tag:blogger.com,1999:blog-1030220433025894048.post6392780966349841983..comments2023-11-03T08:02:25.369-04:00Comments on AmericanScience: A Team Blog: Mergers & Bailouts in American HistoryDavid Roth Singermanhttp://www.blogger.com/profile/12841041983824755867noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1030220433025894048.post-20552631297837819162011-12-08T18:01:48.700-05:002011-12-08T18:01:48.700-05:00I don't know if history can answer your questi...I don't know if history can answer your question about who *should* be punished. But basic microeconomics tells us that if there are no negative consequences to risk-taking then risky decisions become a lot less risky, which is potentially a problem. <br /><br />One way to understand moral hazard is to think of the bailouts has an instance in which the negative consequences of risky decisions have been externalized whereas the positive ones remain internal. So there is a parallel here here to other externalities, like pollution or environmental degradation for example. Of course there is a LONG history of private companies externalizing various costs and internalizing profits, so there may be some lessons there. But as I mentioned in my previous post, it does not even seem to be the case that the innovation of externalizing risk is of recent vintage: the railroads were doing it well over a hundred years ago already!Lukashttps://www.blogger.com/profile/05686764806913124506noreply@blogger.comtag:blogger.com,1999:blog-1030220433025894048.post-74862302962379762392011-12-08T17:14:15.600-05:002011-12-08T17:14:15.600-05:00Good post Lukas. Could you comment on whether *man...Good post Lukas. Could you comment on whether *management* should be punished (her claim), and, if so or if not, who *should be*, and whether history has anything to tell us about that? I.e. to whom should a message be sent?Hankhttps://www.blogger.com/profile/02841787256060612291noreply@blogger.com