Qui facit per alium, facit per se.*
The problems of economics are
everywhere. They come whenever there is human choice, even in man's
relationship to the divine. From the book of the prophet Ezekiel:
Thus the word of
the Lord came to me: Son of man, I have appointed you a watchman for
the house of Israel. When you hear a word from my mouth, you shall
warn them for me.
If I say to the
wicked man, You shall surely die; and you do not warn him or speak
out to dissuade him from his wicked conduct so that he may live: that
wicked man shall die for his sin, but I will hold you responsible for
his death. If on the other hand, you have warned the wicked man, yet
he has not turned away from his evil nor from his wicked conduct,
then he shall die for his sin, but you shall save your life.
If a virtuous man
turns away from virtue and does wrong when I place a stumbling block
before him, he shall die. He shall die for his sin, and his virtuous
deeds shall not be remembered; but I will hold you responsible for
his death if you did not warn him. When, one the other hand, you have
warned a virtuous man not to sin, and he has in fact not sinned, he
shall surely live because of the warning, and you shall save your own
life.
(Ezekiel 3:17-21)
First, what is the principal-agent
problem? The problem is about the difficult of providing the proper incentives for
having one party, be it a single person or even an entire firm,
termed the “agent” work for the benefit of third parties, called
the “principal.” (If you're wondering how the terms “Agent”
and “Principal” became common, they're imported from British
common law.) It is fundamentally about the need to align the
incentives of the agent to guide him along actions that result in the
principal's greatest benefit.
Since the agent and the principal often
have diverging interests, the incentives involved may actually
lead the agent to maximize his own well-being at the expense of the
well-being of the principal. This problem poses the need to construct incentives that are able to converge the two's interests and ensure the same actions maximize both of their benefits.
The problem applies just as much to
motivating a prophet of God to go out to a rebellious house and to
serve as watchman for future events just as it does ensuring
stockbrokers take the best options to maximize the value of his
client's portfolios. Even a prophet is not except from the weakness
of humanity; Ezekiel may very well prefer just to forget his vision
of God and to return to a mundane life of farming. After all, being a
prophet is no easy vocation.
God then has to solve this principal-agent problem when recruiting Ezekiel. He does so by
entwining Ezekiel's fate with those of the principal, of those of the
house of Israel that Ezekiel is supposed to act as watchman for. If a
man dies in sin without being warned, then Ezekiel shares that man's
fate. However, if he had been warned beforehand by Ezekiel , then
Ezekiel will have saved his own life. By making the stakes not simply
about turning the house of Israel away from wicked conduct, but also
about Ezekiel preserving his own life, God is able to provide a
solution to this instance of the principal-agent problem.
There is nothing like the threat of
death to get a man out of bed and to prophesy to the people
* "He who acts through another, acts through himself (i.e. in his best interest)." The Latin expression of the Law of Agency, one of the most important principal in common law that for the regulaton of principal-agent problems in commerce.