The sexual slur, for which Ferguson apologised, is tedious, as is the wilful misunderstanding of John Maynard Keynes’s quip: “in the long run we are all dead”. That was a complaint about the glib willingness of rival economists to endorse temporary suffering, which Keynes thought was largely unnecessary, for the sake of some distant good, which he thought was far from certain to arrive.

But Ferguson’s comment assumes, correctly, that our economic activity cannot be separated from an almost biological desire to create a good society which will endure into the future. In other words, there is a valid analogy between our biological drives to survive and reproduce and the economic desires to satisfy our needs and to thrive, now and in the future. Economists have captured the close ties of biology and society with two different images: growth and fertility.

Start with growth. We desire healthy and fast growth for the economy, just as we do for our progeny. The analogy is helpful and apt when economies are still in some sense young. Much as a child becomes more capable as well as larger as he or she follows their own version of the path to adulthood, an economy produces more and better goods and services as it catches up with more developed economies.

Eventually, though, human and economic childhoods both end. The child grows up; the economy becomes, in the professional jargon, developed or mature. The analogy suggests that growth should no longer be relevant to economics. So when economists hope for perpetual growth, as they generally do, they have abandoned this biological parallel.

They should move to another one: economic fertility. I have borrowed this combination of economics and biology from the ancient Greek word for interest on loans, “tokos”, which means “offspring”. The double meaning suggests that the interest payment is like a child spawned by the monetary principal.

The Greek philosopher Aristotle objected to this verbal analogy, because, he said, money cannot really reproduce itself. Medieval Aristotelians corrected their master. When the proceeds of loans fund further production, they create the economic analogy of nature’s reproduction; loans can be fertile, and in that case interest payments are a legitimate progeny.

I think the fertility image is too helpful to be limited to financial transactions. Everything economic – labour, consumption, investment, exploitation of resources – should be subject to the same test. Does it support an economy which will truly enrich future generations?

Unlike growth, which can be measured in GDP, economic fertility cannot possibly be analysed numerically. Indeed, GDP is quite different from economic fertility. The unpaid parental labour of childcare is fertile but not counted in GDP. The consumption of pornography is infertile but included.

To my knowledge, Keynes did not discuss fertility explicitly, but he made a valuable contribution to the debate, in what is probably his second most famous work, “Economic Possibilities for our Grandchildren”. The 1930 essay accurately predicted economic maturity – people freed “from pressing economic cares”. He then asks the crucial question – how these prosperous people can “live wisely and agreeably and well”.

His answer might surprise many self-professed Keynesians. Their master actually thought that growth in already mature economies was spiritually infertile. He compared the man who spends time and energy striving for yet more wealth, rather than profiting from the available bounty, one who does not “love his cat, but his cat’s kittens; nor, in truth, the kittens, but only the kittens’ kittens, and so on forward forever to the end of cat-dom”.

Keynes thought we should love the cat at hand – “pluck the hour and the day virtuously and well”. He suggested three-hour work days and dedicating the remaining time to the cultivation of whatever is best in the human spirit.

Ferguson’s angry comment was not aimed at this enlightened hedonism, but at the most common current interpretation of Keynes’ magnum opus, “The General Theory of Employment, Interest and Money”. That general theory is widely thought to demonstrate the need for more government action to pump up growth.

Ferguson the pundit thinks differently. He may be right, but I find the whole debate intellectually sterile. I would much rather hear from Ferguson the historian, an expert on the dismal period in which Keynes came of intellectual age. My question to him: after six decades of peace and increasing prosperity, how can Keynes’ cultural great-grandchildren create a truly fertile economy?

It is not a coincidence that both these accidents involved the garment trade. This is an industry of mostly small, poorly capitalised companies, which jostle against each other in a long and rapidly shifting supply chain. Retailers shop around aggressively, suppliers sub-contract freely and the price pressure is relentless. No one takes responsibility, and it can seem like almost everyone involved is irresponsible.

It does not need to be like this. In the first few decades after Triangle, the common good increasingly prevailed in the clothing trade in the United States, and eventually in other rich countries. Trade unions protected workers, customers learned to pay enough for their clothes to support fair wages, and price competition was muted.

Then developing economies entered the market. The conjunction of poor workers with rich customers has been beneficial in some ways; clothes became cheaper and producing nations gained export income and industrial expertise. However, the Rana collapse is more than collateral damage. It is a sign that rich customers are too dedicated to seeking bargains and that poor suppliers are too anxious for business.

