FORTUNE — On the day that J.P. Morgan Chase (JPM) announced it had agreed to a record $13 billion settlement with the U.S. Justice Department, the bank held an afternoon conference call with analysts.
You can listen to the whole thing if you want, but it’s tedious. I recommend skipping to about the 13:40 mark, when an analyst from Morgan Stanley (MS) asks a question about the statement of facts (agreed to by both parties) at the heart of the settlement. “I think in the settlement you acknowledged that you made serious misrepresentations to the public,” is how she framed her question. Then: “Can you just help us understand what you mean by that, and how you expect that’s going to affect your dealings with non-government bondholders?”
In other words, J.P. Morgan Chase, Did you lie to us? And can we ever trust you again?
We 21st Century humans don’t talk much about lying. We might acknowledge “errors” or say we “misspoke” or admit that we “misrepresented the facts.” And we’ll sometimes even say we’re sorry. But how often do we hear anyone — friend, neighbor, loved one, elected official, professional athlete, CEO of a Fortune 500 company — say to us, “I lied?” Not very.
Which is part of what attracted me to a book-length essay by Sam Harris, just published in hardcover by Four Elephants Press, with the stark and unsettling title, Lying. Harris, bestselling author of the atheist manifesto The End of Faith, is like the carpenter you hired to renovate your kitchen — the guy who removed the siding, exposed the rotting sills, and showed you just how shaky your foundation really is. You can read Lying in one sitting, maybe even before your next appointment. It’s a small investment for what could be a huge payoff, personal as well as professional.
“To lie,” Harris writes, “is to intentionally mislead others when they expect honest communication.” The qualifier about intentionality forgives the merely misinformed; the one about expectations, Harris writes, absolves poker players and magicians “while illuminating a psychological and social landscape whose general shape is very easy to recognize.”
It’s a toxic landscape that poisons personal relations (“Failures of personal integrity, once revealed, are rarely forgotten”), and on a bigger scale, engenders reflexive distrust of authority: “As a result, it is now impossible to say anything of substance on climate change, environmental pollution, human nutrition, economic policy, foreign conflicts, medicine and dozens of other subjects without a significant percentage of one’s audience expressing paralyzing doubts about even the most reputable sources of information.”
Harris has been thinking hard about lying ever since he took an undergraduate seminar at Stanford called “The Ethical Analyst,” taught by Ronald Howard, a professor at the engineering school. The class was devoted to examining a single question: Is it wrong to lie?
That may seem like a discussion more appropriate to kindergarten than college, yet Harris writes that it was the highlight of his education, “as close to a firmware upgrade of my brain as I have ever experienced.” In the Q&A with Professor Howard included in the new edition, Harris says, “I remember leaving your course feeling that I had discovered a bomb at the very center of my life and had been given the tools to diffuse it before it could do any damage.”
What makes lying such a compelling topic is that it is both much more complicated than it seems, and ultimately, the more you think about it, much less. We’ve all been in situations where lying seems acceptable, even preferred. Harris recounts one such instance, when a friend asked him, poolside, with wives present, Do you think I’m overweight? The poor guy was probably just looking for reassurance. Harris knows that. So why not proffer a harmless “white” lie?
Because white lies are still lies. “And in telling them,” Harris writes, “we incur all the problems of being less than straightforward in our dealings with other people. Sincerity, authenticity, integrity, mutual understanding — these and other sources of moral wealth are destroyed the moment we deliberately misrepresent our beliefs, whether or not our lies are ever discovered.”
So Harris gave it to him straight. “No one would ever call you ‘fat,’” he said, “but if I were you, I’d want to lose twenty-five pounds.” Two months later, Harris’s pal was down fifteen: “Neither of us knew that he was ready to go on a diet until I declined the opportunity to lie about how he looked in a bathing suit.”
Nice story, as far as it goes. But not all lies are equal. “People lie,” Harris writes, “so that others will form beliefs that are not true. The more consequential the beliefs — that is, the more a person’s well-being demands a correct understanding of the world or of other people’s opinions — the more consequential the lie.”
Harris has no illusions about the power of truth-telling to rid big business of corruption. In fact, he says to Professor Harris, “I’ve begun to wonder … at what level the ethical problems we see in the world can best be addressed.” The whistleblower who sacrifices career on the alter of truth already knows what Harris suspects — that the difficulty lies “in creating systems that align people’s priorities so that it becomes much easier for ordinary people to behave more ethically than they do when they are surrounded by perverse incentives.”
Which brings us back to J.P. Morgan Chase. The statement of facts agreed to in the settlement is a dense document. Nowhere does it say explicitly, for instance, that J.P. Morgan Chase knew it was peddling the financial equivalent of nitroglycerin, or that it hid that fact from its clients. But it does say this:
J.P. Morgan Chase employees were “informed by due diligence vendors that a number of the loans included in at least some of the loan pools that it purchased and subsequently securitized did not comply with the originators’ underwriting guidelines;” they understood “that a number of the properties securing the loans had appraised values that were higher than the values derived in due diligence testing;” they nevertheless “represented to investors … that loans in the securitized pools were originated ‘generally’ in conformity with the loan originator’s underwriting guidelines;” and they promised to “not include any loan in a pool being securitized ‘if anything has come to [J.P. Morgan’s] attention that would cause it to believe that the representations and warranties of a seller or originator will not be accurate and complete in all material respects …’” Got that?
CFO Marianne Lake took the question from the analyst and answered thusly: “First of all, we didn’t say that we acknowledged serious misrepresentation of the facts. We would characterize the statement of facts differently than others might. We think it speaks for itself; it’s publicly available. We do acknowledge the statement of facts but obviously don’t admit to any violation of law …”
Blah, blah, blah.
Enough. I’ll say it if she can’t: J.P. Morgan Chase lied.