a citizen’s journal by Thomas Nephew

Moral hazard

Posted by Thomas Nephew on September 12th, 2006

Worried CIA Officers Buy Legal Insurance, R. Jeffrey Smith, Washington Post:

CIA counterterrorism officers have signed up in growing numbers for a government-reimbursed, private insurance plan that would pay their civil judgments and legal expenses if they are sued or charged with criminal wrongdoing, according to current and former intelligence officials and others with knowledge of the program.

Even though lawsuits against federal employees for misdeeds in the course of their work are extremely difficult to win, it turns out that worries about civil liability were yet another early harbinger of the news to come in later years:

In December 2001, with congressional authorization, the CIA expanded the reimbursements to 100 percent for CIA counterterrorism officers. That was about the time J. Cofer Black, then the CIA’s counterterrorism chief, told Bush that “the gloves come off” and promised “heads on spikes” in the counterterrorism effort.

“Why would [CIA officers] take any risks in their professional duties if the government was unwilling to cover the cost of their liability?” asked Rep. Rob Simmons (R-Conn.), a former CIA officer, during congressional debate that year.

I don’t mean to seem holier than thou here. I don’t remember noticing this at the time, but I was angry, and worried, and wanted results. If I had seen a news item about this outlay, I may well have nodded my head and said, “let’s shield these guys from legal harassment” or some such formulation.

But insurance has another effect on worries like these. In an interview with Kai Ryssdal on the business radio show “Marketplace” this evening, Smith expanded on his Washington Post report:

RYSSDAL: What does the CIA tell you about this?

SMITH: They say that they recommend that employees take it. That it’s a prudent defense against the possibility of some kind of legal action against them. And that the number of people taking this insurance program has gone up, especially in the last two years, and especially among counterterrorism personnel. So, in effect, they are — I mean, I think that they’re doing this to put people’s minds at ease. They want people to feel that they can take more risks and pursue actions that are more bold without fearing the legal consequences and that’s why they recommend it.

(Emphasis added.) Smith uses the circumlocution of “boldness”, but he describes a classic case of “moral hazard“: questionable behavior made more likely because insurance mitigates its costs.

But of course this is not merely a secretive agency finding ways to take the edge off its employees’ worries, if not ease their consciences. This was Congress making a national decision to do so. And this was also most of us either sleeping through that, or shrugging our shoulders or even applauding it if we heard about it.

A kind of daisy chain of moral hazard connects us to those officers: just as they seek to avoid the full consequences of their actions, so do we when we abdicate our responsibilities to monitor and oversee and, when necessary, put a halt to our own government’s questionable practices, while demanding results supposed to make us safer.

The photograph to the right has had two meanings to me since the day I first saw it. First, of course, there’s the straightforward meaning: the attacks, the loss, and the sorrow of that day. But there’s also a second, symbolic one: liberties and values endangered, silhouetted against a backdrop of war and chaos; a brighter world’s day darkened.

I’m truly sorry to be dwelling on these things instead of just on the loss of all those poor people five years ago. But they aren’t paying the price for our mistakes since then, we are. Five years later, we’re defeating ourselves by ignoring our own values. We have to correct that, right the wrongs we’ve committed, and hold those who’ve ordered those wrongs accountable. Or we’ll surely continue to do our enemies’ work for them, and darken our own future.

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