Customers and suppliers can say they are following the rules of free markets. But Rana shows how too much freedom – to push for lower prices and to use lower wages and less safety as competitive tools-  can bring out the worst in human nature. No wonder that the economic history of the last century in rich countries has largely been a retreat from crude market forces to what might be called a post-Triangle consensus – fair treatment of workers, fair prices and firm regulation.

The consensus relies on national solidarity – the recognition that my fair price is my neighbour’s fair wage. That solidarity is harder to summon on a global scale. When shoppers pick up a bargain t-shirt, they are less likely to see a neighbour suffering if the inhumane working conditions that keep the price low are located in a foreign country.

Development is the best cure for this problem. Wages and working conditions tend to improve as economies become more productive. But consumers and retailers in developed economies can help now.

The best way forward is a solidarity cartel. All the major retailers and brands could agree to take responsibility for the entire supply chain. They would delegate an independent agency to enforce safety standards and an agreed minimum wage in every country for everyone connected with the goods they sell. Producers refusing to join would find sales channels blocked; member suppliers would boycott non-participating retailers.

Why would anyone sign up to a cartel that raises everyone’s costs and takes away a source of potential competitive advantage? For the same reason that producers often support environmental regulation – because they feel uneasy harming the common good for the sake of a single company’s gain.

Like all cartels, the solidarity league would be hard to organise and manage, but the main problem is that it would probably violate anti-trust laws. I have a less contentious alternative: a new form of the “Union Made” label on clothing. Popular in the United States in the post-Triangle decades, the seal of approval was accepted by retailers and customers as a mark of fairness.

Those labels could not withstand the import flood, but a modern version might work. The “Fair and Safe” label would be awarded for a supply chain that was indeed fair in its pay and safe in its practices. To work, it would need to be far more ambitious, and more enthusiastically endorsed by retailers and brand owners, than the existing “Fairtrade” movement.

A label campaign may sound utopian. Perhaps most consumers will never willingly pay more for “Fair and Safe” goods, even if the additional cost to them is much lower, relative to their incomes, than the corresponding workers’ gains. Perhaps Wal-Mart and other large retailers will never sign up to a plan which firmly commits them to higher costs and more intensive supervision.

I don’t think such pessimism is warranted. The history of American and European labour relations shows the power of solidarity. What was once radical thinking about wages and working conditions gradually became mainstream, largely because most people, including many employers, understood that the fair treatment of workers helped everyone in the country. Photographs of Rana Plaza could help make that thinking global.

Almost nothing. Imagine a worst case scenario: a hacker closes down all the exchanges for a full month. All portfolios of stocks, bonds, options, futures, currencies and commodities are exactly the same on June 1 as on May 1.

What would the outage change? The prices at the end of the “exchange holiday” would presumably be about the same as they would have been otherwise. The lost income of brokers and traders with superior insight or information would be matched by the foregone losses of their counterparties. As for the economy, a few new issues of bonds and shares would have been delayed a few weeks, but the losses would be more than matched by gains: the absence of frenetic trading would remove a significant distraction for business people.

If that sounds like an improvement, take a miniscule modicum of comfort. Regular financial market holidays are likely to be introduced in the hyperactive foreign exchange market. EBS, which runs one of the big forex trading platforms, plans to force traders to take regular breaks. Admittedly, the R&R will only last a few milliseconds. Instead of dealing with orders as soon as they come in, the platform will wait that long to match buyers and sellers.

Traders and theorists of financial markets usually argue against all trading holidays, whether forced or voluntary, long or tiny. They say liquid financial markets are good for the economy, because ease of selling both encourages savers to buy in the first place and allows them to limit losses. No one should have to wait any longer than absolutely necessary to finish a desired transaction.

That is wrong, for two reasons.

First, liquidity is not an investor’s right; it’s a potentially dangerous privilege. The reality is that as soon as money is invested, it is committed to the capital side of the economy and tied up forever. It is turned into buildings, machines, inventory, roads, cables, software, films, training courses. Whether or not the assets provide a return, and however long they last, they cannot be unmade.

That is an inconvenient truth, and the much of the financial system is dedicated to getting around it. Banks offer withdrawals, bonds are repaid and markets permit portfolio liquidation, as if history could move backwards as well as forwards. For society as a whole, it’s a good system, even a great one. It allows the young to borrow, the middle-aged to save and the old to spend.

