Tuesday, January 11, 2011

Economics and Ethics

I was listening to a piece on NPR about a move to introduce some sort of code of ethics into the guild of economists.  Many economists resist this sort of thing because they view their trade as a science, a matter of "fact" rather than "value," a matter of "this is how it works" rather than "this is what we should do."

Actually, it is this last contrast where some economists contradict themselves.  I agree that economics is a science--if you do this, such and such will happen in consequence.  An economist can thus suggest that "if you do such and such," "such and such will happen."  Of course there are different schools and so we cannot speak of a consensus on many things, but the basic sense of the discipline as science is clear.

It is when the question of "should" that ethics inevitably becomes part of the process.  Boyer, in his Idea of the Christian University, wisely suggested that it was at this point that a person's Christian values became a part of the equation.  For example, an economist might say--this particular course of deregulation or this particular bank failure will create great economic crisis in the short term, but will result in a more stable market sooner, while more moderate regulation and a bailout will result in a slower and less substantial recovery, but fewer people will commit suicide, so to speak.  (I'm not speaking to the specifics of recent events or the Depression, only trying to give a general impression).

It is at this point that those implementing economic principles, whether it is economists suggesting a particular course of action or the political system, bring ethics into the equation.  The implementation of economic theory always and inevitably involves ethics.


Angie Van De Merwe said...

I am very ill informed as to economics, except the very basics. But, it does seem that those of us, like me, that are not "financila wizards" are still dependent on how the "financial wizards" do business! (And even those that did understand investments, were duped by the "Bernie Madoffs")...

I know that some of us are more risk takers than others, is there anything particularly immoral about that? Or is it immoral to use another's money for one's own purposes without their "consent"? Or is it that what is invested or given has "no strings" attached? And the free market for those that are "financial wizards" are beneficial to such as these?

We had some friends that were "financial wizards" and we loved them dearly, but we did seem to disagree with driving up prices (inflating the market for profit) was a little uneasy for us. Someone has to buy into that particular market, so it is ethical to make them pay more, at our advantage?

For the most part, we have let the 'financial wizards" do their thing and thought that our responsible conservatism would be the best "fit" for us. But, it still has left us with the question of do we know enough to benefit from the "financial wizards"? We have been content with what we have, but don't want to be the "meat" for over-greedy interests of profiteers.

::athada:: said...

Scanning the NPR economists' blog, the conflict of interest appears to with private consulting, say, for a major bank, then testifying before Congress about bank regulation. A group of economists are telling their trade group that people should disclose this.

What I find annoying about some economists is that they move fluidly from description to prescription. And since it is a "science", if you reject their prescription, you are anti-science and ignoring immutable laws. Like denying gravity.

The distinction to be made is that it is a social science, not a hard science. Tests can not be repeated in a lab-controlled environment. People are not all identical carbon atoms.

Add to that the complexity of the global economy, and simple answers become even more unsatisfying. That said, some general conclusions can be made to guide us. I liken this to climate science - an incredible complex system that is not suited to 30-second sound bytes. There is still much we don't know. However, we know enough now to see how humans, generally affect the overall system.

Angie Van De Merwe said...

Yes, I believe that humans are complex, as to motivation, ends, values, choice, and memory. The human is more than a straightforward scientific analysis/reductionism, whether that is understood as nature/nurture; environment/physicality (genetics,sensory perception,memory). This is why social planning, as to human behavior is so dangerous, whether that planning be the material or the "spiritual". Humans are more than our brain function, and yet, human behavior is a product of brain/mind/environmental complexity.

One thing is for sure, that America's deficit hasn't just "happened". There were human and organizational players in the game.

theyenguy said...

Economics is synonymous with ethics, as when one says he has economic regard on an issue, he is saying he has ethical regard on the issue. Every person acts in dispensation, that is in household administration of things civil, monetary and political, and these action come from one’s convictions in philosophy or religion. Thus economics is either a philosophy or a religion; it is defined as the quality and type of ethical experience present between a person, and another or others, corporations and the state, that is government.