Becker makes two principal points in his interesting post: that free enterprise encourages people to take responsibility for their actions and thereby make better decisions; and that there is "a strong trend toward shifting responsibility to others."
I would qualify these points as follows. Free enterprise requires individuals to make a variety of decisions, concerning both production and consumption, that in a socialist system is the responsibility of government officials. It does not follow that people in free-enterprise societies "take responsibility," in some psychological sense, for their actions. The tendency to blame others when things go wrong is deeply rooted in human nature and I imagine no less common in America than in any other country. In fact, in a free-market system, competition places significant limitations on the freedom of choice of consumers, investors, and workers.
But has the tendency toward shifting responsibility for our actions to other people perhaps become more common over time? Maybe so, with the erosion of belief in free will. In the traditional sense of that concept, a sense most highly developed (so far as I know) in Christian theology, uncoerced decisions, such as a decision to commit or refrain from committing a crime, are deemed to be uncaused. They are deemed the "free" choice of the person making them, so that if he makes the wrong choice he has no one to blame but himself. (There is an odd exception: some Christians believe that a person can be "possessed" by the devil, in which event he is not responsible for his actions until the devil is exorcised.) I find it hard--maybe for lack of imagination--to believe that decisions have no cause. I assume that they are determined by the balance of advantages and disadvantages as it appears to the decider, though he may not be fully conscious (or conscious at all) of the considerations that are moving him. Those considerations are influenced by background, intelligence, experiences, and other factors most of which are not, in any meaningful sense, within a person's "control."
On this view, to call a person "responsible" for a decision (such as the decision to take out a no-down-payment mortgage with an adjustable interest rate) is just to say that his process of weighing the pros and cons of the decision was not overborne by force or fraud or thwarted by a mental deficiency. The decision may not have been blameworthy in any very deep sense; it may have been foreordained by psychological factors. Becker mentions "greed." Why are some people greedy? Because they choose to be bad? Or because their psychology, which they are not responsible for, has produced in them an abnormal demand for money? All "freedom" means is not being subject to certain kinds of coercion. Freedom so understood expands the opportunities open to people, but how they exploit their opportunities is the product of the interaction of their genetic and financial endowments, their upbringing and other environmental factors, and their good and bad luck.
Moral hazard is thus not a defect of the will, but a rational response to one's opportunity set. If one has medical insurance without deductibles or copayments, the marginal cost of medical care will be low (even zero), so one will consume more of it. If one is confident that in the event of a flood or an earthquake there will be a government bailout, one will buy less or no flood or earthquake insurance. The government‚Äôs bailing out of investment companies, banks, and mortgagors will induce those entities to take more investment risks in the future than they otherwise would, and so will increase the risk of future housing bubbles and credit crunches. This has, I think, always been so. That is, there was never a time when, because people were averse to taking advantage of opportunities to shift costs to other people, moral hazard was not a social problem.
Criminals will sometimes try to place the blame for their crimes on a bad upbringing. That is nothing new. A criminal (or his lawyer) will make any argument that might reduce his sentence; he would be irrational not to do so. And it is plausible that a bad upbringing, along with a low IQ, increases the likelihood that a person will become a criminal, by reducing his alternative legal opportunities. But as Becker points out, most people with a bad upbringing (and equally most people with low IQs) do not become criminals. This has, to my mind, a practical rather than a moral significance. It suggests that the threat of punishment can deter even a person who has had a bad upbringing. So by adding that threat to the considerations that a person will weigh in deciding whether to commit a crime, society can reduce the crime rate. We may even want to punish the criminals with the bad upbringings more heavily than other criminals, in the belief that they can be deterred only by a threat of heavier punishment. On this approach to crime and punishment, we punish criminals not because they "freely" chose to do bad things, but because by punishing them we can at tolerable cost reduce the prevalence of activities that generate net negative social costs. We make people do the "right" thing not by appealing to the exercise of their free will but by increasing the cost to them of doing the wrong thing. Fortunately, few judges, whether or not they believe in a strong sense of free will, allow the excuse of a bad upbringing to mitigate punishment.
As for the people who took out risky mortgages in the expectation that house prices would continue to rise, they should not be bailed out (that is the moral hazard problem) by government even, I think, if they were victims of fraud. But if they were victims of fraud, they should have legal remedies against the people who defrauded them. Of course, if there were no legal remedies against fraud, people would be more careful--but they would be too careful; they would incur high costs of self-protection. It is cheaper to punish fraud, just as it is cheaper to punish burglary than to tell people to fortify their houses.