Moral Hazard

Fr. Peter Daly

Parish Diary

April 8, 2009


            We’ve been hearing the term “moral hazard” a lot lately.

            The talking heads on TV apply it to economic risk in business. They tell us that people have to be willing to accept the consequences of their risks. Letting people “fail” in business serves as a cautionary tale for others. It is warning sing that points out the “moral hazard” of foolish risk.

            I agree with that.

            Business executives take risks with other people’s money. In the right context that is a good thing. But the huge financial rewards of business have often been so seductive that they ignore the hazards until it is too late.

            Business executives are not different from the rest of us in this regards. We all have “moral hazards.” Even good things can be dangers if not controlled.

            Among the “moral hazards” I’ve been hearing a lot about in confession and counseling, I can think of three good things that can be turned to evil ends. They are the internet, credit cards, and prescription drugs.

            More and more people are confessing sins related to the internet.

            The most common is an addiction to internet pornography. This is not just a problem for young people or for men. It troubles everyone.

            In another era people had to leave the home to find pornography. Now it comes right into the seemingly safe confines of their home. People can get caught up in a terrible web of addiction to internet pornography. I’ve spoken to people who spent thousands of dollars and hours on line. They have lost themselves to this “moral hazard.”

            Sometimes I tell them to get a filter or move the computer to a more public room. Sometimes I tell them to cancel their home internet and only use a lap top in public places as a way of taming their demon. Often they resist all three ideas.

            The internet can be a moral hazard in other ways. It can take up people’s whole lives. I recently talked to wife who said she had absolutely no communication at home with her husband because he was always on the internet.

            Credit cards are also a moral hazard.

            We see that in the current economic crisis. People are hopelessly indebt for purchases that are worthless.

             Recently I talked to a man who was suicidal over his credit card debt. He had put fifty thousand dollars on the plastic.

            Credit cards, combined with the internet, are a lethal cocktail.   Again, people don’t even have to leave their homes to waste money. 

            Recently I imposed a penance on a lady who had an addiction to on line shopping. We cut up her credit cards in a sort of modern “exorcism” of her demon of avarice. She literally cried as we snipped up the plastic.

            Another moral hazard is the danger of prescription drugs.

            Like all temptations of the devil, it starts out innocently enough. People start taking pills for back pain or to recover from some surgery. Before they know it, they are addicted to Oxycontin or Percocet and similar powerful pain killers. One policeman in my parish called them “suburban heroin.”

            One poor family spent as much as $7,000 on prescription drugs in a single month. Prescription drug addictions can bankrupt families and ruin marriages.

            Moral hazards abound.

            Even apparently good and useful things like the internet, credit cards, and prescription drugs can be moral dangers if they are not controlled by the virtues of temperance and prudence.  

            The people on Wall Street may not have to bear the consequences of ignoring moral hazards, but the rest of us don’t have that luxury.