Author: Rachel Hsu

Introduction 

Robinhood. It bears a different meaning today than it did even just 10 years ago. Named after the old English folk hero who robbed the rich and fed the poor, financial technology app Robinhood now represents a demographic and ethical shift in finance: the democratization of brokerage.

As the story goes, co-founders Baiju Bhatt and Vladimir Tenev created their own commission-free trading app following the 2008 financial crisis and the 2011 Occupy Wall Street protests (Fontana). Prior to that, the two entrepreneurs worked in the high-speed trading world, having founded two other start-ups: Celeris, an algorithmic trading firm (Constine), and Chronos Research, a software producer for high-frequency trading firms (Michaels and Osipovich). “We were in the center of a lot of the frustration around the financial system,” Bhatt recalled. “A lot of people were feeling like it was fundamentally broken” (Michaels and Osipovich). Hence, having done their time on Wall Street, now fueled by their desire to disrupt and revolutionize the financial landscape, Bhatt and Tenev began their mission to grant “everyone…access to the financial markets, not just the wealthy” (Robinhood). A noble cause, indeed—but perhaps not quite so simple.

Reformation. It carried a different meaning in 1517 than it does today. Initiated against the Catholic Church by German Augustinian monk and professor Martin Luther, the Protestant Reformation now denotes a landmark moment in religious history: the restructuring of Christianity.

What these stories share in common, and what I seek to explore, are parallel ethical narratives. Robinhood touts itself as the folk hero of finance—like Luther, the reformer of the status quo—yet, a deeper analysis of both reveals their common inability to maintain the revolutionary ideals they pioneered when faced with conflicts of interest, namely Luther’s partiality for order and Robinhood’s intrinsic nature as a profit-seeking institution. In this paper, I examine these inconsistencies from ethical and practical standpoints in order to demonstrate the ways in which Luther’s inconsistencies during and following the Protestant Reformation elucidate Robinhood’s ongoing ethical conflicts; with such considerations in mind, I then provide ways for Robinhood to address these ethical concerns so as to remain true to its mission, going forward.

My argument unfolds in the following layers. First, in Business, Ethics, & Business Ethics, I detail the scope and key elements of my ethical approach to analyzing Robinhood. Next, in Why Luther? Why, Luther?, I dissect the ethical narratives of Luther and Robinhood by providing exigence for the comparison (Part 1: On Religion & Capitalism), expounding on ethical and practical parallels (Part 2: Values, Movements, & Ethical Transgressions), and considering the larger implications of such parallels. Synthesizing my prior analysis with Robinhood’s current situation, I then suggest an ethics-informed pathway for Robinhood’s future development in the section, Reformation in Real Time. I address potential counterarguments, as well as topics from the Robinhood-Luther conversation which warrant further exploration, in my conclusion.

Business, Ethics, & Business Ethics

Crucial to any conversation about ethical approaches is a specification of values and scope: answering not only the question What of ethics? but also Ethics of what? My argument is contingent on Robinhood’s proclamation that “The mission is to help the everyman” (Henderson and Kruppa) . Because Robinhood must balance its values and image as the champion of the layman investor with its livelihood as a profit-seeking corporation, it necessarily exists at a nuanced intersection. Therefore, ethics beyond unequivocal bottom-line approaches are needed to properly interpret and advise on Robinhood’s actions. To this end, I adopt a normative pluralistic approach, synthesizing non-consequentialism, Kantian ethics, and contractarianism to arrive at a working definition of ethical. I specifically apply this definition to Robinhood by superimposing it on the corporation-specific framework of business ethics.

