The hazards of discussing moral hazard?

NY Times: How Bailout Backlash and Moral Hazard Outrage Could Endanger the Economy

The excerpt below from a recent piece by Neil Irwin writing for the New York Times about sums up the “economics vs. values” equation we like to talk about on this blog (and perhaps also the popular political-partisan sentiments of the times we live in…)

“My conservative friends don’t think states and cities deserve help,” said Tony Fratto, who worked in the George W. Bush White House and is now a partner at Hamilton Place Strategies. “My progressive friends think certain businesses don’t deserve help. And my libertarian friends don’t want anyone to get help.”

The only viewpoint that’s missing here – is there anyone out there who just thinks everyone should get help? At least then we’d avoid that whole nasty #moralhazard problem… well, sorta (and then we can just let the “economists” figure out the rest?)

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Risk/Reward: Is “living” enough of a reward?

Most people will probably have a pretty visceral reaction, one way or the other, to stories like this one. Read below, and you’ll probably come to a pretty quick conclusion that Lt. Gov. Dan Patrick of Texas is either one of two things:

  • A “noble patriot” who would give his life for the liberty he holds so dear, and wants to see passed on to his children, grandchildren
  • The worst kind of “greedy capitalist pig” who probably holds shares in the businesses he’s hoping to have “get back to work”.

Being a politician, we can probably assume the answer isn’t fully one or the other, but rather, whichever constituency he happens to be playing to at the moment. In reality, the answer is also probably not so clear, but regardless of Mr. Patrick’s particular intentions, we thought this story was especially provocative and relevant to everything we talk about on this blog.

There are risks and rewards in life – and certainly, in theory, in a capitalist system. How you view those risks depends heavily on how you value the rewards, and how you value the rewards – well, it’s complicated (we think so, anyway).

Take your own view – but understand why the question is important in the first place. Whether Dan Patrick is really willing to die – we’ll reserve judgement for now.

Fort Worth Star-Telegram: ‘More important things than living,’ Texas’ Dan Patrick says in coronavirus interview

“Patrick recounted the numbers of COVID-19 related deaths in Texas — 495 as of Monday night. He stressed that “every life is valuable” but compared them to the state’s population of 29 million people. “But 500 people out of 29 million and we’re locked down, and we’re crushing the average worker. We’re crushing small business. We’re crushing the markets. We’re crushing this country”

“And what I said when I was with you that night, there are more important things than living. And that’s saving this country for my children, and my grandchildren and saving this country for all of us. And I don’t want to die, nobody wants to die, but man, we got to take some risks and get back in the game, and get this country back up and running.”

“Patrick, who recently turned 70, was referring to his comments nearly a month before when he suggested in an interview with Carlson that as a senior citizen he would be willing to risk his life “in exchange for keeping the America that all America loves for your children and grandchildren.”

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