Morality clause

Legal is not always fair

What is legal isn’t always fair. Perhaps the role of morality in law is too small. Because people have different views about what is right and what is wrong, the prevailing liberal view in many Western societies is that people should be free to do as they please unless their actions harm others. But even that view may justify a greater role of ethics in law.

Moral issues can be contentious and people reason according to their beliefs and political views. The following arguments may illustrate that:

  • Liberals might be concerned with the rights of criminals in jail but not of the rights of unborn children who are innocent of any crime.
  • Conservatives might be concerned with the fate of unborn children but as soon as they are born in misery their compassion suddenly vanishes.

It is easy to simplify matters in this way but this is how issues are framed in disputes. And as soon as you are dragged into a dispute yourself, it is hard to remain moderate. Moral issues tend to be complicated. Euthanasia can be an act of compassion but it might be turned into a means of getting rid of undesired people. Perhaps a criminal has had a poor upbringing and never realised that he had a choice but making criminals suffer can alleviate the pain felt by their victims and give them a sense of justice.

Liberals and conservatives have moral views and can be passionate about them. This is difference of opinion rather than an absence of ethics from one or both sides. Rational debates might help to clarify these matters and to balance the laws on these issues.

There are however areas where an infusion of ethics may be advised, most notably where business meets law. That may not be surprising as CEO is the job with the highest rate of psychopaths while lawyer comes in second,1 probably is because traders in financial markets were not included in the survey. Media came in third. These findings come from a British research. The British tabloids are rather unique in the world with their disregard of ethics. Salespeople make a rather unsurprising fourth position.

Vulture capitalism

Rural areas in the United States are turning into an economic wasteland. Closed down factories and empty malls dominate the landscape. Communities are ravaged and drug abuse is on the rise. One reason for this to happen is that jobs are shipped oversees. Several factors contributed to this situation, but a major cause is CEOs not caring for people and communities. In many cases other solutions were possible.

Paul Singer is wealthy hedge fund owner. He made a fortune by buying up sovereign debt of countries in trouble such as Argentina and Peru at bargain prices and starting lawsuits and public relation campaigns against those countries to make a profit on these debts at the expense of the taxpayers of these countries.2

In the United States Singer bought up stakes of corporations in distress. He then fired workers so that the price of his shares rose. In the case of Delphi Automotive he and other hedge fund managers took out government bailouts, moved jobs oversees, and cut the retirement packages of employees so they could make a huge profit.2

Vulture capitalists prey on patients too. They buy patents on old drugs that are the standard treatment for rare life-threatening diseases, then raise the price because there is no alternative. Martin Shkreli was responsible for a 6,250% price hike for the anti-retroviral drug Daraprim. Many people died because of his actions.3 Perhaps he should be in jail for being a mass murderer but he is not because what he did is legal.

Profiteering at the expense of the public

In the years preceding the financial crisis of 2008 there was a widespread mortgage fraud going on in the United States. Few people have gone to jail because much of what happened may have been morally reprehensible but was considered legal. Financial executives and quite few a academics share this view.4 And so nothing was done. Perhaps it is still possible to prove fraud but that may take years if it ever succeeds.

Healthcare is another domain for fraudsters. Patients are often not in a position to bargain. Perhaps that is why privatised healthcare tends to perform so poorly compared to government organised healthcare. In 2015 the Dutch government introduced the Social Support Act, making municipalities responsible for assisting people who are unable to arrange the care and support they need themselves.5

Municipalities were often ill-prepared. One of the issues that still persist is fraud perpetrated by several private contractors at the expense of the taxpayers and people in need. The Dutch prosecution is overwhelmed by fraud cases and it is not always possible to get a conviction because private contractors made use of loopholes in the law. Until these loopholes are fixed, their actions remain legal.6

In the United States hospital bills are feared. A routine doctor visit for a sore throat can result in a $ 28,000 medical bill.7 And so many people in the US go without healthcare because they can’t affort it. Efforts to reform healthcare in the US haven’t succeeded, perhaps because those who send $ 28,000 bills for sore throats have plenty of money to bribe politicians into keeping the US healthcare system as it is.

