By Morf Morford, Tacoma Daily Index
Moral hazard was originally an economic term that describes a scenario in a transaction in which one party can indulge in risky behavior because they know that the other party is obligated to assume any negative consequences.
The term “moral hazard” emerged in the Great Recession (2008-09) alongside other questionable principles and assumptions like “too big to fail”.
In short, moral hazard sums up a situation where, if we allow certain behavior to exist, we will get more of it.
This is basic to any principle of training or discipline whether it is military training or dog training.
A basic premise of psychology is that we should reward the behavior we want, and restrict, prohibit or even punish behavior we do not want.
As you might guess, this applies to every area of life from home budgeting to global investing.
And it is central to every organization from a family to a corporation to a nation’s governing bodies.
You’d think any organization, on any scale, would be vigilant about those decisions and behaviors that reflect on the public face of that organization and what it represents.
And that is usually true.
Perhaps that’s why, when blatant misrepresentations or malfeasance occur, they are, by definition, newsworthy.
I’m not upset that you lied to me, I’m upset that from now on I can’t believe you. – Friedrich Nietzsche
A lie, after all, is not just a false statement, it is a statement presented and affirmed as true and real.
Any of us might make a statement that is “true” even if not in a literal sense. How many of us, for example, have said “Yes, that looks good on you” or “We’d love to” or “We need to get together” (when you’d rather not)?
We are not intending to deceive, and no one is (usually) offended and the relationship continues without obligation or unnecessary complication.
The problem with lying is not with absolute adhesion to the facts as they might be known (and as we all know, new facts could certainly change how we see a larger picture) but with deliberate manipulation, usually for our own ends.
We have almost come to a near universal common consensus that politicians lie, for example.
And from Yelp! to a dozen other review sites, we count on (relatively) objective and accurate (aka, true) appraisals.
Deception on a resume or job application is, in most cases, grounds for dismissal or disqualification.
Law suits hinge on this question of deliberate (and sometimes hazardous) distortion and manipulation from corporations and other legal entities.
One’s reputation, career, if not financial survival, is contingent, if not utterly dependent on one’s adherence to reliable, confirmable, truth.
Not, apparently, in the political sphere.
In New York state, a congressional representative was recently elected who lied about his work experience, education, criminal record, ethnic and religious background, and even the death of his mother.
You’d think that a national pollical party would have an established criteria for those who would have access to secure and confidential records and information.
But, apparently, at least in this case, you’d be wrong.
Something, in this case at least, is of higher value than the reality of confirmable, verifiable truth.
I can’t imagine what that might be. And I also can’t imagine why this particular elected official would lie about something as inconsequential as which high school he attended. But I also know that for some I have known, as apparently with this person, lying is just what they do.
Political parties have different priorities apparently, but as an individual, I prefer to not associate, support or do business with such people.
As most of us learned on the school playground, some people need a closer watch than others, and being held accountable for one’s own words and actions, for most of us, should not be onerous.
Not telling the truth is the quickest way to turn yourself into a stranger. – Mark W. Perrett
I’ve also seen enablers at work. These are the people who tell me that “It will never happen again”. I know all too well, from my work with addicts and alcoholics, the shelf-life of statements like this.
The moral hazard is great when we, or those who purport to represent us, gain or hold power and authority through clearly defined and exposed deception.
One thing I have learned from liars – they tend to be consistent. They lie and they lie about lying. And they are good at it.
And somehow they are good at gathering support, or at least compliance, from others around them.
What those others gain from their lies, I have never understood.
All I know for sure is that moral hazard seeps and, on its own, never stops.
Its stain, if not corrosion, crosses borders and years, impacts reputations and brand names for years.
No such thing as bad publicity
There’s a principle among celebrities that “There’s no such thing as bad publicity”. In other words, any publicity, no matter how scandalous or embarrassing, is still publicity. Positive or negative, if your name or the name of your company stays in headlines and conversations, you still matter.
Celebrities obviously inhabit a different world than the rest of us. A public scandal would doom the career of most of us almost immediately.
The 2020s and the “no bad publicity” ethic has given us a bumper crop of sleazy, incompetent, self-serving grifters and scammers in business and politics.
I don’t know about anyone else, but I think we have maxed out our moral hazard bank account.
I’m ready for some solid, steady, and probably boring, leadership. You can leave the scandals to the big screen.