The Center for Freedom and Prosperity has a new video series out on basic economics principles. The first one, “moral hazard,” discusses what happens when bad choices are subsidized (wow, wouldn’t it be really terrible if the federal government did that?), which leads to bad incentives – and thus, bad outcomes. As an added bonus, the narrator is pretty good, too!
Check it out here:
As the saying goes, “capitalism without bankruptcy is like religion without hell.” In a market economy, those who take big risks can make enormous payoffs – but should they fail, those people should bear the consequences of their failure, and not pass it on to others. Otherwise, bad behavior is encouraged, making everyone worse off.