The phrase “moral hazard” is a term you don’t often hear in Irish politics or media, but which society would definitely benefit from learning.
Commonly used in economics, “moral hazard” is basically when someone doesn’t bear the full consequences of a risk, and so they’re more likely to take chances or make decisions that they might not otherwise.
For example, if a company knows they have insurance, they might take a risky gamble, knowing that if things go wrong the insurance will cover it. That sort of thing.
In a nutshell, when someone pays little to no consequences for being wrong, they have little incentive to do right. And on some level, this principle has to be at play in headlines like the following: “51 social housing tenants in Dublin owe more than €27,000 each in unpaid rent.”
As the Irish Independent article this week explains:
“Almost one-third of all tenants of council housing in Dublin city are in arrears with their rents. New figures published by Dublin City Council show that out of a total of 25,159 local authority households in the city, 8,050 are behind with their rent payments – 32pc of all tenants.
There are 51 tenants who each owe in excess of €27,000, while a further 136 owe between €19,000 and €27,000. Another 589 households have rent arrears of between €11,000 and €19,000. Around one in eight of all council tenants in Dublin city owe the local authority between €2,000 and €7,000, while a similar proportion owe between €500 and €2,000.
At this point it’s important to note that if one third of people staying in Dublin’s social housing are behind on rent, that means that two thirds – a significant majority – are not, and have fully paid their obligations. So clearly, this is not an issue with people in social housing in general, and relates only to a specific subset of individuals.
It’s also worth saying that not everyone who falls behind on rent is necessarily doing so out of malice or carelessness – particularly during the last few years with the Covid-19 lockdown, and now the ongoing cost of lockdown and inflation crisis. It’s perfectly understandable how a well-meaning person, by no fault of their own, could fall a month or two behind on their rent with the government throwing banana peels at the economy. No reasonable person would judge them harshly for that.
But with all of that said, this is not a new issue caused by the restrictions – in 2009, 13 years ago, the local council (i.e. the taxpayer) was owed €19.5 million in arrears, back when Covid-19 was little more than a glimmer in a Wuhan virologist’s eye. This situation didn’t come out of nowhere, and has been getting worse for over a decade.
It also has to be said that the average weekly rent paid by council tenants in Dublin city is €72. While some people pay more than this, it’s means tested based on your income, so only those who are able to pay more are asked to do so.
Taking that €72 figure as the standard, to end up €27,000 in arrears you would have to not pay any rent for 375 weeks in a row – over 7 years. And bear in mind that these are people who are in excess of €27,000 – we know it’s at least that much, but it could be far higher.
That’s not a slight slip or falling behind, which could happen to anyone – that’s a habitual thing at that point. You’ve just stopped paying rent altogether, at the expense of hardworking taxpayers who get up every day and go to work so they can pay their way in the world.
And notably, according to an Irish Times report in 2019, it’s the top-earning city council tenants who are most likely to default on their rent – not poorer individuals.
More than €27,000 each owed by 25 tenants in unpaid rents to Dublin City Council https://t.co/4mR0T0GI8o
— The Irish Times (@IrishTimes) December 6, 2019
As the piece reads:
“The lower-income households account for the smallest percentage of the arrears,” Rose Kenny executive manager of the council’s housing department said. “When you take €800-plus as something we would call a high income, and that includes subsidiary earners in a household, they account for over 44 per cent of the outstanding arrears.”
The 25 tenants who have allowed their debts to exceed €27,000 were in this higher-earning bracket, she said…It would be “inappropriate” not to pursue these higher-earning households she said “when you think that 40 per cent of tenants pay on time” many of whom were on “the lowest incomes”.
Some will reasonably point to situations like a Fine Gael councillor who allegedly earned €60k last year and received HAP for his two-bedroom apartment, according to the Sunday World. Which, if true, is obviously outrageous.
Fine Gael councillor who earned €60k last year gets HAP for his two-bedroom apartmenthttps://t.co/HewD2zxaGr
— Sunday World (@sundayworld) August 30, 2022
While there’s an astonishing amount of hypocrisy among politicians when it comes to housing which equally needs to be tackled aggressively, all of these issues highlight the fundamental flaw in the whole concept of housing as a “right” or entitlement. When you just hand someone something, the system gets abused, every time, without fail.
The same goes for free “own door accommodation” for asylum seekers, or handing out visas. You inevitably get false claimants coming to the country just to avail of the service, as one Egyptian man pretty much admitted on camera.
Of course everyone agrees there should be a reasonable social safety net for those who, by no fault of their own, fall on hard times. But every right comes with responsibility – it’s a package deal. And the idea that hundreds of people can stiff their fellow citizens by choosing to dodge their responsibility to pay rent for years at a time is just not reasonable.
It’s not even a “rightwing” economic point to say that we can’t live in a society where politicians, rich people, or ordinary citizens get away with ignoring their obligations – it’s just common sense.
It’s like how Senator Sharon Keogan was brutally criticised for making the abundantly obvious and sensible point that able-bodied people who are on long term jobseeker’s allowance should have to do some kind of community service or volunteer work for it.
An Irish senator says that increasing jobseeker’s allowance substantially will drive up inflation, and that if the dole is increased it should require community service work.#gripthttps://t.co/vY0ikKbJ07
— gript (@griptmedia) August 16, 2022
People freaked out when she said it, but how is she wrong exactly? With the exception of those who have a disability or other exceptional circumstances – exceptions which Keogan mentioned at the time – healthy adults shouldn’t just be handed money for free indefinitely. That’s obviously a recipe for disaster. Everyone who is physically able to has to pay their way in the world.
But try saying that in public some time and watch people turn purple with rage at the very idea that we might row back on some of the more wasteful excesses of the bloated welfare state.
Ultimately, it seems like there are people who want to live in a society with no accountability at any level – not for rich people, or for middle class people, or for poor people. Nobody should have to follow the rules or be held responsible for anything they do, or fail to do.
At what point do we as a society get real and start calling these absurdities out?