The quotes below are taken from the Adam Smith Institute on The Theory of Moral Sentiments, authored by Adam Smith–the Father of Capitalism.
Main themes of the book:
“The Theory Of Moral Sentiments was a real scientific breakthrough. It shows that our moral ideas and actions are a product of our very nature as social creatures. It argues that this social psychology is a better guide to moral action than is reason. It identifies the basic rules of prudence and justice that are needed for society to survive, and explains the additional, beneficent, actions that enable it to flourish.
Self-interest and sympathy. As individuals, we have a natural tendency to look after ourselves. That is merely prudence. And yet as social creatures, explains Smith, we are also endowed with a natural sympathy – today we would say empathy – towards others. When we see others distressed or happy, we feel for them – albeit less strongly. Likewise, others seek our empathy and feel for us. When their feelings are particularly strong, empathy prompts them to restrain their emotions so as to bring them into line with our, less intense reactions. Gradually, as we grow from childhood to adulthood, we each learn what is and is not acceptable to other people. Morality stems from our social nature”
Yesterday, the Association has posted a discussion on student loans, and why moral should be in the equation when decision makers apply a policy which will impact the general public. Adam Smith which is considered as the Father of Capitalism, as quoted above, in the first paragraph, argued that without considering moral, the society will not survive (Read here how much pain the loans has inflicted the borrowers). Unfortunately, when more economic schools, both Freshwater or Saltwater are leaning toward “rational expectation” type of approach, then the society may suffer. The reason has been provided by Adam Smith on the third sentence in the first paragraph. We are hopeful that all the players of which their decisions may impact student loans have a chance to read this post.
Student borrowers need to be morally responsible in their actions as well. Taking the loans with a clear purpose, and not for supporting luxury life style or any thing that is less important and unrelated with their degree program. Rather, to get through college and to graduate on time. It is often heard the other side of the story, where student borrowers spent their loans for spring break vacations. This is not what the loans meant to be. Of course, this group of students are the outliers.