Sure - they signed a contract that I would handle their savings.
Not the same as the sort of thing I was thinking of.
But answer the question anyway - if crime pays, does that mean it is moral as well?
Regards,
Shodan
Crimes are not committed based on the mutual consent of both parties. Contracts (including any termination or liability clauses) are. Completely different animals.
Acting within the bounds of a contractual agreement can only be immoral if the contract itself is immoral. It is absurd to believe that exercising an option that exists within a contract, which all sides have agreed to of their own free will, is inherently immoral. If one party violates a contract through fraud or another crime, that is also a different matter. That, obviously, is not acting within the bounds of the agreement.
You’re a smart guy… I have trouble believing that you think that every termination of a contract constitutes an act of fraud. I hope you explain what you’re driving at, because you are a better poster than this rather silly scenario you are using as an analogy.
Did the contract specify the remedy in the case of you deciding not to return their $100 Million? Did your widows and orphans write the contract, in consultation with a bevy of high powered corporate lawyers?
What about the bank’s promise to the lender? Suppose I go to a local bank and take out a mortgage. I chose that bank because it’s in my neighborhood, I know some of the people there, and if there’s ever an issue I want to be able to go in and discuss things face-to-face with the people involved.
Now, there’s nothing in the contract to prohibit them from selling the mortgage to some out-of-state megabank. They may decide it’s in their financial interest to do so. Do they have a moral obligation to go above-and-beyond the contract terms in their dealings with me?
I remember when this last became a big issue. The big irony of the time was the group promoting the idea of the moral imperative to loan payments was in the process strategically defaulting on their headquarters.
So, what is the morality of these options:
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I sign a 2 year contract with a cell phone company for $75 a month service with a $200 early termination fee. One year in I find a company with better service for $45 a month and switch.
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I open a bank account and sign a contract specifying I pay no fees as long as I have $5000 in the account but with a clause allowing them change the fee schedule at any time. Two years later they up the minimum to $50,000 and start charging me $200 a month.
3)My business signs a contract to provide office supplies to a large office for $100,000 a year for six years with a $50,000 per year remaining penalty for breaking the contract. The company switches to alternate vendor in year 4 and pays me $100,000.
A debt to another human being is a moral obligation.
However, corporations are not human beings. They are incapable of being reciprocal moral actors. So, as a result, I have no moral obligation to a corporation, only a legal one.
It is immoral to not repay a legitimate debt that you have the the ability to repay. That has very little to do with the mortgage and credit crisis in this country, and you aren’t supposed to get bankruptcy protection if you have the ability to repay.
An ideal level of credit availability will include the risk of some percentage of defaults, so if there is a socioeconomic issue it is problem with the percentage, not the existence of bankruptcy.
One of the biggest moral issues in bankruptcy laws was the bribing of congress by the lenders to remove credit card debt from bankruptcy protection. Before we sew a scarlet B on people who end up with underwater mortgages, we should be tattooing a scarlet C for crook on the forehead of each of those representatives who accepted the bribes and voted against the public interest.
The notion that I am compelled to follow a higher standard of honor than a bank or business by sole virtue of being a *man *is ludicrous. I will promise to be honorable to lenders when they promise to be honorable to me. Please tell me which bank arranges mortgages with nothing more than a handshake and a smile.
Of course not - it was entirely one-sided. Nonetheless, they signed.
Do you agree that whenever the benefits to me of abrogating a contract outweigh the costs, I am morally justified in breaking the contract?
Regards,
Shodan
Mortgages cover in minute detail what happens if the borrower stops making payments. Borrowers are morally justified in exercising the foreclosure clause in a mortgage. Would banks put that language in a contract if it wasn’t morally justified?
Completely one sided contracts, i.e. those without consideration, are not valid.
“Whenever” is a very strong term. No, I cannot say that someone is legally or morally obligated to end contracts whenever they feel it is to their advantage to do so, because I cannot anticipate every single circumstance under which a contract may be terminated. But as a general rule, if someone wishes to terminate a contract, it is in their interest to do so, and the contract allows for such an action, I believe that they should not be prevented from doing so in every case, which is what you seem to be espousing.
