I came across a post about Moral Hazard by Jörg Guido Hülsmann from the Ludwig von Mises Institute and I highly recommend reading it whether your interested in economics or not.

It reminds me of hearing a mate say he was parking his car unlocked in a dodgy neighbourhood because the car was insured and he wanted to get a new car... I bet you've had similar experiences through your friends. Its just interesting how deep 'moral hazard' runs, and what outcomes it leads to; so if you haven't already, spend 2 minutes of your time and read the article..

The article got me thinking about the inherent incentives that exist in any system, whether its between a citizen and a citizen, a citizen and a government or a corporation and a corporation or a combination thereof.

And while you could rightfully argue that a cold economic analysis can be quite heartless; and that a society that doesn't provide a minimum level of support to those that need it the most is not 'a good society', the fact is that when incentives exist, they create a 'moral hazard' that can't just be swept under the table. And that in it of itself causes problems, and in some instances, problems that lead to systemic failures over time.

It almost seems any society is inherently designed to fail, whether it happens quickly or it takes 100's of years; its as though human nature at its irrational core can't remain stable, and empires must colapse and rebuild from time to time.

And still on the topic of moral hazard, you can see countries like the USA where generation after generation of inept irresponsible bureaucracy has lead to the country being over $48,000,000,000,000.00 in debt, yes, that's 48 trillion in debt.

About $160,000 for every man, woman and child, and since their GDP was $13.86 trillion (2007 est.) it almost seems like we're in the middle of watching a perfect text book example of a society more hell bent on maintaining the status quo than its own survival, with untold human suffering the only foreseeable conclusion.