The Volkswagen fiasco has led the New York Times to promote a debate on “Is Honesty for Suckers?”
Tyler Cowen thinks dishonesty is bad, but our anger is misplaced. Our errors cause many more deaths than Volkswagen’s deliberate manipulation of pollution controls on its diesel vehicles. Cowen knows enough Smith—or should know enough Smith—to understand why motive is important for justice. Someone who unintentionally (and not through negligence or design) causes the death of another is not held to same standard of culpability because there is no motive. It's moral sentiments at work.
Like William Damon and Anne Colby, I fall definitely into the camp of virtue ethics: we cannot give in to cynicism and throw up our hands in despair. We must keep at the task of helping mold young people to value honesty for its own sake, and provide role models for that. It is hard when there is a vicious cycle of acts of dishonesty breeding lack of trust, breeding more dishonesty, and so on.
Some people are lucky to live in a society with a virtue cycle going in the opposite direction (think Norway). Just remember: it is not an accident! Previous generations had to work very hard to build up that social and moral capital.
And for God’s sake don’t think that the market, left to its own devices, can build enough social capital through reputation effects alone. As Paul Heyne, Kenneth Boulding, and many others have noted, the market, to function well, badly needs the social capital of the family, the church, and the spirit of other civic groups.