October 21, 2014

What is Greed?

Whether you are liberal, conservative, libertarian, or none of the above, it is hard not to feel some sympathy for the “Occupiers.” Even if do not agree with them on every issue, there is something very American about a grassroots movement to “fight the man” and protest the existing order. After all, that is how the united States of America were born. As with the Tea Party, it is refreshing to see a group of Americans objecting to something about the sad state of our republic, rather than indifferently accepting each new depridation like sheep awaiting the slaughter.

It is in this spirit that I take issue with one of the central themes of the OWS movement: the fight against “greed.” Here is one area where I believe that the Occupiers are chasing a phantom. Greed is the government’s favorite hobgoblin. Any politician with a bad record, skeleton’s in his closet, or some other threat to his phoney baloney job can invoke this loosely defined vice and count on some level of support in his time of need (for votes). But what is greed and how can one fight it?

That is two questions and one cannot answer the second before resolving the first. I believe that if you asked any 10 people at random for their definition of greed, you would get 10 different answers. The first answer is usually “a desire to have more than one needs.” However, this doesn’t hold up very well. It is obvious that all people desire more than they need. Without accumulating more wealth than what is minimally needed for survival, no human being can read or write a book, create a work of art, or perform an act of charity. In fact, none of what we commonly call “culture” would be possible if human beings did not accumulate the excess wealth that affords them the leisure time to create art, literature, charitable organizations, or the other blessings of society.

To this objection, proponents of the “more than one needs” definition will immediately clarify. “No, I meant desiring far more than one needs.” This clarification is just as problematic. How much is too much? Who sets the limit? At what point has one changed from being a hard worker to being “greedy?” Does that limit change from person to person? Is there a greed-o-meter out there that can set a dollar amount?

If one accepts this definition of greed, the solution to the problem is even murkier than the definition itself. Exactly what is to be done about the fact that “the 1% cares only about profits and not about the  rest of society?” Should businesses take specific actions to cut their profits? What are those actions? The great majority of all new businesses fail within their first year, even when their sole motivation is profit. How is an entrepreneur to know for sure that his business will succeed at all, much less make “excessive” profits? What action can he take to counteract this? Should he cease to innovate, improve efficiencies, lower costs for consumers, improve the quality and features  of his products, or employ people? These are the things that entrepreneurs do to make profits. Specifically which one is “bad” for the 99%?

To be fair, many of the comments on the OWS Demands page are more specific. As I’ve said before, they are definitely in the ball park when they finger the financial sector. However, comments like this one indicate that they haven’t yet found their seats:

“The moneyed elite of our society has changed from being apart of the team that built an economy that raised the lives of all men with ample profits for themselves to a Gambler, who only wants to keep score through the accumulation of money, ever screaming for more profits for themselves at the expense of the people they pretend to serve.”

This is a popular theme and not just among OWS supporters. The accusation that economic players in the financial sector took excessive risks that harmed people other than themselves is almost universally accepted, even by conservatives. Remember George W. Bush’s famous pronouncement, “Wall Street got drunk.”

However, the statement that the “gamblers” make “profits for themselves at the expense of the people they pretend to serve” just doesn’t compute. Wall Street did take excessive risks during the boom that predeceded the bust. They did indeed take those risks in the hope of making greater profits. However, those profits would not have been made at the expense of the people they serve. The people they serve would have made those profits, too, on their own money. They voluntarily gave their money to the financial sector in the hopes that the “gamblers” would win them a return on their investment. Had all gone well, the 99% would have realized a huge return. It is fashionable to claim that financiers make money for producing nothing, but this isn’t true. They make money from their ability to make sound investments and the willingness of other people to pay them to do if for them.

So what can be done about this problem? How do politicians or their constituents, who know nothing about investing (which is the whole reason that they give their money to financiers in the first place), make rules for how much risk investors are allowed to take? Do those rules apply to their own investments? Without some risk, there are no new businesses, no new jobs, no economic growth. How much risk is too much and who decides? The investors themselves or people who know nothing about investing? If investors are not allowed to take whatever risks they deem prudent and the result is that the economy in America dies, will the 99% take responsibility for that? We know that the politicians won’t.

