Writing in the WSJ about a program to provide food security to India’s poor, Rupa Subramanya reveals her ideological bias in towards the end of the article:
After all, if someone is offering to give you free food, why would you bother to get a job and earn income so that you can feed yourself? Economists recognize this problem as “moral hazard” in which a welfare program leads to perverse incentives which perpetuate its existence.
I would really like someone to apply this logic to CEO pay. After all, many CEOs are now paid more in a single year than most people need in a lifetime, even taking into account differences in “lifestyle.” Shouldn’t they just be given the bare minimum to live from year to year in order to keep them motivated to work the next year as well? Or does moral hazard only apply to poor people?