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A Culture of Risk Aversion

There is a lot of stuff happening all the time now. Trump has really taken the reigns of the presidency, and has tested all sorts of limits, including defying a 9-0 Supreme Court order. He has creatively wielded tariffs, toggling them on and off in ways that have turned the US economy into a giant guessing game, which is not very fun.

I interviewed the brilliant Jessica Riedl of the Manhattan Institute on Tuesday, and she highlighted how the throughline to all of this is… Congress. Congress just isn’t doing that much. They voted to give up their own power and seem to be afraid of the President. They shrug their shoulders, and say “Boy, someone should handle this” as PhD students get deported and erratic tariffs wreck our major trade relationships- when they are the ones that have the power to handle it!

Charles Gasparino, a FOX Business correspondent, is an important bellwether for how business leaders are thinking. His language in tweets and commentary reflect just how much space there is for congressional response, and how little of that space is being used.

No one wants to step out of line. To be fair, some are trying. Representative Chris Van Hollen is going to El Salvador (at significant personal risk) to check on Kilmar Abrego Garcia, a wrongfully deported Maryland father, who the Supreme has ordered to be returned to the States in that 9-0 vote, again, a demand that the Trump administration has mostly ignored.

Right-wing influencer Charlie Kirk immediately twisted the narrative, claiming Van Hollen was "defending criminals and illegals over Americans." In reality, Kilmar Abrego Garcia is a legal permanent resident who was wrongfully deported without due process, a fact the Trump administration itself acknowledged as an "error." Yet the false narrative persists, which is part of the political risk for any legislator who stands up for constitutional rights.

And most of Congress has remained silent. The legislative branch has largely retreated from its constitutional duty. Rather than collective action, we get isolated acts of heroism, because the system of checks and balances has eroded into a system of compliance.

This is a pattern: no one wants to take a risk. Not elected officials. Not 19-year-olds picking college majors. Because in this economy, everything is compliance now. As the Italian philosopher Umberto Eco warned in his essay "Ur-Fascism," social systems don't collapse overnight. They erode through small surrenders, through the gradual normalization of compliance as a civic virtue.

There is compliance with markets, with political power, with the unspoken rule that you must always be optimizing: for income, access, or institutional favor. Majors aren’t educational pathways anymore. They’re compliance signals. Just like a tariff exemption. Or a congressional vote.

Colleges and Curiosity

There was a great 2023 New Yorker article titled ‘The End of the English Major’. The piece walks through the downfall of humanities, and how enrollment in English and history is down by a third. At Harvard, a place that could theoretically subsidize students who wanted to explore these subjects, only 7% of students plan to pursue the humanities, down from 30% in the 1970s.

• Meanwhile, computer science (which is increasingly threatened by AI) and engineering have exploded. Why? Because STEM degrees signal utility. They’re seen as the most efficient way to comply with economic expectations - and they have been!

• That’s not to say students don’t love literature or art. Many do! They just don’t think they’re allowed to love them. One student at ASU said she viewed the humanities as a hobby that “you have to be affluent to take it on.” Others said they picked certain tracks hoping to make change, only to find themselves locked into rote performance.

Students don’t trust that curiosity will pay off. They trust that optimization will - which is completely understandable. The result is a generation of workers trained to anticipate what’s expected, not to invent what’s needed. I did the same thing.

Eco would recognize this pattern immediately – the privileging of action over reflection, the suspicion of intellectual curiosity, and the reduction of education to technical utility rather than critical thinking.

What’s the problem with all of this? Well, increasingly, people can’t think.

The FT ran an article titled The problem with workers who can’t think for themselves which is pretty self-explanatory. Today’s graduates struggle with ambiguity. They aren’t trained to think beyond the lines. And it’s not their fault. We’ve spent decades putting kids into little boxes, and turns out, that’s not what employers really want.

And companies are making colleges now. Palantir, who has a business model of selling software to the government mostly, has their own learning paths. In the ads they talk about fighting ‘shallow consumerism’ and ‘building to dominate’ but then all the paths - understandably! - are data scientist, AI engineer, data engineer, etc, reinforcing the same narrow toolkit. And this is despite their CEO, Alex Karp1, having degrees in Philosophy, law, and neoclassical social theory.

And these paths aren’t bad. I know many, many brilliant and bright and creative engineers and data scientists. But there is a holistic element to education that can get lost in just focusing on the narrow dimensions of computer.

Even Jamie Dimon (who has been quite outspoken against the trade war) has stated that he wants his successor at JP Morgan to have the qualities of courage, curiosity, grit, heart and capability, according to an interview with the FT. Not technical fluency alone - but curiosity.

