Recently one of my favorite blogs, Arts & Letters Daily featured a post on the financial crisis called The Imaginot Line. In it, the author makes the case that the American financial system seemed very safe pre-2008.

This is true enough. In the eyes of the general public and most investors, a major collapse was the last thing to be expected. If you had asked them if they could foresee one happening, the answer would have been no. Seabright says that everyone placed faith in the idea of “islands of stability in a sea of risk.” At least for the optimists among us, it’s a very human tendency to look for safety at the expense of our better judgment. There are always pessimists who can see dangerous potentials around the corner, but a lot of people are happier assuming everything is alright.

In our insurance and now bailout-saturated world, people have lost their sense of responsibility. Very few still hold themselves ultimately accountable for their decisions. The worst result they expect is a little pinch, not outright failure or catastrophe. The problem that they fail to realize is that some problems are too big even for a seemingly all-powerful government to solve.

Americans have a problem with risk. The problem is their desire to eliminate it entirely, which seems to me an unrealistic and impossible goal. Such a result will never truly happen, but it doesn’t stop us from trying. I have to wonder if these attempts to make failure a thing of the past add to our surprise when they happen.

Seabright says that investors and creditors need to bear more responsibility, which is true enough. At the same time, I think we need to remember that some blame rests on the attempts of the government agencies that tried to regulate the economy, and still do. To be sure, many of the investments undertaken prior to the crash were foolish, but so were many of the intervention attempts on the part of the government and central banks.

Many economists, at least on the free market side of the spectrum, hold the belief that an economy free from intervention will naturally grow and prosper. This may be true overall, but sometimes adjustments have to happen, and attempts to regulate the risk out of the economic world sometimes place us in greater danger.

In the end, I think one’s position on government regulation will depend on your view of risk. If you think risk can be eliminated by enough restrictions, you’re probably going to favor more intervention. If you think risk is inherent in this world, you’ll realize that the best option is not regulating risk out of existence, but playing it safe because risk will always be a part of the game.