Ethical behavior

If you read Plato you may recall the question he poses concerning a magic ring of invisibility. The question can be summarized as follows, if you could do whatever you wanted to do without the danger of being caught, would you have any reason to be ethical or moral?

The question gets to the root of a human dilemma, is being "good" something that we should do or is the ultimate goal to "take care of number 1"? Now remember, this is pre-christian and the ancient Greek view of the afterlife was not the same as our current views. Further, if you really want to think about the question, getting caught by God would make it irrelevant.

So, giving no real fear of retribution, would most of us behave well, meaning not taking unfair advantage of our fellows. Unfortunately, based on recent headlines and events, it would seem many of the people in the financial industry are clearly on the side that says, get away with whatever you can. Now, I don't mean to pick on the financial world, but we see more examples there where unscrupulous people took advantage of people who for had no way of discovering their wrongdoing.

Of course it is probably unfair to focus on the highly publicized cases, but in an industry that relies on making trades where generally there has to be a winner and a loser, we probably cultivate some of the most cut throat behavior possible. It is also clear that some of the players are going to have an advantage for legitimate reasons. However, how do we control the unscrupulous players?

If you consider the financial world, there have been many safeguards designed in by the markets themselves. However, many of these self-regulating rules are not as effective as they once were as the old methods have changed due to changes in technology. In fact, one big issue that needs to be restored is trust. There are many, many people who simply don't trust the financial industry.

Government has to be part of the answer, but it can't be the complete answer. Government will never be big enough or capable enough to prevent abuse, it is more appropriate for it to punish abusers who get caught.

The financial industry needs to do what it needs to do to reform itself. This has to take into consideration that public trust is important, not just because of the amount of money that retail investors invest, but because public perception will lead to onerous Government intervention, and we know that can't come out well.