More moral hazards: a reply to threeportdrift’s comment

The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not sufficient warrant. ~ John Stuart Mill (1806 –1873)

From the start I hoped that this blog would provide a forum for discussion. It is hard thinking in a vacuum and I am grateful to threeportdrift for making a number of very interesting points. (see original article and threeportdrift's comment)

What I mean by moral hazard

It seems I failed to make clear exactly what I
meant by moral hazard so I'll have another go. The moral hazard faced when failing banks are bailed out is that the fear of failure is dented and therefore other banks will behave irresponsibly in the future because they believe that they too will be rescued if they gamble and lose.

The parallel in law-making is that, if laws are made and widely ignored, or if they are poorly or unevenly enforced, then respect for the law is eroded. A society without respect for the law is in danger of losing moral cohesion. This is the hazard it faces. It is parallel to the financial moral hazard: if people see others getting away with irresponsible behaviour, they will tend to abandon their own moral compass and behave less responsibly too. It also happens when there are too many laws which citizens find silly, unfair or unacceptable, or which they do not understand. In all these cases, there is a danger that society will lose faith in the institutions which uphold justice.

That is the simple part of the argument. The harder part is deciding when it is reasonable and realistic for society to enact laws to persuade people to pull in the same moral direction, and when it is justified for parts of the population to stand up against laws that are unfair or unjust. And it is here that threeportdrift seeks to take issue with the examples I used to make my point.

Loss of moral faith

My fear is this. The huge number of laws introduced by the Labour government, and its inconsistency in enforcing its policies, are indeed giving rise to a loss of moral faith.

Threeportdrift's last point ("ordinary oiks get off time and time again with warnings even whilst their behaviour gets more and more destructive"), far from undermining my point, actually supports it. I see it like this. The "oiks" see the Kate Mosses, the Elton Johns and the Jackie Smiths of this world getting away with breaking the law and think to themselves "why should I bother?" The reason they should bother is that they don't have the financial and social resources to slip through the legal net. So they get caught – in numbers that the legal system finds difficult to cope with. And so the justice system has a problem which it handles by reducing prosecutions for minor offences. This, in turn, reinforces the idea that the law is there to be ignored. And small crimes turn to bigger ones. (more here)

But let us not forget that being let off with a warning leaves an indelible stain. It makes it hard to reintegrate into society and, in particular, to make a legal living. So an underclass is generated that does not fully integrate into society. Organised crime is the main beneficiary, with society providing them with a work force made up of young men and women with no hope and with nothing to lose. (more here)

We must also remember that the Jackie Smiths and Kate Mosses and Elton Johns provide(d) these gangs with a market for their products, just as the celebrities of the day provided the Mafia with a market for illegal booze when the US government introduced prohibition.

Picking and choosing

Drug laws, I believe, generate the largest and most easily identifiable moral hazard. But respect for the law and the government is also eroded in other ways. If people feel able to pick and choose which laws to obey (speed limits outside schools good; roadworks on the M4 in the early morning bad) is exactly the kind of moral hazard that I am concerned about. It would be much better for the government to bring in fewer laws, to think harder about their implications, and to do its best to ensure that all parts of society are have an incentive to pull together and respect the law.

Epidemic hazard

A final point. Society's contempt for the government and its institutions also shows itself outside the area of the law. When a rogue scientist (completely spuriously) claimed that the MMR vaccine (more here) was the cause of autism and some types of bowel disease in young children, the government was unable to convince the public – in particular the parents of young children – that there was no danger. The government was paying the price for failing to maintain the trust of society, the effect of perceived lies and double-talk, as well as frustration at government efforts to micro-manage people's lives. So when an opportunity arose to make a protest, the population voted with its feet. The result was a catastrophic collapse in the number of children protected against measles, mumps and rubella, and a population vulnerable to an epidemic. Lies and obfuscation also carry a moral hazard.

I believe the government should treat us as citizens, not as subjects. The task is not easy because it must reconcile different needs and expectations in its policies and law-making. But its watchword should be "less is more" (see JS Mill quotation at the top of the page). Fewer laws mean fewer risks of moral hazard. And above all, everyone – and that includes the government and its ministers – should be treated equally.

Thank you, threeportdrift , for giving me the opportunity to clarify my thinking. I hope that I have made my point better now. I am always keen to hear from readers.

Picture credits:

www.badscience.net/?p=457

http://sobnation.wordpress.com/

Comments

[Peter Horne]

But is not Mill's conception of liberty also a kind of moral hazard?

Surely almost all human actions affect other people, how are we to decide which are purely self-regarding?

JF Stephen claimed that Mills' conception was not liberty but licence, because it ignored the claims of morality, public opinion and religion. He thought true liberty could only be defined by the restraints placed upon it, ie liberty as the
absence of injurious restraint, emphasis on injurious.

He thought laws could be passed for the good of citizens if
A. their object was a good one.
B. the proposed measures would actually bring the object about, (drug laws would fall at this hurdle)
C. the cost did not exceed the benefit of the object aimed at.

JF Stephen, "Liberty, Equality, Fraternity"

I think he might have had a point.
PS Nice blog!

[threeportdrift]

"The moral hazard faced when failing banks are bailed out is that the fear of failure is dented and therefore other banks will behave irresponsibly in the future because they believe that they too will be rescued if they gamble and lose."

Isn’t this an economic hazard? It seems to me that if it is a moral hazard, then the same argument applies to the indolent poor, so lets stop paying them a dole because others will behave irresponsibly in the future because they believe that they too will be rescued by the taxpayer if they gamble and lose. The fact is that we bail out people with social security payments because of our moral objections to poverty (which includes crime, health, opportunities, access etc). We bail out banks to keep our economy stable, because by having a stable economy we can make good on our prior moral beliefs such as enabling the poorest in society.

"A society without respect for the law is in danger of losing moral cohesion."

Tell that to Ghandi, Martin Luther King or Nelson Mandela. A society that believes that its laws are the definition of its morals is in far greater danger. Law should be a reflection of our morals, not the driver of them. Otherwise the slave trade, apartheid, racial segregation of schooling and job opportunities etc all become ‘moral’ – because they were all once legal. By your argument the activists that stood up against these immoral laws were creating a moral hazard. Of course we should obey the law, but where that law impinges on matters of morality, the morality should have been independently and rationally defined.

"It is parallel to the financial moral hazard: if people see others getting away with irresponsible behaviour, they will tend to abandon their own moral compass and behave less responsibly too. It also happens when there are too many laws which citizens find silly, unfair or unacceptable, or which they do not understand. In all these cases, there is a danger that society will lose faith in the institutions which uphold justice."

What a depressing view of human nature. Do people only gain their moral compass from imitation of the lowest common denominator? Surely the effect of others behaviour on your moral compass depends entirely on what your moral compass was attuned to in the first place? A contemporary exception to your argument would be those whose moral compass is aligned with a religious belief, who all too frequently, in the face of ‘declining morals’ around them, cling all the more tightly to their original compass. Thus the rise in many forms of religious fundamentalism in parallel with the rise of liberalism and globalisation.