"The unedited musings of a
Most of us have read about the proposed futures market on
Terroism on July 31, 2003. It was quickly struck down by the
I guess I am so much more concerned with the aspect of dealing
with widespread fear and paranoia, I overlook the issues that might
be created by a moral hazard such as this.
If you want to read about the academics view point, there is a
nice piece on Moral Hazard here
by Rice University.
However, I don't see the real moral hazard trigger referenced.
I don't know whether people are sweeping it under the rug or are
just blind to it--Genetic Testing.
There was an interesting case:
of genetic testing in the news. It was of course a victim of
the moral hazard formula and therefore we'll see more of this coming
Here's the bottom-line since I don't have time to develop this
today...if there are no global standards and everyone is not on the
same playing field, such as we have today with labor laws, human
rights, employee rights, you name it, THEN I suspect that business
will use the "moral laws" of one culture to provide the cost savings
(it already is) to its customers, who GLADLY lap up the products and
services they provide at a lower cost.
The real MORAL HAZARD is not any one things, it is the disparity
in value systems that will literally place "selective pressure" on
business to do what it has to survive. The real MORAL HAZARD
is the pressure of one "value system" to compete against another
with the constraints in place of that value system, if you catch my
The simple rule: Price is the determining factor of a purchase.
We're in big trouble as this energy dissipates through the
system, if we don't change the simple rule above and many others
that will literally bankrupt middle
America. Those of us who see the simplicity of what's taking
place will be quick to take advantage--as a
does--of the effects of this granddaddy of them all--moral hazard.
I read something this morning on McKinsey
here ...about China and the companies that are aligning
"China’s industries become more open to foreign
investment, alliances with local companies represent an attractive
and profitable option for many global corporations."
Here's another way of looking at Moral Hazard. If only the
people in the know, the people who are wealthy, connected, on the
inside know how to navigate these waters, then won't they be the
one's to reap the big value from the success?
YET, won't it come on the backs of those least able to be
involved--their noses are to the grindstone milling the profits of
the wealthy--without sufficient time themselves to realize the world
continues to help them digger a bigger hole?
Is that a moral hazard?
It's really funny what's called a MORAL HAZARD don't you think?
I guess it depends on your point of view.
Mike Jay, August 2003