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According to Recent Studies, Wealth Detracts from Ethical Behavior. Or Does It?

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Does wealth breed unethical behavior? I say no.

It’s easy for those of us who aren’t moneyed to lean back in our living room seat of judgement and pontificate about the ethical failings of the wealthy. Hardly a week goes by that this or that rich fat cat doesn’t get his just desserts for what he did, like Texas tycoon R. Allen Stanford who was just convicted on thirteen counts relating to his $7 billion Ponzi scheme. Then there’s Bernie Madoff who’s likely serving the rest of his life for the same kind of crime. Worst of all are the as yet unpunished host of CEO’s, hedge-fund managers, speculators, and other denizens of Wall Street who plunged the world into the great recession.

Is it their wealth, and their desire for greater wealth, that tempts them to commit criminally unethical behavior? This series of studies would seem to strongly indicate yes. Those who were wealthy tended to cheat in games more, took more free candy, were less courteous in their driving habits. The study’s results were quickly published in Crooks & Liars and the Huffington Post, and perhaps led to this hilarious comparison of quotes by Mitt Romney and The Simpsons’ Mr. Burns. But do these indicate that wealth breeds unethical behavior? I am a contrarian, and again I say no.

I am reminded of my career in the Navy. When we were stateside, most sailors behaved everywhere they went. Sure, there were always a few troublemakers, but generally speaking, the sailors behaved. Once we hit an overseas port, however, their behavior would be markedly different. To be sure, most sailors still behaved themselves (particularly in richer ports), but in poorer ports there would always be a significantly increased rate of misconduct, of sailors treating the locals with far less respect than they would treat the locals back in the states. My observation continues to this day, with someone I know very well who is courteous to all when in America, but when this person is in the Philippines, well, it’s not quite a Jekyll-and-Hyde situation, but the difference is stark nonetheless. I suspect that most of the other veterans reading this would agree that they have seen much the same during their careers. For those with little or no overseas experience, think about what you’ve heard about the ugly American tourist, and then read the results of this survey as to who the world’s worst tourists are.

All this would seem to vindicate the conclusions of the studies referenced above, but still I must disagree. I don’t think it’s the wealth at all; instead, I believe it’s the degree to which the person believes that he or she is above the law, that the person believes that he or she is protected from the laws that apply to everyone else. One’s wealth plays a part in that to be sure, but those sailors in overseas ports weren’t rich (though they were blowing money as drunken sailors do). The ones who got in trouble with the locals, however, always seemed to be the ones who thought that the local laws and customs didn’t apply to them, like the American teenager who got caned in Singapore for spray painting cars. He wasn’t a sailor, but none of us felt an ounce of pity for him; the same when in Rome principle applied.

Therefore I would say that no, wealth does not lead to more unethical behavior. Instead, I believe that generally speaking, the greater one’s perceived immunity to the law, the greater the likelihood one will act unethically. If laws and regulations were applied to the rich just as strictly as to the poor, I daresay the rich would be at least as ethical as the poor, if not more so.

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About Glenn Contrarian

White. Male. Raised in the deepest of the Deep South. Retired Navy. Strong Christian. Proud Liberal. Thus, Contrarian!
  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    Even if the law is applied equally, Glenn, the rich have less reason to fear the law than do the poor.

    A $300 speeding ticket, for example, is nothing to a billionaire, whereas to the average Joe it can mean the difference between paying his monthly bills and not.

    Or let’s say Richie Rich clocks a guy in the face with a baseball bat, breaks his jaw and gets arrested for great bodily harm – at more or less the same time that, a few blocks across town, Joe Q. Public is having his collar felt for doing the same thing. Even if the DA throws the book at Richie in exactly the same manner as he throws it at Joe, Richie has access, which Joe does not, to expensive, clever lawyers who are adept at getting his penalty mitigated, his charges reduced, or even making them go away altogether.

  • Glenn Contrarian

    Doc –

    If I had my way, when someone is pulled over for a speeding ticket, one would not pay a specific dollar fine, but would pay a percentage of one’s yearly earnings – say, .25% or so. That would be quite fair, IMO. I can see it now – a $4M/year ballplayer coughing up $100K for a speeding ticket.

