Wednesday, May 20, 2009

Greed: A Deadly Sin or a Necessary Virtue

As an economic libertarian, I've always held the belief that selfishness was a virtue (in an economic sense) but that greed was not. Greed was just this abstract concept that you knew it when you saw it. Greed was evil. Greed was a deadly sin. Gordon Gekko, the main character in the infamous movie Wall Street, was the archetypal evil greedy villain whoultimately landed in jail for breaking the law. Everyone probably remembers the iconic line, "The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works." After the financial collapse of 2000 and the financial meltdown of 2008, it was GREED that made the headlines. The greedy CEOs, the greedy executives, the greedy bankers. And on and on.

Well, here's the problem ladies and gentlemen. What the hell is greed anyway? How do you define it? You really can't (unless you use Biblical definitions; but I'll get to why I don't think that works later). Greed in my opinion is simply wanting more than you need. Do we need the Porsche? Do we need the million dollar home? Or better yet, do we need the private jet? Of course not, but we accrue such things because they're nice. They're pretty. They provide convenience. They're a status symbol and of course we all want to feel important and prosperous. But is this evil? Is this a sin? Is taking that golden parachute from a shareholder owned company or taking a contractually promised pension or working your ass off to expand the bottom line for your shareholders an evil act? Of course not. Is it greedy? Sure it is.

But people seem to confuse greed with unlawfulness. The two can be mutually exclusive. You can be greedy but also stay within legal bounds. Insider trading, collusion with your competitors, and back-dating stocks for instance are not acts of greed. Such acts are the mode of operation of short-cutters. (Remember the kid in your class that got As by cheating? Yes we all knew a few.) That is why, as a society, we have outlawed them. They are unequivocally contrary to a vibrant free market economy.

Now what type of greed should we avoid? Well, the Bible defines greed as an obsession with the accumulation of wealth (you can look up the verses yourself). The key is an obsession. An obsession is irrational. It is gluttonous. Another distinguishing factor is the Bible also refers to greedy people as those who seek to amass wealth but are not willing to work for it. Such greed is perhaps a deadly sin.

The point being, it depends on how we define greed. I think a contemporary definition is an innocuous one, wanting and pursuing more than you need. Most importantly, it is absolutely necessary to a vibrant free market economy. Perhaps Gordon Gekko wasn't so wrong after all.

At your service,
American Confucius

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