But the arrangements are fundamentally fragile, because they are based on a sleight of hand. The sale of a financial asset, whether to cash in totally or to trade for another one, corresponds to nothing in the real economy. The system is designed to deal with only a limited quantity of such transactions. Excessive liquidity is an abuse of the privilege, turning the financial system into an economic risk factor.

Second, liquidity encourages the dangerous chimera of safe investing. In reality, the financial system cannot be safer than the stock of investments, and investments are always claims on a necessarily uncertain future. At best, the existence of financial markets can increase some investors’ safety, but that gain that always comes at the cost of less safety for their counterparties.

For safety-searchers, increased liquidity ultimately makes this trade-off less attractive. That may sound counter-intuitive, because ample liquidity is needed for “dynamic hedging” and many other techniques used to make portfolios safer. However, easier selling leaves the market more subject to emotions, which are more volatile than facts, and to trend-followers, who almost always push prices farther than reality dictates, whether the market momentum lasts for milliseconds or months. Increased liquidity leads to greater price volatility – and more expensive hedges.

Less trading is a good idea, but many investors will be appalled. They are basically speculators, who like making more trades just as gamblers like making more bets. For the real economy, though, less liquid markets would do no harm and could discourage the financial bubbles which often end in economic busts.

Financial transaction taxes may decrease liquidity. A more direct approach is to reduce trading frequency. Why not stretch out the millisecond holidays in foreign exchange into once-daily price fixings in all markets? Think of it as a version of work-life balance: less wasteful work in finance, more time for genuine economic life.

In 2011, the two eminent professors claimed to show a tipping point for government borrowing. If the debt amounted to more than 90 percent of GDP, the GDP growth rate was typically much slower than in more fiscally prudent countries. When Thomas Herndon, a mere graduate student at the University of Massachusetts, redid the maths this year, he also found a correlation between higher government debt and slower growth. But there was nothing remotely like a tipping point.

The new paper was a blow to the politicians who relied on the Rogoff-Reinhart 90 percent line to support fiscal “austerity” (smaller government budget deficits). But they were always foolish to trust a study which drew a universal conclusion from a small sample of countries in vastly different situations.

Insofar as the Rogoff-Reinhart research had any value, it merely restated something that should have been obvious anyway: unsatisfactory economic performance and excessive government borrowing generally go together.

The connection is social, not financial. In societies that can get things done, respond well to challenges, compromise when necessary and do not spend more than is affordable, the government is likely to be fiscally competent and the economy is likely to be effective. Conversely, if the society is deeply divided, the economy is probably enfeebled and there is a high chance of a political deficit – to stay in power governments then need to spend more than they take in taxes.

The statistical analysis supports this correlation, but it’s really common sense, like the relationship between obesity and bad eating habits. The social analysis should serve as a warning to the austerity crowd. A balanced government budget is not going to restore an ill economy to good health or unify a divided society. The political deficit and social divisions will just appear elsewhere, perhaps taking the form of greater political instability.

The austerity-promoters would also do well to admit that large quantities of government borrowing and spending can be helpful, for example during and after wars, natural catastrophes and recessions. And the choice to raise funds by borrowing rather than through increased taxes is at least as much political as economic.

After all, debt and taxes are interchangeable in terms of cash flow, as long as taxpayers hold all government debt. The two financing mechanisms can be integrated, so the higher taxes needed to pay for higher debt loads are exactly compensated by the interest income and principal repayments taxpayers receive from the government. Government borrowing does not necessarily “crowd out” other economic activity any more, or any less, than an equivalent quantity of tax revenue.

It’s clear that Rogoff-Reinhart has methodological and theoretical problems, but their opponents, the advocates of “stimulus” (larger deficits), should be careful about gloating.
Pro-deficit economists cannot counter Rogoff-Reinhart with a persuasive historical study of their own, because peacetime deficits have almost never been as high a share of GDP as they are now. Deficit-doves often cite the U.S. Great Depression, but even if government spending reversed the 27 percent decline in GDP between 1929 and 1933, the precedent is not clearly relevant to the recent 4 percent decline.

The pro-deficit camp does have a plausible theory. Government deficit spending can make up for activity unnecessarily lost through an external shock, for example the 2008 financial crisis. But the stimulus crowd should admit the theory’s limits. The more the government spends, the more likely it is to spend foolishly, especially when the government suffers from the sort of large political deficit common in easily shocked economies. Spending financed by borrowing, or by newly created money, is no less likely to be wasted than spending financed by taxes.

