Frank Capra’s 1946 masterpiece “It’s A Wonderful Life” is one of the great ethics movies of all time, perhaps the ethics movie of all time. In 2011 I prepared a guide through its complex ethics thicket. The post was divided into three separate posts, and I eventually combined them s0 readers can have the pleasure, if one can call it that, of watching the film like I do: having ethics arguments the whole way through. And now, here is your guide. Additions are welcome and encouraged.

1. “If It’s About Ethics, God Must Be Involved”

The movie begins in heaven, represented by twinkling stars. There is no way around this, as divine intervention is at the core of the fantasy. Heaven and angels were big in Hollywood in the Forties. Nevertheless, the framing of the tale advances the anti-ethical idea, central to many religions, that good behavior on earth will be rewarded in the hereafter, bolstering the theory that without God and eternal rewards, doing good is pointless.

We are introduced to George Bailey, who, we are told, is in trouble and has prayed for help. He’s going to get it, too, or at least the heavenly authorities will make the effort. They are assigning an Angel 2nd Class, Clarence Oddbody, to the job. He is, we learn later, something of a second rate angel as well as a 2nd Class one, so it is interesting that whether or not George is in fact saved will be entrusted to less than heaven’s best. Some lack of commitment, there—then again, George says he’s “not a praying man.” This will teach him—sub-par service!

2. Extra Credit for Moral Luck

George’s first ethical act is saving his brother, Harry, from drowning, an early exhibition of courage, caring and sacrifice. The sacrifice part is that the childhood episode costs George the hearing in one ear. He doesn’t really deserve extra credit for this, as it was not a conscious trade of his hearing for Harry’s young life, but he gets it anyway, just as soldiers who are wounded in battle receive more admiration and accolades than those who don’t. Yet this is only moral luck. A wounded hero is no more heroic than a unwounded one, and may be less competent as well as less lucky.

3.  The Confusing Drug Store Incident

George Bailey’s next ethical act is when he saves the life of another child by not delivering a bottle of pills that had been inadvertently poisoned by his boss, the druggist, Mr. Gower. This is nothing to get too excited over, really—if George had knowingly delivered poisoned pills, he would have been more guilty than the druggist, who was only careless. What do we call someone who intentionally delivers poison that he knows will be mistaken for medication? A murderer, that’s what.  We’re supposed to admire George for not committing murder. Mr. Gower, at worst, would be guilty of negligent homicide. George saves him from that fate when he saves the child, but if he really wanted to show exemplary ethics, he should have reported the incident to authorities. Mr. Gower is not a trustworthy pharmacist—he was also the beneficiary of moral luck. He poisoned a child’s pills through inattentiveness. If his customers knew that, would they keep getting their drugs from him? Should they? A professional whose errors are potentially deadly must not dare the fates by working when his or her faculties are impaired by illness, sleeplessness or, in Gower’s case, grief and alcohol.

4. The Uncle Billy Problem

As George grows up, we see that he is loyal and respectful to his father. That’s admirable. What is not admirable is that George’s father, who has fiduciary duties as the head of a Building and Loan, has placed his brother Billy in a position of responsibility. As we soon learn, Billy is a souse, a fool and an incompetent. This is a breach of fiscal and business ethics by the elder Bailey, and one that George engages in as well, to his eventual sorrow.

5. George’s Speech

When his father dies, George delivers an impassioned speech to Mr. Potter, the owner of the only other financial institution in town, who proposes that the Bailey Building and Loan be closed down.  Potter has a point. For example he points out that Ernie the cab driver was approved by for a home loan by George, who is his good friend. Yes, it’s a small town, but still, this a suspect policy and a conflict of interest with the appearance of impropriety.  When Potter impugns George’s father however, George has  a rebuttal:

“Just a minute. Now, hold on, Mr. Potter! You’re right when you say my father was no business man. I know that. Why he ever started this cheap penny-ante Building and Loan, I’ll never know. But neither you nor anybody else can say anything against his character, because his whole life was… Why, in the twenty-five years since he and Uncle Billy started this thing, he never once thought of himself. Isn’t that right, Uncle Billy? He didn’t save enough money to send Harry to school, let alone me. But he did help a few people get out of your slums, Mr. Potter.  And what’s wrong with that? Why…here, you are all businessmen here. Doesn’t it make them better citizens? Doesn’t it make them better customers?”

