Libertarian Papers, Vol. 1 (2009), Art. No. 31: “The Ethics of US Monetary Policy in Response to the Financial Crisis of 2007-2009,” by George Bragues
Abstract: Since the financial crisis first erupted in the summer of 2007, the US Federal Reserve has sought to contain negative spillovers into the real economy by dramatically loosening monetary policy. Initially, this was done by lowering its key lending rates, but as the crisis has worsened, and rates have approached closer to zero, it has resorted to expanding its balance sheet in a historically unprecedented fashion. The Fed’s total assets have more than doubled to nearly $2 trillion since the summer of 2007.
Much of the debate surrounding the wisdom of this extraordinary increase in the production of money has revolved around its expediency-in other words, will it actually work to rescue the economy? Very little has been said, at least explicitly, about whether it is the morally right thing to do.
This paper seeks to fill this gap by providing a moral analysis of the Fed’s response to the financial crisis. For this purpose, we apply Aristotelian virtue theory, Lockean natural rights philosophy, Kantian deontology, and Benthamite utilitarianism. The idea is that if a consensus, or a strong majority, can be reached from differing philosophic assumptions and starting points, then the resulting judgment ought to be compelling for all neutral observers. On the basis that the Fed’s efforts are likely to result in a marked rise in inflation, we argue that every one of these four moral theories ultimately renders a negative judgment. As such, we conclude that the Fed is pursuing an immoral course.
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This is a silly argument–generating a consensus among four false philosophies is not a valid method for discerning what is true.
Vince,
From the wording of the paper, he is not necessarily saying that by analyzing the Fed’s loose monetary policy under 4 different value systems we can arrive at moral truth.
He seems to be comparing its actions under 4 different value systems simply to begin a general discussion of the underlying morality of this policy.
Although the last sentence does somewhat lead to the conclusion that you draw, it is clear from the previous sentence that he is merely testing the policy’s morality under different value systems to get a consensus of negative or positive judgment.
“The Ethics of U.S. Monetary Policy”: A blank sheet of paper, I take it?
For the sarcastically challenged, that was not a knock on Mr. Bragues.
I’m commenting on the paper right before it gets into the ethical analysis but I must say the background information is very clear and concise. One of the better analysis of the Feds actions (its reasoning and its likely outcome) that I have read.
Now to the good stuff.
Keith:
Brague is concerned about persuading neutral observers to assent to a moral argument. He argues that moral arguments usually aren’t very compelling to a neutral observer because there doesn’t seem to be any objective way to resolve disagreements between different philosophical systems. Brague tries to overcome this problem by finding an instance where four different systems reach the same moral conclusion–that somehow such a consensus would be more compelling to the neutral observer.
However, given the premise that moral arguments are subjective, the neutral observer will conclude that the consensus view is subjective too, and therefore isn’t compelling at all. The only way to compel assent by a neutral observer is to find an objective basis for preferring one system of ethics over another, and then show that the preferred system leads to the conclusion one is seeking asset to.
The number of other systems that arrive at the same conclusion, or at the opposite conclusion, is irrelevant. In other words, the compulsion of assent by a neutral observer is based on objectivity, not on inter-subjectivity. Arguments that otherwise lack epistemic justification don’t attain justification merely by reaching a common conclusion.
Do you really need a detailed analysis to come to the conclusion that legalized embezzlement and counterfeiting are immoral?
“As such, we conclude that the Fed is pursuing an immoral course.”
The Fed’s existence is an immoral course.
“As such, we conclude that the Fed is pursuing an immoral course.”
The Fed’s existence is an immoral course.
I agree that the post above deserves to be in duplicate.
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