Why did the implausible 90 pecent Rogoff-Reinhart debt threshold ever gain credence? And why do stimulus defenders ignore the dangers of ever larger governments? Because the austerity-stimulus debate is ultimately a battle in the ideological war over the proper role of government in society. Both sides fervently believe they are right: governments need to be restrained or governments need to be let loose. Both find supporting evidence everywhere and contrary evidence nowhere.

No facts will decide this argument, but the current mix of policies is particularly hard to interpret. For austerity fans, deficits are too high to count as truly austere; for their opponents they are too low to count as genuine stimulus. There will certainly be enough evidence to show that the other side’s approach has failed. And it’s a safe bet that the next Thomas Herndon will find easy pickings.

The Catholic Archbishop of Westminster said many things, but his main idea of how to improve businesses can be summed up in one sentence: “All businesses big or small should be able to demonstrate how they are making the world a better place through providing goods that are truly good, or services that truly serve people, and, by doing so, create employment and fair returns to investors, whilst minimising harm”.
A few moral relativists or free-market ideologues might argue with that, but most business people think they are already behaving as the archbishop thinks they should. They usually see themselves as well-meaning cogs in a basically benign economic machine which provides people with a remarkable array of desired goods and services, and does so efficiently, safely and in a way that is fair to workers and the world.

That self-image is fair. Most businesses in developed economies do work to a quite high ethical standard.

Still, Nichols is hardly alone – and not wrong – in worrying that some businesses have ethical problems. The concern explains why business ethics has become a standard part of the curriculum in MBA programmes, and the existence of numerous initiatives to promote corporate social responsibility and other virtues. The main problem with these worthy efforts is blandness: it’s not clear what business ethics classes are supposed to teach or what, for example, should be the aim of the Westminster archdiocese’s programme “A Blueprint for Better Business”.

One possibility is that ethical instruction should induce qualms. Moral training might have restrained the captains of finance from excessive bets and pay demands before and after the 2009 crisis, but I doubt it. Lloyd Blankfein of Goldman Sachs may have been only half-joking when he said the company he headed was doing “God’s work”. He sees high pay as an appropriate reward for doing a good job in Goldman’s basically good businesses.

If finance is to be made more ethical, Nichols and other crusaders will have to offer something more substantial and detailed than eloquent but vague calls for virtue. They will need to offer fairly sophisticated economic and sociological analyses. It is much the same for most other ethical issues in business. The obvious vices – dishonesty, deception, wilful damage, cruel treatment – are already considered unacceptable. Simple condemnations of greed and calls for solidarity are not enough to deal with problems such as excessive consumerism, irresponsible investing and manipulative advertising.

Still, I see one widespread error: the dangerous belief that people want what is good for them. This belief leads companies to strive for immediate profitability, because that’s what shareholders want. It leads managers to trust that sales and profit, which do indicate what customers want, also show whether customers are being well served. It leads advertisers to decide that any advertising which is effective must be good.

In fact, judgments are so distorted by ignorance, greed, envy and hedonism that people often crave things that are bad for them, their neighbours or their society. Crusaders for ethical business should challenge this false belief – and then provide a coherent objective vision of the relevant economic goods.

Right now, finance belongs at the top of the business ethics agenda. The trade is lost in a frenzy of greedy desires – of savers and investors seeking high returns and absolute safety, of borrowers looking for bargains, of finance professionals lusting after unjustifiably high incomes. The clear and clearly virtuous economic purposes of finance – gathering savings, allocating investments and providing reasonable returns to savers – are often ignored. In a more ethical financial system, customers who ask for things which are objectively unjust would not get their way. Rather, the industry would band together, perhaps guided by the government, to say no. The industry and its regulators would subject all products and activities to severe tests for genuine merit.

A similar determination not to pander to low desires could improve ethics in other economic activities. For example, little advertising qualifies as one of Nichols’s “services that truly serve people”. Rather, advertisers all too frequently raise unrealistic expectations and appeal to greed and gluttony. This is much less “truth well told”, an old slogan of the McCann Erickson agency, than a powerful tool for encouraging bad behaviour.

