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.
When caught, he suffered no adverse consequences. Had he not been caught, the list and value of public assets would have been smaller, while those of his family would’ve been a lot larger. His actions transferring the property were not to serve the people of Guam, he was serving himself.
The problem with moral hazard violations is the public suffers greatly from the actions. Perpetrators are rarely held accountable for their actions. Taxpayers always end up bearing the total costs of the actions as we have seen in too many incidents to list in this article.
There is a difference between moral hazard violations and acts of ineptitude or mistakes; it is called intent. The recent successful lawsuits against government of Guam for mistakes made during the termination process of employees that annually cost taxpayers millions of dollars are examples of “ineptitude.”
When a new director is confirmed to manage a government department or agency and one of his first acts of managing his department is to refurnish his office with new furniture, purchase a new government vehicle for his/her personal use with a government gas card; his actions are not for the benefit of the people, his actions only benefit himself at taxpayer’s expense are “moral hazard acts.”
The biggest moral hazard of politics is building a personal empire to accumulate political power. We see it every year as every government department budget and staffing levels grow; while the tax base remains the same. The most commonly used tool for politicians out to build their empires at public expense is fear.
“If you don’t increase the Business Privilege Tax, we will be forced to close libraries, fire and police stations.”
“If you don’t increase our budget funding to the levels we’re demanding, patients will start dying.”
“If you don’t raise the fuel tax, it will take us 100 years to fix all the roads that need fixing.”
There is a very old saying that the road to hell is paved with good intentions. Every politician and government manager starts down the road to public service with good intention, but somewhere along the way, many drift away from those good intentions to empire building.
The main reason politicians stray from the path of doing good to empire building is that we citizens fail to do our job. Once we elect politicians; we, as a group, stop talking to them. We don’t call them on issues to give them our perspectives. We don’t attend public hearings on proposed legislation, rules, or other things that impact our lives. We don’t make appointments to meet with them, or even call their staff members and give our personal views to them to rely to the politician or manager.
You wouldn’t hire a new employee and let him work unsupervised. So why do we do stop supervising and communicating with those we elect and give power to act and spend money in our name? When we don’t participate in the governing process we have effectively cut those in power morally adrift.
I understand why politicians and government officials attend weddings, funerals, and visit with patrons at all the tables of a restaurant before sitting down. It is often the way they can reach out and talk with members of the public about governmental affairs they manage since we, as citizens, do not call them, do not go to their offices, or go to hearings to discuss matters that will have major impacts on our lives.
Th ere’s another old saying that says you get the kind of government you work for. Our work begins when we elect politicians. It is our duty to monitor and engage with them as they exercise the powers we give them to act in our name.
Esther Aguigui; within a few months after being confirmed to lead the Guam National Guard, tried to secretly increase in her compensation package by 50 percent, until public outcry forced the government to roll back the pay raise.
Her actions are reminiscent of self serving actions by former Lt. Governor Ray Tenorio and 32nd Guam Legislature speaker Judy Won Pat, who called the legislature into special session with no public notice, and passed a massive secret and retroactive pay raise that cost taxpayers millions of dollars. It was only after loud public outcry, and citizens voting out six senators that strongly defended the pay raises; did the members of the 34th Guam Legislature rescind the pay raises give the governor, lt. governor and senators.
Direct communication and voting is how we manage the “public employees” we have chosen to give great powers to, to act and spend monies in our name.
Ken Leon-Guerrero is the spokesperson of Guam Citizens for Public Accountability. Send feedback to firstname.lastname@example.org