I employ a broadly non-consequentialist ethical stance because consequentialism in business ethics does not encompass the notion of personal responsibilities to others; given that servicing others is an intrinsic component of Robinhood’s identity and mission, consequentialism is, therefore, an inappropriate perspective from which to consider Robinhood. Consequentialist economists such as Milton Friedman argue that a corporation’s “one and only one social responsibility [is] to use its resources and engage in activities designed to increase its profits” (6) because “‘business’ as a whole cannot be said to have responsibilities” and the business employee’s “direct responsibility [is] to his employers…to make as much money as possible” (1). “I share Adam Smith’s skepticism about the benefits that can be expected from ‘those who affected to trade for the public good,’” (1) Friedman writes—a reference to Smith’s belief that “the study of [one’s] own advantage [as opposed to that of society] naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society” (362). These beliefs, as ethics scholars Milton Snoeyenbos and James Humber claim in Utilitarianism and business ethics, assume a “utilitarian [and therefore consequentialist] justification” because they “make an efficiency claim for the free market: the market is said to be the most efficient means to maximize utility” (23). Not only does the consequentialist approach of utilizing selfishness to inadvertently yield social good contradict the sentiment behind Robinhood’s mission to help the everyman, but it also literally displaces that mission with another one: profit-seeking. Such a deception would be ethically transgressive (due to a violation of Kantian ethics and social contracts, on which I elaborate later). Fixation on bottom-line profits could also lead to problematic behavior such as circumvention of regulations. A severe enough scandal could destroy Robinhood’s reputation, ethos, and business. Therefore, consequentialism is not well-suited for a definition of “ethical” in Robinhood’s situation.

With this in mind, I adopt a loose Kantian approach to defining “ethics,” as Kant’s emphasis on the individual’s humanity makes his philosophy particularly important for Robinhood—which seeks to distinguish itself from its chillingly systematic Wall Street competitors—to consider. Because Kant’s philosophy is anti-consequentialist in nature, it is compatible with a values-based mission statement such as that of Robinhood and therefore likely to be effective in guiding Robinhood’s development of an ethical brand. In A Kantian approach to business ethics, Norman Bowie emphasizes three key elements of the categorical imperative upon which Kantian ethics are built: “1. Act only on maxims which you can will to be universal laws of nature, 2. Always treat the humanity in a person as an end and never as a means merely, 3. Act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time” (4). These three ethical notions are relevant and significant for Robinhood because they encompass and effectively address both the intrinsic and extrinsic motivations for ethical business practice. The first notion, perhaps best embodied by the word consistency, applies to the ethical choices that companies make about how strictly, if at all, to uphold their stated values. The second notion, respect for individuals (rather than the utility that can be extracted from them), addresses ethical choices in situations where customers’ best interests and companies’ best profits are at odds with each other. The third notion, action informed by empathy, describes company approaches to policies and decisions, in particular how they account for customers’ interests. Because Robinhood must grapple with these Kantian considerations to rightly uphold its folk hero brand, Kantian ethics provide a comprehensive and otherwise solid foundation for my definition of ethics in this paper.

The final determinant of my definition is social contract theory—the general idea that rational prospective contractors would consent to the terms of a given agreement—since Robinhood’s ethos is contingent on its credibility with the everyman it claims to serve. As Thomas Dunfee and Thomas Donaldson note in Social contract approaches to business ethics, social contracts in business are often thought of in terms of “implied agreements” and “unspoken promises,” though “specific implications need to be put into user-friendly terms” (49-52). These implications are of particular import for Robinhood, as its folk hero name, layman-friendly slogans, and brand image all contribute to a persona unlike that of conventional big finance corporations. The very notion that Robinhood is unlike other finance corporations, in and of itself, is an unspoken promise with specific implications, as consumers are expected to and encouraged to view Robinhood in a different light: the onus of the social contract, then, is on Robinhood, which must take care not to act in ways which will make its customers feel misled. Given, for example, Robinhood’s stated emphases on “deliberately engineered systems — not marble office buildings on Wall St[,] making Robinhood simple, focused, and immediately understandable [, and fostering] individual participation in equity markets,” customers should be correct in deducing that Robinhood seeks to upend the Wall Street brokerage space through technology-enabled democratization and commit to the individual’s informed entry into equity markets (Robinhood). Robinhood, in turn, should act in accordance with these assumptions, which effectively formulate the terms of a social contract. In short: to be ethical, a business must act in accordance with its projected persona, since that persona informs the terms of the implicit contract between corporation and general populace.

Thus, my working definition of ethics combines elements of non-consequentialist, Kantian, and contract-based ethics. These ideas are by no means mutually exclusive: many consider Kantian synonymous with anti-consequentialist, and contract-based ethics mesh well with Kant’s notion that the perspective of ruler and ruled both ought to be considered. In contrast with the consequentialist, profit-centric thinking which seems to characterize financial corporations at large (Robinhood certainly takes many jabs at Wall Street for this), my ethical stance treats Robinhood as the exception, instead weighing the needs and wants of Robinhood’s customers. Such an approach is most apt because Robinhood does not only desire to commit itself to the everyman: it exists to.

Why Luther? Why, Luther?

