Friday, October 29, 2010

Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk.

Anyone want to debate how morel hazard has affected our world?

2 comments:

  1. I know that some would claim that by shielding a public official from moral or political risk, you will get a public official that works more for the "great good" or "big picture" and less for his own gain (or loss).

    As government goes there may be some truth to this. When a judge is shielded from the risk of losing their job because of an election or term limits they will focus more on what is right, even if what is right is not popular.

    Where you get into serious trouble is when you stop to think about "what is right." The worst murderers, serial killers and rapists all thought they were good people and were doing what is right, and that others just "didn't understand." Every decision and action can be justified as "being the right thing" to the person who is making the decision or doing the action.

    No policy is right in ALL circumstances. This is why policy based on collectivism rather than individualism will always be tyrannical and will never make sense.

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  2. It is the bricks vs the rocks. Bricks are man made and all look the same. Rocks are made by our creator and are all different.

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