The Human Condition and Moral Hazard

Last week I was working in the garden at Mongarlowe. It is a most wonderful place to think and reflect.

A story about Muhammad Ali started me off. I was fascinated with Angelo Dundee‘s relationship with Ali and the insight he brought to a young person who became one of the most memorable faces of the second half of the twentieth century. Simon Canning wrote of the program that:

In an age when we have grown accustomed to confected celebrity and beliefs of convenience, this documentary serves as a useful reminder of what a true celebrity and sportsman of substance really was all about.

I could not stop thinking about Angelo Dundee’s wisdom illustrated by the documentary and I felt very strongly that having someone in your corner, literally and metaphorically, is a very special relationship and a wonderful antidote to ‘confected celebrity’.

I managed every kind of fighter and I understood very quickly that every human being has his own approach to life. I didn’t try to change them. I just asked them to follow my advice inside and outside the ring, to be sure that they were 100% the day of the fight. I can proudly say that I became friend of every boxer I worked with.

What is fascinating is that Angelo Dundee was able to use this approach with a range of boxing champions over a long period of time.

Whilst thinking about the documentary I listened to a Radio National program, Counterpoint, featuring Kate Jennings and was introduced to ‘moral hazard’. She discussed two kinds of moral hazard. One is the subject of her novel and the other is that discussed in detail in Wikipedia. This latter moral hazard arises when “an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.”

My pondering on her work was somewhat later than Guy Maddison in his post. In August last year he introduced his post thus:

What’s going on in the financial markets? It’s not just about liquidity and asset bubbles. We’ve long been conditioned to think the stock market is relatively safe because of all the reforms and regulations implemented since 1929. Sure, the market might go up or down hundreds of points in a day — but off a 13,000-plus Dow that’s nothing. Most people think a 1929 style crash couldn’t possibly happen now.

He concludes (after a synopsis of Kate Jenning’s novel):

Much of our securities trading now takes place under the totally unregulated umbrella of the hedge funds, which have been operating on a laissez faire frontier for a long time now. They should have learned — and been regulated — after LTCM in 1998, but that didn’t happen.

Now, nobody knows what’s going on behind their walls. There’s no way to know, with their very limited reporting requirements. The bottom could fall out tomorrow, and the damage would be done before anything could be done about it.

Back to Angelo who started me off thinking about the essence of a person that has insight and a real understanding of human behaviour. As the world financial crisis unfolded in the latter part of 2008 I wondered who was in whose corner and who defines risk and hazard.

In earlier blog posts I have linked to homelessness, fistula and the Merry Makers. What links these posts I believe is a human condition that could transform moral hazard into an ethical set of behaviours to underpin business practice.

I understand that such transformation requires dealing with ‘insatiability‘. It necessitates addressing the impetus to seek ‘confected celebrity” too!

I am off to the garden to work out some of these thoughts! I am wondering too about the concept of the Commons and the possibilities for a common wealth. I need to get started on Metcalfe’s Law too!

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