Attributes of the law

First we have to recognise why it is so hard to prevent these things from happening. On the political front it is because once politicians are elected, they can do as they please until the next election. Lobbyists prey on them. Citizens have few means of correcting politicians, except in Switzerland. The Swiss have direct democracy. Swiss citizens can intervene in the political process when they see fit and fix laws if they think that is needed. Direct democracy might help to fix many of these issues.

Laws are often made with the best intentions but you can’t test them in a simulation to see how they will work out in practice. So, once they are introduced, problems pop up. The process of lawmaking is slow and it often takes years before issues are fixed, if they are fixed at all because lawmaking is often political process. Changes in the law can be subject of a political process and that can make it rather complicated.

Even more importantly, the underlying principles of law cause certain restrictions that benefit the savvy. The law is the way it is for good reasons. No-one should be above the law and people as well as businesses should not be subject to arbitrariness. The rule of law implies that every person is subject to the law, including lawmakers, law enforcement officials, and judges. And it is agreed that the law must be prospective, well-known, general, treat everyone equal, and provide certainty.

Laws being prospective means that you can only be convicted for violation of laws in force at the time the act was committed. Legal certainty means that the law must provide you with the ability to regulate your conduct, meaning that the law must be sufficiently precise to allow you to foresee the possible consequences of a given action. Businesses prefer the laws to stable. They make investments for longer periods of time. If laws change then they may be faced with losses. If laws are unstable, investments may not be made, and a country may end up poorer.

With the rise of neoliberalism came the era of shareholder capitalism. Making profits became a goal in itself. Greed was good. Wall Street traders and CEOs were seen as heroes even when they were psychopaths outsourcing jobs for no other reason than making more profit. Often there was little consideration for the planet, people and communities. Consumers prefer the best service at the lowest price so businesses were pressed into cutting costs and moving jobs to low-wage countries. Businesses must remain competitive to survive. The moral issue comes maximising profit at the expense of the planet, communities and people.

A bigger role for ethics

More and more people start to believe that ethics should play a bigger role in business. The Internet enables activists to put pressure on corporations. It may however not be enough to shame corporations who misbehave or to press consumers into buying goods and services that have been made with consideration for the planet, communities and people. Corporations must remain competive and so they are not inclined to make real changes if that increase their costs. Levelling the playing field with regulations is an option but that may not be sufficient. Perhaps the law needs a morality clause, making specific forms of unethical behaviour unlawful.

A randomly selected jury of laypeople could make verdicts in these moral issues. Perhaps it is better that the legal profession stays out of these matters.

There are a few issues that come with a morality clause. First of all, ethics in business can be a political issue. It contradicts the prevailing neoliberal view that as much as possible should be left to the markets. It can also affect legal certainty, meaning that it will be harder for businesses to predict whether or not a specific action is legal. Business owners may incorrectly guess moral sentiment and believe they did nothing wrong. That might reduce the available investment capital for questionable activities. And if immoral profits and bonuses from the past are to be confiscated, that may affect the prospectiveness of the law. One cannot allow the world to be ruled by psychopaths so a morality clause in the law is an idea worth considering.

Featured image: Of course the laws are always functional. Loesje.

1. The Wisdom of Psychopaths: What Saints, Spies, and Serial Killers Can Teach Us About Success. Kevin Dutton (2012).
2. The death of Sidney, Nebraska: How a hedge fund destroyed ‘a good American town’. Charles Couger, Alex Pfeiffer (3 December 2019). Fox News. [link]
3. Vulture capitalists prey on patients. The Sacramento Bee (22 September 2015). [link]
4. How Mortgage Fraud Made the Financial Crisis Worse. Binyamin Appelbaum (12 February 2015). New York Times. [link]
5. Social Support Act (Wmo 2015). Government of the Netherlands. [link]
6. Gemeenten starten onderzoek naar Albero Zorggroep. Eelke van Ark (31 October 2019). Follow The Money. [link]
7. How a routine doctor visit for a sore throat resulted in a $28,000 medical bill. CBS News (31 December 2019) [link]

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