Tap. Tap. Tap.

Class?  Attention, please.

Please raise your hand if you pay a deductible on any insurance policy you have?

Can you see me?  I have two hands raised.  One for my car and home insurance policy and the other for my medical insurance (it’s called co-pay).

Ok.  So far so good.

Now, we think once again about “moral hazard”.

We know the term from attempts to manage this colossal f up in the financial global world which surfaced a year ago, September ’08.  We know now it started right here in the US of A with the greedacious creation of financial products sold world wide and immensely profitable to the chain of originators until they became unlimited, incalculable liabilities on world wide books and 11 trillion dollars disappeared from portfolios individual and corporate seemingly overnight.

The price of oil may have plummeted in this crisis, but the price of red ink?  Through the roof.

Anyhoo…moral hazard, according to Wikepedia, lists several scenarios where it can occur.   In the corporate world (with consequences far beyond the boardroom) when “upper management is shielded from the consequences of poor decision making”.  It can also occur to Joe the Plumber–I just had to rework him back into the discussion somehow.

For example, if Joe insures his truck without a deductible (I’m not even sure that’s possible but let’s say it is)  then he might not be so concerned about whether it is stolen or not since the consequences of the stolen vehicle rests primarily with the insurance company.  If he has a deductible expense, however,  then the thinking is he’ll think a little deeper about leaving his car unlocked or parking in unsafe areas.  So, a deductible in our daily insurance lives is actually a real world attempt to control reckless, moral hazardy behavior of  the plain vanilla individual people in pursuit only of  life liberty and the occasional droplet of happiness.

There will be a multiple choice surprise quiz on this sometime this week, class.

So, doesn’t it make total sense to bring the deductible to the boardrooms?  Seriously, what is takin’ them so long to figure this out?

If 500 or 1000 dollars is statistically proven to curb my risky behavior, what might a few hundred mill do to the corporate swashbuckler?

This moral hazard thing for creative thinkers (artists, scientists, inventors NOT bankers or corporate CEO’s) is a distinctly more fun concept.

What does a creative mind shielded from the risks of his or her own creativity get?

It’s called a MacArthur Genius Award.  Each year around this time of year, several folks who have been creative in some way in the past get a call from an unknown person saying they have just received $500,000 and there are no strings attached.  Do with it what you will or not they are told.  The MacArthur award cannot be rescinded or taken back.  They are not coming after you if you produce nothing or you produce the biggest f up in the artistic or scientific community known to man.  They are banking (no pun intended) that this financial windfall freedom will encourage your creativity not endanger it and that encouragement shall lead to contributions to the society as a whole one way or the other.

My take-away from this:  There is unlimited liability for a creative person only when they fail to take risks rather than the limited liability or “deductible” on any single failed artistic or scientific endeavor.

Suspended hundreds of feet in the air, the window washer in this image, for example, is spelling out my telephone number for the secret MacArthur board in the grime and grit of Boston air molecules.

Do you see it?


Well,  surely, you can hear him whistling?

It’s the theme from “Bridge over the River Kwai”.

You remember…build the damn bridge then blow it up.


©Pat Coakley 2009





The growing season has not come to an end on Singular Sensation, my photoblog about flower photography.  I just posted Rule #25: “For God’s sake, take the batteries out of your flash.”

7 comments on “Talk, Listen, Sing-AFTER THE MUSEUM, THE SERIES”

  1. Pat… Uh..maybe I haven’t had enough coffee but you lost me with this one. I don’t get it. Maybe Ill drink some more and come back to read this for a third time. Maybe Im being overly dense this morning.

    • Oh, Amber..your reaction makes me smile because when I finished writing it I thought. I get it now…I think it’s clear even to me!! But, I suspect, the density of the topic deserves more thought…thankfully, provided below by my readers! This is a good example of a post I think I get on some level and then am always amazed at how I had just focused on one aspect of it! So, we’ll both learn about what I wrote by reading Tipota and Don!