“You…you said that uh… what’d you say just a minute ago… They, they had to wait and save their money before they even thought of a decent home. Wait! Wait for what? Until their children grow up and leave them? Until they’re so old and broken-down that they… Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you’re talking about… they do most of the working and paying and living and dying in this community. Well, it is too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn’t think so. People were human beings to him, but to you, a warped, frustrated old man, they’re cattle. Well, in my book, he died a much richer man than you’ll ever be.”

Capra, as was his habit, stacks the deck by casting the advocate for fiscal responsibility as Potter, whom the heavenly spokesperson has already identified as “the meanest man in Bedford Falls.” But George’s speech, delivered by Jimmy Stewart in his best “Mister Smith Goes to Washington” fervor, is pretty close to the philosophy that set up U.S. for the housing and mortgage meltdown in 2008 that wrecked the economy. George’s speech could probably have been recited with equal sincerity by  various well-meaning members of Congress who were pressuring financial institutions to hand out mortgage loans to hundreds of thousands of aspiring homeowners who would never have qualified for them under well-established banking principles.

Peter Bailey’s “plan,” if one can call it that, was to give mortgages to people who couldn’t afford them, and then not press the good people to keep up with payments when they couldn’t afford them. In short, he was irresponsible, fiscally and otherwise, and his poor business sense, matched here to generosity and compassion as if one justifies the other, was guaranteed to be ruinous to investors, the unqualified homeowners, and ultimately the Building and Loan.  Ethical borrowing means committing to pay back the loan on the terms of the loan. The greater the risk of a loan not being paid back, the more proof of collateral is needed. Neither Peter Bailey, nor George, nor Frank Capra knew how to somehow loan money to people who can’t pay it back, not foreclose on the property, and yet keep the altruistic loaner solvent.  They just know it’s “the right thing to do.” The problem is that a plan that can’t possibly work is never ethical. It is by definition irresponsible, and thus not the right thing to do.

6. George’s Fork in the Road

George Bailey’s decision to give up his plans to go to college to save the Building and Loan is clearly not motivated by his personal dedication to the institution; he doesn’t like the place. He says so over and over again. He admires his father’s motivations for starting it, but if Potter had not sparked his resentment with his nasty comments about George’s late father, George would have been out the door. But his passionate speech in rebuttal of Potter’s words put him on the spot: after those sentiments, turning down the Board’s appointment of him to be the new operating manager of the S&L would have made George a hypocrite in his own eyes, and rendered his passion laughable. If George has any integrity, then he must accept the appointment.

It is one of the most interesting ethical moments in the film, because it represents a realistically complex ethical decision. George does what he does for selfish reasons as well as altruistic ones, and irrational reasons as well as considered ones. He wants to respect himself; he fears what might happen to his family and the community if Potter becomes the only financial power in town, and knows he will feel guilty if the consequences are bad. He feels like not staying will be taking Potter’s side over his father’s—completely irrational, since his father had given his blessing to George’s college plans, and wasn’t alive to be harmed by whatever he chose to do anyway. A large proportion of George’s decision seems to be motivated by non-ethical considerations, for he doesn’t like Potter—even hates him, perhaps—and wants to stick it to the old tycoon by foiling his victory. There are few ethical decisions in real life that are made purely on the basis of ethics, and Capra makes George’s decision wonderfully impure.

Still, this may be the single most important decision in George Bailey’s life. It changes everything, for him and for the town. Most important of all, perhaps, it probably is the tipping point in the formation of George’s character. Many of us face ethical decisions that require us to embrace or reject core values. Once a value has been rejected, down-graded in our priorities, we may be permanently changed as human beings. Choosing non-ethical considerations —self-interest—over honesty, integrity, loyalty or fairness one time will make that choice easier the next time, then a habit, then a character trait, then a personal philosophy. George faces that fork in the road and chooses integrity, respect, fairness and caring…because of the man he was at that moment, a caring and ethical one. Had he chosen to leave, thus opting for new experiences and ambition over the values he had once thought paramount, George Bailey might have become less like his father and more like Mr. Potter. Luckily for him, he recognized this pivotal moment in his life and character when it occurred. Too often, we make life and character-altering decisions in the heat of the moment, without playing ethics chess and thinking about the possible consequences.

George also makes his life-altering decision under pressure, another condition that leads to unethical acts. When we have such decisions to make, the wise course is to delay, take time to consider, and consult with others. As “It’s a Wonderful Life” shows, however, this isn’t always possible.