Just a note, you don’t seem to have commented on the fact that one can lawfully terminate a contract without implications of fraud, theft, or making poor widows homeless.
Tiny New England City Faces Big Financial Problems
So, are state and local governments that agreed to labor contracts they couldn’t afford, morally justified in abrogating them when the benefits of doing so outweigh the costs?
Or is this somehow different when it is union members getting screwed?
I agree with this completely.
Let’s turn it around the other way. Let’s say that I make a loan to a corporation, and that corporation is unable (or unwilling) to pay it back. Do the shareholders of the corporation have a moral obligation to dig into their own pockets and pay me back? Of course not. One of the major purposes of incorporation is limiting liability. It’s a legal structure that allows the owners to make a calculated amount of risk, but to not risk assets that aren’t explicitly pledged to the corporation. I know going in that, no matter how friendly I am with the CEO, we’re conducting a business transaction, and he’s not going to make good on the loan if the corporation can’t.
Similarly, in the case of a non-recourse housing loan, the rules are clear. The whole point of a non-recourse loan is to limit liability. Why should one legal structure intended to limit liability result in no moral obligation, but another one continue to impose a moral obligation? We both know going in that there’s a chance that I will walk away if it’s in my best interest. This is not the moral equivalent of me borrowing money directly from a friend and promising to pay it back. It’s a complicated and precise legal arrangement dictated by hundreds of pages of laws and contracts.
First off, as I explain down below to Strassia, there is a difference between service and debt, mostly because in a loan situation you have all the leverage aside from colateral risk. However, as a moral matter I usually reccomend that people fulfill their contracts absent drastic change of circumstance.
Moral? So as they should try within their power to fulfill the contract. That was a reasonable and just agreement reached by all parties. Hopefully a few posters will note that I hold organizations with their consequent power, to a higher standard than private individuals in this case (see again below).
However, and as I previously mentioned, as they are going into bankruptcy, society can and should recognize that they cannot do so. This applies to both you and the company. If smeone cannot pay up, then bankrupcty is a reasonable way of clearing the bad debt off the books and allowing all parties to move forward.
However, it implies to me that all parties should have made a good-faith effort to fulfill thsoe contracts; I expect it to be the job of the bankruptcy court, not the company, to summarily cancel all contracts. Or alternatively, that the company makes attempts to renegotiate under the rpessure. I am no fan of the various suck-it-consumer provisions included in many contract provisions. That said, they change the legal, and not moral, rule. And I justify that on the same grounds as the law: the corporation is a fictiona lega person, who can enter into contracts. Therefore, the real individuals who make decisions for that fiction must act morally.
Now, there are some companies, and some people, who I wouldn’t trust further than I could throw. But most people, and most companies, I deal with have a solid track record of honest business.
I am hardly unaware that loans commonly contain escape clauses and collatoral claims.
I would answer first by saying that’s not really the thrust of my argument, and not even related to it. I am considering the issue of morality, debt, and moral duties. This would be somewhat sidetrack and I haven’t really considered the issue. AT first glance, it looks like a complicated and knotty problem to me.
There’s no moral issue here, or in any of them ultimately. You bought or sold a service and no longer need it. There is a subtle, but eal difference between this and debt. In undertaking a debt, whomever loans you the money does not want the collateral. They want to loan you a certain amount and be repaid a certain amount. The collateral is an emergency backstopping the possibility that you can declare bankruptcy, or simply refuse to pay. It’s there not if you decide the contract is no longer useful (which would involve complete repayment), but if you try to stiff the creditor.
So you claim that the people who actually mke up the corporation cannot act morally, and do not count, and that you are free to screw them in any way you can?
I can’t speak for Shodan, but I made a big distinction between what you can do and what you can’t do. Morality doesn’t enter into what you cannot do. It’s more or less irrelevant. It does not matter if in theory you ought to hold up the planet, because unless you’re Atlas you can’t.
