STREET DOGS

If a builder builds a house for a man and does not make its construction firm, and the house which he has built collapses and causes the death of the owner of the house, that builder shall be put to death. — Hammurabi’s Code

Admittedly we don’t know how often Babylonian houses fell down before and after the implementation of Hammurabi’s Code. Or how many (if any) Babylonian builders were put to death as a result, but we do know that self-preservation instincts are strong, so it’s probably fair to assume it encouraged a decent margin of safety.

Unlike our current financial systems, in particular the systemic bonus incentives, that tend to encourage a skewed risk-taking.

“While in the past people of rank or status were those and only those who took risks, who had the downside for their actions, and heroes were those who did so for the sake of others, today the exact reverse is taking place,” says Nassim Taleb in Antifragile. “We are witnessing the rise of a new class of inverse heroes, that is, bureaucrats, bankers, Davosattending members of the IAND. (International Association of Name Droppers), and academics with too much power and no real downside and/or accountability.

“They game the system while citizens pay the price. At no point in history have so many non-risktakers, that is, those with no personal exposure, exerted so much control … There are too many cases of ‘heads, I win; tails, you lose’. It ignores the potential for Black Swan events … it rewards those who take unwise risks, and harms others for their own benefit.” Hammurabi’s system had the opposite effect; it united the interests of the person getting paid and the person paying. Rather than the builder being motivated to earn as much profit as possible and the homeowner to get a safe house, they shared the same goal.