Greed Is... Only Natural

Ever since the financial crisis exploded over a year ago, there has been plenty of rhetoric in the media decrying greed. Occasionally, you get a rabid capitalist taking the opposite position - reverently quoting Wall Street's Gordon Gekko... "Greed is good!"

Today, I read another article on the subject at naked capitalism. I had been planning on writing on this subject for some time. No time like the present...

What is greed? Wiktionary says: a selfish or excessive desire for more than is needed or deserved, especially of money, wealth, food, or other possessions. It's also one of the seven deadly sins. My basic philosophy of human action is that every decision - whether trivial or significant - is driven by a complex assessment which seeks to maximize the individual's self-interest. I also believe that self-interest is not the same as financial wealth. If I had to describe self-interest as anything, I'd describe is as happiness.

This philosophy of human action extends to the microeconomic theory of utility maximization. Generally utility is measured by money. For some, financial wealth is very important. Perhaps money cannot buy happiness, but money may be equated with happiness. I think of utility and self-interest as much more complex, perhaps "softer", concepts. Why else would one donate to a charity, smell the roses, or even love? These are rational actions which produce happiness.

The unending pursuit of happiness is only natural. So, is a "selfish or excessive desire for more than is needed" bad? There is no way to clearly define "excessive" or "more than is needed" - they are subjective terms. Thus, greed can only be attributed as wrong by one who feels that someone's actions exceed the reasonable pursuit of happiness. Perhaps greed is bad or sinful, but only under a system of morality which recognizes this as such.

The opposition voices to greed seek laws and regulations to control and/or punish greed. But, since greed is a moral issue, a matter of subjectivity, when is it appropriate to use government force? I suggest it is appropriate only when one's greed - the insatiable desire for excess - violates another's life or property.

I believe that humans are sinful. The pursuit of self-interest crosses the line when another is harmed. It is also usually kept in check by fear. This may be the fear of personal loss, but it may also be the fear of getting caught doing something illegal.

If greed is the biggest problem of capitalism, it is only because there is not enough risk associated with fear. I'd argue that this isn't capitalism; it's definitely not a free market. The government has removed this risk for some businesses and individuals which has allowed greed to take over. If you want to find blame for income inequality, high unemployment, and the financial crisis, don't blame greedy capitalists on Wall Street. Blame the government for systematically removing risk and misaligning incentives. Patchwork regulation, inconsistent enforcement, manipulated interest rates, perverse tax incentives, ... all these things serve to distort the greed/fear balance and let ugly human nature wreak havoc.