From George Will in today’s Washington Post:
Moral hazard exists when a policy produces incentives for perverse behavior. One such existing policy is farm price supports that reduce the cost to farmers of overproduction, and even encourage it. Another is the policy of removing tens of millions of voters from the income tax rolls, thereby making government largess a free good for them.
If there’s one thing government is good at, it’s repeatedly amplifying moral hazards into a populist zeal for worsening the problem. Will’s column deals with the sub-prime mortgage meltdown and how Democrats are inevitably going to exploit it to push stupider economic policies to “protect” the little guy. Will points out that the primary problem with this is that the little guy who gets protection is the same little guy who willingly entered into the deal that is now causing him problems.
Granted, Democrats would seek to take from him if he’d won, exactly as they want to take from the big guys who won. So we should just ignore that some little guys won, too, and some big guys lost. That’s capitalism. Democrats don’t like capitalism.