Part 1: On Religion & Capitalism

In order to effectively demonstrate why Luther during and after the Reformation is an effective case study in ethics for Robinhood, I first establish why religious history and modern trends in brokerage are even a worthwhile comparison. Numerous scholars have explored the parallel roles that religion and capitalism have played in people’s lives over time, though, for the purposes of this paper, I focus on Weber’s genealogy argument (which addresses the development of capitalism as well as its metamorphosis into a kind of successor to religion) and Tanner’s points about financial capitalism (which provide essential context for my discussion of religion alongside and finance specifically). Together, these perspectives provide the basis for my comparison, allowing me to clearly illustrate the ways in which Luther’s ethical conflicts explicate and foreshadow those of Robinhood.

I first look to Max Weber’s The Protestant Ethic and the Spirit of Capitalism to demonstrate the genealogy between religion and capitalism, as this central connection underpins my Luther-Robinhood comparison. Taking the correlation as a given (“we are dealing with the connection of the spirit of modern economic life with the rational ethics of ascetic Protestantism” (xxxix)), Weber makes the specific claims that (1) Luther’s “unquestionably new” notion of a “calling” primed Protestant populations to adopt the investment-oriented, uber-disciplined spirit of capitalism, and (2) Lutheranism’s ascetic derivative, Calvinism, actually produced that spirit of capitalism (40). To the first point, Weber argues that Luther’s “calling” instilled in Protestants the mindset that “The only way of living acceptably to God was…through the fulfilment of the obligations imposed upon the individual by his position in the world” (40). This mindset effectively prepared them to undertake capitalist modes of production with wholehearted devoutness because it “inevitably gave every-day worldly activity a religious significance” (40). To the latter, Weber charges the Calvinist doctrine of predestination with instigating the lifelong industriousness so characteristic of capitalism because “however useless good works might be as a means of attaining salvation…they are indispensable as a sign of election,” thereby making them “the technical means…of getting rid of the fear of damnation” (69). With these two assertions, Weber suggests that Protestantism birthed capitalism by instilling in its believers the initial psychological impulse to perpetually engage in growth-oriented economic activity. It is worth noting that, at this relatively early point in Weber’s report, religion is the central, driving force for action.

Where the relationship between Luther and Robinhood really begins to take shape is with Weber’s real-time observation about the development of capitalism since its religious origins. Paradoxically, he notes, it seems religion is displaced by the very thing he credits it with creating: capitalism is not just the descendant of religion but the heir to it! “Any relationship between religious beliefs and conduct is generally absent, and where any exists…it tends to be of the negative sort,” Weber notes. “The people filled with the spirit of capitalism to-day tend to be indifferent, if not hostile, to the Church…religion appears to them as a means of drawing people away from labour in this world” (32). To choose religion is to necessarily divert focus away from labor, he suggests. Framed this way, religion and capitalism function as two equally significant alternatives, one symbolic of the old and one the new, from which individuals must choose. Given this dichotomy, religious and capitalist examples are ripe for comparison.

Still, my contextualization for a Luther-Robinhood comparison would be outdated and incomplete without addressing the modern capitalist landscape which Robinhood inhabits; to this end, I reference Kathryn Tanner’s Christianity and the New Spirit of Capitalism, in which Tanner details the evolution of Weber’s capitalism to our modern capitalism, i.e. financial capitalism. While Tanner’s main argument in this book disputes aspects of Weber’s claim that Protestantism nurtured the spirit of our modern capitalism, Tanner emphasizes, “The present book shares with Weber the idea that religious beliefs (Christian beliefs specifically) have the capacity to provide powerful psychological sanctions for economic behavior” (4). Her disagreement with Weber has more to do with obsoletion: “The capitalism of today is finance-dominated (as well as finance-disciplined), and as such it has its own distinctive spirit,” separate from that of the old, production-based capitalism about which Weber writes (9). Tanner takes a three-pronged approach to proving that finance-dominated capitalism is contemporary capitalism: “First, finance-generated profit has growing importance for contemporary capitalism,” “[second,] finance is no longer directly in service of production elsewhere but takes on a life of its own,” “[third,] finance comes to discipline all other forms of economic activity” (10-19). I determine, therefore, that religion and capitalism are worthy of direct comparison, and there exists a particular exigence for conversations about religion and finance: in leading its reformation, Robinhood can, in a caveated sense, play the role of Luther.

