End the Fed, by Rep. Ron Paul (R, TX): on Welfare & Poverty

Ron Paul: Moral hazard permeates a welfare state

Anything that is seen as protection against risk causes people to act with less caution. Even if their actions may seem risky, someone else suffers the consequences, and moral hazard will encourage bad economic behavior.

Moral hazard, from whatever source, is detrimental because it removes the sense of responsibility for one's own actions. Interventionism conditions business people to believe they can enjoy the rewards of the market, yet pass on the penalties to others. That's what's happening today.

Although I'm talking here about financial moral hazard, the whole notion of the safety net permeates a socialist or welfare state, encouraging carelessness and dependency on the government.