PHI 2397 Lecture Notes - Lecture 6: Ethical Dilemma, Negative And Positive Rights, Paternalism
4 Jul 2018
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Text: Frederick & Hoffman, “The Individual Investor in Securities Markets: An Ethical
Analysis”, pp. 141-145
You are investors who want to invest in bonds and share in stock market, and you can get hurt,
how should you deal with this?
Pg.144 examples
- By the fraudulent trade, brokers and financial advisors, markets are complex and fast
moving, used to be clear and straightforward, now increasing turmoil
- Now dangers to individual investors
Policy proposal: if SEC announce individual investors, for protection, no longer have access to
security market, only big businesses can only invest in this
-Ethical Motive: protect individuals and clear the market that brokers target naive
investors
-Response: restricting of freedom, right to do as you buy and chose to invest your own
money is not free, right-based is taken away; but it’s not entirely true, market are already
restricted (no buying drugs)
-Reason: preventing people from harming themselves and others (kid driving car)
-Ethical principle: when possible, people ought to be protected from undue harm, why
can’t we protect them from financial harm if we can protect others in other concepts
(physical); ex. Invest in high return investment but doesn’t know that it’s risky
Justification: 2 types
-1) Paternalistic argument: restrict in best interest, for investors’ own good
-Libertarian argument (against paternalistic): Who are you to tell me what to do
with my life? Investors are not childrens. How do you know what their own good
is? (large group of people), can’t claim what is best for them; even if you do know
what is best for them, will this be effective? Protect my rights
-2) Duty to protect argument: duty to protect investors not to be harm, that they
unwillingly bring to themselves. Government duty is to protect citizen from harm. BUT
placing restriction on their freedom to make a lot of money on risky investments (right to
self determination - do what i want), what is number of people who can stand to lose in
bad deals vs gain if they had full freedom? People say ‘you dont need to protect me’.
Hard to place restrictions on everyone, should make mandatory to make investors get
EDUCATION they need.
- What if you had infeormation that the investor doesn’t have, to prevent thm from
harm? If they knew, they wouldnt invest. INCOMPLETE INFORMATION, not that
you know their own good, but intervene when you have info.
Right-based vs deontology (duty) - overlap
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Text: frederick & hoffman, the individual investor in securities markets: an ethical. By the fraudulent trade, brokers and financial advisors, markets are complex and fast moving, used to be clear and straightforward, now increasing turmoil. Policy proposal: if sec announce individual investors, for protection, no longer have access to security market, only big businesses can only invest in this. Ethical motive: protect individuals and clear the market that brokers target naive investors. Response: restricting of freedom, right to do as you buy and chose to invest your own money is not free, right-based is taken away; but it"s not entirely true, market are already restricted (no buying drugs) Reason: preventing people from harming themselves and others (kid driving car) Ethical principle: when possible, people ought to be protected from undue harm, why can"t we protect them from financial harm if we can protect others in other concepts (physical); ex. Invest in high return investment but doesn"t know that it"s risky.
