Rabbi Avi Weinstein

Archive for October 12th, 2009|Daily archive page

Had they followed the Torah, The Economic Meltdown Could not Have Occurred.

In Uncategorized on October 12, 2009 at 8:27 am

One of the unusual components of the Torah is that ethical principles are often stated as legal ones.  In other words, it’s not only the good and right thing to do, but it is, in fact, illegal not to do it. “Do not place a stumbling block before the blind” (Leviticus 19:14) is not a pithy aphorism, but a law forbidding one person to mislead another–whether it is giving wrong directions, or willfully selling faulty merchandise.  Professors Hershey and Linda Friedman  in an article that appears on the website Jlaw.com outlines the Talmudic principles that, if followed, would have averted the current crisis that has put millions out of work, and threatened a corrupt banking system where major players are perceived as “too big to fail.” The frightening thing about the meltdown is that most of what caused it, was legal. In Jewish law, before many homes would have been foreclosed, the companies would have been taken down and forced to renegotiate terms that were reasonable. The paper makes it case–

that of Jewish law, using six framing
principles: misleading with bad advice; deception and fraud; bribery, both outright and subtle;
honest weights and measures; conflicts of interest; and transparency. Each of these is used as a
lens through which to view the activities and behaviors that caused the current financial debacle
and, in the process, almost totaled the global economy. The paper concludes that Jewish law was
violated at every step of the way towards the current financial catastrophe. Had the bankers,
auditors, rating agencies, politicians, regulators, and mortgage brokers followed the principles of
business ethics described in Jewish law, the global financial crisis would not have occurred.

…using six framing principles: misleading with bad advice; deception and fraud; bribery, both outright and subtle; honest weights and measures; conflicts of interest; and transparency. Each of these is used as a lens through which to view the activities and behaviors that caused the current financial debacle and, in the process, almost totaled the global economy. The paper concludes that Jewish law was violated at every step of the way towards the current financial catastrophe. Had the bankers, auditors, rating agencies, politicians, regulators, and mortgage brokers followed the principles of business ethics described in Jewish law, the global financial crisis would not have occurred.

I would add that the capitalism vs. socialism is a false framework designed to avoid any serious framework for reforming the current system.  The Torah is concerned with personal accountability on both sides.  A person is accountable to make a genuine effort to make a living–if he is capable. A society is accountable for taking care of their most vulnerable who–through no fault of their own–are unable to care for themselves.  The Torah also makes it clear, unlike American law, that the burden of fairness falls squarely on the merchant’s shoulders.  The consumer is not accountable for ascertaining the legitimacy of the merchant–the merchant is presumed to be following the law.  Therein lies the rub.  As long as caveat emptor is the fundamental principle of buying and selling in America, business ethics is destined to be an oxymoron.