Destructive Chancellors and The British People: A Moral Hazard Made In Heaven?
Our elected officials’ role in destroying Britain must be scrutinized and punished.
Anyone who has seen Wall Street 2 will have some familiarity with the term — Moral Hazard.
It is a term which stalks the entire movie and one that has shaped our reality more than we care to imagine.
As much as I try these days to avoid running to Wikipedia for just anything, I find myself having to lean on the extraordinarily powerful tool to help explain things to a wide audience.
is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs. A moral hazard may occur where the actions of the risk-taking party change to the detriment of the cost-bearing party after a financial transaction has taken place.
Moral hazard can occur under a type of information asymmetry where the risk-taking party to a transaction knows more about its intentions than the party paying the consequences of the risk and has a tendency or incentive to take on too much risk from the perspective of the party with less information. One example is a principal–agent problem, where one party, called an agent, acts on behalf of another party, called the principal. If the agent has more information about his or her actions or intentions than the principal then the agent may have an incentive to act too riskily (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.
And it would seem that the British people have been the great moral hazard for the bankers and our politicians.
They have got away with shafting the people in all kinds of ways.
Think about it.
Whether it has been Alistair Darling, George Osborne, Sajid Javid, Rishi Sunak and now Kwasi Kwarteng, the shafting of the British people continues unabated.
And if I choose to dig deeper into the last 60 years, you will readily appreciate that we haven’t had the best custodians of…