How do you cultivate curiosity? By embracing things beyond data and numbers (which again, are gorgeous in their own right) and by allowing people to explore things beyond optimization.

And to be clear, there is a lot going on with the Trump administration and the universities. Trump has sent out a list of demands to many institutions, including “audits of academic programs and departments, along with the viewpoints of students, faculty, and staff, and changes to the University’s governance structure and hiring practices” threatening to pull billions in research funding. Harvard was the first university to really say No and several of the other schools have followed suit. Trump is now threatening to take their tax exempt status and to tax them as a political entity.

So talking about embracing the humanities at a time when the universities are being threatened as institutions is a bit like discussing the paint on the walls as the house burns down, to borrow from Henry Grabar.

But how we get out of this mess is by getting out of a compliance mindset. We need people to look at history and look beyond social media.2 We desperately need people to think again. Nowhere is this more evident than in Congress, where the same risk aversion that steers students away from the humanities now steers elected officials away from constitutional duty.

Congress and The Paralysis of Political Survival

Our elected officials are behaving the same way as the students and CEOs: with deference to power and a fear of standing out.

Take the current tariff escalation, an absolute nightmare. Trump has raised and lowered rates so many times that the uncertainty of the tariffs matters more than the actual tariffs themselves at this point. No one can keep up, not even people inside the administration according to the NYT.

Congress could stop him! They have the authority. There’s even a bipartisan bill in the Senate that would force a vote to approve any new tariffs after 60 days. Still, nothing.

This paralysis is what Eco described as a “fear of difference” where dissent is dangerous, alternative views are threatening, and deviation is punished. What we get is a legislative body that performs democracy, but no longer exercises its constitutional powers.

Standing up to Trump would mean risking access to donors, media cycles, committee power, and the favor of a political ecosystem that now functions more like a loyalty marketplace than a deliberative body. They ignore the Constitution at great costs to their constituents.

So they comply.

Even if they hate tariffs. Even as China initiates export controls on rare earth materials, threatening entire supply chains. Even when farmers get clobbered (and will now have to get bailed out, negating any positive revenue the tariffs could have generated). Even if they privately acknowledge the math doesn’t work. Because non-compliance is punished economically - or so they think.

Governor Gretchen Whitmer’s visit to the White House is a case study in this dynamic. She appeared to endorse Trump’s policies in a photo op, but later explained she felt she couldn’t object. Her constituents in Northern Michigan had been without power for 15 days at that point due to an ice storm. She feared losing federal aid if she upset the beast. Compliance, she hoped, would protect them. (It might. Or the funding may still be yanked, just like what happened in North Carolina.)

And this is happening at the business level too. As Anne Applebaum describers in Kleptocracy, Inc companies are bending the knee and are seeking presidential favor in exchange for regulatory relief or market access. Tim Cook called up Trump to get Apple exempted from the tariffs. Warner Bros has been told to offer Don Jr a hunting show to get some shine. Mark Zuckerberg called Trump a ‘badass’ and is now trying to cozy up to the admin to get his antitrust case dismissed, as reported by WSJ [edited for clarity].

This kind of dealmaking benefits only the largest players. It hurts small businesses. It undermines trust in markets. And it encourages a culture where insider connections (not public service) dictate outcomes.

Our education system reinforces this behavior. Criterion-based assessments, as Michael Spence at UCL notes, teach students to anticipate what assessors want and deliver it. No risk. No ambiguity. Just match the rubric.

That’s also how most political careers function. Intuit what the power brokers want. Rehearse the right message. Vote accordingly. Diverge, and you’ll be kicked off committees or primaried out of existence.

Domestic compliance is dangerous enough. But on the global stage, it becomes catastrophic.

China and Trade Wars and Global Positioning

Compliance doesn’t work in geopolitics.

Trump thinks he’s playing poker with China, but Xi seems to hold the better hand. This is another of Eco’s concepts of “permanent war” where complex relationships are reduced to binary conflict. Tariffs become weapons. Dependency becomes betrayal.

The FT put it bluntly: Trump’s erratic tariffs - randomly rising to 145% (and now 245%? We are totally off the Laffer curve) - have sparked chaos. He’s backtracked on smartphones, computers, bicycles, air conditioners (80% of the world’s air conditioners are made in China). No one knows what is happening.

Trump assumes China is weak because it exports more to us than we to them - the whole misunderstanding a trade deficit thing (we should really start calling it a capital surplus). But as Adam Posen writes, this is backwards: Americans need what China makes.

There are now videos floating around of Chinese OEMs who make the products that American brands like Lululemon sell at markup to American consumers. Tariffs just raise prices for importers and consumers. Xi can wait. Trump cannot.

