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Where do the Democrats go from the Mueller report?
Is impeachment the next step?
In economics, there is a concept called “moral hazard.”
The idea is that if you do not get consequences as a result of your actions, you will behave differently, likely more recklessly, than you would if you do face consequences. This concept has broad application in the study of economics and management.
In particular, consider where you have a large organization. In that organization, the leaders of the organization might earn the same amount of money no matter what happens, short of losing their jobs. The shareholders or the lenders, on the other hand, stand to lose a lot of money if those same managers don’t do their jobs. Although the top managers may theoretically worry about losses experienced by the shareholders, if they have no “skin in the game,” ultimately, they won’t worry about those losses in the same way as the shareholders themselves will. This situation is what is referred to as the “agency problem.”
There is an old joke that lawyers tell in relation to this problem. Lawyers, of course, are the ultimate agents. We act on behalf of our clients and have a fiduciary duty to them. In other words, we must put their interests ahead of our own. Ultimately, however, although we work hard for our clients, as the joke goes…
