When All Else Fails: Government as the Ultimate Risk Manager.

Author:Kemp, Thomas
Position:Book review

When All Else Fails: Government as the Ultimate Risk Manager, by David A. Moss. Cambridge: Harvard University Press. 2004. ISBN 0674016092, $18.95. 456 pages.

This is a useful and worthwhile book for anybody interested the evolution of U.S. government risk management or effective policy design. Professor David Moss argues that the U.S. government has since its inception acted as a manager of risk due to its unique ability to enforce action. Moss goes on to define risk management policy as "any government action designed to reduce or to reallocate risk" (p. 1). The general thesis of the book is that government has facilitated economic development and growth by managing the risk associated with the economic process. Indeed, Moss goes so far as to state that without this intervention "it is doubtful that a modern industrial economy could have taken root in America" (p. 1).

Moss develops his thesis of government as the ultimate risk manager from the assumption that government policy makers are problem solvers (pp. 20-21). To his credit Moss continually justifies this hypothesis by including the comments and testimony of legislators. Even a casual glance through the notes section will reveal numerous references to the U.S. Congressional records. Indeed, Moss's research is convincing that the "problem solver" assumption is justified more often than not. This does not mean that political opportunism has been overlooked where it has played a role in policy outcomes. However, the overall impression that one gets is that lasting policy actions are the result of perceived problems and not simply political opportunism.

The basic layout of the book is straightforward. A brief historical treatment of the study of risk including an overview of the necessary mathematical tools sets up the rest of the book, which focuses on specific economic problems in their historical context. Chapters on limited liability, money, bankruptcy, workers' insurance, social security, and product liability make up the bulk of the text with a concluding chapter entitled "Security for All." With the exception of the last chapter the topics are self explanatory--in each case Moss shows how government responded to perceived economic problems by managing the associated risk either by reducing it all together, shifting it onto more able parties, or spreading it across the population. The last chapter hypothesizes on future areas that may demand government attention (e.g., health...

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