Phil Ebersole's Blog

“Yves Smith” wrote an important post on her naked capitalism web log about the claim that economic incentives can be a substitute for ethics and morals.

Economics as it usually is taught considers moral values only as one of the factors that influence free choice.   A few make a specialty of writing books and articles purporting to show that acting on moral intuition always does harm, and that self-interest always works to the greater good.

It is true enough that good intentions can backfire if there is no reality check.  That does not mean simplistic economic goals such as “maximize shareholder value” are a substitute for a moral code.   In our complex economy and big organizations, actions and decisions are so far removed from their consequences that it is impossible to design a set of economic incentives that will automatically generate the common good—especially when the structure of economic incentives…

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