Ethics Newsline®

You might think bankruptcy reform would be a dust-dry topic. But the bill that passed the U.S. Senate last week raised a tough ethical question: How easy should it be to declare bankruptcy?

Not very easy, say those who see ethics as a matter of responsibility. They insist it’s irresponsible for people not to pay what they owe. They worry about millionaires, deadbeat dads, and credit card addicts hiding their assets and walking away from their debts by declaring bankruptcy.

But those for whom ethics is a matter of compassion take a different view. They worry about single mothers plunged into debt when alimony payments don’t show up, or about uninsured patients running up huge medical costs. From this perspective, these people need a system that lets them clear their records and start afresh.

Last week, senators voted 74-to-25 for the former arguments. The bill, which requires those filing for bankruptcy with incomes above a certain level to repay some portion of their debt, now goes to the House of Representatives with President Bush’s support.

Banks and businesses, which depend on extending credit and receiving predictable repayment, have been pushing this legislation for eight years. Why does it finally pass now, and by such a solid margin? One answer lies in current presidential priorities. But something larger is at work. Bankruptcy, which is a deliberate breaking of a promise to pay, is only a symptom a deeper issue. We’re confronting a national epidemic of promise breaking — an unwillingness to accept responsibility for keeping one’s word, doing what’s been agreed, and honoring commitments.

This irresponsibility shows up in academic cheating, despite standards of integrity that students are expected to uphold. It shows up in illegal steroid use among athletes, despite expectations that sports will be played fairly. It shows up in the abandonment of mothers by fathers, despite mutual obligations for caring and nurturing that come with childbearing. It even showed up last week at Boeing, where CEO Harry Stonecipher was ousted for breaking his promise to uphold the company’s ethics policy — a breach that cost him the trust of the board of directors once they learned of his affair with a colleague.

What do all these have in common? Promises given and promises broken. Some of these promises are explicit: Marriage vows, sports rules, and honor codes all involve a conscious agreement to do certain things in certain ways. Some promises, including mortgages and credit card contracts, are so explicit that they’re legally binding.

But some of our most important promises are implicit, secured by ethics rather than law. Parents don’t sign child-raising contracts with the state, nor do they expect their children to be required by law to care for them in later years. And which of us, when a luncheon partner fails to show up at the restaurant, will file suit? These relationships are based not on law but on implicit promises. Yet those promises are no less important just because they’re ethical rather than legal.

Keeping promises, then, is crucial to social stability and progress, whatever form it takes. So (to get back to the bankruptcy bill) can there be any moral justification for those who argued in the Senate for compassion? If we set aside arguments about catastrophic medical costs — a problem that takes more than bankruptcy legislation to fix — the moral case for compassion is that the epidemic of promise breaking is paralleled by a broad public indifference to debt. That indifference shows up in discussions about the national debt, which few understand and even fewer take seriously. It shows up in the current debate about Social Security, a system of future-payment promises that many say can’t be kept. And it shows up in relentless and sophisticated campaigns by banks and businesses to persuade inexperienced users of debt — like college students and low-wage employees — to sign up for credit cards that can lure them into purchases far beyond their means.

If there’s an argument for compassion, then, it’s the double bind created by our current financial culture. If we create indifference about debt, and then set up irresistible temptations to fall into it, can we honestly blame only those who fall? Didn’t we help create the conditions that caused their collapse? Don’t we collectively have some obligation to help the victims?

The right path, which the bankruptcy bill seeks to find, must balance these two core values of responsibility and compassion But unless we go beyond symptoms and face up to the root ethical causes — the culture of promise breaking, indifference, and temptation — it’s hard to see how we’ll make the real social progress that this issue demands.

©2005 Institute for Global Ethics