How “good” is greed anyway?
Read this fascinating piece in the Wall Street Journal by Professor Alan S. Blinder (Princeton) to find out what a smart guy thinks of that question.
An excerpt:
They say markets are alternately ruled by greed and fear. Well, our panic-stricken financial markets have been ruled by fear for so long that a little greed might serve as an elixir. But everybody knows you can overdose on an elixir.
When economists first heard Gordon Gekko's now-famous dictum, "Greed is good," they thought it a crude expression of Adam Smith's "Invisible Hand"—which is one of history's great ideas. But in Smith's vision, greed is socially beneficial only when properly harnessed and channeled. The necessary conditions include, among other things: appropriate incentives (for risk taking, etc.), effective competition, safeguards against exploitation of what economists call "asymmetric information" (as when a deceitful seller unloads junk on an unsuspecting buyer), regulators to enforce the rules and keep participants honest, and—when relevant—protection of taxpayers against pilferage or malfeasance by others. When these conditions fail to hold, greed is not good.
Oh, and just for good measure, here's what Milton Friedman thinks about the entire matter of greed:
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January 13th, 2010 - 12:26
The Constitutional form of government, which can largely be characterized by the term “balance of power,” is the best in world history simply because it acknowledges the stark, honest reality of mankind’s innate depravity and selfishness. Milton Friedman (and Prof. Blinder, per your quote, above) should be required reading for all college freshmen. Period.
Any form of government, economic structure, human-remedial plans that fails to place the reality of mankind’s self-centered evil, as well as God’s absolute goodness, at the core of its ideology, history shows again and again, will come to complete bankruptcy and failure and enslave the masses (as Marxism does). Our present times are a hallmark to this.
Phil Donahue is a socialist-liberal (well-meaning, no doubt) who simply refuses to admit that he, himself, is morally bankrupt (like all of us) and without merit and is persuing his own selfish ends at all times.
January 13th, 2010 - 22:06
I couldn’t agree more. Well said, Greg. I would just add one of my favorite axioms I’ve ever heard about this topic:”Free market capitalism is the worst system in the world…except for every other system in the world.” Fallen men and women ruin freedom. Freedom, whether at the ballot box or in the workplace or in terms of how much is taken out of your paycheck, is a good thing. Freedom without morality, including the immorality of socialism and collectivism, is no freedom at all.