In this case, previous politicians promised more than could actually be delivered. It may be shameful, but not unreasonable to recognize that, nor to admit that there may be more important government fuctions than providing generous benefits. Soverign default (or the equivalent and various levels of government) is, unfortauntely, one of the risks you take in doing business with the powers-that-be.
How about when corporations make promises to labor that they can’t keep? Let them slide too?
What’s the moral standpoint of a person who offers the loan in the first place, expecting or at the least considering it likely that the other person will default? If the moral responsibility is on the side of the person who loaned, who is in the wrong in a situation where, say, I loan my friend $1000 on the collateral of his car, knowing him well enough that I know he’ll act such as to be unable to pay me back? Clearly if my friend acts in such a foolish way, he has himself to blame, at least in part; but do I have any moral responsibility towards him on the basis that I know whether he is likely to repay me or not? Am I morally required to ensure that - if not certainly, but - there is a good chance that I will be repaid?
It seems to me that, if I know in advance that my friend likely won’t repay me, then loaning to him with collateral would be immoral. I’m essentially taking advantage of him.
Fair enough. I used to somewhat agree with your point in the OP. I’m pretty self-reliant and fiscally disciplined. I’ve only borrowed money once in my life, thirteen years ago to buy a car, and I paid it back early. I looked around for a house off-and-on during the 2000’s. I may have been able to get a loan, but there was no place that I felt I could comfortably afford.
But I’ve also decided that I don’t owe some extra obligation to a bank if they won’t respond in kind. If I’m just a number and a contract to them (and remember, they’re the ones who write the contracts), then that’s all they are to me. I hope I’m never in a situation where my best option is to default on a loan, but I don’t see it as a moral failing when people decide to take that option.
[quote=“smiling_bandit, post:13, topic:598555”]
Or, try Mrs. McArdle, and this is hardly the
You are the only one making accusations and allegations. I pointed out that the article you linked to had a bunch of speculation in it without any evidence to back it up. That is all you do in these threads. You make blanket assertions, and then when questioned on them, you accuse other people of making blanket statements.
I’ll take a look at the articles when I get a moment, but if there along the lines of your original article, you really haven’t proven anything.
I think it’s quite clear at this point that you don’t understand the concept of imputed rent. Nor do you understand what happens to the real value of a fixed mortgage payment in an inflationary economy. If you understood those things, you would understand why it is valid to treat housing as a capital investment.
Ha, ha, ha. You keep claiming that the market value of a mortgage isn’t affected by the value of the underlying value of the property, but you can’t explain why. I think I see what’s going on here. The only way you can assert this is if you think the market value of a loan is wholly determined by the amount of the initial loan–why is completely wrong. You have no idea what you are talking about, yet you run around these threads lecturing everyone else.
After this, I’ll stop the hijack. If you respond again, though, I’ll keep responding. Your call.
Huh? Shoplifting is illegal. Declaring bankruptcy is legal. Walking away from a non-recourse mortgage is legal. All of these things are legal and known ahead of time. There’s nothing similar to shoplifting.
Now, for an unsophisticated lender who isn’t really aware of how bankruptcy works, well, I would say, it’s probably wrong to simply walk away from your debt. But a bank knows what a non-recourse mortgage is. Walking away from a non-recourse mortgage isn’t springing anything on the bank. That’s the way the loan is structured. The borrower has either the option of paying the mortgage and keeping the house or not paying the mortgage and walking away from the house. There’s nothing immoral about a borrower exercising one of his options that the bank is fully aware of and has agreed to.
Now, in the case of bankruptcy, if you can pay your debts, then the court is supposed to protect creditors, and people can’t just walk away from debts they owe by declaring bankruptcy. They actually have to not have the money to pay. And if they don’t have the money to pay, the court is going to figure out how much they can pay and work out a fair solution for the creditors. But exactly is immoral about not being able to pay? If you can’t afford to pay, then what exactly are your other options?