All of these seemingly insoluble dilemmas spring from the initial premise about greed. As long as greed is defined in terms of how much wealth one desires to accumulate, the conclusions that one draws from that premise will always be absurd. The amount of wealth one accumulates or desires to accumulate is immaterial. Instead, it is the means by which one wishes to acquire it that is vital.

If you change your definition of greed from “desiring more than one needs” to “desiring more than one has earned,” then all of the contradictions and ambiguities disappear. Of course, we are immediately begging the question of how to define “earned,” but that is a simple matter. One has earned wealth if one has acquired it without initiating the use of force against anyone else. Under this definition, money given to someone as a charitable contribution qualifies as earned just as profits made from selling products do. In this scenario, the amount of wealth one is able to accumulate has a natural limit – the amount that others are willing to pay for one’s goods or services. This eliminates those troublesome questions about how much is too much in terms of profit.

To be greedy, then, is not the desire to accumulate more wealth than one needs, but the desire to accumulate more than others are willing to pay you for your services. For in order to do that, you must forcibly take the money that they would not willingly give. There is only one institution in all of society that can facilitate this legally: government.

Thus, if Person A accumulates $1 million by selling 100,000 units of his product at $10 per unit, he is not being greedy. He has made an equitable exchange with his fellow human beings: $1 million in products for $1 million in money. In this scenario, he and the 99% are square. Each has benefitted equally from the exchange. We know that he has earned his $1 million because the consumers set the price of his products with their voluntary decision to buy.

Now consider Person B, who wishes to accumulate that same $1 million through government employment, subsidies or privileges. No one voluntarily buys his product. The fact that the government has to either subsidize Person B or protect him from competition means that he is trying to sell something that people would not otherwise buy at his asking price. At best, Person B has sold something at a higher price than people are willing to pay. At worst he has sold something that his fellow humans don’t want at all, but are forced to purchase by the government.

Either way, Person B is greedy – he wishes to accumulate wealth beyond what people are willing to pay him voluntarily. In other words, he is willing to commit armed theft against his neighbors. As you can see, Person B may be far more greedy in his desire for even $50,000 than Person A is in his desire for $100 million, if Person B plans to obtain it by force and Person A means to obtain it through voluntary exchange.

OWS is right to want to stamp out greed, but they aren’t defining it correctly. Since Woodrow Wilson, progressives have been making the same fundamental error in failing to distinguish between legitimately acquired wealth and wealth acquired through government force. It is the latter that OWS should look to stamp out, rather than indiscriminately condemning anyone who becomes wealthy. The most effective way to fight greed by its true definition is to take the Occupation to Washington, D.C., where the power that the greedy utilize resides.

Imagine a world in which every individual has an equal chance to be a millionaire, but only if he offers his fellow individuals $1 million in benefits, with the 99% deciding for themselves how much they are willing to pay. That is a world without greed. That is what we used to call “freedom.”

Comments

  1. Claire M says:

    Great article, Tom. I would just add that one of the reasons most people put their money in the stock market or otherwise entrust it to financiers is that they are forced to do so by inflation. If you could feel secure just socking your savings under the mattress, knowing that your wealth would be worth the same after you retire as it was when you earned it, then you would really be free to use your good judgment as to how, if at all, you wish to invest it in the stock market, and the price of stocks would better reflect the real value of the wealth they represent. There would be more real growth and less fake growth. Bubbles would be smaller, and corrections would be much less painful. Also, executives would be paid what they are really worth.

    As for banks, if bank deposits were not insured by the federal government, then people would have to purchase their own deposit insurance, or risk losing their savings. The banks with the most responsible policies and practices would be the most secure and the least expensive to insure, and would therefore attract the most customers. Banks would thus be motivated to behave responsibly. They would not sell questionable mortgages or buy questionable bundled mortgage securities, for example, nor would they reduce their fractional reserves below reasonable levels.

  2. Actually greed by definition has meant several things, one is excessive especially when pertaining to wealth, but it came from gree which meant superiority, mastery or victory or best yet what is agreeable.

    But from the wealth perspective it means power for elitists who feel themselves above the rest or god like if you will.

    The truth of the matter is greed is a result of power and authority or superiority over and is best represented not by businesses or entrepreneur but mainly by Financiers or money changers by the practice of manipulating producers with bogus exchange.

