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Binghamton Journal of Philosophy

Volume 1, Issue 1, 2013

Randy Benjenk
Pages 3-22

The Morality of Short Selling

The controversial investment scheme of short selling has come under fire as a scapegoat for the economic crisis of 2008 despite evidence that it is an economically valuable practice. This paper seeks to explain the moral suspicions of shorting by examining a short seller’s emo­tions. A short seller hopes for negative events to occur that will drive down the price of stock, and feels satisfaction if and when such events occur. These emotions, which I call shorthope and shortsatisfaction, are problematic for two reasons. First, they conflict with a justified norm of proper competition that allows investors to be respected and self-respecting. Second, they can conflict with an investor’s own moral attitudes, creating undesirable moral binds. Because of countervail­ing considerations, these conclusions do not necessarily justify a ban on shorting. They do, however, warrant further philosophical debate about the practice as well as moral reflection by its participants.