‘Moral hazard’ is rapidly taking over from ‘sex worker’ as the favourite sentence-filler of the chattering classes. Indeed, I have no doubt that a local Council language-strangler somewhere is currently writing guidelines about the moral hazard faced by sex workers.
It has that booming ring to it I always associate with touring Shakespearean actor-managers calling themselves akk-tooorrrrs: “My name is Morrral Hazz-aard, and I am currently appearing in a production of Azzzyooolikeitt at the Al-Haambraaa Theatorrr Chesterfeeyeld”. Such an association is entirely apt, as both phrase and ham-actor are not what they seem at all.
The emergence of these odd terms is nearly always an unconscious statement about the culture inventing them, and this newest example is no exception. It seems to have come originally from the banking community, quickly gaining ground in relation to descriptions of the conflict of interest faced by advisers in general and Goldman Sachs in particular. The fact that George Osborne is starting to use the phrase tells you a lot about who he hangs out with.
Anyway, life is a moral maze and there are hazards. For instance, there is a moral hazard in helping Greek rulers hide their debts from others to get some business. But only if you do it.
The term moral hazard is nothing more than a spurious reason, and often little more than a feeble excuse. Everyone faces a moral hazard every day of their lives, the most common one being the thought, ‘If I do this bad thing, I know I will be better off/feel better’. The old feeble excuse was “But I’m only human” – usually the precursor to doing something utterly inhuman. Well, moral hazard is the new reason (“I didn’t see the moral hazard”) but this also allows the old version to add some badly needed credibility, as in “I didn’t see the moral hazard in this approach, and being only human I didn’t think about the harm I was doing. But thank you for pointing this out to me; now you’ve done so, I promise not to do it again”.
Until a few days ago, this was Goldman Sachs’ ‘vigorous’ defence against charges of fixing markets, swindling clients and misleading the EU. But the SEC guys are too old and ugly to fall for the moral hazard line, so now (in keeping with its approach to most things) Goldman is trying to bribe the US Government via a $250 million dollar plea bargain. No doubt this too will present the SEC with a potential moral hazard. But only if they accept it.