Re: Greed in the Economy: It’s the Morality, Sinner (Part I)

In the linked blog post, Jim Wallis issues indictments for greed to those responsible for the current economic crisis. Although he states his argument in theological terms, the same conclusion can be reached easily using the principles of philosophical ethics.

The first step in Wallis' "morality play" is the "aggressive lending to potential home buyers using subprime and adjustable rate mortgages." The lenders profited by encouraging people to buy more expensive homes than they could safely afford, "knowing" that their own share of the risk was protected by the ability to foreclose the loans if (or when) the borrowers defaulted. Without going any further, we have a clear violation of Kant's Categorical Imperative, since the lenders used the unwitting borrowers as a means by which to increase their own profit.

Interestingly, this is the converse of an example that Kant uses to argue that the Categorical Imperative forbids deception. Specifically, in Grounding for the Metaphysics of Morals, he points out that if it were morally permissible for a person to borrow money with no intention of paying it back, then nobody would ever lend money. By similar reasoning, if it were morally permissible to lend money ostensibly for some purpose while secretly planning to foreclose on the loan before the borrower's purpose is achieved, then nobody would ever borrow money (for a purpose). Perhaps it's time for all of us to give more serious thought to the biblical admonishment -- "Neither a borrower nor a lender be." Without resorting to that (probably socially unimplementable) extreme, however, it is still clear that the subprime lenders engaged in unethical behavior.

Of course, this is just the first step in Wallis' "morality play."