Primer on Ethics and Morality: Why Good People Disagree About What to Do With Their Money

An essay in a series on business, values, and investing

In my first essay in this series, I posed a question that I couldn’t answer. “Who is best positioned to act as the moral arbiter in values-based investing?” Asset managers, ratings agencies, regulators, advisors, or investors themselves?

I still cannot answer this question. Over the past two weeks, through conversations with a rabbi, a physician, and a philosopher, I’ve come to believe I was asking the question too soon. Before we can argue about who should hold the moral compass, we need to understand why thoughtful, serious people — people who care deeply about doing the right thing — find that compass pointing in different directions.

This essay is my record of asking questions of people smarter than me about a topic I find endlessly interesting and stubbornly unresolved. How can we better match our financial investments with our personal views of morality? Or, alternatively, is this problem sufficiently challenging that it is not worth working on it?

The Philosopher’s Map

Josh Wretzel is a philosophy professor who specializes in 19th-century German philosophy and Hegel’s meta-ethics. When I sat down with him, I asked him what a generalist audience needs to know about ethical frameworks. He gave me a clean answer: there are three major traditions, and they developed roughly in historical order.

The first is virtue ethics, rooted in the work of Plato and Aristotle. The core idea is that good actions flow from good character. If you cultivate the right inner qualities — courage, temperance, justice, wisdom — then right action follows naturally. Aristotle called this a “second nature,” something you build through practice over time, not something you’re born with. There are no prodigies in virtue. It is earned.

The question it asks is not “What should I do?” but “What kind of person should I be?” Josh tells me that when he teaches this to undergraduates, many of them light up at Aristotle’s claim that all human actions tend toward happiness and that being virtuous is what makes you happy. It is a hopeful framework. But it is also insufficient on its own.

The second tradition is deontology, most associated with Immanuel Kant. Deontology is the study of duty. Where virtue ethics focuses on character, deontology focuses on rules: universal principles grounded in rational autonomy. Kant articulated what he called “categorical imperatives,” rules that apply without exception.

The first of these imperatives is universalization: you cannot create moral rules that apply only to you. Whatever standard you hold yourself to must be one you’d apply to everyone. The second is that you must treat other people never merely as means, but always also as ends. In other words, your actions must respect and further the goals of others. You cannot force someone to sacrifice their aims to serve yours. The paradigm violation, as Josh put it, is slavery, where the master has no obligation to consider the ends of the enslaved.

The key question deontology asks is: “What is my duty, regardless of outcome?” Its strength is moral clarity. Its challenge is rigidity. Kant held, famously, that lying is always wrong, even a white lie to protect someone’s feelings. When I told Josh that I recently lied to someone about something trivial, and that I felt fine about it, he laughed. “I’m not a hardcore Kantian,” he said. “There are times when white lies are necessary because we value the people we’re speaking to.”

NOTE: This “lie” was not related to business or any misbehavior!! It was, indeed, the definition of a white lie!

The third tradition is consequentialism, and its most well-known form is utilitarianism. Where deontology judges an action by its adherence to rules and virtue ethics judges it by the character of the actor, consequentialism judges it by results. What matters is the outcome. The formative thinkers are Jeremy Bentham and John Stuart Mill; the most prominent contemporary voice is Peter Singer. The key question: “What action produces the best outcome for the most people?”

Consequentialism has an intuitive appeal, especially to people in business. We are trained to think about results. But it has a dark edge, too. Taken to extremes, it can justify terrible means in service of supposedly good ends, which is why so many dystopian stories and Machiavelli’s Prince live in this neighborhood.

Josh offered a fourth framework that I hadn’t expected: existentialist ethics, drawn primarily from Sartre and Simone de Beauvoir. This one isn’t a competing system so much as an argument for why we need systems at all. The existentialist observation is that animals don’t need ethics: a cat just cats, a tree just trees. And God doesn’t need ethics either. But humans are caught in between: part nature, part spirit, “thrown into a world” and forced to figure out what to do. And because our essence isn’t fixed by instinct or divine plan, every action we take is, as Josh put it, an “essence-defining action.” What we do defines what humanity is.

That last idea feels like a lot to me. It is also, I think, the right frame for why this whole project matters.

If how we invest is an action, and every action defines something about who we are, then the question of whether our portfolios should reflect our values isn’t trivial. It is, quite literally, existential.

What Happens When These Frameworks Meet Real Life

The clean lines on the philosopher’s map get messy when you talk to people who are actually trying to live by their values. That’s what I find most interesting about my conversations: nobody operates inside a single framework, and nobody is fully satisfied with where they’ve landed.

