Get the rich?

'Get the Rich' is on the cover of the latest issue of the Economist. While much has been written about what caused the current crisis, how to avoid it and so on (and hence I have avoided that completely on this blog), a handful have also pointed out that none of what has precipitated was illegal. Which in turn begs the question - is the current favored approach of regulating our way out of this mess the right answer? 

It is blindingly obvious that the primary driving force behind all this was individual greed which when aggregated into a collective phenomenon (as shareholders, as corporations) can steer any society into a wrong turn. And this is where something curious happens - individual cognitive biases get aggregated into lemming-like behavior (there are road-signs beseeching people not to take the turn and yet whole economies refuse to even look at them because it does not fit in with the prevailing 'conventional wisdom'). 

And now that we all know that we took the wrong turn and we have ended up at the edge of the cliff, the blame game is going on - 'moral outrage' comes out of the woodwork. The obvious reaction is to find someone to blame - the last Economist cover was 'Get the rich' (delicious irony that, given Economist's general proclivity towards a libertarian outlook). And this poses an interesting question for society at large - while it is relatively easy to define financial incentives for behavior and also define the legal boundaries, it is devilishly hard to reward a whole class of moral actions just as it is hard to punish morally reprehensible actions. For instance - I doubt if we can define incentives for socially moral behaviour (like giving to charity, apart from the limited effect of tax incentives) and equally, define disincentives for behaviour that is not moral (e.g. you own an extremely expensive car - while you clearly could have settled for a cheaper car and given the incremental money to a charity. Are you morally justified to make that choice?).

All this raises an interesting question on Utility - while it has been used in microeconomics to explain rational individual behaviour, how relevant is it as a moral standard? Arguably, if there are no price externalities of any action, good or service, every individual is fully justified in maximizing utility. But this assumes that 'concepts' like conscience, social value systems etc. can somehow can be translated into the price - something this clearly absurd. A good example is the global warming issue and how individual behaviour affects global warming. Assume that we manage to create a perfectly efficient carbon trading market which will then enable every individual to maximize his/her utility without any externality (pretty much impossible, but this is how the libertarian argument runs) - will that then justify an extremely rich person to buy an extremely expensive car or any such objects of conspicuous consumption, given that there is enough poverty going around? If yes, is it morally acceptable and if not, is there a notion of natural social justice on the grounds of moral compassion that would frame what is universally acceptable as right or wrong? Obviously there is no notion that is remotely possible. So where does that leave us? 

Should we just make these judgments as individuals, with the assumption that there is a moral fabric with characteristics (e.g. compassion) that is define us as a species? How do these 'compete' with the process of Darwinian natural selection?