August 12, 2012

A theft upon us all

In the paper the other day were two stories in which people pleaded guilty to serious fraud. This sort of crime can range from stealing cash from a business to claiming a disability or worker’s compensation by a person who is able to work.

As I read the stories, I tried to understand how someone could rationalize fraud. While some may argue that fraud is not a serious crime like robbery, extortion or treason, I believe otherwise. Fraud tears at the fabric of a productive economy.

Let’s begin with the perpetrators’ likely rationale. A fraud is an intentional deception formulated to allow personal gain at the expense of another. I can’t help but believe that today’s entitlement society allows people to easily rationalize fraud. They argue that their victim is no more entitled to those profits than they are. They may go even farther and convince themselves they deserve the money more.

Maybe they are poorer, maybe they think they are harder working or more deserving, perhaps they feel slighted or underappreciated, or maybe they simply resent their victim or their victim’s wealth. If it is a fraud against the government, perhaps they think they can gain handsomely and it will cost each one of us just a bit. Intentional tax fraud is a classic example.

Try as they might to convince themselves their transgressions serve a higher ethical purpose, fraud still takes property from another. Theft is always wrong. There can be no rationale. No one is entitled to the property of another, no matter how deserving they are or how undeserving their victims may be.

Misappropriation of another’s property also violates an important economic premise that is often a theme of this column. The economic system is designed to create production. An enlightened system does so in a sustainable manner that recognizes the need for incentives today and intergenerational incentives tomorrow. If we get it right, we optimize the economic pie we all share.

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