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Copyright: ©2009 Rusty Wright
NEEDED: ETHICAL BAILOUT
By: Rusty Wright
“We don’t just need a financial bailout; we need an ethical bailout.”
So writes New York Times columnist Thomas Friedman about the current financial mess.
Interwoven among news of economic turmoil and government rescues in the banking, investment, insurance and automobile industries are some wild tales of greed, deception, and bad choices. Consider recent headlines.
Financial manager Bernard Madoff confessed that his investment empire was built on elaborate global swindles. Well-heeled philanthropists, Hollywood moguls, universities, and more fell victim to his self-admitted Ponzi scheme, a $50 billion fraud. Several charitable foundations, unable to recover from Madoff-related losses, announced they would close down.
Sounds like Madoff (pronounced MAY-doff) made off with a bundle.
Details should emerge in court. A classic Ponzi scheme, of course, underhandedly rewards early investors with subsequent investors’ cash, rather than with actual investment growth or income. Investors perceive good “returns,” word spreads, and new investors join in.
The swindler keeps using new investors’ money to reward earlier investors, while using the earlier investors’ funds for his/her own ends. When new investment slows down – say, during an economic meltdown – the money manager can’t pay off and the pyramid collapses.
The scam is built on lies, deceit and false promises. Greed can fuel it from both ends. Ethical bailout needed.
Scandal brings some ironies. Disgraced former New York Governor Eliot Spitzer acknowledged that his family real estate business lost money in the Madoff scam. As state attorney general, Spitzer built his reputation fighting investment fraud. As governor, he resigned after it became known he had consorted with a prostitute. Ethical bailout needed.
Illinois Governor Rod Blagojevich became embroiled in a corruption scandal when federal authorities overheard him allegedly using or trying to use his position for personal gain. Allegations include attempting to sell President-elect Barack Obama’s vacated US Senate seat. Ethical bailout needed.
Wall Street traders have amassed huge bonuses by running up clients’ accounts, often with borrowed money, and generating large profits for their own trading firms. When markets fueled by debt go bust, traders often can keep their bonuses. Some investment banks like Merrill Lynch planned to pay bonuses though taxpayer funds were propping up the company.
Of course, ethical lapses are not uniquely American. Recently Siemens, the German multinational engineering conglomerate, paid $1.6 billion in fines for bribery, a modern record.
Companies look to government for financial bailouts. Where do we look for an ethical bailout? Is there a reliable basis for ethical decisions? If so, how do you get people to follow it?
Nineteenth-Century French aristocrat and political observer Alexis de Tocqueville in his classic work, Democracy in America, wrote, “… liberty cannot be established without morality, nor morality without faith.”
For liberty in government and free markets to work, it helps if the players behave ethically. Faith traditions offer ethical guidelines. Moses, the Jewish lawgiver and liberator, wrote, ““You must not murder … commit adultery … steal … [or] testify falsely against your neighbor.” Jesus counseled, “Do to others as you would like them to do to you.” He offered inner strength to follow His example.
Of course, not everyone claiming to follow God faithfully actually does (witness Enron and televangelist scandals). But Moses’ and Jesus’ teachings provide a good starting place for ethical living.
Laws aim to encourage ethical behavior, but laws do not govern every ethical decision. An ethical society begins with individual ethical convictions and choices by corporate leaders, political leaders, workers, families, people like you and me.
Where should we look for an ethical bailout, something to rescue us from ethical deficiencies? How about up?
Rusty Wright is an author and lecturer who has spoken on six continents. He holds Bachelor of Science (psychology) and Master of Theology degrees from Duke and Oxford universities, respectively.
"Real Answers™" furnished courtesy of The Amy Foundation Internet Syndicate. To contact the author or The Amy Foundation, write or E-mail to: P. O. Box 16091, Lansing, MI 48901-6091; firstname.lastname@example.org
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