    See it is perfectly ok to create ideas, demands and create exchanges for such demands in as much abundance as one is willing to produce but some found ways to skip the effort part and take without the effort basically killing good representing exchange from those who do produce. Essentially it is called steeling but the financiers want you to believe it is funding only the funding is funny money rather than a true representation. Those who put in the effort know well the short change because they are totally aware of the effort involved in generating such demands. Those steeling are clueless and only view the wealth they steel as the driving force for manipulation.

    Back in the days of Egyptian furrows there was the idea of wealth, yes I know that is a very long time for a very bad idea, this is also the time taxes were first invented. Both finances and taxes stole everything from the producer and eventually wiped out the entire civilization because when you manipulate the exchange from the producing they begin to stop producing anything because it begins to pay better to be a thief which is the example they recognize being set before them.

    Today we have such examples and we are starting to see far less producing and far more steeling because if you are not producing exchange how are you surviving? You are taking it from some other who is producing, when this balance goes too far others begin to wonder and production begins to die along with the civilization that produced such a poor effect. Call it the true free market of life which is irrefutable.

    Greed is by far a healthy concept and has produced some of the most ignorant barbaric thieves yet. Because essentially when you steel from the producer it is the act of steeling from yourself and people are just not this stupid as thieves tend to think. Greed is also easy to spot just look at who has lots of stuff but does very little and there you have it your thief. I think that lists most politicians, financiers and corporations owned by financiers. OWS is an effect of bad exchange practices, it has no clue why nor did anyone investigate.

  3. jon says:

    there were some on wall street who absolutely profited from the loss of those they claim to serve. look at goldman sachs who sold bonds they rated AAA to banks, pension funds, investors, anyone and then also went on to leverage themselves against the performance of those derivatives to the tune of billions. in other words, they said hey sure we’ll sell you this packaged investment that’s rated among the safest investments and then went on to profit while their customers took a loss. i understand that hedging is necessary but there’s no way a company should be able to profit as much as GS and others did while their customers are taking losses on products sold to them as reliable investments.

    seriously, read this.
    http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511

    and even if the people who are pissed off aren’t fully aware about this, it doesn’t mean that their position is any less justified.

    • Vae Victus says:

      According to the type of system Mullen would like to see realized again in this country, GS would have collapsed as a result of their greed.

      But we know that they survived, even profited, from their behavior. They did this through “Too Big to Fail” and TARP.

      This is a perfect example of what the piece is about: how could GS have been ‘Bailed Out’ if not for government forcing the taxpayer to subsidize them and other firms?

      As Tom says, the Occupiers need to Occupy D.C. more so than Wall Street, not to say Wall Str. is blameless, but the crux of the problem is in D.C. with its bought politicians.

      Next, the Occupiers need to attack the actuators of the aims of corrupt firms, i.e. the ones who enable the currency manipulation, subsidization, and protectionism.

      So, Occupiers should be calling for an END to the Federal Reserve, NAFTA, WTO, USDA, and USD of Commerce, among others.

  4. Mark Are says:

    The military industrial complex is based on greed. And the suffering of our fellow human beings. I think greed is a central mental problem of psychopaths.

    • Hey You says:

      You’re correct. The really frightening thing is that an estimated 4% of the population are psychopaths. Although that seems very small, it’s like having 4% your foods eaten by household bugs. No, they won’t eat much but what’s left over is usually not fit for human consumption.

      Anyway, to what occupation are these 4% drawn? You win if you guessed politics.

  5. Republic Reminder says:

    I would have to include taking from others by fraud and deceipt in the category of greed as well. That is why virtuous and moral behavior is the antidote to greed. Virtuous and moral people do not enlist the government to steal taxes from their neighbor even to give to the “really, really poor”. Virtuous and moral people do not steal, kill or destroy anything that belongs to their neighbor. Virtuous and moral people encourage others to behave virtuously and morally. If everybody starts behaving virtuously and morally toward one another there will be no one crying out for more government to rule over those who refuse to live virtuously and morally. There will be people preventing them from harming their neighbors. The KKK nor any other tyrant wouldn’t have a power base from which to operate. The FEDS wouldn’t have a power base from which to operate. Politicians would have the ability to produce class warfare because all of our neighbors would know each other well enough to know we were not out to harm one another. It is only in a corrupt and licentious world that factions and every form of evil have the opportunity to multiply.

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