March 04, 2014
Moral hazard is the economist’s term for a rule that encourages people to behave badly. For example, a rule that says that you’re not liable for your factory’s pollution if you don’t know about it encourages factory owners to totally ignore their effluent pipes – it turns willful ignorance into a profitable strategy.
‘‘The Cold Equations’’ is moral hazard in action. It is a story designed to excuse the ship’s operators – from the executives to ground control to the pilot – for standardizing on a spaceship with no margin of safety. A spaceship with no autopilot, no fuel reserves, and no contingency margin in its fuel calculations.
‘‘The Cold Equations’’ ... barks at us that now is not the time for pointing fingers, because there is an emergency. It says that now is the time to pull together, the time for all foolish girls to die to save brave explorers from certain death, and not the time for assigning blame.
But if a crisis of your own making isn’t the time to lay blame, then the optimal strategy is to ensure that the crisis never ends.