The Ethics of Wall Street

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I got my information from:

1.) http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph (Sources are at the bottom of each graph)

and

2.) http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

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Ethics and Wall Street – two terms that we don’t usually think of together. I think that many of us criticize the insider trading and egregious financial irresponsibility that Wall Street has demonstrated over the past decade by saying things like, “they have no ethics.” I think that we should reconsider this statement and statements like it, however.

Every economic theory has a corresponding political theory and, in turn, a corresponding ethical theory. In the United States, our dominant economic theory is capitalism. Thus, our dominant political theory is that our government should be organized so as to encourage the growth of a capitalist economy. Granted, there are very different opinions in this country as to how that is best accomplished, but you won’t find any politicians calling for a serious shift away from capitalism or a slowdown in the growth of our economy. Our dominant ethical theory, then, would seem to be, at least in general, that personal freedom is good and that every person in this country should have a fair and unrestricted opportunity to compete in our capitalist economy.

Now, that doesn’t sound too bad. But what happens when the wealth in our country, as it is now, is divided in such a way that the top 1% owns 34.6% of the wealth and the bottom 90% owns 26.9% of the wealth? (and those stats are from before the housing market crash, which has affected the bottom 90% far more than the top 1%). I think we have to seriously reconsider whether we are actually living under a system of free market capitalism. The top 1% of the population did not monopolize the wealth because of purely free competition. I’m not saying the top 1% (or 10%) are all evil, but rather that their wealth is due largely to tax rates that are far more burdensome on the bottom 90% and to deregulation which enabled the richest people and corporations in our country to get rich irresponsibly, and then forced the rest of us to pay for their mistakes.

The connection between our current economic situation and our political situation and practices should be clear. The rich did not get rich because of free market capitalism. They got rich because of policy (and lack of policy) which gives them an unfair advantage and poorer citizens an unfair disadvantage. That seems to me more like a government subsidized plutocracy rather than a free market.

Anyway, lets get to the ethics of the matter. If our economic situation is summed up as a massively unequal stratification of wealth, and our political situation is, as a result, largely a plutocracy, then what does this say about our ethical situation? What are the ethics of Wall Street, that financial institution which best characterizes our economic and political situation? When we endorse a political and economic stance we endorse the corresponding ethical stance. Thus, the ethical stance that Wall Street apparently endorses is one in which it is ethical to amass wealth through unfair advantage and to force those who suffer as a consequence to foot the bill of, say, a hypothetical financial disaster that is largely caused by financial irresponsibility on Wall Street. This is a Greatest Happiness Principle, but it is one in which happiness ought to be kept in the hands of the few. It is a Greatest Happiness Principle which is based on the “trickle down effect,” as if the bottom 99% should be grateful for any scraps we get from the high table of the top 1%.

I won’t even go into what this bodes for the viability of democracy as a political system, because I don’t have the space. Nevertheless, it should be clear that not only do we have an economic and political bone to pick with Wall Street, we have an ethical one too.