  2. well this takes some thought, thoughtfully and entertainingly written and the photo is subtle, the lines and geometrics broken by the words and figure so tiny there, i like its desaturated color to the greys et al.

    for instance, if your vehicle insurance deductible is lets say $1000, it doesnt help to have insurance for the dent some guy foisted on your car in the parking lot while u were shopping. but if the same guy out and out stole your car, then it is my understanding that the deductible takes a second seat to the replacement of the auto. your choice is what to do with the insurance company’s response. i could be wrong. i am not good at this stuff. my understanding is that the insurance will provide funds for a new auto minus $1000 or some close ambiguous number. at least you get a replacement vehicle, although unless you can fork up the difference, it will be less in value than the one that was stolen. there is the negative side to damage control revealing a true dismissal attitude regarding accident and loss itself. the back side of the deductible: “hey insured person, if you were more careful somehow your car wouldnt have been stolen, and so, because you are partly to blame, you are punished with a less than ideal replacement and you have to live with it, and i dont wanna hear any yapping.” a ‘blaming the victim’ scenario.

    now, to bring that into the art world is brilliant. i am still wrapping my brain around it. it is exciting to think that there might actually be some justice somewhere in here. it is inspiring to realize the dilemma and what you can do with it.

    • Tipota, you are right about the messages contained with insurance company policies. I totaled my car once (without leaving the garage but that story is for another day) and the insurance company valued it for far less than I could buy a similar vehicle. There is punishment involved in insurance and in life. But, not having insurance? Not good either. I am still wrapping my head around the art world parallel myself. I’ll write more about that in response to Don but your thoughts help me wrestle with this whole concept!

  3. hmmm… Let me try to puzzle this out… If moral hazard somehow relates to being insulated from the risks of bad or “immoral” decisions; and the risks and rewards of creative work are primarily personal and internal to the artist; then for the creative person the moral hazard must occur when the artist ceases to care about their work.

    From another angle, when money and/or fame becomes the primary motivator for a creative person, then the artist may begin to produce purely for the financial rewards or for the adulation of others — rather than for personal expression and fulfillment. A situation of creative moral hazard may develop for the artist where the creative work becomes totally other-directed and the artist no longer cares about the quality or meaning of the work, other than its ability to win financial or other rewards. Hence the secrecy of the MacArthur group, and their refusal to make the recipient accountanble for the use of the grant?? Maybe to avoid some sort of creative moral hazard that “ruins” the artist?

    Finally, most creative people appreciate and need some positive strokes to keep going, and there seems to be nothing wrong with that. To me the creative moral hazard (just like the corporate one) occurs when the focus and emphasis on the external rewards gets totally out of balance with the internal risks of artistic failure.

    • Oh, I like it when you puzzle things out, Don!! I think thoughts I wouldn’t have without your musings. The one parsing of the term moral hazard that I differ with from your rendition is that I was not thinking that the insulation from risks would be entirely around only “bad” or “immoral” risky decisions. I think some of the risks could be within the boundary of moral and good but still end up bad decisions and fail for one reason or another. I think my version of this accepts the proposition that the risks of creative work are primarily personal and internal to the artist but not the rewards as I think there is a much more external dimension to that more in line with your final paragraph…and so well described there. I do think the second paragraph of your response contains what appealed to me about this concept applied to creatives in the first place. There is a fascinating (to me) inverse of what hazardous means when you think about the corporate moral hazard vs the creative moral hazard. The liability in the corporate venture comes after the risk is taken. To me, the artist that doesn’t take the risks in the first place (like your suggested artist who opts for repetition of one commercial artistic spin at the expense of all other creative work) incurs the creative peril and liability that is simply ongoing until he or she returns to taking risks that their work might fail, might offend, might not incur the financial rewards. Remember, our financial system would still be built on derivatives and not considered too morally hazardous at all IF the real estate market hadn’t tanked and the value of homes and property went in the hopper. The leveraging of that “bubble” value was the big money maker behind these products. When money stops flowing in the corporate world, hazard kicks in and plain to see. When money stops flowing in to an artist? They may have a hard time paying their rent, but they might be at the peak of their creative powers.

      And, I think your thoughts on the MacArthur group , their refusal to make the recipient accountable may be for just the sort of reason you suggest! I love this topic, dense as it is, and not yet fully articulated as it may be here at SFAR!

  4. Ok.. it was far too early when I read this… I wasn’t getting the depth of the topic on which you were speaking. Thank you Don for making it clear to me. Tipotoa as always interesting in your response too.

    Pat normally on your musings I find them interesting because in some way they are touching to “every person”. This in its way was presented in such an abstract feel I didn’t get it. The subject is indeed fascinating and worthy of contemplation, although its the kind that drives one crazy if pondered on for too long. You begin to lose faith in your fellow man, and start to wonder if the world is indeed good or not… as this is a slippery road my friend.

    The picture is gripping (I should have said that in my first reply). Its one that I particularly like not for its beauty, but for its impact in the way it makes me feel.

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