The moral case against much advertising is strong, but few business school ethics professors will make it, because advertising is too well entrenched in the modern economy. As an outsider, Nichols could take up the cause. He is unlikely to get very far, but at least he would not be bland. He would be calling for something like an ethical – and a cultural – revolution.

Full disclosure: Edward Hadas is on the steering committee of Westminster archdiocese’s programme “A Blueprint for Better Business”.

The idea of minimum wages is well accepted, but the American $7.25 an hour does not meet the simple standard of providing enough to support the worker who earns it. For an adult in New York State, self-support requires 55 percent more, $11.25 an hour in a full-time job, according to The MIT Living Wage Calculator. And a just minimum should really be enough to raise a family – something closer to the $23.58 an hour required to support a single wage-earner with one child.

The minimum wage is one part of the remarkably complex pay system found in all developed industrial societies. Economists often suggest that wages are determined by market forces, the supply and demand for labour, and by employers’ calculations of the value of labour. But actual wages influence both the market and the perceived value of labour. It is more accurate to include market forces and economic value somewhere in the middle of the long list of factors which contribute to the ever-shifting social agreement on pay levels. This agreement is established in the mysterious way that all social orders are built – the powerful push, the weak resist, traditions are followed and evolve, justice is respected and flouted, market forces and economic calculations nudge.

By far the most important factor in determining pay is the social judgment of value. The main reason that bankers, advertising executives and doctors are paid more than teachers, childcare workers and street cleaners is that society values the former more than the latter. And the main reason that the minimum-wage jobs pay too little to support a family is that society has agreed that is what such labour is worth. This is an injustice, because honest labour should always be rewarded with enough to live a decent life.

To be fair, the social judgment of these occupations is less harsh than the pay level suggests. The very poorly paid usually receive welfare benefits from the government, either in cash or in the form of free or cut-price services. It is an awkward arrangement, but unavoidable in societies which have decided that pay should be determined by the job but spending power should be determined, at least in part, by needs and family situation. That division will exist as long as family breadwinners do not receive special pay status.

Still, the combination of low pay with additional benefits subtracts from the dignity of work. The worker deserves his or her reward, and the right reward is a living wage. Besides, in the current arrangement the low paid often find that playing the benefits system pays better than hard work, to the detriment of both demoralised workers and overburdened taxpayers. It would be better to rely more on pay and less on transfers.

That should be possible. After all, the United States and other developed countries produce enough goods and services and have enough infrastructure for every man, woman and child to enjoy not merely life’s necessities but a generous share of its comforts and luxuries as well. With sufficient wisdom, the pay system could be arranged to share out that abundance fairly without much help from the benefit system.

The beginning of this social wisdom is higher pay at the bottom of the social scale. Of course, a sudden massive increase in the minimum wage would be counterproductive. Too many employers would be unable or unwilling to pay, so jobs would be lost or moved into the unregulated black market. However, history supports the case for steady and ultimately substantial increases in the minimum wage. When the less well off have more, they spend more, adding to economic activity and reducing the need to extract taxes from the better off. Besides, better remunerated workers have more motivation to work while their employers have more motivation to increase the productivity of this more expensive labour.

The macroeconomic objections to higher minimum wages deserve serious attention, but they often hide higher earners’ justified fear of losing out. After all, when those at the bottom end up with more – as they inevitably would with a higher minimum wage, even after benefit cuts – those at the top must end up with less. Doctors would still have much higher incomes than cleaners, but both the doctors’ own pay and the ratio of their pay to cleaners’ remuneration would fall.

The desire to maintain consumption and social status is legitimate, but must be set against a higher virtue – solidarity. The fruits of economic success should be shared equitably. A living wage for all is a good standard of success.

Consider, for example, the enthusiastic response from around the world to the material renunciations of Pope Francis. The crowds cheered when the new leader of the Catholic Church said he wanted a “poor Church for the poor”. His decision to stay in simple lodgings and wear simple clothes amounted to turning down shillings for the sake of giving a morality lecture, but few observers were bothered. On the contrary, it was welcomed as a pertinent comment on the excessively materialist values of modern society.

The need to be “for the poor” is eternal and universal. In every society there will always be people who cannot thrive without help from others. Despite Dr Johnson’s comment, the need for conscience-pricking discourses on the topic, papal and otherwise, is equally timeless. Otherwise, it would be too easy to find plausible but ultimately selfish reasons not to help out.

