky" delivered in hushed tones. Even well-known business magazines are replete with headlines suggesting that Company X's strategy is "risky," or in a larger context a commentator may condemn the President's foreign policy since it entails "risks." In each of these articulations, the word "risk" is used as a pejorative, just as if there were alternatives in life that do not carry a greater or lesser degree of danger.
Americans in all walks of life steadily ignore the safety-first signs of society. In 1984, seven major candidates vied for the Democratic nomination for president, risking everything for the chance to run against one of the most popular presidents in history. I have no doubt there are dozens more even now planning and dreaming of winning the most difficult and demanding job in the world. What is true in politics obtains also in business. My banking experience was full of the excitement of meeting entrepreneurs with an idea they felt would create jobs and values, although more often than not mature corporate bureaucrats viewed them with alarm. A trucker named Malcolm McLean once came to me with the idea of transporting by ship truck-trailers filled with cargo, and against all seagoing conventional wisdom built a great company called Sea-Land. More than that, he changed the very concept of moving freight. The ship became almost incidental to the fact the freight was picked up at someone's loading dock in one city or continent and delivered to someone else's receiving area. One of America's most respected shipping magnates paid a call on my boss to remind him that the proper way to take freight off ships was with a crane and cargo slings and expressed the hope that we would not find McLean's idea credit-worthy.
Today, the data show that 70 to 80 percent of all new jobs created in America in the last ten years were created by small start-up firms of less than 100 people. Some business persons knew an opportunity when they saw it and took the risk to make their dreams come true. While some don't make it in a competitive marketplace, many do. The free market in commerce,
like a free political system, requires prudent risk-takers, men and women who know that risk is not synonymous with recklessness, but who also know that there is no real security in this life. Apparently, however, many commentators still do not remember Gilbert Chesterton's remarks that "democracy is a dangerous trade."
The essays that constitute this volume are edited versions of speeches that I wrote and delivered, often at the height of some public controversy. Today it is hard to recall the intensity of the feelings created during particular crises. There is always the temptation to revise the conclusions reached in the midst of the battle in order to bring them into harmony with what has been revealed in the blinding clarity of hindsight. This temptation has been resisted, and the judgments made at the time will have to stand on their own.
It has been my belief that it takes about ten years from the time an idea is launched on a college campus, or in some other forum, until the Congress of the United States passes a law reflecting some version of the concept. That is as it should be, but it is also true that if there are competing ideas in the marketplace, better decisions will result. The Salvation Army was founded by an extraordinary person who asked the question, "Why should the devil have all the good songs?" These essays were written following a similar theory. Why should the advocates of bigger government and more regulation, which lead inevitably to the loss of individual liberty, be so lightly opposed in the battle of ideas? During much of the period during which these speeches were written, the proponents of freer markets, with some notable exceptions, were not much in evidence. This was particularly true in the financial service industry. Some businessmen even called for price and wage controls, or legislation to protect or preserve an entrenched market position. Since the written and spoken word clearly can and does have a role in shaping the political process, I like to think that America's return toward a freer economic system got a small nudge along the way from some of the contributions to the debate contained in this volume.