Monday, 22 November 2004

Moral hazard and negative liberty

Will Wilkinson has a great post on negative liberty and the welfare state that I largely agree with:

However, I think that among the best argument for robust negative or liberty rights, i.e., for institutionalized constraints on coercion, is that a reliable system of negative rights over time creates more abilities, opens more paths of feasible possibility for individual lives, than most alternative systems of rights. Like Friedman and Hayek, I’m in favor of a modest and well-designed social safety net. However, political systems built around positive rights tend toward sclerosis, thereby reducing rates of economic growth, and a high rate of economic growth, along with (negative) liberty and stability, is part of the trinity of primary political goods (says me). Furthermore, a system of positive rights, conceived as a system of guarantees, is often self-defeating, because it cannot overcome systemic moral hazard problems that, independently of growth problems, turn out foreclose many of the possibilities for life that the system of guarantees was meant to open.
Read the whole post, including the comments regarding moral hazard (when an agent takes on risk knowing that it will be covered by a principal other than himself); points that I agree with, though I wouldn’t endorse the notion of “positive freedom” as Will has done. We do have some responsibility for our fellows, though I don’t think it reaches the status of rights.

I’m now listeneing to AC/DC. Not exactly 80s, but still good.