Germany, Sri Lanka, and the Perils of Precaution
How playing it safe can be costlier and more harmful than taking risks.
Two recent events have me thinking (as one does) about the unseen and unintended harms of inaction, particularly when it comes to government regulation. First, Germany—which is facing a severe electricity shortage because of the Russia conflict—rejected late last week a legislative proposal to maintain several nuclear power plants that were scheduled to be mothballed this year, choosing to burn more coal instead (including some from Russia). Then, this past weekend, the government and economy of Sri Lanka basically collapsed (thousands of protesters even stormed the presidential palace!) because of a wicked combination of crippling debt and major food and fuel shortages.
At first blush, these events don’t really have much in common (other than the Russia-induced global energy crunch), but dig a little deeper and you see that both have at their roots a thing called the “precautionary principle.”