The power of incentives to cause rationalized, terrible behavior is also demonstrated by Defense Department procurement history. After the Defense Department had much truly awful experience with misbehaving contractors motivated under contracts paying on a cost-plus-a-percentage-of- cost basis, the reaction of our republic was to make it a crime for a contracting officer in the Defense Department to sign such a contract, and not only a crime, but a felony. The worst of those contracts was the Cost-Plus-A-Percentage contract, the title of which has been changed to “Cost-Plus-A-Fraction-of-Cost” contracts, and usually shortened to CPAF contracts.
But, in a perverse way, this raises a serious question about the reasonableness of the federal government's power to make up new crimes: why stop at crimes for contracting officers? Why not make felonies out of accidents?
The government that receives benefits from accidents is the government that benefits from reducing accidents. But there is no need to pass on the costs of accidents to the government that enjoys the benefits of reducing accidents: the effect of raising the price of aircraft is already sufficient to reduce accidents, and so the only reason to pass on the costs to the government that enjoys the benefits is that the federal government has the power to do so.
But it is not just with contractors that we see this. In a realm far removed from business, money also has these sorts of perverse powers. I have been speaking of the power of money to motivate terrible behavior, but there is also the power of money to not motivate behavior. If you want to get a group of people to do something, whether it be to work, or to walk, or to do anything really, you have to provide them with an incentive that is not just their own interest, but is also not their own disinterest. Such incentives can be provided by money, but they can also be provided by tradition, by honor, by religion. Money is an effective mechanism for providing the incentive of a disinterest, but it is not the only one. 827ec27edc