From the fact that people are very different it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them differently. Equality before the law and material equality are therefore not only different but are in conflict with each other; and we can achieve either one or the other, but not both at the same time

-- F.A. Hayak

Saturday, April 17, 2010

Rabbi Shmuley Is Upset With Wall Street

Rabbi Shmuley Boteach is upset with Wall Street. It seems much of his anger stems from personal experience, which he then generalizes into a broad condemnation. I responded to his post on his blog, Rabbi Shmuley Unleashed, but because I believe the Rabbi’s reaction was of a kind that completely misses the point, I thought I would republish my response here.


You would do well to read the Rabbi’s original post. Here’s my response.


With the greatest of respect, I wonder if you haven't missed the bigger picture. Wall Street is not a moral agent and therefore can have no intrinsic ethical system -- which I define as rules of right behavior that express an underlying moral conscience. Thus, I would argue that the reprehensible behavior you rightly call to our attention is a consequence of unwarranted regulation. Regulation whose objectives are not to achieve honest and transparent financial transactions, but rather to achieve leftist social and political goals (Senators Schumer and Dodd and the regulations they are proposing spring to mind -- But that's another conversation).

Wall Street is an institution whose "ethics" are imposed on it and reflect and express the values of its imposers -- the federal, state, and local agencies charged with its regulations. If its behaviors are repugnant to you (as they are to me), the problem lies squarely in the lap of those doing the regulating. Wall-Street, like Pavlov's dogs, respond to cues in the environment not moral conscience.

The principle you may be missing is that your criticism of Wall Street assumes the regulations we have imposed have no consequential and unintended side-effects. In truth, as in fact, Wall Street is no more to blame for our troubles than is water to be blamed for finding the leak in a Rube-Goldberg designed and jury-rigged plumbing project. The solution, Rabbi, is not to plug the leaks with more putty, and add additional fixtures. Rather, we need fire the plumber and redesign the system to eliminate unnecessary flows, joints, and fittings recognizing that, if a flaw is present, the water will find it.

Unfortunately, there may be more specific problems with your post.

Your reasoning, unfortunately, consists of mostly a series of anecdotal enthymemes -- syllogisms of which one premise has been suppressed. As it happens, for each point in your post, it is the major premise that has been suppressed. I'll try to illustrate syllogistically:

Your Major Premise: [omitted]
Your Minor Premise: Gargantuan Wall-Street Bank makes money by acquiring and adhering to public and private contracts.

Your Conclusion: All financial institutions are corrupt.


The logical absurdity of this example is obvious - Since no major premise is advanced the conclusion does not follow. Moreover, the conclusion also falls into the logical fallacy of unwarranted generalizations.

Your Major Premise: [omitted]

Your Minor Premise: Matt Zimmerman is a crook and Ace Greenberg a liar
Your Conclusion: Wall-Street is a culture whose only loyalty is to money.


Same as example 1. However, the premise implied by your conclusion, i.e., that loyalty only to money is immoral, suggests that you have a suggestion as to where a for-profit institution's loyalty ought to reside. So, I'll bite. Where?


Your Major Premise: [omitted]
Your Minor Premise: Chase won't reveal the names of its "silent investors".

Your Conclusion: Chases' practices are questionable and unjust.


Are their no other possibilities for Chase's silence? How about violation of disclosure laws imposed by state and federal agencies, the penalties for which, in some cases, are criminal? A far more serious consequence than, say, upsetting a valued client.