Bailouts

During the aftermath of the Twin Towers bombing, victims were compensated based on their potential future earnings which is the normal way insurance is handled. One difference is that anyone who had the sense to purchase personal life insurance were discriminated against as that amount was deducted from their settlement. We are now facing a similar situation with student loans. There is a push for the government to cancel all student loan debt. This means that people who worked hard and paid their own way will now be discriminated against as they had the foresight to avoid this kind of debt. What is the lesson to be learned from these two examples? This is what happened in the bank bailouts of 2008 and it is called a moral hazard. If someone knows that the government will cover their debt they are likely to take more risk.