7. Harry’s Betrayal

George gives his college money to younger brother Harry, an ethical act if there ever was one. All he asks in return is that Harry return after college and take over the Building and Loan, so George can get on with his life. Harry, however, returns to Bedford Falls with a new wife, who has other plans. Harry plays George like a violin, and lets George be a martyr and waive Harry’s obligation.

I regard this as a double-cross by Harry Bailey, aided by the new Mrs. Bailey. He had made a deal, and benefited greatly from it. By the time he got back home, his wife should have already been told in no uncertain terms that he was taking the weight of the S&L off of George’s weary shoulders, and that he was turning down her father’s offer to employ him. Harry knew George and what he was like—his brother’s penchant for sacrificing his own needs for others. The script shows Harry putting up a perfunctory fight when George lets him off the hook, but he simply should have refused to accept George’s arguments. Harry had an obligation, and a big one. He took an easy route to avoid it, and closed his eyes to the Golden Rule answer staring him in the face. Harry knew what was fair, knew what George wanted, needed and deserved, and still accepted George’s waiver.

Yes, George is accountable and responsible for his own actions. At this point, he is a candidate for a diagnosis of toxic altruism; he’s a probable altruism addict, a professional martyr.

8. Sam and Mary

George’s next ethical dilemma occurs when his mother urges him to try to steal away Mary, the lovely local college girl (played by radiant Donna Reed) who is supposedly the main squeeze of George’s obnoxious friend, Sam (“Hee-haw!”) Wainwright. The movie’s view is that since Sam is a jerk, there’s nothing wrong with George stealing his girl and Mary slyly encouraging him to do it. Capra even shows Sam with a floozy in his office when he’s calling Mary, so we know he’s a louse. Sam obviously considers George a friend, however, so George’s motivations and conduct in this episode are still less than ideal. He and Mary do apparently foil Sam’s well-intentioned efforts to turn them into inside-traders, something that was not illegal at the time, but still unethical.

9. The Run on the Bank

The second great ethical turning point in “It’s A Wonderful Life” and the fictional life of George Bailey comes when there is a run on the Building and Loan just as George and Mary are leaving on their honeymoon. Yet again, George makes a huge personal sacrifice and uses the money he saved for the trip to keep the bank from closing and out of Potter’s clutches yet again. A few things to keep in mind:

• He had no obligation to use personal resources for this purpose.

• When Potter offers to pay off the S&L’s obligations at 50 cents on the dollar, George has no right to reject the offer unilaterally—it’s not his offer to reject. He needs to consult his board, or at least try to, and if they vote to accept Potter’s gun-to-the-head deal, George can’t over-ride them. If he can’t reach the board, then his ethical obligation is to act as he thinks they would, and he knows they almost certainly would accept Potter’s offer. George’s conduct in this situation is personally courageous and generous, but a blatant fiduciary breach of trust and an abuse of his authority.

• Mary is the one who offers up the couple’s money, and she does it without consulting George. She has no right to do this. She may presume, from watching George go through life offering himself up as a human sacrifice, that he would approve, but it is irresponsible and disrespectful for her to risk the couple’s resources on a bad bet like the Bailey Building and Loan, during a financial crisis, without discussing it with her husband first. (How does the Building and Loan weather the Great Depression, by the way?)

10. Potter’s Offer

Mr. Potter’s next tactic is to try to hire George away from the Building and Loan with a large salary. George views the offer as an invitation to corruption, and nobly turns it down.  There is no wrong solution to George’s dilemma. He could justify taking Potter’s offer as ethical because it allows him to  better the lives and future of his family and children, and perhaps he should. Surely whatever obligation he feels to his father’s project and the community has been more than fulfilled by this time. George, however, is blocked by cognitive dissonance. He detests Potter and all he stands for; if he agrees to work for the man, he cannot avoid embracing Potter’s values, or at least becoming connected to them. He will have to be loyal; he will be dependent on a man whose ethics he reviles. This is how people become corrupted.

Does George have an ethical obligation to risk corruption of his core values—remember, none of us are as immune to corruption as we think we are (Restraint Bias)—for the benefit of his children? Wouldn’t this be the greatest sacrifice of all for the altruism addict, selling his integrity so his children have a better future? Or would he be corrupting them, too?

I think George is right to uphold his integrity and avoid allying himself and his family’s welfare to someone with deplorable values and who is, after all, untrustworthy, perhaps because I would (I hope) make the same decision in his shoes. Nevertheless, it is not the ethical slam-dunk that Capra would have us believe.