    But how would one enforce that law? I can just see the legal battles we’d have over that!

  • http://rwno.limewebs.com Warren Beatty

    Glenn, I’m worried. We agree on a subject. Does that make me a contrarian as well?

    I agree that wealth (or lack of it, or relative wealth in the case of sailors or soldiers) does NOT breed unethical behavior – upbringing and family values (IMHO) have the strongest influence on ethical (or lack of) behavior. In your article, you say, “…instead, I believe it’s the degree to which the person believes that he or she is above the law, that the person believes that he or she is protected from the laws that apply to everyone else.” That belief, of which i could not agree more, is a direct result of respect for others that is learned from parents.

    While I like your examples, I must point out that “wealth” is not necessarily confined to money – hence the “knockout” game, as perpetrators see youth and numbers as wealth.

  • http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

    instead, I believe it’s the degree to which the person believes that he or she is above the law, that the person believes that he or she is protected from the laws that apply to everyone else.” That belief, of which i could not agree more, is a direct result of respect for others that is learned from parents.

    You’re partly correct, but also wrong in your implied contention that poorer criminals’ belief in their immunity from the law is directly related to their upbringing.

    Criminals in lower income brackets are generally under no illusion that the full force of the law will be brought to bear on them if they get caught. However, they often see no alternative but to commit crimes, and as such accept the possibility of arrest and imprisonment as an occupational hazard.

    I’ll grant you that you do get the occasional gang member or other idiot who convinces himself that the police are afraid of him and won’t touch him, but he’s the exception. The general assumption, in the case of the vast majority of those who commit crimes – rich or poor – is that they won’t get caught.

  • Glenn Contrarian

    OA and Doc –

    Do y’all realize that with this view of “wealth doesn’t cause unethical behavior”, I’m actually taking what is the conservative view if it were applied to guns? “Guns don’t cause crime – criminals cause crime”.

    The difference is that people can’t get along without money…but most people in first-world nations get along just fine without guns. Pragmatism over ideology is almost always the more sensible way to go….

  • troll

    Warren asks: Does that make me a contrarian as well?

    …in light of Quiggin’s characterization of contrarianism as…a cheap way of allowing ideological hacks to think of themselves as fearless, independent thinkers, while never challenging (in fact reinforcing) the status quo. the answer is a resounding yes

    (my thanks to wikipedia for this one)

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    And that’s a cheap shot as well, though not exactly undeserved!

    Was Hitchens a true contrarian, contrary to the Wiki definition, or just another blowhard?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    God help me@ I’m running out of minds.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Ready for translation, Eden. No more place for me on this here Earth.

  • troll

    …but geeze nowosielski – what about all that highbrow ‘logic and debate’ over on TD?

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    U’m finally getting through to Ana. There’s hope in the air.

    Besides, I plan to milk Michael Ozark for all he’s worth, just hope he can live up to the challenge. Hetero is another possibility.

    Other than that, it’s slim pickings. I don’t know why I need to say it, but you’re3 badly needed,

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Do you know how it actually feels like? Disconnected from the whole fucking human race.

    I’m sure glad I’m no good Will Hunting and that my genius is not in mathematics. One would hope, therefore, that I’d stand better chance of communicating with mere mortals, since the subject matter is humanity.

    Wrong@

    It’s only more frustrating for the fact.

  • Zingzing

    Wipe that splooge off the mirror, Roger…

  • troll

    …the sun will come out tomorrow – betch’er bottom dollar

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Fer sure.

  • Igor

    What is the proper tax rate for the rich?

    Brad de Long says 70%


    The 70% Solution: Taxing the Rich Department

    Project Syndicate: Via a circuitous Internet chain – Paul Krugman of Princeton University quoting Mark Thoma of the University of Oregon reading the Journal of Economic Perspectives – I got a copy of an article written by Emmanuel Saez, whose office is 50 feet from mine, on the same corridor, and the Nobel laureate economist Peter Diamond. Saez and Diamond argue that the right marginal tax rate for North Atlantic societies to impose on their richest citizens is 70%.

