The Difference Between Moral Hazard and God’s Grace

28 04 2011

 

If corporations are considered to have most of the same rights as humans should they also be entitled to Grace?

Last summer the Supreme Court decided that corporations had the right to make unlimited contributions to political candidates.  For a number of years labor unions have also been able to make contributions to political campaigns.  This ruling is just another incident where the law has held that corporations have many of the same rights and responsibilities of humans.  Proponents of corporate personhood believe that corporations, as associations of shareholders, were intended by the founders and framers to enjoy many, if not all, of the same rights as would the shareholders acting individually, such as the right to lobby the government, the right to due process and compensation before being deprived of property, and the right, as legal entities, to speak freely. All of these rights have been upheld by theU.S.courts.  On the other hand those same shareholders, employees, and officers have limited liability from suits and actions.  In fact, one reason for incorporating is to limit the liability of those in this corporate association.  This convergence makes me wonder if there is a relationship between what has come to be called Moral Hazard and God’s Grace. With the financial crisis that we’ve experienced in the past two years there’s been a lot of discussion about Moral Hazard.  Massive bailout of banks, insurance companies, and the auto industry have made many wonder who’s responsible for this crisis and that not only should the corporations be punished, but also that individuals within those corporations should have accountability for their imprudent decisions.  So, what is Moral Hazard?

Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk.  Moral hazard arises because an individual or institution does not take the full consequences and responsibilities of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to hold some responsibility for the consequences of those actions. For example, a person with insurance against automobile theft may be less cautious about locking his or her car, because the negative consequences of vehicle theft are (partially) the responsibility of the insurance company. (Wikipedia)

 CITI bank is a good example of Moral Hazard occurring over and over because no accountability or responsibility is taken for imprudent, unethical or criminal actions. Citibank was started in 1812 and has been bailed out successive times in its history.  
  In the latest financial crisis other banks and two of our major auto companies were determined to be too big to fail. It was believed that for them to fail would have more far reaching and long term disastrous effects.

So, is forgiveness of debt and poor judgment by corporations, their officials and shareholders sufficient to create situations where we bestow corporate grace on them? 

Biblical Grace can be explained by the following scripture:

Eph 2:4,5, 8-10 (NIV) But because of his great love for us, God, who is rich in mercy, made us alive with Christ even when we were dead in transgressions–it is by grace you have been saved. For it is by grace you have been saved, through faith–and this not from yourselves, it is the gift of God–not by works, so that no one can boast. For we are God’s workmanship, created in Christ Jesus to do good works, which God prepared in advance for us to do.

Somehow it seems a bit ludicrous for me to suggest that God can forgive a corporation even though it’s easy to see how an individual can be guilty of Moral Hazard.  So, what happens when a powerful corporation creates a situation like we faced in the 2008 financial meltdown?  In this case there’s a lot of blaming, hearings and promises of new legislation to remedy the problem.  Occasionally there are a few people who are tried and put in jail, but often after the furor dies down, nothing substantive happens and we’re off and running to our next crisis.  And if you saw the congressional hearings those with the power who were complicit in the crisis didn’t even make an apology.  In many cases the buck was passed to someone else including the government and congress.  Contrast this to the CEO of Toyota who came to the congressional hearing and took full personal responsibility for his company’s lax engineering of the gas throttle installation. 

To me Moral Hazard is tantamount to what Dietrich Bonheoffer called cheap grace.  Cheap grace is the grace we bestow on ourselves. Cheap grace is the preaching of forgiveness without requiring repentance, baptism without church discipline, Communion without confession…. Cheap grace is grace without discipleship, grace without the cross, grace without Jesus Christ, living and incarnate.  Grace without accountability or responsibility.  So, it’s no surprise that as a society whether it’s in business, labor or government we see the equivalent of Cheap Grace.  And it’s no wonder that individuals and other institutions practice a lot of cheap grace.  Whether it’s about being responsible for children we produce, or holding the sanctity of marriage intact or working for an organic and wholesome community, we often seem to think we can leave it to someone else.   We abdicate responsibility and want to blame others or expect to get off Scott free.

On the other hand Bonheoffer also talks about costly grace.  In his case he was talking about the costly grace of standing up against the Nazi’s in Germanyand finally dying in a concentration camp for his actions. As he put it so well, costly grace is the gospel which must be sought again and again and again, the gift which must be asked for, the door at which a man must knock. Such grace is costly because it calls us to follow, and it is grace because it calls us to follow Jesus Christ. It is costly because it costs a man his life, and it is grace because it gives a man the only true life. It is costly because it condemns sin, and grace because it justifies the sinner. Above all, it is costly because it cost God the life of his Son: “ye were bought at a price,” and what has cost God much cannot be cheap for us. Above all, it is grace because God did not reckon his Son too dear a price to pay for our life, but delivered him up for us. Costly grace is the Incarnation of God.

