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Roger This: Limiting Liability For Our Nuclear Nightmares

on March 7, 2016 - 10:05am
By ROGER SNODGRASS
Los Alamos Daily Post

In his novel, Odds Against Tomorrow, a talented young writer Nathaniel Rich, explores the converging vectors of risk, natural and manmade disaster and finance in the wisp of time folded between today and tomorrow.

Published in 2013, a few months after Superstorm Sandy battered the entire East Cost while pounding New York and the Jersey Shore, this story of an apocalyptic inundation of Manhattan could not have been better timed. Introducing a  “long-short” scheme to profit from a whole market basket of global fears, Rich spins up a valuable parable for what we are doing now.

A mathematician named Mitchell Zukor lands his first job after college on the seventy-fifth floor of the Empire State Building in New York City, working in the Department of Equities, Assets and Derivatives of a fictional financial services firm Fitzsimmons Sherman. Mitchell dreams that one day he will make it to the seventy-sixth floor, where he can work in Risk Analysis.

“Risk was all that interested him,” Rich writes. “It was all he wanted to do. Event trees, optimism bias, binomial distribution, base-rate fallacy – these were his long-lost friends ...  but there were no entry-level positions in Risk. You had to make it elsewhere first.”

Finally, he has his first opportunity, when his boss asks him to put a value on the lives of each of his 300 coworkers to calculate any liabilities if the building or its occupants should be accosted by some freak of fortune. “Risk,” Mitch hoped, “would be his reward.”

In the process of carrying out this task, Mitchell found himself needing to know more about the effect of future conditions on current values; and because that influenced his search patterns, he was soon targeted by an advertisement suggesting that he, “Find Out What the Future Will Cost You.” This in turn led him to a job opportunity with FutureWorld a small company strategically focused on risk and risk alone in a brilliant scheme to charge large companies a significant fee to cover their liabilities in the event of a catastrophe. FutureWorld itself is protected from liabilities by an innocuous loophole inserted on behalf of the company in the state legal code that enables FutureWorld to avoid liability.

Risk is the priceless new commodity everybody already owns

Whether it’s betting on your car, your health, your luck, or the day of your death, there’s a premium to be made by someone or something willing to assume a share of your risk, for a few points more than its probable worth. Simultaneously, according to Jonathan Levy, an assistant professor of history at Princeton University, and author of Freaks of Fortune: The Emerging World of Capitalism and Risk in America, there is also a countervailing moral imperative for every individual to take personal responsibility for his or her risks, although the limits of that responsibility are never very well defined.

In our global economy, risk has become a commodity, to be shamelessly traded and hedged via instruments like mortgage-backed securities, commodities futures, overdraft protection and – here’s a new one – modernized and stockpiled nuclear weapons.

Consider the multiple connotations and contradictions of the concept of risk in realm of nuclear weapons

When federal managers in the first decade of the twenty-first century were badgered into riding herd on safety and security lapses at high risk weapons facilities like Los Alamos National Laboratory, they were treated like irrational spendthrifts, whose risk-averse tactics amounted to impossible demands that drove costs up and made it impossible to lick a stamp without five levels of approval. There was an element of truth in that, having to do in part with an all too human disinclination to weed and thin the static buildup of useless clutter.

The laboratory managers fell farther and farther behind in their schedules and budgets and promises and began complaining to congress about the burden of federal oversight, that the relationship was “transactional” – item by item – rather than strategic – which would mean reaching a common goal.

The tide began to shift with the help of a risk-shaming crusade from an overspent congress that could no longer afford to pay for a budgetary premium that is the best grease for operational peace and quiet.

Then the day the complex stood still, the radiation incident at WIPP happened. “It was something that wasn’t supposed to happen,” said one senior manager. “But then it did.”  Did the canister erupt in the underground repository because of an abundance of caution or a superfluity of complacency?

The answer is self-evident, but the confusion and hypocritical manipulation of risk for political advantage has been completely unaccountable.

“Public perception remains an important aspect of oversight and enforcement and over time has led to a Departmental culture of risk aversion and overcompliance,” remarks the latest blue-ribbon Department of Energy review commission. The most recent of the 50 reviews over the last 40 years admits it can barely find anything new to say because so few of the recommendations from earlier reports have been implemented.”

There could be no growth in the nuclear weapons business now until there was enough international threat to justify increased spending. Barking threats from Iran and North Korea, while alarming, were never enough by themselves to get the arms fever boiling. But what was really needed was a major international crisis, like if only Russia would flip out and start rattling its warheads and clawing back some of its own former territory, like Crimea and Ukraine.

How about a trillion dollars for nuclear weapons over the next 30 years? Done.

How about SM-3 anti-ballistic missiles for Romania and Poland? One done. Poland Pending. Why not show off our new Minuteman III Intercontinental Ballistic Missile? Message delivered last week.

Are we building a new monument to risk creation? Or a facing a new low in risk-aversion?

I’m afraid to say so, but we are not prepared today to negotiate a healthy settlement with our risks. Risks are in the saddle and ride humankind.


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