As mentioned, my Luther-Robinhood discussion takes the form of an ethical argument, the reason being that religion and capitalism, beyond sharing a relationship with each other, share a fundamental and potentially precarious relationship with ethics due to their sheer influence as the central driving forces in people’s lives. Weber conveys similar sentiments in his characterization of Calvinism as the dominating influence on its followers’ decisions: “constant self-control and thus…a deliberate regulation of one’s own life” (79). He hints at the ethical undertones of this religiously motivated lifestyle by equating Calvinist living to “a life of good works” (71). With capitalism usurping religion as the centerpiece of life, Weber notes, the tireless anxiety of Calvinism remains, but the humanity and “moral energy” of it is “eradicate[d]”: he famously refers to this newly dominant, amoral capitalist mentality of rationalization and efficiency as an “iron cage” (123). In this way, Weber explicitly demonstrates the all-encompassing nature of religion, then capitalism, while implicitly suggesting that the rightful place of ethics is in both. Tanner similarly regards capitalism as the crux of modern living, perhaps even more so than Weber did. The Calvinist ethic continues in capitalism, she asserts, “in a heightened, intensified form…intensified by being totalized. There is no ‘you’ apart from it; it covers the entirety of life, at work and outside of it, and the whole of one’s aspirations” (27-29). And, like Weber, Tanner believes that religion and ethics are intertwined, equating “being moral” to “life in God” (162). Accordingly, Tanner posits the necessity of humanity and ethics to human behavior (which, as just established, is governed in the modern day by amoral, efficiency-based capitalism): “The fundamentally non-purposive, and in that sense non-productive, activity of God should underlie all our productive activity” (208; emphasis mine). Thus, Weber’s and Tanner’s arguments clearly point toward the exigence for a discussion of ethics as well.

Part 2: Values, Movements, & Ethical Transgressions

I thereby unpack my assertion that the ethical conflicts of Luther in his Protestant Reformation elucidate those of Robinhood at present, first by identifying the values which underlie Luther’s objectives in leading the Reformation. In particular, I examine the underlying values of the following Lutheran objectives: to counter the selling of indulgences and to assert justification by faith alone. The “ethical conflicts,” as I describe them, refer to Luther’s subsequent violations of what I’ve identified via his objectives to be his underlying values. I focus on his allegiance with institutional hierarchy in opposition to the so-called radical reformers, identifying this as a betrayal of the every-Christian he once fought for and, accordingly, an ethical transgression. Because Robinhood and Luther possess like values and experience comparable conflicts of interest, I argue that they struggle to make similar ethical decisions regarding the reconciliation of tensions between their ostensible motives, their unspoken motives, and the revolutions they begin. In detailing the history of Luther’s inconsistencies and their resulting ethical and practical consequences, I seek to highlight parallels in Robinhood’s ongoing circumstances and, more importantly, draw attention to relevant areas of ethical concern (to which I propose solutions in Reformation in Real Time).

Luther’s opposition to indulgences set the tone for the Reformation by implicitly drawing attention to the qualities of opacity, love, and sense. In 1517, Luther condemned not just the factual inaccuracy of the indulgence system (“21. Those who preach indulgences are in error when they say that a man is absolved and saved from every penalty by the pope’s indulgences”), but the deception (“24. It must therefore be the case that the major part of the people are deceived by that indiscriminate and highsounding promise of relief from penalty”), fallaciousness (“44. Because, by works of love, love grows and a man becomes a better man; whereas, by indulgences, he does not become a better man, but only escapes certain penalties”), and opacity (“56. The treasures of the church, out of which the pope dispenses indulgences, are not sufficiently spoken of or known among the people of Christ”) used by the Church to justify and perpetuate it (The Ninety-Five Theses 1-3; emphasis mine). He bolstered these denunciations of vice with questions guided purely by common sense: “86. Again: Since the pope’s income to-day is larger than that of the wealthiest of wealthy men, why does he not build this one church of St. Peter with his own money, rather than with the money of indigent believers?” (4). Indulgences, Luther suggested, need not exist, since salvation comes from faith and love, rather than money, of which the Pope has more than enough. More pressingly, he asserted, indulgences should not exist, since their purpose is deceptive and scheming in nature, and their very existence is a testament to the insufficiency of faith for salvation. Therefore, we can reasonably assume that, in addition to explicit theological reasons, the Reformation was underpinned by Luther’s adamance about opacity, love, and sense.