Can we call ourselves to accountability?  Can we call our institutions to accountability?  The price is high and it’s hard to go it alone like Bonheoffer did.  As persons involved with our faith communities we can work together to hold ourselves and our institutions accountable and embrace Grace as the Incarnation of God.


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Categories : ethics

Ethics of the Expedient

1 02 2010

A friend and I were discussing ethics and he told me a story of when he was in high school.  He was on the track team and one day after practice the boys on the track team found that the Coke machine was broken and that they were able to get Cokes out of the machine without paying.  My friend along with a lot of the other track team members took Cokes.  The next day the track coach found out about the incident and questioned all the boys as to whether they had taken Cokes.  My friend was the only one to admit to taking a Coke.  As a result of his confession he was kicked off the team for the rest of the year.  As far as he remembers, he was the only one that was disciplined.  Was this just?  Should he have kept his mouth shut?  Was there another way for the coach to handle the issue?

In game theory, there is a classic game called the Prisoners Dilemma.  The scenario is as follows:

Two thieves are believed to have robbed.  They are split up into separate rooms and given the chance to confess.  The specified consequences are as follows.  If one confesses and the other doesn’t the one that confesses gets off for his testimony while the other gets ten years.  If both confess they each get a five year sentence.  If neither confesses they get a one year sentence for possession of fire arms.  It would seem that confessing would be the desired outcome except that he doesn’t know whether the other thief is confessing or not confessing. 

 In this scenario, it would be in both thieves self interest not to confess, even though they neither one know what the other will do.  If they both do not confess, they will only receive a one year sentence.  What my friend experienced is a variation of the Prisoners Dilemma.  Unfortunately for him, he didn’t know what the consequences of a confession meant and he did not tell on others that he knew had also taken Cokes.  He bore the whole consequence.  What do you think would have happened to him and the track team if he had not confessed and no one else had confessed?   My guess is that it would have resulted in a much lesser consequence for the whole team.  Would the track coach have suspended the whole team for the season?  I doubt it.  Maybe harder workouts and some form of group consequences, but not as severe as what my friend experienced.  In a sense he became the scapegoat.  He did what he thought was right.  I imagine that’s what he was taught. 

 In the last few years we’ve seen business persons, professionals, clergy and politicians go to jail for breaking laws or acting unethically.   This is as it should be.  But as a result of the actions of a few, those who are innocent are also implicated by association.  New laws and regulations get passed or implemented to ensure that future infractions will be avoided.  Intuitively though we know that those who will be unethical and unlawful will find ways to circumvent the law and go on doing whatever they deem to be in their interest. 

 The Prisoners Dilemma and other game theory games are based upon rational and mathematical constructs rather than what’s ethical or moral.  Ethics and morals sometimes come into play in game theory but the games tend to be independently determined only by logic, reason, and mathematics.  It brings to mind the crucifixion and resurrection of Jesus.  He could have probably avoided crucifixion by “going over the hill”, so to speak which was a theme in the book and movie, The Last Temptation of Christ.  Not only could he have avoided death, but he might have even been able to continue his ministry in some minor way.  No matter what your belief is concerning the atonement, most Christians would agree that what happened on Calvary and at the tomb is a cornerstone of what we believe.  The Romans and the Pharisees probably believed that by killing Jesus, this new radical movement would end.  After all, all his disciples had deserted.  Jesus bore the burden of death and defeat but showed us the power of God in the resurrection.  And for centuries we have embraced this God of new beginnings and hope.  We believe that the Kingdom exists both now and in the future.

            In this hope and belief, we also realize that we are sometimes called to pick up our cross too, not just because we want to be martyrs but because that’s a price of God’s freedom.  I don’t know the deeper motivation of my friend and the Coke machine incident. Whether it made an impact on his team mates, we’ll never know.  But even if they thought he was a chump is not important.  What is important is that he did what was right and suffered the consequences for the whole team, even when they abandoned him.  As Christians, we’re called to risk doing what is right in spite of the consequences.  That’s not always an easy thing to do, when we don’t know whether following ethical principles will make any difference.


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Cultures in Isolation (Part 2)– Don’t Tell Me What to Do

22 11 2009

Jeremiah  5: 1 ; 7: 3-11

“Go up and down the streets of Jerusalem, look around and consider, search through her squares.  If you can find but one person who deals honestly and seeks the truth, I will forgive this city.”

            ”Reform your ways and your actions, and I will let you live in this place.  Do not trust in deceptive words and say, ‘This is the temple of the LORD, the temple of the LORD, the temple of the LORD!’   If you really change your ways and your actions and deal with each other justly, if you do not oppress the alien, the fatherless or the widow and do not shed innocent blood in this place, and if you do not follow other gods to your own harm, then I will let you live in this place, in the land I gave your forefathers for ever and ever.  But look, you are trusting in deceptive words that are worthless.”

