The last half-century has been marked by a shift in the meaning of the word morality in Western Civilizations. It has been slowly transitioning from an objective to a subjectively based word. What is considered to be good and evil has increasingly become dependent on one’s on opinion and less on objective and absolute standards. One may now feel justified in defaulting on a contract simply because, in his judgement, the other person or entity is rich and doesn’t really need the money. This mindset, when predominate, does not foster a robust economy.
Consequently, this shift has increasingly hindered economic activity over time because economics is based on millions of transactions. Contracts are signed. Trust is placed in others. It is agreed that if you do this then I will do that. As trust erodes so does the ability for the life-blood of an economy, commerce, to happen freely. Rather contracts are broken, defaults abound and lawyers celebrate. In the end, the economy suffers, and so do the people.
Unfortunately for society, the drag that immorality places on commerce doesn’t stop with the individual participant. The immorality of corruption leaches upward from an immoral society into the governing authorities. This also impedes an economy as unreasonable demands are made on the participants in commerce by those authorities. Resources are then squandered on excessive taxation, bribes, excessive regulation and delays.
This adds up to the siphoning of resources which would have otherwise led to higher standards of living for the population. If you’ve ever wondered why the people of some nations struggle to eat while living their lives on ground that is abounding with resources, one need to look no further than endemic corruption.
So what does morality have to do with economics? In a word, everything.