Sunday, October 30, 2011

From Deadly Sin to Virtue

I had more responses to last week’s blog posting, Greed is Still Good, than any since I skewered Reverend Jones last September (Is That What Jesus Would Do? Really? ). I was pleased that the responses were thoughtful and articulate. While the core of my argument was about the economic theory known as the Law of Creative Destruction, most of the responses were a reaction to the headline. Apparently mentioning one of the seven deadly sins is a great way to get a response.

Of all the responses, most interesting to me was a comment from the Mensa group on Linked In by Richard Irwin. Here it is:

“There is no point in having wealth and power if it is just to serve our own ego. Wealth should be spent so others benefit from it, not hoarded, for that is miserly. Power should be used to serve others, not ourselves, as true happiness is not achieved through the domination of others. Equally, poverty is of no benefit to the individual or the society they find themselves in.

“We now need to look at sustainability and balance and learn to rebuild the diversity of the world we inhabit. The ancient Egyptians had a concept they called Ma’at which was the presence of truth, order, balance and justice in the world. I believe that after a century or more of world conflicts and unrestricted exploitation, that the concept of bringing Ma’at back into the world through the deeds we undertake in our lives is a valuable one.”

I must confess that I had never heard of Ma’at who, as it turns out, was an ancient Egyptian goddess representing the concept that Mr. Irwin describes.

In reading about Ma’at, I found myself thinking of Practical Wisdom, the principle defined by Aristotle. The result of the application of Practical Wisdom is a virtuous society. Two great books, published in the last year, examine Aristotle’s thinking in the context of modern society. The first is "Justice: What's the Right Thing to Do?" by Harvard professor, Michael J. Mandel and the other is "Practical Wisdom: The Right Way to Do the Right Thing" by Swarthmore professors, Barry Schwartz and Ken Sharpe. Schwartz gave a great lecture on the topic last November which can be found on by clicking HERE.

The critical element of Practical Wisdom in its application to how our society works is the flexibility to bend the rules -- to use judgment to structure the best outcome for society and its inhabitants. Schwartz compares it to Jazz improvisation. The notes are on the page but the musicians play a variation that results in beautiful music. My interpretation is that he is talking about the difference between rules and principles (a construct first pointed out to me by a colleague).

In American society, our response to people and institutions that are unprincipled is to create rules to govern their behavior. But Schwartz points out that doesn’t work. Hence we have laws like No Child Left Behind that leaves children behind and Dodd-Frank Financial Reform that doesn’t reform the financial system.

On the topic of bankers – that target of the OWS crowd – Schwartz points out the bankers are smart people and “like water, they will find the cracks in any set of rules”. What we need, posits Schwartz, is the moral will to do the right thing and the skill to figure out what that is. In other words, we need principles.

He further points out that rules (or regulations in government parlance) “create people who only respond to incentives”. If you reward teachers for their students achieving higher test scores, that’s all they will teach. If you reward doctors for doing too many medical procedures, they will perform too many medical procedures.

Great thinkers like the college professors who have written on this topic make a material contribution to our society by creating a construct for our institutional leaders – commercial, religious or government -- to absorb and adapt to a practical application. But for most of us there is a simpler way to look at it.

It’s not what you do but how you do it. There is nothing inherently wrong with being a lawyer; however, lawyers who put their own interest ahead of their clients are unethical. There is nothing wrong with being a doctor; however, prescribing too many procedures so you can make your next boat payment is unethical.

Examples abound… Journalists who bend the truth to create a headline that will please their editor… legislators who are guided by special interests that make donations to their campaigns… Auto mechanics that convince you to make repairs you don’t need. And so on.

During the years before the financial crisis, Goldman Sachs sold Collateralized Debt Obligations (CDOs) to their customers while their proprietary trading desk was “shorting” those same securities through the purchase of Credit Default Swaps (CDS’s). They made money while their customers lost a bundle. Unethical? Definitely. This is a simple principle anyone can grasp.

Illegal? Maybe. We’re still sorting that out. Legal is about the rules while ethics is about principle.

Is investment banking in and of itself unethical? In practice, investment bankers arrange for capital financing to enable entrepreneurs and corporations to invest in business growth spurring demand for goods and services and creating jobs. Is that unethical? I think not.

