Best of 2018: Winning is the Absence of Losing

There are two notable things about this post that made me glad to feature it in our annual “best of” week. The first is that it’s a good year whenever Nassim Taleb publishes a new book. In 2018, it was Skin in the Game, a book that I’m absolutely going to include in my top five books of the year when I publish that list next week. I did an interview recently where I was asked about my influences and, intellectually, there is no bigger than Taleb. If you want to understand Strong Towns thinking, start with the Black Swan.

Here’s the second, and I just love sharing this: When I ran this piece, one of our readers recommended in the comments section a related book called Finite and Infinite Games by James P. Carse. Wow! I’ve read it twice now and feel like I could read it a third time and still absorb new things. It put into simple words a concept I’ve been clumsily gnawing on for a long time now. How liberating!

Where businesses, organizations, and even the Strong Towns movement is involved in a finite game—something that has a beginning, a middle, and an end—cities are involved in an infinite game. For most cities, the beginning is obscure to us now. There is no ultimate end point, thus there is also no middle. It’s an ongoing game where survival is the ultimate objective, or as I describe it below, “the absence of losing”. This is not how most of us think about the places we live, and it’s certainly not how city-building professionals think about it. Yet, we must.

A few years back, I wrote a draft of a book that I called Moneyhall: Building a Strong Town in an Unfair Time. It was a crash course in applying Moneyball thinking to city hall. It was poorly received by potential publishers who judged the overlap in the Venn diagram of urban planning and baseball analytics to be too small to properly market. They were right, and consequently the book will never be published. (Don’t fret—it seriously wasn’t that good.)

One aspect of the book that even my friends objected to was my definition of winning. It’s a fairly clear concept in baseball—you win games, win a division, and the team that wins the World Series is the ultimate winner—but for cities, the concept of winning is more ambiguous. Here’s how I described it:

What does it mean for a city to win? For local governments, there is no defined start and end point like there is in a baseball season. Things don’t ever reset, as they do for baseball after the playoffs. Therefore, the idea of “winning” is not quite as easy to define.

For cities operating in an unfair time, winning is the absence of losing. Winning means being around year after year as the stable, reliable platform which enables a city’s residents to be successful.

To fully understand what I’m suggesting, it is important to distinguish between the local government that manages the city and the people, businesses and institutions that dwell within its boundaries.

People win. Businesses win. Non-profits and local institutions win. Cities serve them all in that regard. The local government as an entity is a platform for communal action, not an end unto itself. What is the point of having a city government that is thriving—with high tax revenues, nice facilities and new projects—when the people it serves are struggling?

Local government can’t (or shouldn’t) progress independently of the people it serves. But if people in a community see their lives improve in ways that don’t allow the local government to take a victory lap, that's fine. It's a problem if a city government prospers while serving a community that struggles. The opposite is acceptable.

Finally, and most importantly, it's okay for private individuals to take risks in a different way than we should tolerate from our local officials. Families and businesses can lose and be okay. The risks they take sometimes don’t work out and they end up in bankruptcy. As a society, we’ve recognized that we should provide a degree of protection and assistance to people who try and fail. People can start over. They can recover and move on. In many instances, I would call such risk takers heroes. At the very least, they are courageous, and we need courageous.

For a local government, the stakes are much different. The failure of a city brings harm to more people outside of city hall than within. In many ways, those in the local government are the least harmed.

While politicians and city staff stand to benefit from actions the government takes, the entire population bears the burden if those actions fail. This is, thus, an asymmetrical risk, one where the person exposed to risk (the resident) is different from the decision-maker and primary beneficiary (public officials and professional staff).

In his most recent book, Skin in the Game: Hidden Asymmetries in Daily Life, Nassim Taleb affirms my thinking: for local governments, winning is the absence of losing. As he states in the book:

The central problem is that if there is a possibility of ruin, cost-benefit analyses are no longer possible.

Then later:

The central asymmetry of life is: In a strategy that entails ruin, benefits never offset risks of ruin. Every single risk you take adds up to reduce your life expectancy. Rationality is avoidance of systemic ruin.

This kind of prudence is not fun. For professional staff—the planner, the engineer, the city manager—it’s way more inspiring (and better for the resume) to have a grand vision, one with big budgets and bold actions. The fact that our systems of state and federal governance, not to mention corporate consolidation and centralized finance, promote such thinking merely serves to normalize it.

It’s rarely seen as enough to just be competent—to merely, for example, run the buses on time and collect the trash within budget. Yet we should value these humble achievements. There is no downside to simple competence. There is zero risk. None. And all kinds of reasons to believe that doing the little things well has a ton of upside.

For the past two weeks I’ve written about local governments that are taking large, systematic risks—Cobb County and Akron—when what is needed most desperately is a strategy that, first and foremost, avoids ruin.

And now, returning from a vacation where I was disconnected from our media stream, I’m hit with lots of feedback—from public officials and others—that not only defends these risks, but fails to grasp in even the most basic way that there is any risk at all. It’s just the way things are done. I find that so divorced from reality that I struggle to even respond to it.

I’ll close with another quote from Skin in the Game:

                One may be risk-loving yet completely averse to ruin.

Contrary to what has been suggested, I am not against local governments taking risk. Quite the opposite, in fact; I am “risk-loving.” I just want those risks to be of the type that do not include the chance of ruin. This means small bets for which the worst-case outcome is entirely tolerable.

Millions in debt for a new stadium in the hope that mixed-use development around it may prove profitable—despite no track record locally of such success—risks ruin, especially when the rest of the community’s development pattern is so financially unbalanced.

Three decades of subsidy for a new business on a remote site with a history of failure—a development which, despite the risk, has no meaningful chance to positively impact the community’s bottom line, even if successful—risks ruin, especially while the city’s productive core neighborhoods decline from lack of basic service and maintenance.

Let’s stop it already with the delusions of grandeur. Let's ditch the notion that the elusive prosperity we seek can be manufactured all at once, that our genius can not merely downplay risk but overcome it. Let's just focus for a while on basic competence. Our communities win when local governments avoid losing.