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 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