The threat against risk

One of the greatest threats to the economy are the increasing political and legal consequences against taking risk. Milton Friedman has said (my paraphrasing) you need to be able to fail in order to be able to succeed. As the line between failure and fraud is increasingly blurred, for the sake of political grandstanding, media supremacy, and trial lawyer greed, pre-emption against risk taking, both regulatory and self-imposed, will flourish and the economy will suffer. We need an alliance for risk. From Robert Bartley's column today:

CEOs are hunkering down at the threat of jail. As a class they're under legal, political and societal assault, brought about by apparent crimes of a few of their peers, a general impression of excess by imperial CEOs and, of course, the collapse in share values after the boom from mid-1999 to mid-2000. It's not easy to assume risks when Eliot Spitzer, Robert Morgenthau and the SEC and Justice Department are all in the field. Not to forget the swarming piranhas of the tort bar, suing even the best of firms because their share prices fell.