I was having a conversation over the weekend about the epidemic of people who have jobs and a steady income that are walking away from their homes because they are paying more into it than it’s currently worth. Most of us agreed that, even if the numbers make sense, walking away from your home when you can still pay the mortgage is not “the right thing” to do.
Whether any of us would do it if we were in the same circumstance, that’s a different story.
But it got me thinking about money and morality. There are a lot of people out there that don’t have a budget and don’t have any idea of how much money they’re burning or where it’s all going. But they live pretty decent lives—some probably a lot fancier than my own.
And that pisses me off.
But is it wrong or is it just irresponsible?
For it to be immoral, it would have to be inherently wrong, which I always relate to encroaching upon another person’s life.
Think of Tom: he has a huge credit card balance and never intends to pay it off. All he does is pay the minimum on his card every month and the balance keeps getting bigger with every video game and trip to California that he buys with it.
He lives a nice life: goes out to eat every night, buys plenty of clothing and new DVDs every weekend, and his job is pretty steady. He gets to live more lavishly than me and just pays the minimum on his card to keep the lifestyle afloat. But does this affect me negatively somehow?
Well, it could. It’s what economists call a negative externality. Tom’s “lavish” lifestyle contributes to ridiculously high credit-card rates that eventually need to be modified by lawmakers to help people like Tom out of the hole they’ve dug themselves into.
Which means credit card companies have to rethink how they do business. New credit-card rules to help people like Tom mean most cards will probably come with an annual fee and the bonus rewards will come down drastically. And that affects me. It’s a negative externality because Tom’s actions are negatively affecting me even though I had nothing to do with it.
All I was doing was living within my means and racking up massive credit cards points at no cost to me.
If you look at it that way, Tom’s behavior could be seen as immoral.
On the other hand, it’s a free country and he should be able to act as irresponsibly as he can as long as he doesn’t directly mess with my business.
Right? That’s why smoking in public and driving an SUV that gets 10 miles to the gallon is OK. Although—think about it—smoking in bars is no longer allowed in many states and SUVs now tout their mileage in commercials. So does Tom have the right to act irresponsibly like this?
I think the answer to that questions would’ve been “yes” a few years ago. But now that we’ve seen what massive damage this kind of behavior can bring, it might be time to revisit the question.
Is it better to try to fix problems like these after the fact (which is what we’re doing now) or try to restrict immoral financial behavior to keep from digging ourselves into these holes to begin with? And if the answer is the latter, how do we do it effectively without having people scream out that they’re civil liberties are being accosted?