Luther’s other notable objective, to prove justification by faith alone, promoted the notions of righteousness, Christian freedom, and the decentralization of the church system. In 1520, he refuted the Church’s distinction between the “spiritual estate” of the “Pope, bishops, priests, and monks” and the “temporal estate” of “princes, lords, artificers, and peasants,” asserting instead that “all Christians are truly of the spiritual estate, and there is no difference among them, save of office alone” (Address To The Nobility of the German Nation). Given this spiritual equality, then, if any group of “pious Christian laymen were taken prisoners and carried away to a desert, and had not among them a priest [but] were there to agree to elect one of them…this man would as truly be a priest” (Address To The Nobility of the German Nation). In short, all Christians are of equal spiritual validity and authority. He concluded his rebuttal against the three walls of the papacy with a call to action from the German nobility against the papacy. After all, “Is not every citizen bound in this case to rouse and call in the rest?” (Address To The Nobility of the German Nation). He conveys sentiments of faith-based salvation and an inclusive, decentralized Christianity most concisely with the following declaration: “One thing, and only one thing, is necessary for Christian life, righteousness, and freedom” (The Freedom of a Christian).

While scholars disagree on the exact nuances of the ensuing conflicts, they generally agree that (1) Luther inspired the emergence of numerous Christian sects, (2) these sects, in turn, viewed Luther as their trailblazer, (3) either they misunderstood Luther or Luther changed his mind at some point, (4) as a result, Luther acted against them, and (5) this opposition was, at least in part, politically motivated—I view Luther’s inconsistency as an ethical transgression which plays into a larger ethical narrative. Protestant historian Franklin Littell reveals, “In [Anabaptist] records they refer to Luther half in praise and half in sorrow, as a leader whom they first followed but who did not carry them through to as thorough a reformation as they had anticipated” (4). Mennonite scholar Harry Loewen explains, “Many of the radicals had been close to what the reformer had believed and taught so that when they were rejected and persecuted by Luther and other magisterial reformers, not only were they disappointed and hurt they also felt betrayed. The oppressed peasants and urban workers especially” (29). To be clear, there were differences between Luther and the so-called radicals he inspired (and later disowned), namely their views on free will, infant baptism, communalism, and real presence (25). Still, it is easy to understand the basis of their radicalism and their attribution to Luther when Luther himself published such responses as “If we punish thieves with the yoke, highwaymen with the sword, and heretics with fire, why do we not rather assault these monsters of perdition, these cardinals, these popes, and the whole swarm of the Roman Sodom, who corrupt youth and the Church of God? Why do we not rather assault them with arms and wash our hands in their blood?” (Bainton 149). It is often speculated that Luther’s reliance on German nobles and political figures such as Frederick the Wise for protection influenced his (literally) violent opposition to the radical reformers and commoners. Alas, we see an ethical transgression of utmost severity: not only a stark unfaithfulness to the righteousness, transparency, and sense which Luther so boldly led with before but a disregard for individual humanity (through murder and emotional betrayal, among other things) to achieve an ends, regardless of cost.

Because Luther and Robinhood initiated their revolutions with similar values in mind, and because religion and finance share the predecessor-heir relationship, the objectives and influence of these revolutions are directly and necessarily comparable. Much like how Luther emphasized the qualities of opacity, love, and sense when he waged his war on indulgences, Robinhood adopted a common sense approach and championed the notions of “understandab[ility], friendl[iness], and approachab[ility]” when it waged its war on trading commissions (Robinhood). Recall, too, the conclusion of Weber and Tanner that capitalism (in Tanner’s case, financial capitalism), has succeeded religion in the modern day: religion and finances both dominate the human psyche through perpetual anxiety and pervade all actions due to their all-consuming natures. If, as Weber suggests (and Anthony Giddens paraphrases), “the continual accumulation of wealth” is capitalism’s ultimate goal, then wealth accumulation is effectively capitalism’s salvation (Giddens xi). Arguably, the stock market—metonymic to finance—is “the best available tool…for individual wealth creation” (Robinhood). Access to markets, then, becomes the ticket to salvation. Before Robinhood, access to salvation was gatekept by brokerage firms’ trading commissions; before Luther, access to salvation was gatekept by the Church’s indulgences. Robinhood, in similar fashion to Luther, asserts that such gatekeeping need not and should not exist. In this way, the relationship between Robinhood and layman investor mimics that between Luther and layman Christian.

