Calvin Coolidge used to say, "If you see ten troubles coming down the road, you can be sure that nine of them will run into the ditch before they get to you, and you have to battle with only one of them." Herbert Hoover's comment on this was revealing: "The trouble with this philosophy was that when the tenth trouble reached him he was wholly unprepared and it had by that time acquired such momentum that it spelled disaster."
This is a beautiful example of the difference between strategies of anticipation and strategies of resilience, or solving problems when the occur versus searching out possible problems and preventing them from happening.
Part of the beauty of it is that Hoover is so obviously wrong: not all problems become disasters if you wait until they actually happen. Equally obviously, Coolidge has a point: switching from resilience to anticipation vastly increases the number of problems you must deal with: not only actual ones, but an indefinite array of possible ones. That is why your default strategy in life has to be resilience. Perpetual anticipation would be a form of insanity. (Maybe that's what OCD is?)
Some situations do call for anticipation, of course. The question is, When should we switch it on? The answer is no doubt complicated. When we consider institutionalizing anticipation -- basically, having someone watch over you -- the matter becomes even more complicated.
One layer of complexity came out in the wake of revelations about Bernie Madoff's vast Ponzi scheme. Madoff will be subjected to suits and criminal charges, just like he would have been in the bad old days before the Securities and Exchange Act of 1934. Criminal law and tort law are strategies of resilience. The SEC is part of the great transformation in which the American state moved from sole reliance on resilience to greater and greater reliance on anticipation. What it supposedly adds to the securities industry is that it somehow "regulates" it so that these things like the Madoff horror do not happen in the first place. This, of course, they failed utterly to do, despite repeated warnings about Madoff, going back ten years.
Arguably, the consequences of this arrangement are much more dire than the fact that a promise of providing some good thing (security against problems showing up) was broken. Here is an interview in which the brilliant Jim Grant tells us that the SEC makes things worse from the point of view of security: that it is merely the figleaf that conceals from us the flaws in the securities markets, that it lulls us into a false sense of security that is unsupported by the facts.
Anecdotally, I do see evidence that this is what happens. The very same evening I saw the Grant interview, I saw another one, with a Madoff victim who said in tones of pure shock, "The SEC assured us that nothing would go wrong!" She apparently meant that it assured us by its very existence. This was her explanation for why she and her husband trusted Madoff with their entire retirement account.
In the bad old days we had scams and frauds, of course. But then we had the SEC. And then we had a fraud bigger than anything that happened in the bad old days. A coincidence? Maybe not.
One difference between using resilience yourself and institutionnalizing it: If it's just you, you know whether the search for possible problems is actually being carried out. You also have a lot of information on whether it is working. When you institutionalize the strategy, you transfer these responsibilities to someone else, and so lack this sort of information. And if the institution is one about which you have a quasi-religious awe and trust, an institution for instance like the state, then you are lulled into the frame of mind that Grant describes.
Ironically, the criticism that Hoover foolishly levels against resilience actually works against his own favorite strategy of trusting an anticipatory state: when a problem reaches you, as it will, you will be caught flat-footed, unprepared. The system assured, after all, that nothing would go wrong.