Rabbi David Ostrich has spent a career steeped in moral reasoning. In rabbinical school, the study of ethics wasn’t a course; It was the substrate of everything. He studied Socrates and Plato and Kant alongside the Talmud and the rabbinic response literature, a tradition of legal reasoning that stretches back millennia.

What struck me most about our conversation was his description of how Jewish law actually works. The default, he told me, is to follow the codes: the 613 commandments. That’s deontological. But when following the code would produce a bad result, you’re permitted to consider breaking it, weighing the people affected, the context, and the consequences. That’s consequentialist reasoning operating within a rule-based system. Neither framework alone describes what’s happening. It represents a dialogue between them.

He gave me a beautiful example: Rabbi Moshe Feinstein, one of the great Orthodox legal minds of the 20th century, was asked to rule on organ transplantation. The question required navigating ancient principles: you’re not allowed to kill someone to take their body, you’re not permitted to benefit from the dead — against the countervailing principle that saving a life overrides virtually every commandment.

Feinstein went back centuries through precedent, commentary, and competing opinions to reach his conclusion in favor of transplantation. It wasn’t a rule mechanically applied. It wasn’t a utilitarian calculation. It was something more human: a tradition in conversation with itself.

When I asked Rabbi Ostrich how this connects to his own investment decisions, he told me, candidly, that the investment world baffles him. He trusts the Reform Pension Board, which incorporates values-based filters, and he trusts his investment counselor, who is not Jewish, but rather a former Baptist preacher, which he figured was worth some moral credential. But he shared that once you start the moral investigation of what your money is actually doing, “there are all kinds of angles and all kinds of different opinions that come up and can really make the discussion difficult.”

I asked whether legality was a sufficient test for an investment being ethical. His answer encapsulated how other conversations concluded: “I’m unsatisfied with that answer, but I think practically, yes.”

Another friend, a trained physician, arrived at the conversation from a very different place. He is Catholic, Canadian, and with family roots in Czechoslovakia and western Ukraine. Before medicine, he studied engineering and business, searching for what he describes as “purpose and meaning.” He didn’t find it in either field. When he finally went to medical school, it clicked. Helping people made him feel good. He wondered aloud to me whether that is selfish; Whether the satisfaction of doing good in the world is just hedonism in disguise.

He may be the most instinctively moral investor I have ever talked with. He told me he would “only invest ethically,” and I believe he means it. He described an early experience trading Dogecoin — buying early, selling at a profit when Elon Musk drove the hype cycle, and then immediately feeling guilty. “My gains are going to be from other people’s losses,” he told me. That feeling, which was instantaneous rather than reasoned, was his first foray into thinking about the ethics of investing.

He now invests in things like fusion companies and energy-efficient products through crowdfunding platforms, hoping to put money into ventures that might actually help the world. It strikes me as admirable. It is also selective in a way that his broader financial life can’t sustain.

When I pointed out that his 401k almost certainly holds United Healthcare stock through its index funds — a company that, in the view of many of his colleagues in medicine, represents something close to market malignancy — he paused. “I actually haven’t really thought of that until you just brought it up right now,” he said. He owns stock in a company whose profits he wishes would decline. The system obscures this detail from him. It is not an intentional obfuscation but the result of abstractions of individual investment holdings into broad choices under the banner of “mutual funds,” “exchange traded funds,” or “separate accounts.”

This is a description of a structural problem. Most of us who invest through index funds have no idea of what we own specifically, and even those who care deeply about ethical alignment lack the tools to act on it within the vehicles available to them.

Josh Wretzel, the philosopher, offered a comment that virtue ethics and Kantian approaches both shape how he moves through the world. But he’s deeply suspicious of what he calls the “crank-box” approach to ethics — the idea that you can feed a moral dilemma into a framework and have an answer pop out the other side.

“I worry about an approach to ethics that treats it like a box with a crank on it,” he told me. The existentialist in him insists that ethics requires ongoing sensitivity to human freedom and ambiguity. There is no formula. This is uncomfortable for anyone who wants to build a product (which, of course, is exactly what I’m exploring.)

Why They Disagree: The Moral Psychology Underneath

It feels to me that, in some ways, “these are three smart people saying the same thing three different ways.” On this point, I am interested in what Jonathan Haidt has to say.

Haidt is a social psychologist at NYU-Stern who has spent much of his career studying the moral foundations that underlie political and economic disagreement. In his book The Righteous Mind and in his ongoing research for a book called Three Stories About Capitalism, he offers three principles of moral psychology that I’ve found helpful.

The first is that intuitions precede reasoning. We don’t reason our way to moral positions and then feel them. We feel them first, in our gut, instantaneously, and then build arguments to justify what we already believe. This is true even of economists, even of philosophers. It is certainly true of investors.

That means values-based investing debates are rarely about data. They are about identity.

