Tuesday, January 26, 2010

Rob Arnott speaks truth to power ( financial power)

FT Article by Rob Arnott

Why poor moral ethics prove costly

By Rob Arnott
Published: January 24 2010 10:40 | Last updated: January 24 2010 10:40
A successful economy hinges on trust. Trade must be mutually advantageous the vast majority of the time, with buyer and seller both content. If we are cheated 1 per cent of the time, we are dismayed, but we write it off. If we are cheated 10 per cent of the time, we practise “defensive trade.” We draft contracts carefully, seeking to anticipate every possible abuse.
In 2004, I wrote a piece in the Financial Analysts Journal on the distinction between moral ethics (doing only what is right) versus legal ethics (doing only what is allowed). In a very real sense, the credit bubble and its aftermath hinges on this conflict. Worse, we are going further down this path, at a prodigious pace.
This is a short but terrific description of the moral laxity in the boardroom on Wall Street and apparently in the air in Washington. Please read it all.

and thanks to Rob for putting it out there so clearly.

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