11. Uncle Billy screws up, as we knew he would

11.  Christmas Eve arrives in Bedford Falls, and Uncle Billy manages to forget that he left the week’s deposits in the newspaper he gave to Mr. Potter. Thus more than $8,000 is missing on the same day that the bank examiner is in town. Why is Uncle Billy still working for the Building and Loan? He’s working there because George, like his father, is putting family loyalty over fiduciary responsibility.  Potter, of course, is a thief; by keeping the lost money to trap George, he’s committing a felony, and an unnecessary one. As a board member on the Building and Loan, Billy’s carelessness and George’s negligence in entrusting him with the bank’s funds would support charges of misfeasance. Mr. Potter, had he played fair, might have triumphed over George legitimately, and no Christmas miracle or guardian angel could have saved him. But this is the inherent weakness and fatal flaw of the habitually unethical: since they don’t shrink from using unethical devices, they often ignore ethical ways to achieve the same objectives that would be more effective.

12. George folds under pressure

Faced with an unexplainable deficit (since “We lost it” would not endear the bank to regulators) George panics. This is a remarkable feature in the screenplay and Stewart’s portrayal, because George’s reaction when faced with a personal crisis reveals him to be less principled and admirable than we thought, and more importantly, than he thought. This is a brave move by Capra, and an instructive one. George Bailey’s story is a good example of how it is relatively easy to stick to ethical principles when one feels in control and relatively safe, but when desperation and fear set in, the ethics alarms can freeze up, leaving only primitive “fight or flight” instincts. That’s where George is on Christmas Eve. He verbally abuses poor Uncle Billy, who feels badly enough already, and whom George shouldn’t have trusted in the first place. When a fool acts foolishly, the person at fault is the one who placed him in a position where his foolishness could be harmful. George is full of rage and frustration that all his self-conscious martyrdom has bought him no breaks in life, so he rails about conditions that were the results of his own choices. He hates the Building and Loan, which his actions have kept operating; he says he hates the “drafty old house” (Whose idea was it to live there?); he asks, “Why do we have to have all these kids?” (Do we need to explain it to you, George?). He snaps at his children, who are excitedly preparing for Christmas, and is insulting and rude to his daughter’s teacher, not because of anything she’s done, but because he’s mad at the world.

Now we understand a little more about George Bailey. Like many heroes, leaders, and regularly virtuous people, George Bailey is a narcissist. His obsession with helping others and sacrificing his own needs was to feed his vanity and self-esteem. He needed others to respect  and admire him, and he needs to admire himself. What he is facing now is scandal and diminished respect from others—things that undermine his carefully constructed self-image. So with the walls closing in, where are his ethical principles? Gone. He doesn’t share his crisis with Mary, for example, though she has a right to know that her whole family is imperiled by the crisis. Incredibly, he goes to Potter, and begs to make the deal with the devil that he righteously rejected when he felt in control of his fate. Now, he’ll trade his integrity, the Building and Loan and the welfare of Bedford Falls for Potter’s help, because he can’t accept the results of his own mistakes. The lesson: even the most ethical people usually have their breaking point, the point at which ethical principles will be trumped by personal interest. Watching just the first part of “It’s A Wonderful Life,” we might have believed that George Bailey was the rare idealist who would stand true even when he was at personal risk.

Nope.

After being turned down by the devil, Potter, only then does George resort to God, whom he clearly has ignored up to this point. Now he prays, the classic hypocrite’s prayer, a foxhole conversion. Then he gets drunk, which is pure escape: its not going to help matters, just make them blurrier. George is a coward after all.

13. George heads for the bridge

As a coward, he seeks the ultimate coward’s solution, suicide.  [ Note: many have objected to this characterization of suicide.  I stand by it, in the context of this movie. I don’t deny that suicide can be justified, even courageous, or that it is often the product of mental illness. When it is used as George chooses to use it, however, it is cowardly. ] This is the watermark of the narcissist: at this point, he doesn’t care about Mary, his children, the bank, or his obligations. He just wants to escape accountability and consequences. The usual excuse given for George’s deplorable conduct is that our hero is having a “breakdown.” No, this is just George being human…and unethical.