Wall Street – the financial services industry – provides a valuable service that enables the prosperity of American society. That investment bankers can make millions while doing so is neither illegal nor unethical. The OWS crowd may take issue with that. Despite the lack of a coherent platform, one clear message from these protests is that our system lacks social justice.

Perhaps we can find some guidance in Ma’at. Consider this from the Tour Egypt website:

“Ethics" is an issue of human will and human permission. It is a function of the human world of duality. What is "ethical" for one group is sin for another. But Ma'at, the reality that made all groups what they are is transcendent of ethics, just as a rock or a flower is amoral, a-ethical, without "truth or falsehood." How can a flower be "false" or "ethical?" It just is. How can the universe be "ethical or moral, right or wrong"? It simply is. That is Ma'at.”


  1. In a society governed by rules not principles there will always be those that will find ways to circumvent the system. An ethics based society would train and nurture value based behavior while admonishing bad behavior. I would encourage ethical training at all levels of society. I would also submit that we collectively and publically need to set up a system that better humiliates those that clearly go over the line. Yes, while shorting stock that you’ve just sold may not be illegal, clearly it’s unethical. What comes to mind is the rage that was expressed in the 1976 movie Network a satirical film about a fictional television network. When faced with an impossible and blatantly unethical move by the television studio Beale the anchor galvanizes the nation with his rant, "I'm as mad as hell, and I'm not going to take this anymore!" and persuades Americans to shout out of their windows during a lightning storm. How can we take this rage and channel it to create a modern version of the public stocks, those once used for public punishment and humiliation?

  2. How can we reach a point of Ma'at when the majority of the people, at least in this country dwell on the ends of the spectrum. Common ground is about as abundant as cheap beachfront property in Miami. Okay, beachfront right now in Miami is a little cheaper than its been in a long time due to the economic distress in this country. Which makes my point and maybe yours too John. If we all are in such distress, and I would think obviously we would want to relieve that distress. So why are we not working towards common ground and in that sense a form of Ma'at?

    The ancient Egyptians did not have to deal with the internet and the very rapid flow of information, either right or wrong information. Do you think the recent upheavels in Egypt would have been possible centuries ago? Do you think that a movement like OWS would have spread so fast 100 years ago? OWS is spreading like a virus without even a coherent message, which may be the message that attracts so many. When there is so much polarization starring us in the face every morning when we turn on whatever device that gives us our update on what is going on in the world (it surely isn't newspapers anymore, but I digress), does this war of words drive us to a state of Ma'at or away from it? I think it has become so popular to be the purveyor of all that is on the extremes and what separates us instead of what we have in common, which only serves to get our blood boiling at the beginning of the day, that we head out to whatever we are going to each day with a load of disgust and in some cases hatred for the other extreme. What we come home to each night is more of the same as we have but two choices, the news as reported by MSNBC or FOX. There is not much inbetween those two in the spectrum.

    Which gets me back to OWS, and their disdain for all things corporate, as they absorb all this information coming to them 24/7 via their Iphones, Ipads, Tweets, FB, etc. Which leads me to believe that Steve Job's last words of "Oh Wow, Oh Wow, Oh Wow" might have been more of a lament of the monster he may have helped create than the potential for good and the opportunity for us to be united. I am sure he invisionsed something better with these amazing tools he brought to the world. We have so much coming at us at what now seems like the speed of light that we may not have enough "broadband" in our heads to assimilate the amount of "broadband" available to us in our electronic toolboxes. Remember the phrase, information overload? Well we are surely approaching that point with yet more "apps" yet to come.

    While what John proposes is going back to something that would be a wonderful change from where we are at today, I am not sure that our generation and maybe even the next generation will be able to do, as we struggle to come to terms with all this information bombarding us every minute of everyday. If only we could harness this amazing thing that people like Steve Jobs and others have given us and use it to unite us and help us find the common ground, then reaching Ma'at may be attainable. Then, just maybe Job's last words of "Oh Wow, Oh Wow, Oh Wow" might have signified what he really wanted for us all.

