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« Moral Hazards | Main | Yet more moral hazards »

Thursday, 10 January 2008


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!

"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.

Have a look at the Centre for Defined Ethics and Celebrating our Common Moral Compass.

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