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What Was Up with Wall Street? The Goldman Standard and Shades of Gray:
Evaluate each of the actions or practices, using ethical analysis models other than the question “Is it legal?”
Sample Answer
What Was Up with Wall Street? The Goldman Standard and Shades of Gray
Introduction
The financial crisis of 2008 revealed numerous questionable actions and practices adopted by Wall Street firms, including Goldman Sachs. While legality should not be the sole criterion for evaluating ethical behavior, other ethical analysis models can shed light on the actions and practices employed by financial institutions. By examining these practices through different ethical lenses, we can gain a deeper understanding of their ethical implications.
Evaluation using Ethical Analysis Models
Utilitarianism:
Actions and practices that prioritize maximizing overall happiness or utility may be considered ethical under utilitarianism.
In the case of Goldman Sachs, some of their actions, such as packaging and selling risky mortgage-backed securities, may have been driven by the pursuit of profits and increasing overall economic well-being.
However, the negative consequences of these actions, including the financial crisis and widespread economic hardship, outweigh the potential benefits, making them ethically questionable.
Deontology:
Deontological ethics focuses on the inherent moral principles and duties that guide actions, regardless of the outcomes.
Goldman Sachs’ practices, such as selling complex financial products without fully disclosing risks to investors, violate the principle of honesty and transparency.
Deontological analysis would deem these actions unethical since they go against the duty to provide complete and accurate information to clients.
Virtue Ethics:
Virtue ethics emphasizes the development of character traits that lead to ethical behavior.
Goldman Sachs’ actions, such as betting against their own clients’ investments (as revealed in the “Abacus” case), demonstrate a lack of integrity and betray the trust placed in financial institutions.
From a virtue ethics perspective, these actions are considered unethical as they fail to demonstrate virtues like honesty, trustworthiness, and fairness.
Social Contract Theory:
Social contract theory examines actions by considering their impact on society and whether they adhere to mutually agreed-upon rules.
Goldman Sachs’ practices, such as engaging in predatory lending and contributing to the mortgage crisis, violate the principles of fairness and social responsibility.
These actions can be seen as unethical under social contract theory as they harm society at large by undermining economic stability and contributing to widespread financial distress.
Conclusion
The actions and practices of Wall Street firms like Goldman Sachs during the financial crisis cannot be evaluated solely on the basis of legality. By employing various ethical analysis models, it becomes evident that these practices were ethically questionable. From a utilitarian perspective, the negative consequences outweighed any potential benefits. Deontologically, these practices violated principles of honesty and transparency. Virtue ethics highlighted a lack of integrity and social contract theory revealed actions that undermined fairness and social responsibility. Evaluating these practices through multiple ethical lenses offers a comprehensive understanding of their ethical implications.
