Anyone following current debates about our aid programme should remember the following rule of thumb for interpreting political discourse: once politicians and their ideological fellow travellers start attacking people who can’t fight back, it is a sure sign that they’ve run out of actual intellectual ammunition.

The classic example is beneficiary bashing. Government X implements poor macro-economic policy, unemployment rises as a result, and politicians from government X start blaming ‘dole-bludgers’ for being too lazy to get a job despite having had one until the very moment the economy started to tank. Beneficiaries tend to be poor and socially marginalised, and rarely afforded a chance to tell their side of the story in the media, so they’re a safe target. Continue reading →

Moral hazard sounds like the sort of thing a politician ought to worry about. And it is, although not in the way you might imagine. While the name ‘moral hazard’ suggests theology, it’s actually an insurance industry term used to describe the propensity of people insured against a particular risk to behave more recklessly because they no longer bear the full weight of the risk.

The example used in economics textbooks is usually the claim that people with home insurance are likely to be less careful in securing their home knowing that, should something happen, they will be spared the full costs. Like many examples in economics textbooks, this is a little far-fetched, yet the problem is a real one. And it’s one that Foreign Affairs and Trade associate spokesperson John Hayes needs to think about. Continue reading →