  3. Ken, old friend... Ma'at accepts the balance inherent in the world you describe. What is virtue for one man may be sin for another. So, while I may be an advocate of Wall Street as a vital American industry, another might see it as an evil enterprise. Or, while you might like FOX, another might like MSNBC.

    Old men like you and I might like to lament the state of affairs in the world today; however, the younger generation might accept the balance -- the Ma'at -- of today's society. ;->

  4. Deep. DEEP! But how did the ancient Egyptians apply to the
    slaves who built the pyramids? Ted

  5. John ...... as usual, your insight is 20/20. I enjoy your thought provoking blogs immensely. Just lamenting ........ :o)
    Posted by Ken

  6. I guess that the Fed and by extension Wall Street are applying to the investors of the nation. Maybe Marko Ramius (The Hunt For Red October) was right; a little revolution now and then is a healthy thing.

  7. Courtney Schumacher • I am still unfamiliar with Ma'at. What is that?

  8. Richard Irwin • The ancient Egyptians had a concept they called Ma’at which was the presence of truth, order, balance and justice in the world.

    The principle of Ma'at was expressed through a Goddess of the same name, but people were asked to allow Ma'at to flow through them in the way they behaved.

  9. John Slegers • Ever heard of Kant's categorical imperative? I think it at least partially correlates with your interpretation of the Egyptian concept of Ma'at.

  10. John Slegers • @ John Calia :

    " Kant's categorical imperative requires one to do "the right thing" irrespective of the result. A simple example would be telling the truth under all circumstances. "

    It really depends on what imperatives you start with. The more abstract your imperatives are, the more pragmatism is allowed and the less dogmatism is required.


    " Ma'at would accept that capitalists would view a re-distribution of wealth as theft while the OWS crowd would view it as social justice. "

    Both perspectives are incompatible. Unless you allow specific circumstances to determine which of both perspectives is the correct one at any given time, your interpretation of Ma'at seems useless as a criterium for morality. Moral pragmatism is perfectly valid, but we should avoid arbitrary choices as much as possible. Categorical imperatives should be the axioms of morality, ie a handful of partially arbitrary choices on which an entire moral framework is constructed much the same way mathematics is based on a handful of partially arbitrary axioms.

  11. @John Slegers

    My guess is that you are better educated than I on this topic. However, I would like to reply anyway. :)

    The trade off between pragmatism and dogmatism sounds very much like Aristotle's Practical Wisdom. My blog post supports this approach and, like many in this country, I lament the loss of wisdom at the highest levels of institutional leadership.

    I agree that the two conclusions are incompatible. But Ma'at is about balance and accepts that both can co-exist. In an open society governed by a democratic system, there will always be differences of this sort. That our government leaders cannot apply Practical Wisdom to reach consensus is the tragedy.

  12. John Slegers • @ John Calia :

    " In an open society governed by a democratic system, there will always be differences of this sort. "

    Maybe. But is that the kind of society we want? Remember that it was democracy that got a man as wise as Socrates killed for what he believed in. I can't say I'm convinced that a democracy of any kind is in any way superior to a technocratic system.

  13. John Calia • Great theory. But, where will you find competent technocrats. I can't think of anything the government does competently except make war.

  14. John Slegers • @ John Calia :

    " But, where will you find competent technocrats. "

    When dealing with corporate matters, look for the best CEOs. When dealing with agricultural matters, look for the most succesful farmers. When dealing with exact science, look in academe for the most respected scientists. When dealing with matters of justice, look for the most respected judges.

    Basically, you look for expects wherever they can be found. Competent technocrats are most likely to be found among those who get the best results or achieve most respect in their respective fields of expertise.


    " I can't think of anything the government does competently except make war. "

    And even that is dealt with in a fairly incompetent matter when you consider the number of troops still present in Afghanistan and Iraq.

    Any kind of "democracy" always breeds incompetence as it favors incompetent populists with a lot of charisma and economic elites over experts with little charisma and little money to back them. So what can you expect from such a system other than incompetence?

  15. The nature of politics breeds incompetence. It cannot be overcome by a theoretically well designed bureaucracy (technocracy). Examples abound. They are too numerous to mention. The Soviet Union comes to mind. Can you think of one that works?

    The American free enterprise system offers the best path to prosperity -- and it has throughout our history.