Ethical Issues in Financial Markets: The American Experience

Abstract

Most people, most institutions, and even most politicians and governmental officials are decent, well-meaning people. Ethical issues sometimes occur not because people are evil or even greedy, but because the way in which their view a situation belies its ethical import. The model of financial markets one adopts, that is, the way one thinks markets operate or should operate, affects one’s perception of those markets and whether and how one focuses on its ethical issues. Part of this model or perception is derived from the political, ideological, and economic context, (in the cases I shall discuss, the United States), and part from individual mores, corporate culture, or more global perspectives. Often ethical dilemmas arise because of a narrow perception of what is at issue, or because one has failed to see clearly how one’s model or point of view concerning financial markets may be incomplete, narrow, or even erroneous. Often, too, that perspective does not include a moral point of view. Managers, traders, CEOs, financial analysts, and bankers do not always think clearly about the normative implications of their decisions and actions-how they will affect (positively or negatively) the well-being other people and other institutions, nor how their actions may or may not treat people fairly, respect them and their rights as human beings. This “moral muteness“ in turn can have dilatory economic as well as moral effects. By illuminating these models one can sometimes begin to clear up these problems.