Mar
24
Recently, I wrote a rather judgmental article about the personal shortcomings of individuals who find themselves caught up in a possible home foreclosure. My goal with regard to writing about the mortgage crisis is not to berate individuals who have chosen poorly, although it may seem that this is the case. Rather, the mortgage crisis represents a stellar example of what I refer to as “everyday ethics.” This is the notion that not only is the world full of opportunities to develop yourself as an ethical person, it is also full of lessons in what being an ethical person really means. Everyday ethics is about seeing the world as your teacher as well as your classroom, and the mortgage crisis is just one of the many lessons out there.
Already the mortgage crisis has offered us a lesson about taking accountability for our choices. Perhaps there is also an opportunity to flex our ethical muscles. Whether you are actually facing a potential foreclosure, or simply engaging in philosophical thought experiments, thinking about the ethics associated with financial problems is a great source of personal moral development.
Consider the following scenario. You made a bad choice about home loan financing, and now you find yourself facing financial obligations that far exceed your means. An opportunity presents itself for you to be freed of your financial burden, but it requires that you participate in an embezzlement scheme hatched by one of your co-workers. What should you do?
From the standpoint of ethical theory, this is an easy question. Embezzlement is stealing, and most people agree that stealing is wrong under almost any circumstances. But in the world of everyday ethics, this question is not so easy to answer. If you don’t participate in this scheme, you lose your home. If you do, you are stealing. How do you decide what is more important?
This is a challenging situation, as are most real-life ethical problems. It won’t do to suggest that possibly losing your home makes stealing morally acceptable. But we can consider what ethical theory might offer us with regard to settling this confusion. One popular theory of ethics is known as utilitarianism. This theory says that being moral requires us to maximize happiness or good consequences in our moral decision-making. So the question of whether to participate in the embezzlement scheme becomes a question of what will lead to the most happiness.
Utilitarianism may not be what leads us to the best decision in the end, but it will definitely help us get clear about the problem, and hopefully provide insight into what we really ought to do. First, we have some questions to answer. First of all, are we likely to get caught? Second, what are some possible consequences if we do get caught? Will our family be ashamed of us? Will we be setting a bad example for our children? Will this cause other people to lose trust in us?
There are many factors associated with making this decision, and most of them suggest that their really is a lot of potential for trouble if we do decide to pursue the embezzling scheme with our coworker.
Ethical theory is a great tool, even for those who don’t want to spend all day arguing about morality. In this case, a simple theory like utilitarianism helps us to realize that most of the potential for negative consequences and unhappy results lies on the side of doing the unethical thing and stealing to try and get out of financial trouble. It seems that stealing is not only morally wrong, it’s also not conducive to making us happy or creating positive consequences in our lives. A confusing problem where we might be tempted to take shortcuts has been turned into a very clear scenario where the right decision is apparent.
Who knew ethical theory could actually be useful?
Feb
17
Anyone who has been following financial news, or even mainstream media news for that matter, is aware of the degree to which the housing slump has affected the overall economy. The prevailing viewpoint seems to be that we are on the verge of a recession, and various public agencies, NGO’s, and politicians are calling for the federal government to intervene in an effort to rescue our economy and save those who exceeded their means from financial ruin. But before we take such action, we would be wise to consider what ethical issues are at play and determine what morality dictates we ought to do.
Two issues at hand are significant to ethics and the mortgage crisis. First, we must consider if unethical behavior caused or enhanced this situation. This is a tough one, because it is difficult to know what individual agents might have told borrowers about the terms of their loans. From the outside, it appears that many individuals were swept up in the hype of the housing market and wanted to get in on the action. In the highly borrower friendly climate of the past several, pre-bust years, many individuals took out loans under less than ideal conditions, accepting variable rates that had the potential to exceed their ability to pay, as well as borrowing the full cost of their home. Sound financial planners normally discourage both of these things.
However, mortgage brokers are not typically sound financial planners - they are salespersons. They want you, the customer, to sign on the dotted line, and many of them could likely care less whether you ought to be doing what you are doing. Further, all they know about you is what your credit report tells them. Not every aspect of your financial status is revealed to them, and they cannot be responsible for what you fail to share or improperly account for.
More importantly, the people who voluntarily accepted loan terms that they could not afford were all adults. The reason I focus on this point is that I have heard many individuals argue for government bailouts and special loan renegotiations for people who are in danger of foreclosure. The fact that these people made bad choices and either didn’t read or didn’t understand their loan terms is not the fault of the US government, and taxpayers who didn’t lose their heads in a de facto get-rich-quick scheme should not bear the burden of other peoples’ bad choices. To say that mortgage companies are to blame when the economy takes a turn and your loan payment goes up is not supported by facts or reason.
Mortgage companies are not interested in helping you out, they want to make money, and if you don’t know that, you have been living somewhere near Mars for quite some time. Second, nobody, including economists, is terribly good at predicting economic shifts. Mortgage brokers are not Alan Greenspan clones, and we shouldn’t treat them as such.
The point I am trying to make, clearly, is that blaming mortgage companies for the housing slump is a case of misplaced responsibility. Individuals made bad choices, regardless of what they may have been told or led to believe. Loans cannot legally be deceptive, even if brokers can be. Adults who do not read legal documents should not be given a free pass. They should be made to endure the consequences of their actions. Unfortunately, this seems to be the only way that some people learn.
Assuming you buy into the above position, the second ethical concern with regard to the housing crisis is whether the US government ought to get involved to any extent. This is a question of motive. If the motive for government intervention is to rescue the dopes who bought a huge castle that they had no chance to afford, there is little justification for such action, ethically or otherwise.
However, if the motive is to prevent a broader economic collapse and shield those who did not cause this problem from the consequences of actions that they had no part in, this seems appropriate. There is not much support, ethically speaking, for protecting individuals who caused their own demise. Protecting the innocent, however, is an ethical principle that many can support, and that is consistent with our ideas of justice.
To those readers who actually are among the “dummies” who have gotten themselves into trouble, I offer my apologies. I do not intend to judge you unfairly, but I do hope to offer some perspective that others may not. Choices have consequences, plain and simple. Failure to take responsibility for our actions is one of the greatest barriers to personal growth. Even though it may be difficult at times, the best place to begin when trying to assess a negative situation is to ask yourself what you could have done differently. This is difficult, but also empowering. It makes you the center of your moral universe. Better to be in control and do the wrong thing sometimes than to feel as though you are a victim of circumstances beyond your control.