The moral hazard of politics

“Power corrupts. Absolute power corrupts absolutely.” Lord John Acton/politician-historian

“Moral Hazard” is the concept that some individuals have incentive to alter their behavior when the costs of the risks they take, or bad-decisions they make, are paid for by others.

The very act of governing and being in the position to make decisions that cause great public expenditures, transfers of assets, or changes in laws, regulations, or zonings leads to Moral Hazard temptations. How the decision maker handles the temptations confirms whether they are there to serve the public, or themselves.

Rory Respicio, upon being confirmed as the general manager at the Port Authority of Guam, started at the very top of the pay scale instead of working his way up from Step 1 through a series of performance evaluations as his predecessors did, and other government employees are required to do.

Within days of being confirmed, he promptly worked behind the scenes in an effort to settle a $14 million court decision with a politically well connected insider, that could have cost the citizens of Guam $5 million to $10 million dollars, paid by for by increased port handling fees on incoming shipping containers.

His actions on his personal pay, and trying to circumvent the Guam YTK case out of court, are examples of “moral hazard” acts.

Michael Borja; while director of the Chamorro Land Trust Commission, transferred public property to members of his family outside of regulations, policy, and procedure.