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Ethical Individualism
Lets look at the Greek debt crisis from an ethical perspective. We will examine two principles from extremely different sources, one from the insurance industry and another from Muslim Shari’a Law. An Ethical Individualist is not restricted to a fixed set of given ethical principles but is open-minded and,

“sees a certain value in all ethical principles, always asking whether this or that is more important in a particular case.” (POF 9.4)

Greek debt crisis
Greece owes European countries and banks €340 billion borrowed over the past five years. To afford the debt repayments, Greece made huge cuts leaving many impoverished. As Greece lagged on repayments, they were told to make more cuts. Greece refused. The big problem now is that Greek banks are running out of money.

Two principles that could be applied in this case are moral hazard (suffer the consequences) and forgiveness (debt relief).

Principle Of Moral Hazard (suffer the consequences)
Moral Hazard originated as an insurance company principle. It occurs when all the risks shift to one party after a financial transaction has taken place due to the removal of the severe consequences that force the other party to act appropriately. In this case, Greece will lose the incentive to pay back the huge debt if it is granted debt relief.

The thrifty Germans, the biggest opponent of debt relief, insist on more harsh austerity measures, even though that makes it even less likely that Greece can pay its debts. By ignoring the Greeks terrible economic plight along with the disparaging language that is routinely used about Greeks, the Germans seem more interested in inflicting punishment rather than any genuine reform.

Principle Of Forgiveness (debt relief)
To explain the principle of forgiveness I will turn to Islamic financial principles guided by Shari’a Law. Islamic finance must contribute to the development and good of the community. Not surprising, then, the fundamental feature of Islamic finance is socio-economic and distributive justice. Islamic finance principles state clearly that individuals who have trouble repaying their debts should have their obligations made easier for them and not more difficult. It is immoral for a lender to harass or pressure a person who has borrowed money and is unable to repay the loan, if that person has fallen on hard times. Instead, such individuals are deserving of charity.

Do you agree with the finance principles of Shari’a Law or the finance principles of the insurance industry?

sources: Frances Coppola and Dr. Kara Tan Bhala

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Comments

  • The issue goes beyond the simple dialectic presented by this post and the rather simple premises presented, to which forgiveness as a principle and social construct predates Islam, but to which one such model of relevant.

    First, this is not the "Greek Debt Crisis" as is asserted by this article, for Greece is merely being played as the scapegoat in what is a financial/economic crisisof the entire western world which is in its entirety swamped in a quicksand of debt of around 2 quadrillion dollars caught up in financial derivatives.

    Now Greece is demonstrating moral fortitude in standing up to this evil, to which Germany represents nothing more than a broke player itself working with and for the bankrupt
    loan-sharks of the Federal Reserve, and the banking houses of London and the Wall Street to which it is being played and bullied by as it is a broken nation, which needs to break
    free of the warmongers of the Atlanticists now pushing war against Russia. That war is predicated upon ensuring the power structures stay in power, despite the fact that the economic system is bankrupt, and thus uses war to prevent an alternative system, or competing crime syndicate, take control.

    Certain relevant commentaries realize that the issue is that Germany is directly being prevented from working with the Russia and China towards development of an Asian Land Bridge to inaugurate a working way out of this crisis  where the mobilization of human capabilities is demonstrated by proper economic development.

    Even without a dirigistic outlook, the fact remains is that Greece's crisis can be reflected in the collapse of the basis of any economic reality, for there has been a collapse of the raw material production, particularly in the development of agricultural wealth, due to a collapse in the prices paid to the producers of such wealth, the farmers, which is a the heart of America's demise hastening the off=shoring of manufacturing as a symptom of this financial imbalance.....that seeks cheap labor and cheap raw materials to keep going.....

    For the moral heart of the story is that "Our Daily Bread" ......should not be stolen.....but that his the systematic practice of the west, and the tragedy of the United States when we abandoned the
    standard of Parity put in place in 1942 with the crisis of the world war scaring the financial oligarchy.Parity, which paid farmers a fair price created earned income at the most basic level of all economic activity, where such earned income is demonstrated, actuarlially in the historic level to be the key to prosperity at the national level, but  was not attractive to the "interests whose interest is interest" who were interested in selling credit, credit that pushed people, individuals, communities and nation's into servitude, debt slavery and suicide.  (see National Organization for Raw Materials)

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© Tom Last 2017