Still, China isn’t invincible. As Tyler Cowen notes, some of China’s success relies on American-led global order: on secure shipping lanes, free trade, and fossil fuel access. If Trump wrecks that order, China loses too.

Cowen also points out that Chinese power rises precisely because the West has outsourced its defense, its values, and in many ways its ability to think. And now, as the US retreats, some countries may harden rather than soften, potentially shutting China out. Still, the trade war will hurt both economies. China’s youth unemployment is high. Their economy isn’t growing very fast anymore.

What China wants some element of respect from the Trump administration before entering talks, especially after JD Vance called Chinese manufacturers ‘peasants’. Trump is now asking China to call him and saying “we don’t have to make a deal with them” which feels… like a teenager who got into a fight with a friend and is asking another friend to talk to that friend so they can make up. Nevertheless, global superpowers and whatnot.

Martin Wolf argues out that China is now more predictable than the U.S. in the eyes of global business. It’s no longer a complement to the global economy - it’s a substitute.

Meanwhile, US policy keeps sabotaging its own firms. Trump’s latest curbs on Nvidia’s H20 chip (which is a product specifically designed to comply with earlier restrictions on the H800 chip) will cost the company over $5.5 billion in writedowns and cause them to miss up to $18 billion in revenue this year. China has also halted all Boeing orders, which will result in a $7-$10b loss for them. A policy meant to hurt China is crippling American innovation3.

And that’s sort of where we are at with the trade war. It seems like Trump wants everyone to decouple from China and just work with the US, but just objectively, why would any country do that at this point? Brazil is a huge winner because they have started exporting a ton of beef and soybeans to China. Why wouldn’t other countries follow suit? The US is buddying up to Russia, has threatened to take over Canada and Greenland (who is now approaching China!) and is showing signs of authoritarianism.

There is a playbook for this kind of behavior. Europe has seen it before.

Eco's Warning Signs

As Umberto Eco warned in Ur-Fascism, authoritarian systems don’t return with parades and uniforms. They return in habits. In rhetoric. In a culture where obedience masquerades as patriotism - or as economic strategy.

When disagreement becomes disloyalty, when nuance is dismissed as weakness, when conformity becomes civic virtue, we’re no longer living in a democracy. We’re participating in the performance of one.

Eco outlined a mindset: traditionalism, irrationalism, the cult of action for action’s sake. A worldview where diversity is feared, intellectualism is mocked, and masculinity is tied to violence. Where reflection is weakness, pacifism is betrayal, and Newspeak replaces thought.

It’s familiar.

We are raising a generation trained not to think but to comply. To be afraid of asking questions. To find safety in the right answer rather than in deeper inquiry.

The problem with this is simple: a compliance economy can’t invent. It can’t adapt. It can’t lead. It can only follow.

Beyond Compliance

We’re facing bond market chaos (it’s calmed down bit!). Fracturing alliances. A generation of workers who can’t afford housing, and a political class that can’t imagine anything beyond the spreadsheet. The compliance economy has manifested itself across all sectors:

• In education, we've created a generation that excels at following rubrics but struggles with ambiguity – exactly when technological change like AI demands adaptability and creative problem-solving.

• In governance, Congress has withered as officials prioritize survival over constitutional responsibility.

• In international relations, we’ve traded strategy for performance with reactive tariffs over long-term planning.

The common thread? A system that punishes risk-taking while rewarding conformity. But there are concrete steps we can take, that many others have said before:

• In education, fund humanities departments. Build interdisciplinary programs. Measure outcomes beyond job placement (again, complicated right now).

• In governance, restore congressional oversight. Reform campaign finance. Protect civil servants who uphold the rule of law.

• In international policy, craft coherent trade strategies grounded in realism, not rhetoric, as so many strategists have already discussed.

We don't need more people optimizing. We need people who can think. This means revaluing curiosity across institutions. It means reinvesting in education that rewards exploration, not just performance. It means electing leaders who are willing to ask questions, not just recite talking points. And it means giving students permission to study the world and not just navigate it.

Because a world built on compliance might function for a while. But it will never lead. And right now, we really need people who can lead.

1 I actually think Alex Karp is one of the most interesting people in the world. Palantir is such a strange company with such a strange name and such a strange stance on things.

2 For example, the polling numbers of Gen Z have a lot of the younger generation going toward Trump still. I wrote about this a few weeks ago and some element of studying history could be useful to combat this. Maybe.

3 And the rest of the world, as Singapore’s PM pointed out. He expects things to be ‘more fragmented and disorderly’ in the years to come.

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