14. Welcome to Pottersville

George meets Clarence, his tattered guardian angel, who tricks George into rescuing him instead of drowning. George is relentlessly nasty to Clarence—rude and disrespectful.  If Clarence didn’t have a job to do and a personal objective to accomplish—he wants those wings—he would be ethically justified in telling George Bailey to go to Hell.  It is noble to continue to help someone in the face of abuse, disrespect, contempt and incivility, but it isn’t ethically mandatory.

[There is also the intriguing question of why Clarence doesn’t just tell George that Potter stole the money. Then he could have Potter arrested, and the town, presumably, would be better off. Apparently there are “rules” that prevent this, and, I suppose, Clarence wouldn’t get his wings this way. But transforming the entire world into a dystopian Hell seems like an awfully baroque way to solve George’s problems, when a simple tip to the police would be just as effective.]

After Clarence grants George his wish that he had never been never born, we see what Bedford Falls and it occupants would be like without the Building and Loan. It looks and sounds a lot like New Orleans, really, but the idea is that Pottersville is a coarser, cruder place than its Alternate Reality in the Park with George. The businesses we see are all sin-related or pawn shops, and the people are different too—meaner, more irresponsible. Why, Bert the cop even fires his gun into the crowd when George slugs him and runs away after accosting Mary—who, despite being about the most adorable, lovely and sensitive woman in the world, has somehow been unable to find a husband without George in it.

Sure.

It’s easy to make fun of Pottersville, but the sequence’s main point is still valid: without the Building and Loan to symbolize caring and a mutually supportive community, the ethical culture of the town has rotted, and rotted the ethics of everyone in it. Cultures do rot, which is why, for example, the popular Republican fantasy that America can just round up all its illegal aliens and march them at gunpoint and without their children back to where they came from is so dangerous. A nation that would really do such a thing has turned the corner towards Pottersville. We must always be vigilant about spotting and avoiding cultural tipping points that will erode our basic ethical values. (I feel that I have to mention that Capra’s version of Chaos Theory’s “Butterfly Effect” with George as the butterfly is a little one-sided. There are always perverse and unanticipated reactions when something is taken out of the cosmic equation, and it would have been more realistic to show someone being significantly better off with no George, like if Mary had gone on to become a fabulously rich and famous movie star who wins an Academy Award for “From Here to Eternity” and goes on to star in an iconic 1950’s TV sitcom.)

15. “The richest man in town!”

In the grand finale, the entire community rallies to save George and the Building and Loan, out of gratitude for his many unselfish acts through the years, filling his table with more than enough money to cover the deficit. This is the uber-ethical moment in the film, a massive display of unselfish thanks, compassion, community, charity, loyalty, generosity and gratitude, proving what an essentially ethical and caring place the town—now Bedford Falls again—has grown into thanks to George’s influence. Just enjoy it and cry, like my wife does every time, when Harry raises his glass to toast “My brother George, the richest man in town.”

Still…

• Harry owes George a lot more than a toast, since his ingratitude put him in this situation in the first place.

• George can’t ethically accept more money than the deficit, since it isn’t intended for him personally anyway. How is he going to be responsible and give the extra money back? How will he decide who gets a refund on their remarkable generosity? Are the donors now his partners? Ethically, George was obligated to organize the orgy of good will going on in front of him, since it was technically a complex business transaction.

• And he’s still got to fire Uncle Billy tomorrow, or maybe the day after Christmas.

• As for the happy bank examiner, swept up in all the Christmas spirit, he needs to be fired too. He’s abdicating his responsibilities. The deficit is still unexplained; the S&L is still in violation of regulations. If he thinks George absconded with the money, the fact that he can now pay it back doesn’t mean he didn’t commit the crime.

• The sheriff, similarly, is breaching his duty by tearing up the warrant for George’s arrest. It isn’t his to tear up; only a judge could do that. It’s a legal document. Good will and gratitude don’t suspend the law.

• Finally, there’s Sam Hee-Haw Wainwright. What a prince! George steals his girlfriend, he and Mary treat Sam like a disease through the whole movie, and yet he comes through with an open-ended loan! Of course, once everyone hears that, George should start handing everyone back their money. He doesn’t. And he and Mary probably still make fun of Sam after New Years Eve.

And George? He’s happy and ethical again, because everyone is showering him with love and admiration. Later, we should hope, Mary will have some words with him about candor and trust in the marital relationship.  For his part, George Bailey needs to reflect on how his principles folded up like a telescope once things got tough, and think about how he can control his narcissistic tendencies to make more responsible and ethical decisions in the future.

Aw, he probably does. After all,

It’s a wonderful life!