            No one likes a prophet.  It was true during the time of the prophets and it was true in the time of Jesus and it’s true now.  In today’s world the language of the bible and the concept of God as a vindictive capricious old man seem antiquated and mythically irrelevant.  Most people can’t relate to this kind of God, even if they believe in God.  The Church of the past placed great emphasis in this understanding of God and people both in the faith, and unbelievers say that this concept of God is an ancient concoction that needs to be purged.  J. B. Phillips in his book “Your God is too Small” explores our historical and limited view of God.  Characterizations of God as the “resident policeman”, “parental hangover”, “the grand old man”, and “the puppeteer” are all limitations and holdovers from a time past.  He goes on to say that because of the immensity of God our human mind cannot wrap itself around the fullness of God’s being.  He states that the closest we come to an idea of the nature of God is through Jesus of Nazareth.  He quotes John to make his point.

John 14: 9  “Anyone who has seen me has seen the Father.”

John 14: 6 “I am the way, and the truth and the life. No one comes to the Father except through me.” 

Phillips interprets this by saying, “ Jesus says, in effect, that there will be no inward endorsement of the truth of the way of living he puts forward as the right one, until a man is prepared to do the will, i.e. co-operate with the purpose of God.  This at once rules out arm chair critics of Christianity and any dilettante appraisal of it merits. “You can’t know,” say Christ, “until you are willing to do.”   He further states that Jesus calls us to “pick up our cross (i.e. bear the painful cost of that denial) and follow him (i.e. live positively according to the principles that I teach and demonstrate).” 

“Now at the moment a person does this, even temporarily and tentatively, they find themselves in touch with something more real than they have known before.  There is a sense that they are touching a deep and powerful stream that runs right through life. In other words, the moment a person begins to really love, they find themselves in touch with the life of God.”

            There is also the warning that even though we can experience Grace, there are consequences to our actions.  Even our best intentions are subject to judgment and consequences.  Just because we don’t know God’s law or can’t foresee the unintended consequences, none the less consequences flow out of our actions.  Our ethical and moral decisions have effects.  I don’t think that God sits in Heaven and metes out judgments and punishment on a daily basis.  To the contrary, God has set in motion God’s physical and spiritual laws for us to live by, interpret or ignore.  Even in the 21st century, with our knowledge base, we don’t always foresee the results of our actions. 

            In spite of our cultural isolation and the realities of the challenges facing the human race, we still stubbornly live out of personal self interest, a sense of individualism, positivism or on the other end of the continuum, a sense of dread and doom.  Much of what we hear from the television pulpit is the gospel of prosperity.  If we only believe enough, we are told, God will make us prosperous.  On closer observation, we know that’s not correct.  Often, regardless of belief and right actions we will suffer.   None the less, God is with us.

             On closer observation we see that Christ takes all of life into Himself.  Our separation and lack of understanding or adherence to His will are all taken into Himself.  And in so doing he still acknowledges his love for us in this isolated and broken state.  He weeps and bleeds and dies in our separated state.  He shares in our joys and our life’s learnings.  In His resurrection he acknowledges and points to this alternative way and it leads to Him and to new life.  He points us towards the God of new beginnings; that we can make mistakes and even be lost in our will to power, but that if we are willing to acknowledge this brokenness we can start new, even knowing that we will fall again.  Even if for only a little while we can be in the Light and know that there is another way and that we are always welcomed back.

            But acknowledging our fallenness is only the first step.  We next have to commit to change and learn from our mistakes and realize that we are not the center of the universe.  We look back at Gen. 3: 22 “And the Lord God said, ‘The man has now become like one of us, knowing good and evil.’   We might say further that we have the ability to know good and evil, but sometimes our eyes are covered with scales. 

In William Menzies 1936 movie adaptation of H.G. Wells book Things to Come, the world is followed through a series of wars and plagues from 1936 until 2036 until a pool of technocrats build a society in Basra Iraq and finally in 2036 dominate the world with their superior technology and intellect.  Even in their domination there is a sense of cold resignation that something is missing and one of the characters Cabal, then delivers a speech to the idea of progress and humanity’s quest for knowledge, asking, “And if we’re no more than animals, we must snatch each little scrap of happiness, and live, and suffer, and pass, mattering no more than all the other animals do or have done. It is this, or that. All the universe or nothing. Which shall it be, Passworthy? Which shall it be?”

I contend that there is another alternative.  It is that faith in the power of relationships, where we live, love, suffer and pass but along the way, are connected in a spiritual way to our inner selves, to one another and to God.  Our salvation is not in our knowledge of the universe, or in things, wealth or power, but in the realization that we are all connected and unconditionally loved in spite of our self absorption.  Life then becomes an adventurous journey to share that vision with one another and live into it.


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Categories : ethics


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