We can examine the reformers in tandem to see how movements founded on values of righteousness, individual freedom, and decentralization influence the public perception of those movements and construct the terms of an implicit social contract. Robinhood’s founders frequently emphasize the righteousness of Robinhood’s mission to give retail investors more financial freedom and decentralize what they depict as an unnecessarily institutionalized system—an objective not unlike Luther’s to decentralize religious activity away from the Catholic Church, promote Christian freedom, and emphasize the individual’s relationship to God. Robinhood’s origin is “the younger generation [who] felt really frustrated and disenfranchised with the way that the system worked,” and what differentiates Robinhood from the rest of the system, beyond commission-free trading, is its accessibility and the fact that it puts customers first” (Bhatt and Tenev). Robinhood claims to achieve this by providing “access to financial information” and making “a complex system of regulation, financial institutions, and assets…immediately understandable” (Robinhood). It is reasonable for the public to deduce that Robinhood intends to act for the layman investor’s interest, against the current bureaucracies in place. As was the case with Luther, these deductions can take on a life of their own and develop into the premises on which unspoken social contracts are built. Whether Robinhood intends for this or not, the public perception is the same: the visionary, reformer, lead actor has arrived.

As we saw with Luther, it is no exaggeration to say that religion is a matter of life and death, and misleading proclamations and unspoken motives have serious implications for the lives and livelihoods of many; finance, as I have established, possesses a similarly central influence as the centerpiece of modern life. While, obviously, Robinhood does not kill or spare in a literal sense, its role as a revolutionary and a financial institution imbues it with a high-stakes influence on life and livelihood. When I discuss these deceptions and their life-or-death consequences, I am referring both to the inconsistencies which are probably excusable to the general populace and to the inconsistencies which directly led to lethal and/or life-changing fallouts, as small transgressions can be symptomatic of fundamental gaps in consideration. Robinhood has clearly struggled over the years to reconcile its folk hero brand with its reality as a financial institution. In 2019, it paid $1.25 million to settle claims that it “didn’t take steps to ensure it was getting the best prices for customer orders” from October 2016 to November 2017 (Michaels). Since September 2020, Robinhood has been entangled in a civil fraud investigation regarding its omission of payment for order flow—selling client orders to high-speed trading firms on Wall Street such as Citadel and Virtu (Michaels and Osipovich), the exact system Bhatt described as “fundamentally broken” (Fontana)—from the “How We Make Money” page on its website, despite making “roughly half” of its revenue from the practice in 2018” (Michaels and Osipovich). While these are relatively small fish, they do signify a proclivity for misleading the public, implying motives other than helping the layman investor.

This tendency escalates from mere hypocrisy to red flag when one considers the implications of Robinhood being a facilitator and profiteer in the business of dealing goods its consumers either misunderstand or do not understand. In June 2020, Alexander Kearns, a 20-year-old college student, committed suicide after his Robinhood account displayed a negative $730,165 cash balance following an options trade. His suicide note contained one question: “How was a 20 year old with no income able to get assigned almost a million dollars worth of leverage?” (Gara and Klebnikov). Kearn’s cousin-in-law, a research analyst at a financial services company, responded to the news. “Tragically, I don’t even think he made that big of a mistake. This is an interface issue, [Robinhood has] slick interfaces. Confetti popping everywhere [referring to the colorful confetti Robinhood displays on the screen after each trade]. They try to gamify trading and couch it as investment” (Gara and Klebnikov). What is troubling about Robinhood’s failure to, as it promised, ensure user understanding of sophisticated financial tools, beyond the dishonesty in and of itself, is the potential reason why. As Luther’s partiality to political order demonstrated, one’s own livelihood can bear heavy influence on the decisions that they make: Robinhood pockets more profit when more trades are made, even if those trades lose money. It is in this interest, then, for Robinhood to encourage transactions by clueless users through gamified features such as levelling up by trading more, popping confetti upon the completion of every transaction, and having leaderboards.

