Moral Hazard In A Market Economy?

With all of the hubbub in the media about the Fannie/Freddie bail-out by the Feds, the phrase “moral hazard” has been spewing from the lips of the pundits faster than you can say, well, faster than you can say just about anything.

There is a lengthy set of definitions of “moral hazard” on Wikipedia. The Economist defines “moral hazard” as follows, where obviously the ‘insurer’ in our debacle-du-jour is likely the U.S. taxpayer:

Moral hazard means that people with insurance may take greater risks than they would do without it because they know they are protected, so the insurer may get more claims than it bargained for.

I thought the article “Who Else Can Pile On for a Federal Rescue?” in today’s Times, painted a useful picture of things. This quote from Jonathan Koppell of Yale sums up the situation for me:

Do we live in a market economy or not? If we do, it seems companies have to be allowed to fail. If we say companies can’t fail because they’re too big or the consequences are too great, we have something [other than a market economy].

Do we live in a market economy or not?

If you believe we do not live in a market economy, then what do you believe the economy is? Who runs it? Who is responsible for its continued operation and optimization?

If you believe we do live in a market economy, then can we continually suffer moral hazard?

Satellite Image of the Day

EveryPlaceISell.com + TrustPlus = Smart Selling!

Last week, the good folks at AuctionBytes launched a great new service. EveryPlaceISell.com allows sellers to aggregate access to, information about, and promotions for all of their online stores. They support a zillion different store sites (eBay, Etsy, eBid, BluJay, eCrater, etc.) and are constantly adding more.

TrustPlus was ecstatic to be included in the launch of EveryPlaceISell! Aggregating your reputation while aggregating your online stores obviously makes a ton of sense. Here’s a link to one of the EveryPlaceISell sellers:

Is New Facebook the new New Coke?

TrustPlus has been hard at work getting our new flash widget out to the social networking sites. Our Facebook app is in testing now. We have focused on “Old Facebook” design, but we are keeping tabs on “New Facebook” as well.

I’ve done a deep dive into “New Facebook”, and I’m just not getting it. Apparently I’m not alone, as this topic’s dozens of pages on the Facebook Discussion Board nearly uniformly attest.

I have yet to see the compelling win for the user. The level of complexity is just generally higher across the board. It’s tougher to find the information I’m looking for on a friend’s profile. It’s much more complicated to set data access permissions for apps. Some useful functionality of Old Facebook seems to just be flat-out gone. And so on and so forth.

Does anybody out there think New Facebook is a good thing? The only non-detractors I’ve found thus far seem to argue solely that “simpler is better” and therefore it’s better. It’s an argument… Any and all thoughts from the blogosphere appreciated!

Mac vs. PC Ads … Enough

I think Apple’s Mac vs. PC television ads have run their course – they really seem to be stretching now to find points of differentiation. I’m no Microsoft apologist – half my tweets are probably me ranting about Vista! I used to bleed six colors back when, and I was a devout “OS X” user when it was called NeXTSTEP back in the early 90s.

The last ad I saw really irked me. I think this is it. The PC guy is a “king” on a throne with a scepter and lots of gold and red velvet about. The net-net is that the Mac guy explains that if you buy a Mac laptop at the store, the “geniuses” will transfer your files from your PC to your Mac right then and there.

While this is a nice service, it’s hardly something worth investing production money and ad buys in. The problem isn’t moving files. IMO, and IME, the fundamental reason why switching is so hard is the software. “It’s the applications, stupid.”

I’ve looked seriously at switching – twice. Once in 2004 (?) when OSX came out – I owned a MacBook at the time, and again in early 2007 when I ultimately bought my current daily driver X60s. In both cases, I decided the hardware was acceptable, the OS was sex, and virtually all my data would move between the platforms. BUT, and it’s a gigantic BUT, the real cost of switching was much higher when I factored in the cost of buying AGAIN all the software I use: Office, Photoshop, Acrobat, etc. Once you factored those costs in it was a non-starter. Apple’s lack of next-day service plans for their laptops was a huge liability too.

If Apple wants to impress the serious PC users, invest those ad dollars instead to get the big software companies to enable and permit license transfers between the platforms. That would be worth crowing about!