Legal, Profitable, and Evil

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In 2004 business was good for Goldman Sachs, and it was getting even better. The financial giant had recently devised a new way to make money: they bundled sub-prime mortgages into securities (Abacus bonds), peddled the shoddy securities off to pension funds, and then helped other clients to bet against the same shoddy securities they had just sold. Goldman employees seemed to be fully aware that their behavior was unethical. They were even quite pleased with themselves, congratulating themselves in internal emails like the following:

“Just made it to the country of your favorite clients [Belgians]!!! I’ve managed to sell a few abacus bonds to widows and orphans that I ran into at the airport…”

In late 2008, when the worldwide economy was in freefall (in large part due to the financial industries’ malfeasance), Goldman Sachs’s scheme came to light and was met with public outcry. People demanded justice, especially since it was they, the public, that were now paying for the massive bank bailouts that were keeping the financial system afloat. Oddly enough, six years later not a single high-level financier has gone to jail or been stripped of their ill-gotten gains. The reason? While Goldman Sachs and other financial institutions had engaged in unethical behavior, they hadn’t broken any significant laws (thanks to the financial industry’s diligent army of lobbyists) and all lawsuits were being settled out of court.

What does all of this mean?

On the one hand, it means that it is possible to make a fortune destroying the world, and that it does not require breaking any laws to do so. But there’s a deeper lesson to learn as well: there is no point in looking to the law (governments) or markets (economics) to tell us what is right and what is wrong. Governments overlook injustices on a regular basis and markets will happily facilitate the buying and selling of junk. These are human institutions, which means that they are as corruptible and fallible as the humans that comprise them. They are far too frail and faulty to be used as moral and ethical guide rails.

Our only hope for living good lives, leading ethical companies, and building thriving communities has to come from something that transcends individuals, governments, laws, nations, markets, traditions, and culture. It seems to me that this can only be God and/or reason. Ultimately, every ethical or moral framework rests on God, reason, or a combination of the two. So if you have an ethical or moral framework, now is the time to inspect it closely. And if you don’t have one, now is the time to find one.

Then the next step is even more challenging: we have to submit ourselves to the moral/ethical framework we have chosen. And we have to stick to it—at home, at the office, and elsewhere. We need to communicate how we distinguish right from wrong and let others hold us accountable. If we pick our frameworks up when they are convenient and set them down when they aren’t, we have not truly committed to them, and they serve no real purpose. We are shaping them rather than letting them shape us and our organizations. And it is in this way that individuals and organizations go about the tragic business of losing their souls.

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