In the modern world, the challenge of being pro-poor is particularly difficult, because there are two distinct types of poverty: of the seriously poor and of the relatively rich. In poorer countries, including Francis’s native Argentina, poverty is often absolute: not enough to eat, squalid housing, no access to education. The poor there need Dr Johnson’s shillings. In rich countries, material poverty is only relative. Those called poor generally all have life’s necessities, but fewer comforts and luxuries than most of their compatriots. As Francis’s papal predecessors often suggested, this relative material deprivation is less significant than more intangible shortages: of opportunity and noble aspirations. The socially and spiritually deprived could benefit from something like Dr. Johnson’s “lectures on morality”.

Involuntary poverty, whether material or intangible, is a bad thing, but Francis said he wanted a “poor church”. He must believe that voluntary poverty can sometimes be virtuous.

Two virtues spring to mind. The first is solidarity. There is something selfish about having much more than is necessary when so many people are forced to go without. Renunciation by the rich can redress that injustice.

As Francis’s wish suggests, the Catholic Church has much to renounce before it can be considered poor alongside the world’s poor. It has too often amassed fortunes and its leaders have been too close to the privileged classes, especially if they express the right pious sentiments. The lack of economic solidarity, though, is a global phenomenon.

A New York family pays thousands of dollars for surgery on a pet cat. Parents in the slums of Buenos Aires cannot raise the hundreds of dollars needed for surgery on their child. There may be no direct relationship between the two, but there is something distasteful about the conjunction, because the Americans and Argentines live in the same world. Solidarity is much more appealing. The New Yorkers could foreswear surgery as a sort of memorial of the plight of the poor, or better yet, donate the unspent money to a children’s medical charity.

The second virtue of voluntary poverty is the detachment it brings from what the pope’s namesake, Francis of Assisi, called the “dung” of “earthly things”. The 13th century saint loved “Lady Poverty”  because in her presence it was easier to taste “the honeyed crumbs which fall from the table of the Holy Angels”. In less poetic words, we may think that we own our houses, cars or yachts, but they often own us, by taking precedence over more important concerns. When higher GDP is considered the paramount sign of national success, people have become subservient to things.

The Catholic Church canonised Francis of Assisi, “the little poor man”, but its numerous ecclesial palaces and luxurious monasteries suggest an excessive attachment to material things. Pope Francis seems to think his detachment from the Church’s fortune can set an example for the Church. It could also inspire residents of rich economies. Detachment from material things is particularly valuable when there are so many material things to be detached from, and when so much of society, from family life to education, seems to be organised primarily to serve the satisfaction of material whims.

In choosing a relatively simple wardrobe and housing, the new pope is not necessary criticising the view, widespread among Catholics, that elegant clothing, beautiful buildings and fine art bear witness to the glory of God. But in a world where there is both too much poverty and too much wealth, the renunciation of riches can speak more persuasively than luxury.

Such talk was out of proportion. Cyprus is a small country – its GDP would put it at 116 on the Fortune 500 list of the largest quoted U.S. companies – with a financial sector that had expanded excessively for two decades, almost entirely by attracting flight capital from Russia. A national financial collapse was both insignificant and merited. Besides, the EU and the International Monetary Fund had a plan to deal with the collapse: a combination of financial help from other countries and managed pain for depositors in Cypriot banks.

Alarmists could not deny all this, but they invoked the great demons of financial crises: precedent and contagion. That was silly. Cyprus was obviously a special case, and the European Central Bank was clearly determined, and able, to keep its problems from spreading. Even if Cyprus had left the euro zone, there would have been no dangerous precedents or grim effects, just a demonstration of a bizarre desire for economic self-harm. For everyone else, Cyprus would still be like a flea-bite – scratch for a minute and forget about it.

Why then have so many distinguished economists made so many dire predictions? I believe the answer is that they overestimate the current power of finance.

Recent history is on their side. For more than three decades, financiers almost always prevailed over political authorities. In the 1980s, they bamboozled politicians with spurious arguments for financial deregulation. In the 1990s, banks trampled over their regulators. In the early 2000s, central bankers became votaries at the altar of finance. They treated rising asset prices as signs of divine favour.

The 2008 financial crisis didn’t end the sway of bank-think. Banks forced governments to rescue them, but bail-ins were treated as anathema and calls for radical changes were ignored. The largest banks became ever larger, top bankers’ pay remained extraordinarily high and monetary policy was designed to make life easier for banks. In the euro zone, investors gave politicians orders on fiscal policy. The desires of the financial sector had to be met and their fears, however irrational, had to be calmed.

