It would be better for everyone if moral hazard were eliminated from the social order as much as possible. But it will be hard to root it out, because it is institutionalized deep in our laws. How deep? As deep as the rejection at the beginning of the 19th century of the old Mesopotamian notion of proper compensation for torts, memorialized both in the Law of Hammurabi and in the OT: an eye for an eye, and a tooth for a tooth. The moment we reduced the penalties for torts from the time-honored “like for like” to financial compensation or time served, we reduced the net cost of hurting each other. Reducing the net cost of any sort of act does not generate more such acts immediately – you need agents for the mediation – but it does decrease the disinclination of agents to enact them, which they then more often proceed to do. So we are losing a lot more eyes and teeth than we might have been, had the penalties remained as they were.
The way things are now, we can injure each other horribly in great confidence that the worst that will happen to us is incarceration – and the lives of those who are so improvident, so morally and aesthetically deranged, as to be engaged in criminal activities in the first place, are unlikely to be so very impressed by a remote risk of a spell of years spent watching TV on a full stomach in a warm building. All but the most stupid men would decide differently if they knew for dead certain that they would pay in full with the coin of their own pain for every jot of suffering they inflicted. If you knew that the cost of shooting your enemy was that you would very soon be shot in exactly the same way, you’d think twice. Or three times. Fear is the beginning of wisdom.
If you were so stupid that you didn’t think even twice about the wisdom of what you were about to do, why then your ontological capacity to err again in that same way would soon be drastically reduced. Chip away at others, and you’d get chipped away. The feedback loop controlling for bad behaviour would be extremely tight, and finely calibrated. That’s good system design.
“An eye for an eye makes the whole world blind,” then, is just false. If we all knew that we would certainly suffer at least the same degree of pain that we inflicted on our fellows, our motivation to avoid hurting anyone would be extremely high. We’d be more careful and prudent, and so there would be a lot fewer torts in the first place.
Nevertheless it would be somewhat wasteful for society to lose two useful hands to a tort that destroyed one hand outright. Is there a way that torts could be punished so severely that no one would want to risk them, without permanently degrading the productive lives of all those who nevertheless do – perhaps without meaning to? Is there, e.g., a way to exact just compensation in suffering for the loss of a hand, without imposing the permanent loss of yet another hand?
Sure. Flogging will do. Quick, excruciating, and not (usually) permanently crippling.
How severe does a flogging have to be, in order to reduce the motivation to commit a transgression to zero? Good question. The penalty must be horrible enough to engender terror in the strongest heart of the toughest man, but not so bad as to kill him inappropriately. It is a matter for trial and error, perhaps. We might start with the traditional sentencing policies current in, say, 17th century Britain – the end product of millennia of experience – and work from there. Better though to err at first on the side of severity, and ease off if we start getting more than a bit of mortality at the whipping post. We are not now so knit as our near ancestors; punishments they shrugged off might kill us.
But in the infliction of such punishments, it is important that no sort of squeamishness be allowed to weaken their severity, and that they be quite appallingly severe. To the extent that the severity of punishment is lessened, we will get more transgressions than we want – i.e., more than zero transgressions.
It may be objected – it will certainly be objected – that this suggestion is uncivilized, cruel, brutal. I answer that it is far less cruel than our current subsidies of bestial cruelty and carelessness, that promote and coddle it. I answer further that it is meet, and right, that we should all suffer the pain that we inflict on our fellows. One way or another, we shall feel it anyway, sooner or later; for the world is so made that its justice cannot be gainsaid, and will certainly be done upon us, body or soul. There is no other way, in the final analysis, that things can hang together coherently.