    It is an arresting assertion, given the tax-cut mania that has prevailed in these societies for the past 30 years, but Diamond and Saez’s logic is clear. The superrich command and control so many resources that they are effectively satiated: increasing or decreasing how much wealth they have has no effect on their happiness. So, no matter how large a weight we place on their happiness relative to the happiness of others – whether we regard them as praiseworthy captains of industry who merit their high positions, or as parasitic thieves – we simply cannot do anything to affect it by raising or lowering their tax rates.

    The unavoidable implication of this argument is that when we calculate what the tax rate for the superrich will be, we should not consider the effect of changing their tax rate on their happiness, for we know that it is zero. Rather, the key question must be the effect of changing their tax rate on the well-being of the rest of us.

    From this simple chain of logic follows the conclusion that we have a moral obligation to tax our superrich at the peak of the Laffer Curve: to tax them so heavily that we raise the most possible money from them – to the point beyond which their diversion of energy and enterprise into tax avoidance and sheltering would mean that any extra taxes would not raise but reduce revenue.

    The utilitarian economic logic is clear. Yet more than half of us are likely to reject the conclusion reached by Diamond and Saez. We feel that there is something wrong with taxing our superrich until the pips squeak so much that further taxation reduces the number of pips. And we feel this for two reasons, both of them set out more than two centuries ago by Adam Smith – not in his most famous work, The Wealth of Nations, but in his far less discussed book The Theory of Moral Sentiments.

    The first reason applies to the idle rich. According to Smith”

    A stranger to human nature, who saw the indifference of men about the misery of their inferiors, and the regret and indignation which they feel for the misfortunes and sufferings of those above them, would be apt to imagine, that pain must be more agonizing, and the convulsions of death more terrible to persons of higher rank, than to those of meaner stations…

    We feel this, Smith believes, because we naturally sympathize with others (if he were writing today, he would surely invoke “mirror neurons”). And the more pleasant our thoughts about individuals or groups are, the more we tend to sympathize with them. The fact that the lifestyles of the rich and famous “seem almost the abstract idea of a perfect and happy state” leads us to “pity…that anything should spoil and corrupt so agreeable a situation! We could even wish them immortal…”

    The second reason applies to the hard-working rich, the type of person who:

    devotes himself forever to the pursuit of wealth and greatness….With the most unrelenting industry he labors night and day….serves those whom he hates, and is obsequious to those whom he despises….[I]n the last dregs of life, his body wasted with toil and diseases, his mind galled and ruffled by the memory of a thousand injuries and disappointments….he begins at last to find that wealth and greatness are mere trinkets of frivolous utility…. Power and riches….keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death…”

    In short, on the one hand, we don’t wish to disrupt the perfect felicity of the lifestyles of the rich and famous; on the other hand, we don’t wish to add to the burdens of those who have spent their most precious possession – their time and energy – pursuing baubles. These two arguments are not consistent, but that does not matter. They both have a purchase on our thinking.

    Unlike today’s public-finance economists, Smith understood that we are not rational utilitarian calculators. Indeed, that is why we have collectively done a very bad job so far in dealing with the enormous rise in inequality between the industrial middle class and the plutocratic superrich that we have witnessed in the last generation.

  • http://frivolousdisorder.com/ Frivolous D

    Contrarian,

    I’m pretty new at BC and have been reading some past articles of a few of the more active members. I know that I’m late to the table (commentary wise) but I also cautioned against easy interpretations of the studies on my blog, Does Wealth Really Make You Unethical? | Frivolous Disorder. I think that you made an especially good corollary to the gun control debate.

    I will add that, in general, I’ve appreciated your articles as well as your comments on articles by others.

    So far, I’ve been showing up as Andrew Ratzsch but I will be posting comments as Frivolous D in the future. I’m not sure why since my alter-ego says exactly the same thing that “Andy” would anyway.

    Cheers!

    BTW, Warren Hussein Beatty is a real piece of work, eh?

  • Glenn Contrarian

    Frivolous D –

    Thanks for the observation – I appreciate that! It doesn’t look as if anyone else got the comparison I was making. I look forward to seeing you join the fray –