Financial Ethics- Part 1

Finance has a big problem. From 1984 to 2008 there are ten financial crisis around the world an average of one major financial crisis every two and half year. Last global crisis was in 2008, the financial industry's reputation took a big hit at its brand got shredded. It is the time for a deep change. The big problem is that finance has lost its purpose. People engaged in finance forgot the purpose of finance.


Finance is to help people by manage and raise money. It does not always improve the personalities of the people helped that's not not job that's what professionals of all stripes do. They help people when your purpose is to help people. You are less likely do heedlessly aim to make money for yourself. Markets run on trust usually what is unethical is also illegal but not always. No one went to jail for meltdown but lots of folks wish they had hence the shredded brand. One of the most important results of being a professional with ethics is that you perform at a higher level which is good thing. 

Ethics is the performance- enhancing drug to beat all performance- enhancing drugs but it requires your time and effort to take effect. Ethics help you spot issues which saves your company money and keeps the market healthy and functioning for the long term. A finance professional and a company that are ethical encourage proper functioning of the market, avoid bad headlines, reduce reliance on regulations and create a reinforcing culture. They fulfill the purpose of Finance by helping people. Take the time to learn what it takes to be that professional because the single biggest threat to the financial system is ethical failure. 


Teaching Ethics in finance is just a relation ploy a way to put a new face on an old problem no one is interested but wait a minute not so fast. May be it is more than just a lack of interest. The concept that Ethics has no absolute objective truth can make us pause. for the past half centuries, finance theorists have held that people are economically rational and act only in their best interest they created Homo Economicus. 

Homo economocius comes out of a self-interested profit maximization ideology that dominated our economic and social thinking. These theorists say that free markets are the best means of determining the value of houses, cars and other stuff. Markets should also determine our moral code and values. No need for ethics to be taught, no need to worry about moral relativism. Just because people are disagree does not mean there is no moral truth. Differences between cultures are often exaggerated all cultures share some of the same value. 


There are flaws in the free market because people are flawed they are not always rational. Ethics are discursive, we use reason and argument to determine the right and wrong not methods of science. The methods of ethics are just as legitimate as the methods of science. Moral relativism makes no sense. Free markets do not determine values. Teaching ethics won't rid financial services of all unethical acts. Ethical progress takes one step at a time.

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