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Article: Economists' 'moral hazard' applies only to the poor
- Article from:
- Deseret News (Salt Lake City)
- Article date:
- March 21, 2008
- Author:
CopyrightCopyright 2008 Deseret News (Salt Lake City). Provided by ProQuest LLC. (Hide copyright information)
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BOSTON -- I don't know too many economists who get confused with
preachers. But there are times when they talk about virtue and
temptation as if they were free-market holy rollers.
Consider the phrase that has been popping up all over the Bear
Stearns debacle: "moral hazard." No, Moral Hazard is not the name of
a country and western singer. It's the phrase economists use to
explain why people shouldn't be protected from the consequences of
their actions. In the Wall Street Journal's definition, moral
hazards are "the distortions introduced by the prospect of not
having to pay for your sins."
The idea began as an argument against insurance. If you had fire
insurance, you'd be careless around ...