Gearing up, crashing loud. Should we punish high-flyers for insolvency?
Journal of Business Ethics · 1996 · Volume 15 · Issue 12
Abstract
In the mid-1990s the recession is turning to a recovery. Around the world corporate bodies which fell victim to structural changes and high interest rates finally get buried. However, many feel that corporate funerals are not enough to clear away the litter of the past, crucifying people is required too.In the common law countries, where the treatment of bankrupts is tougher than in the U.S., and in continental Europe, where discharge of debts has been virtually unheard of until recently, the failed entrepreneurs' heads are wanted on the platter. A high level of debt and an extravagant lifestyle combine to provoke most demands for reprisals.This paper argues that these hallmarks of highflying provide neither retributive nor utilitarian grounds for punishing business bankrupts by limiting their access to discharge. Furthermore, it is argued that, from the point of view of distributive justice, wealth appropriated through leverage is ethically no worse than prosperity gained by hard work and parsimony — not even if the gearing eventually leads to insolvency.
Keywords
Europe, Economic Growth, Structural Change, Interest Rate, High Interest
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