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Aug 5, 2022

Market Morality

By:Dylan Ratigan

There are moral boundaries most people will not cross no matter the incentive. Most of us would not be willing to accept money in exchange for hurting someone innocent. The idea of actively hurting someone is morally incomprehensible. But what happens when there’s a degree of separation between you, the morally unjust action and in between rests potential profit?

In March of 1989, 11 million gallons of oil spilled out of a tanker into Alaska’s Prince William Sound. Hundreds of thousands of marine life died as a result. It crushed the local economy. It affected food supplies. In other words, the effects of the spill reverberated beyond the sea. In 1989, ExxonMobil stock traded at just over $20. Today, it trades closer to $90. Animals died. An industry upon which livelihoods depended was upended when seas became unfishable. But people kept buying the stock and its price kept climbing.

When it comes to priorities, I can make a compelling argument that morality takes a backseat to money. We’re often willing to look the other way or make a moral compromise in the name of our individual financial security. Oil companies, weapons manufacturers, polluters, sweatshops, they all exist. We know what they do, how they operate, yet all too often we’re willing to look the other way if the money is good.

Listen, I’m not passing judgment. This is just an observation. Compromising on what’s best for what is most fulfilling, be that financially, unhealthy foods we eat, buzz from alcohol, the list goes on, is nothing new. I believe it’s a part of being human.

Markets are even more capable of compromise because they are not moral. They are efficient. They make no distinction between what is good for you or me. They simply facilitate the transfer of capital to wherever it will earn the most. Imposing our personal ethical standards on markets sounds appealing. It makes sense. But in a battle between morals and money, money tends to win.

I’m not advocating we should set aside our morals or ethics. Not at all. I’m simply stating markets ultimately do not care. We buy Nike and Apple stock because we know demand for shoes and iPhones is constant. We also know the atrocious conditions under which workers in China are subjected. It’s not that we condone those conditions but we can look the other way if it’s in our financial best interest.

Moral markets are a near oxymoron. However, that’s only because we conflate ideals with investment opportunity. Sure, there are companies that make money and hold themselves to high ethical standards. Sadly, they’re the minority. And while I’m not here to absolve you of, or offer you a hall pass for, morally objectionable behavior, I am here to point out before anyone gets on their high horse and begins throwing stones at companies for their business practices, perhaps they should take note of the glass house in which they live.

Check out the debate on this week's Truth or Skepticism. 

Special Project's Editor Josh Fabian contributed to this article.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

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