Reformation in Real Time

So what can Robinhood do to reconcile its folk hero brand with its reality as a financial institution? I spend much of this paper expounding on the ways in which Luther betrayed the common Christian, but Luther trailblazed remarkable movements as well, chief of them widespread literacy, which I suggest Robinhood emulate to genuinely benefit its customers. “From a secular viewpoint, surely the most far-reaching effect of Luther’s activity was the radical increase in literacy from the early 1520’s on through the rest of the century,” historian H.G. Haile notes (817). “By 1500, about forty German imprints were being produced annually at issues of about 500 each…in 1523: 498 imprints, which are thought to have averaged over 1,000 copies each” (817). Luther not only urged people to read, but he produced “a lion’s share of the imprints” including pamphlets and a vernacular Bible (817). These literacy efforts made scripture infinitely more accessible and appealing to the layman Christian.

I suggest Robinhood follow through on its allegation that it renders complex market concepts understandable by prioritizing the financial literacy of its 13 million users, most of whom come from the millennial and Generation Z demographic (the median age being 31 years old) and are not financially experienced or stable (Walker). When asked about their reasons for using Robinhood, users almost unanimously give reasons such as “It’s simple,” “I was bored,” and “Sports are gone [due to the coronavirus pandemic], so I’ve moved onto day-trading” (Greg, Portnoy and Maira). Worth noting is the fact that these users try other investment apps such as Schwab and TD Ameritrade but return to Robinhood once they realize they do not understand finance thoroughly enough to navigate the various technicalities and restrictions on other trading platforms (which are implemented for user safety in the first place). In this way, Robinhood perpetuates a reliance founded on illiteracy and keeps users hooked its through widgets of behavioral psychology such as the gamified platform.

Given that Robinhood financially benefits from the reliance of clueless investors, it is, in some ways, contrary to Robinhood’s livelihood as a company to suggest that it educate its users. Objectively, Robinhood lacks the sophistication and security of other brokerage firms; in educating its users, Robinhood could lose business, since educated investors would likely notice the app’s deep systematic flaws. One such flaw: in 2018, Robinhood launched its cryptocurrency platform, Robinhood Crypto, but users cannot withdraw their coins, transfer coins out of Robinhood into their own private wallets, access their wallet addresses, or even hold the private keys for their crypto assets (Robinhood Support). In other words, users technically do not own their crypto assets (Exodus Support). That said, this paper is about ethics. The ethical reaction for Robinhood, if it truly wants to put the customer first, is to facilitate the transition process if customers do ultimately decide to switch platforms by making it convenient for users to withdraw money, liquidate assets, and close accounts.

Conclusion

It must be stated now that there is no perfect analogy, nor is there any realistic example of an ethically perfect being that maintains perfectly static relationships with their ideas and contemporaries over time. It may seem unfair of me, for example, to drag Luther’s inconsistent revolutionary spirit, when he was a reluctant revolutionary to begin with, evidenced by his Ninety-Five Theses being written in Latin, which the general public could not read (Loewen 11). It is not unethical for an individual to simply change their mind, and understandably, messages can be misinterpreted at no fault of the listener or speaker. Luther clearly had complex views on the rightful roles of temporal and spiritual authority. Even today, scholars contradict each other in interpreting those nuances, with some viewing his partiality to temporal authority as embodying the religious spirit of his revolution assuming temporal authority is a gift from God, some viewing it as a betrayal of revolution itself regardless of religious backing, and more. However, I specifically analyze Luther and Robinhood as leaders and reformers—figures and symbols of revolution—not average, capricious individuals. Luther embraced the revolution once it began, appealing to the masses every time he challenged the Church publicly and irreverently. If any party, be it an individual or corporation, embraces the title and influence of being the poster child of a revolution, it is reasonable for them to accept the responsibilities that accompany that role as well. Ultimately, a leader’s message and followers’ interpretations of it are inseparable, and a leader figure has responsibilities that differ from those of an average individual.

Through examining Luther and Robinhood in their respective reformations, I demonstrate ethical considerations that the former raises for the latter, as well as the exigence for their very comparison. The two leaders share similar value-based approaches to revolutionizing their systems, which in and of themselves share parallels, and the two have struggled to maintain those values in practice; for these reasons, Luther’s values and actions in his reformation function well as a case study in ethics for Robinhood to consider moving forward. There is still much to explore in the liminal space of ethics and practicality, particularly for businesses in the ever-evolving modern landscape. Similarly, there is still much to unpack in the comparison between salvation and wealth in general: the implications that has for a characterization of God, the areas in which the parallel falls short, the role that religion still plays in determining people’s perceptions of and ways of handling wealth, and more. In discussing the implications of ethics and practicality in Luther for Robinhood, I have merely scratched the surface.

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