Thoughts on the Black Lives Matter Movement and Moral Hazard Inspired by D.L. Hughley

Courtesy of Wiki Commons

A thought just crossed my mind listening to D. L. Hughley talk about police shootings of people of color on CNN with Chris Cuomo this morning. A weird parallel about my academic works/writings and D. L.'s comments crystallized in my mind.

In my academic life I've written about financial services/banking regulation under the Glass-Steagall, Gramm-Leach-Bliley, and Dodd-Frank Acts. These have proven to be among my most cited and influential scholarly writings-measured in my mind by subsequent law review, book, and blog discussions by other scholars and thought leaders. In my article published in the Albany Law Review in 2010, where I discuss one of the root causes of the 2007-2008 Financial Crisis (The Great Recession), I spilled a lot of ink talking about the issues of Too-Big-To-Fail and moral hazard in the banking world. I think these concepts have applicability as we try to intellectualize and come to grips with the back-to-back police killings of Alton Sterling and Philando Castile last week.
When I talk about moral hazard to my students, I situate the concept in the following terms. Imagine you purchase a house for cash, but the kicker is that for whatever reason (cost or benign oversight) you decide or fall not to buy a homeowner's insurance policy to insure your home against risks like theft, fire, or other casualties that are reasonably foreseeable that might beset your home. When you don't have insurance you are ultra safe! When you leave for work in the morning you triple check to make sure the doors are locked and all accessible windows are locked and shuttered. You unplug your iron and let it cool down before leaving for work. You get the picture!

The moment you purchase an insurance policy things change dramatically. In the morning when you leave you might not triple check to see if the doors and windows are locked. Hell, if you're running late on the way to work one morning for a big meeting with your Boss, and you think in the back of your mind you left the iron plugged in on the cotton/linen setting on the ironing board you probably won't turn your car around.

Why do rational people behave in such a manner? It all comes down to the moral hazard dilemma! When I don't have insurance and I have to foot the bill if a thief breaks into my house, or I create conditions that could burn my house down (like leaving my iron on the cotton/linen setting all day), I would tend to act with a high level of caution. My wallet serves as the backstop if something goes wrong-I'm personally financially on the hook. I have to write the checks to pay for my own damage and carelessness! The moment a person gets insurance they become less worried and careless, and begin to take more unnecessary risks. Risky/Reckless behavior is cleaned up and financed by others (your insurance company)-levels of responsibility and accountability are vastly diminished when someone else theoretically is footing the bill. In a nutshell, this illustrates the problem of moral hazard.

How does the issue of moral hazard relate to the killings of primarily African-American males in this country? In my mind, the issue is one of police responsibility/accountability. When one has to account and be responsible for their own actions, and there are consequences and repercussions the individual tends to act with restraint, caution, and measure. Just like in the homeowner examples I've outlined above. All too often, I think the problem has been our criminal justice system (specifically, a failure to prosecute police-involved shooters)-the "system" has acted as a backstop, insurer, and guarantor of unrestrained police behavior and blatant killing.

The botched grand jury proceedings in the Mike Brown case, the failure to prosecute Tamir Rice's killer, the lack of accountability for the killer of Eric Garner, and countless others, bear witness to the point that I'm making. From a prosecutorial standpoint, for years in this country, police who kill Black males have had nothing to fear. Where actors have no accountability they will continue to act in an unrestrained and lawless fashion. Here lies the moral hazard dilemma in American policing-reckless police behavior has gone unpunished for decades.

In the recent cases of Alton Sterling and Philando Castile, we will have to see whether the criminal justice system holds the officers involved accountable. If not, the morale hazard dilemma in policing in America will continue to persist and manifest itself. Our society will bear the cost of the unjustifiable and highly suspect killings of these young men.

If our criminal justice continues to fail to value lives, even those of the perceived lest among us, life is valueless for all humanity. Are we saying that police officers and police departments are Too-Big-To-Fail? Will we continue to throw bad actors (police who kill for unjustifiable reasons) a lifeline and bail them out for unabated risk taking behavior? Our criminal justice system is not a shareholder in an insurance company or an insurance company itself, the criminal justice system has to make police officers who kill unjustifiably write their own checks and be held to account for their own actions. When a day comes where police officers have to answer with their own lives (let's be clear-I'm in no way advocating for violence towards law enforcement) and liberty for their bad decisions/actions the lives of Black males might matter. Just some thoughts on issues that have troubled me for some time.