Very gradually, however, finance has lost ground. Regulators and public opinion are forcing pay cuts and capital additions. Governments plan to tax some economically pointless trading. And now, the people who put money into reckless Cypriot banks are being punished rather than rescued. It’s a big change from 2008, when foolish Irish banks managed to dump almost all the cost of their mistakes onto taxpayers.

Some of the alarming talk about Cyprus comes from apologists, sometimes unwitting, for the forces of finance. Their claim, that economic health is harmed when governments refuse to support troubled banks and to fully guarantee depositors and bondholders, makes sense for the industry. For society, such deference to narrow financial concerns is corrosive; it encourages bad behaviour from banks and high pay for bankers.

Other pessimistic experts are simply behind the times. They don’t realise that investors are now less in awe of finance and sufficiently trustful of the authorities to foreswear the emotional excesses which wreaked such havoc while finance’s power was unchecked. Investors are slowly learning, with some difficulty, that banks will neither be allowed to fail disastrously nor rescued painlessly. The lesson has been sufficiently assimilated to allow them to ignore the Cyprus-alarmism.

That is good news, but banker-think still remains too powerful. It still shapes monetary policy, poisons the debate over fiscal policy and slows down institutional reform. There is still too much credit outstanding in rich countries. Too many people still believe that rising house prices and bull markets in shares are unconditional goods.

Finance needs to be restrained, but it should not be crushed. While power so corrupted financiers that they often lost sight of their economic responsibilities, the industry has a valuable role to play in modern economies. It should protect savings, and both gather and allocate funds for investment.

Finance and government ought to help each other. Governments can restrain bankers’ greed and foolishness. Bankers can keep governments from spending more than they can afford, and can encourage a just and responsible monetary policy. There is much work to be done.

True, the government of the Mediterranean island may retreat from its first plan, and in any case the accounts are to be taxed, not written down, so the terms of the deposit insurance will be technically kept. And strictly speaking, deposit guarantees are not being breached in the United States and other countries with an inflation rate higher than the interest rate paid on savings accounts, even though that inflation-tax steadily erodes the accounts’ real value. But in fact, governments – both small and suspect like Cyprus, and large and respectable like the United States – have failed the lovers’ test. They have made promises to savers which they either cannot or will not keep.

These trust-breaking governments can resort to the errant lover’s usual excuse: we could not have known what the future would bring. Just as bitter experience somehow invalidates a promise of undying love, an impossible-to-predict avalanche of bad loans might erase the obligations of Cypriot banks and the equally unpredictable financial crisis could exculpate monetary authorities in the United States and elsewhere. Such events, they can say, are like the acts of God which invalidate insurance policies.

Lovers’ quarrels are a delicate matter, but it is not hard to judge the promises made by the Cypriot government. It should have known better. There was nothing like the financial equivalent of an asteroid collision. The authorities could either have kept the banks from expanding wildly without sufficient buffers against losses, or they could have refused to issue an unaffordable guarantee.

States which use inflation and low interest rates to break their promises may be more suave about their promise-breaking, but they are also guilty of a breach of faith. They obey the letter, but violate the spirit of their commitments.

Thoughtful defenders of guarantees argue that virtuous intentions justify falsehood. Modern economies rely on credit, credit relies on trust, and the economy suffers if mistrustful savers refuse to lend. Besides, disingenuous savings guarantees are hardly an anomaly in the financial system. On the contrary, loans, the standard financial instrument, rely on a similar ethical legerdemain. Promises of future payments are never certain and are often made lightly, for example by junk-rated corporations or by mortgagees before the U.S. housing crisis.

Even though both lenders and borrowers theoretically know roughly how little the promises are worth, strong words, like lovers’ oaths, can be dangerously beguiling. If financial commitments receive too much credence, lenders can sell off their loans at too high a price and borrowers can get away with implausible commitments.

When the truth is finally revealed, financial institutions or entire financial systems may fail – it has happened in the United States, Japan, the UK and several member states of the euro zone within the last generation. The damage from revealing the initial deceit is ultimately greater than the pain of telling the truth in the first place.

What should be done?

First, educate people about the nature of banking. The public is generally unaware that banks take risks with their money. There is a widespread belief that it is right and just to guarantee the value of all deposits. It is actually impossible and dangerous. If more people understood that there is no way to make the future certain, they would be less prone to panic at bad news, and the financial system could be made to conform more closely to economic reality.

