Penny Ante Ethics

One rhetorical trick used by mainstream ethicists is to make the rules for proper behavior in life seem simple. Call it the "Everything I Need to Know I Learned in Kindergarten" approach. It sells books and posters and also makes it look like anybody who disagrees is just overthinking things. People like this, of course, because it absolves them from having to think. People who hate thinking really hate overthinking, after all.

Why am I prattling on about this?

Because of this email I received this morning:

"Even after the new bankruptcy bill is passed, debtors who file Chapter 7 will still have a moral obligation to repay creditors.

So says professional ethicist and syndicated columnist Dr. Bruce Weinstein, The Ethics Guy.

Dr. Weinstein will show your readers why:

One makes a promise—a moral commitment--when one borrows money
That promise is not erased just because a law removes the responsibility to repay the debt
Debtors should let creditors know that they still intend to repay their debts even after bankruptcy is granted by the state."

Well, that sounds about right, doesn't it? It sounds as if the Ethics Guy has offered us a simple, moral lesson.

I thought about it for awhile. At first, I dashed off a quicky reply, pointing out that the bankruptcy bill makes it harder for consumers to have their debts forgiven by a court, so I didn't quite see the point of this argument at this time. Then, I thought about it a little more and realized that while this sounds good, it's completey wrong. Here's my reply:

"Take a consumer with a credit card, for example. The consumer has current needs but not the money to meet them. The consumer believes that future earnings will be enough to cover current purchases, so, they get a credit card.

The bank issuing the card examines the consumer's financial track record and decides that it can bear the risk of lending to this consumer. But, they don't take on this risk for free. To the bank, bearing risk is a service and it must be compensated. So, they charge interest and fees on whatever balance the consumer maintains and they ask for monthly payments of at least a minimum amount. The consumer pays fees monthly, for as long as they have a balance.

Now, let's say the consumer defaults and is, even under the new law, granted a bankruptcy that absolves them of this credit card debt... do they still have a moral obligation to pay the card company?

The answer is... clearly not. They did, after all, pay the credit card company to bear the risk of their own default. All of those interest payments and monthly fees were payment for a service, after all, and the bank provided that service, which is to bear the risk of lending money."

See, ethics is a complicated business, after all.