Friday, December 2, 2011

Stressing The Ethics Of Responsibility

Morality & Society

The publication of stress test results for U.S. banks will demonstrate that they are able to sustain the impact of a severe recession and allow most of them to receive approval to distribute more capital to shareholders.
Gerard Cassidy, analyst at RBC Capital Markets.

Action springs not from thought, but from a readiness for responsibility.
Dietrich Bonhoeffer

When a man points a finger at someone else, he should remember that
four of his fingers are pointing at himself.
Louis Nizer

Liberty means responsibility. That is why most men dread it.
George Bernard Shaw  

Here is an  excerpt from an article ("Higher 'Stress' for Big Banks") from The Wall Street Journal, published  last week. I sense that most persons might not read this, since it seems arcane and quite particular to the financial sector. But it caught my eye for other reasons, and its importance which will soon become apparent:

Regulators said they will publish full results next year of a bruising "stress test" of the biggest U.S. banks, in a bid to reassure investors about the health of the financial system at a time of intense market uncertainty.

The six largest banks in the U.S. will be asked to gauge losses from a "hypothetical global market shock" related to the turmoil in Europe, the Federal Reserve said Tuesday. The Fed said that test "will be based on market price movements seen during the second half of 2008," when financial markets froze following the bankruptcy of Lehman Brothers Holdings Inc.
That might be a good and sound idea, taking a medical term—stress test—and applying it to financial institutions to gauge their health. Even so, it does not get to the root of the problem, as much as it gives us some idea of health of an institution. But institutions are run by people, and it is the people on top who need a stress test—an ethical stress test. One of the signs of a healthy society, culture or nation is in its ability to take on responsibility for its actions. Like all such actions and behaviors, it benefits society if starts at the top, among the political, religious, business and academic leaders.

Equally important, such actions should be sincere, genuine and transparent. Of course, such a requirement would leave most of our political and business elites failing the stress test of ethical behavior, similar to stress tests that large banks now undergo to test their liquidity. In an ideal world, hardly the case today, a potential leader who fails such a stress test of ethical behavior would not be able to take a position of leadership.

Well, of course, many would find what I just wrote idealistic since it fails to note what is going on today, particularly among political and business leaders, who for the most part care little about ethics. What is important is the appearance of good or doing good, and all efforts are put into the appearance. The chief prevailing idea is to slough off responsibility, at least until one derives sufficient benefits. That's in the best of cases. For others, they care little of appearance or otherwise, since the consequences are so little, so inconsequential, that they continue with business as usual, which is mainly the business of enriching themselves.

That's a shame and explains much, too much of what is happening today, causing misery and misfortune to millions. (One wonders how such persons sleep at night, knowing their actions have caused so much pain and suffering.) Responsibility is the direct opposite of a culture of blame, which is to look elsewhere for the source of one's collective national problems. Of course, it's a lot easier to blame, thereby abdicating responsibility. This happens on an individual level and, sometimes, on a collective national level. But it is an unhealthy dysfunctional way in which to think, act and view the world. It's also a miserable and selfish way to live.

Healthy means affirming an ethics of responsibility, a way of thinking that is foreign to many persons, including otherwise intelligent adults. In To Heal A Fractured World: The Ethics of Responsibility, Rabbi Jonathan Sacks lays out a reason why this so:
The concept of an ethic of responsibility was not at all natural, nor can we take it for granted. It came about through intellectual discovery, revolutionary in their time and still challenging today.  Judaism has distinctive beliefs, not the least of which is the way in which God empowers us to exercise our freedoms, under his tutelage, to create a social order that, by honouring human dignity, becomes a home for his presence. The Bible tells us a story about this and it's worth retelling. (12)
Yes, indeed. It is not natural for humans to act with kindness and to think of others, to act against extreme self-interest or personal ideology, or as the evolutionary psychologists put it, "with altruism." The rewards seem unimportant when compared to the riches and power within their grasp, easily attainable. Of course, there are wealthy philanthropists who do good, including hedge fund managers, who rise to the challenge to better the world (see here and here). Bill and Melinda Gates, Warren Buffet and George Soros quickly come to mind. As do Jamie and Chris Cooper-Hohn and Michael Bloomberg, the mayor of New York City who made his multi-billion dollar fortune in financial news and information media.

But many in high finance and investment banking do little, perhaps reflecting their sense of entitlement. Or, perhaps it's something else, a result of living in a hermetically sealed world of privilege. Or, perhaps, to be fair, too many of our political and business elites are ignorant of the stories and the meanings associated with such real and human biblical lessons, oblivious of the benefits to humanity of such ancient codes and ethics and of the need to grapple with them (e.g., am I my brother's keeper?).

To be sure, many are worth reading and internalizing, particularly those emphasizing self-restraint, kindness and giving, a comprehensive and rewarding approach to life that can galvanize the rich and powerful to encourage and oversee some real and positive changes in the world. Some are doing this already, but more can be done.