The physician’s Dogecoin guilt was immediate. He didn’t sit down with Bentham and run the calculations. He sold, he profited, and he felt bad. The ethical reasoning came later. Rabbi Ostrich’s sense that legality “isn’t enough” precedes his inability to articulate what would be enough. Josh’s discomfort with the crank-box isn’t an argument… it’s a sensibility.

The second principle is that different moral foundations shape different perspectives. Haidt’s research identifies several moral foundations including care, fairness, liberty, loyalty, authority, sanctity and shows that people weight them differently depending on their temperament, upbringing, and political orientation. Progressives tend to emphasize care and equality-based fairness. Conservatives tend to emphasize liberty and proportionality-based fairness.

This is why the same data about capitalism produces opposite conclusions. It is also why “values-based investing” means genuinely different things to different people. A screen that satisfies one investor’s moral foundations may be irrelevant or even offensive to another’s. The physician who won’t touch crypto might be perfectly comfortable with defense stocks. The rabbi who trusts a pension board might be appalled by what a faith-based screen in another tradition excludes.

The third principle is that morality binds and blinds. We coalesce around leaders, communities, and ideologies. This gives us solidarity and identity, but it costs us objectivity.

This may explain why ESG debates feel less like portfolio construction and more like culture war.

Rabbi Ostrich and I discussed the Israel divestment movement, and he expressed frustration with how political solidarity overwhelms nuanced analysis. He also told me a story about the California grape boycotts of the 1960s and the later pesticide scare, where competing unions weaponized ethical language so effectively that even a religious action center in Washington couldn’t sort out the facts from the positioning. Once morality becomes a banner, it can obscure as much as it reveals.

The physician’s 401k blind spot is a quieter version of the same phenomenon. Many of us are bound to the system — the tax advantages, the employer match, the simplicity of index funds — and the system blinds us to what we actually own. It’s not that we don’t care. It’s that the structure makes not-knowing the path of least resistance.

What This Means — And Where We Go Next

Here is what I think I’ve learned so far:

The subjectivity problem is real. But it is not an excuse for disengagement. Everyone I’ve spoken with thus far, including people not referenced in this essay, agrees that values matter and that the gap between our moral aspirations and our financial behavior is worth closing.

Perhaps Haidt offers a useful diagnostic here. He describes three “stories” that people tell themselves about capitalism: that it is exploitation, that it is liberation, or that the truth involves a search for what he calls “dynamism with decency.” The story with which you feel most aligned shapes what feels like an ethical problem in the first place.

The physician didn’t feel a tension about his 401k until I named it. Rabbi Ostrich feels the tension but has made peace with a pragmatic stopping point. Perhaps Josh resists the premise that any framework can resolve it cleanly.

…so, perhaps before we build a screen, we need a conversation. My first essay asked who should be the moral arbiter. I think the answer emerging from these conversations is: maybe nobody or, at least, not until the investor understands their own moral landscape. The rabbi trusts a pension board. The physician trusts his gut. The philosopher distrusts mechanical answers. All three approaches are reasonable. None of them are complete.

Haidt’s observation is that there is “no one right form of capitalism”… he cites Denmark and Singapore as very different successes, Argentina and Venezuela as very different failures. I suspect the same will prove true of values-based investing. There may be no one right way to align a portfolio with a conscience. But there may be many wrong ways: ways that oversimplify, that impose one moral foundation while ignoring others, that treat ethics like a marketing label rather than a genuine inquiry.

I plan to dig into the specific territory that surrounds this question: the history of capitalism and how we arrived at this moment; the existing frameworks for socially responsible and ESG investing and where they succeed and fall short; Milton Friedman’s claim that the social responsibility of business is to maximize profits, and what that argument gets right and wrong; the perspectives of different religious traditions; and the practical question of what investors actually want when they say they care about values.

I don’t expect to resolve any of this neatly. Rabbi Ostrich told me: “Once you get involved in the decision, there are lots of different factors and it’s a never-ending process.” Josh warned me against the crank-box. The physician told me he debated whether the ends justify the means through four years of Catholic high school and never reached a conclusion…

When I started making cold calls from that cubicle above The Cheese Shoppe in 1998, I didn’t know the word “deontology.” But I knew something felt wrong about the “red-shoes” model of financial advice –selling people what they wanted to hear rather than what they needed to know. Twenty-seven years later, I still don’t have a settled answer about who should decide what’s ethical in a portfolio. But I’ve learned that the question is richer, and more rooted in an exploration of humanism, than I expected.

If you want your portfolio to reflect your values, the first step is not selecting a fund. It is confronting your own moral framework, including its tensions, its blind spots, and its trade-offs.

If we are going to build tools to align capital with conscience, we need to begin, not with screens, but with moral anthropology.

I hope you all have a wonderful day.