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Standard Excuse for Immorality October 25, 2009

Posted by Dwight and Lynn Furrow in Current Events, Dwight Furrow's Posts, Ethics.
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During a public debate about the financial crisis entitled “What is the place of morality in the marketplace?”, Goldman-Sachs advisor, Brian Griffith, defended the exorbitant salaries and bonuses his company will pay their employees this year. Goldman-Sachs was one of firms that was bailed out by the Federal Government last year. Although it has since paid back the funds, its current profits and bonuses are made possible by government programs that reduced Goldman’s competition and continues to give them access to taxpayer-supported cheap money.

The compensation packages are controversial because many think they are undeserved and in fact contain perverse incentives (emphasizing short-term profits) that led to the near collapse of our financial system.

Griffith argued:

“We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all.” […]“It was the failed moral compass of bankers which was primarily responsible for why we had this crisis,” […] “The question is: what can we do in the culture of institutions to make them behave in a more socially responsible way?”

Well, one socially responsible thing he might do is to stop using the claim that inequality is necessary to achieve prosperity as an all purpose excuse for immorality.

This is the same kind of crude, delusional utilitarian justification that Hitler or Mao might have used to justify their atrocities.

This is not moral justification. Its just dishonesty. If you want to use the claim that prosperity requires vast inequalities as a justification, the claim must be in fact true. But there is little evidence for its truth.

Via the Wonk Room:

While record bonuses may indeed spur spending on million dollar apartments in New York City, the growth in Wall Street pay — and the growing share of national income that is going to the richest Americans — has not translated into shared prosperity. Consider, “back in 1985, the average annual salary for all workers across the country was actually a bit higher than the average [Wall Street] bonus ($19,000 to $13,970),” but “while the average bonus soared almost 14 times higher (by 2006), the average salary has essentially been stagnant since the mid-1980s.”

Pat Garafalo supplies a handy chart:

 

pay

 

We know, after the past 30 years, that expanding incomes for the well off don’t translate into higher income for everyone else. And even if there is some connection between inequality and GDP, the money has to be put into circulation for it to have the effect rather than sequestered in some bank account in the Cayman Islands.

It might be nice at a conference about morality if they actually discussed morality instead of bogus arguments about economic efficiency.

 

book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

For political commentary by Dwight Furrow visit: www.revivingliberalism.com

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