Second, make fewer financial promises. Guarantees may bring savings out from under the mattress, but dishonesty is ultimately self-destructive. Every debt promise which is broken – either directly by not paying out or indirectly through inflation – makes the financial system more untrustworthy. The poor may deserve some protection – perhaps a guarantee for the real value of the first few thousand dollars or euros of savings – but everyone else should have to take more chances.

Finally, phase out conventional debt. The apparent certainty of loans with fixed terms and fixed nominal interest is misleading, even false, since unpredictable and varying rates of inflation and GDP growth ensure that their true value is uncertain. Such loans should mostly be replaced by common shares, which conform better to economic reality. Of course, governments cannot issue shares, but their debts can be made more like equity, linked to inflation and GDP growth.

The world has still not recovered from the 2008 financial crisis, in large part because the financial system has lost credibility. That will not be regained fully until finance is no longer based on impossible promises.

In the United States, the world leader in obesity, the trend toward higher body weights began more than a century ago. Researchers John Komlos and Marek Brabec show that the average body mass, weight adjusted for height, has moved upward fairly steadily – from too low for optimal health right through optimal to the current too high level. Most visibly, and alarmingly, the gap between the heaviest 30 percent and the rest has widened significantly in the last few decades. There is no end in sight.

The problem of obesity is an adverse side effect of one of the greatest economic liberations ever, the freedom from want of food. Until shortly before 1900, food shortages were nearly always and everywhere a lively possibility, and all too often a grim reality. Now, although inadequate nutrition still blights the lives of more than a billion people in the world, residents of developed economies enjoy food in excess.

This change from shortage to surplus should have provoked a moral analysis. In the old days, the ethics of abundance were almost irrelevant. Moralists chastised gluttony, but for most people necessity imposed moderation, in practice if not in desire. And farmers did not need a course in philosophy to decide to produce as much as they could.

In the new era, physical need is no longer a constraint and unhealthy eating is now an everyday reality. The threat must be countered by individuals, food producers – no longer primarily farmers, but companies with processing plants and factories – and governments. All have failed to live up to the challenge. The result is that food is often not used as it should be, to provide the benefits and pleasures of healthy eating.

What should individuals do? They can and should count calories, read labels, avoid “junk food” and so forth, but above all they need to turn to the traditional religious and philosophical wisdom about the virtue of self-control. Moderation in eating is a skill which nearly every modern person needs, like the ability to drive or mastery of the Internet.

This is not a painful discipline, not with so much tasty and healthy food readily available, but the virtue is in scant supply. People have mostly responded to bounteous food as they have to all other varieties of industrial plenty, by buying ever more and looking for ever lower prices. When it comes to food, that approach is disastrous. Undisciplined munching and feasting leads directly to obesity, while the heedless desire for low prices and vast quantities encourages producers to skimp on quality – witness the current scandal of mislabelling horse as beef – and to concoct products which please the taste buds but harm the rest of the body.

The demand for junk food in an economy of plenty is an alarming cultural sign, and so is the supply. What are food producers doing? Some of what they do is good – food is safer and more readily available than ever before – but the largest companies all follow a narrow commercial logic, aiming above all to sell as much as possible and to generate as high a profit as possible. If nutrition doesn’t pay, they basically ignore it. If sugar, salt and umami increase sales, they add more. In practice, this approach amounts to the promotion of gluttony.

Producers need a nobler objective. They should recognise that the customer is not always right, that it is often better to ignore consumers’ preferences than to pander to their self-destructive appetites. They should enthrone nutrition as a higher goal than profitability, just as airlines put safety before profit. They should not manufacture junk food. If people want to stuff themselves on empty calories, they should have to prepare their own nutritional poisons.

Finally, governments have been slow to recognise that obesity is a social problem which they can help address. In the last few years, legislators and regulators have started to wake up. But the current menu of plans and programmes which attempt to educate consumers and restrain producers still looks thin in comparison to the mountains of fat.

An economic analysis of obesity can help explain why the system makes too much bad food too readily available, but I think moral analysis is more illuminating. Individuals have not cultivated restraint, corporations have put the lesser good of profit before the greater one of promoting health, and governments have shirked their responsibility for ethical leadership. There will be no substantial changes until the moral challenge is faced head-on. Neither science nor the marketplace can substitute for willpower.