What You Should Think About Greed

December 1, 2007

“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.”

–Erich Fromm

Roaming the blogosphere provides observers with no shortage of comedic sights. People just making their first efforts at articulating political thought may give off that adorable vibe one senses in little children trying to get their hands around an adult tool. Then again, if the message is sufficiently hateful, they may instead give off that disturbing vibe one senses in little children trying to get their hands around a loaded firearm.

A prime example of this phenomenon is the vast array of instances in which the Gordon Gecko “greed is good” speech is cited as a compelling defense of cutthroat capitalism. Anyone of sound mind who actually watched Oliver Stone’s Wall Street couldn’t come away seeing Gecko as a hero. No doubt he was a complex and charismatic character. Also, in the context of the dramatic moment, his speech was an appeal to idealize cutthroat capitalism. Yet in the broader context of the film, the character was clearly a villain willing to inflict enormous pain and suffering on others simply to add even more money to his own uselessly vast personal fortune.

As a character, Gordon Gecko was an exceptional man. For example, he referenced Sun Tzu in a business context without completely mangling the application of that ancient wisdom. Ordinarily, when an executive or manager invokes that sagacious general, it is just before pulling a monumentally stupid move. The Art of War has much to teach about abstract strategy. Yet it also has much to teach about overseeing armies of slave-conscripts in the midst of deadly struggle. Since that text became fashionable with the MBA crowd, it has done far more to promote the view that free workers engaged in constructive endeavors should be treated like slave-conscripts than it has done to refine the abstract strategic thinking of business leaders.

Likewise, if his words are to be believed, Gordon Gecko was right to call for sweeping reform of management at Teldar Paper. When a private enterprise is taking huge losses while continuing to pay out large salaries to an unproductive legion of executives, change is warranted. Yet his actions represent the exception that proves the rule — not the rule in action. In reality there are plenty of bloated Teldar-style corporate bureaucracies and very little pressure to link pay with performance. Insofar as reality’s Wall Street drives business trends, it promotes the search for cheap labor abroad rather than real restraint in the realm of executive compensation packages.

If popular beliefs about the benefits of cutthroat capitalism were remotely true, then bloated executive payrolls at unprofitable companies would be rare and short-lived. Instead of the tight correlation between productivity and executive compensation that capitalism is thought to promote, year after year in the U.S., executive pay raises consistently outpace overall economic growth, sometimes by a substantial multiple!

Architects of modern capitalism often spoke of “enlightened self-interest.” In a world where capital market activity involves long-term investors taking an active interest in the management practices of companies they partially own, there is at least the theoretical possibility that greed will tend to promote good business practices. We do not live in such a world.

Much of the activity in capital markets today is short term speculation. Investors seek to cash in on growing trends or public reaction to world events rather than build wealth by supporting wise executive stewardship. Even institutional investors, like mutual fund managers, are no longer likely to hold long term positions of any consequence. Though he is held in much esteem amongst financiers and tycoons, virtually no one today emulates Warren Buffet’s practice of actively monitoring the management practices of companies supported by his investments. He has become a living relic of a bygone era.

The end result is an economic dystopia alluded to in Oliver Stone’s film. Corporate raiders gain control of a business, loot it for saleable assets, trim workforces, further cut payrolls by replacing experience and skill with untrained novices, declare an impressive short term profit, then laugh all the way to the bank. It is a strong driving force in the “race to the bottom” — a steady decline in the quality of goods and services. While financial insiders get new piles of money to place alongside the piles of money they already possessed, thriving businesses are gutted and abandoned.

Depending upon economic elites to be consistently enlightened in their pursuit of self-interest makes no more sense than depending upon hereditary aristocrats to be consistently enlightened in the exercise of despotic power. The core idea behind the establishment of the United States was that exploitation of the many by the few could be disrupted through periodic redistribution of power according to the results of a nationwide public process. While this approach to political power is widely embraced, it is hard to imagine many Americans endorsing a similar approach in which wealth would be periodically redistributed.

In fairness, there are some good consequences to economic inequality. Then again, there is a vast range of possibilities between absolute economic equality and cutthroat capitalism. Right now, only the empty promises of trickle down economics answer any demand for social justice. Just imagine the outrage if a group of hereditary political aristocrats answered calls for democratization with flimflam about how their immense personal privilege will eventually spill over to empower ordinary citizens.

Wealth and power are not the same things, but no society that has accommodated extreme concentrations of wealth has found ways to prevent them from also serving as extreme concentrations of power. Some would defend a greed-based competitive paradigm with assertions about human nature. “Communism didn’t work because people are too greedy” goes the propaganda point woven deeply into the fabric of American culture.

If we actually governed ourselves with total deference to human nature, then we might also argue that medicine doesn’t work because people are too vulnerable to sickness or police do not work because people do not possess a natural tendency to comply with statutes. Government is not about shrugging and letting the worst of human nature determine the course of human events. Government is about taking collective action to restrain the worst of human nature and promote the advance of civilization. In short, it is a means to transcend “the law of the jungle.”

Because of the strong connection between wealth and power, a system that is dedicated to rewarding the effective actualization of personal greed is a system that empowers the selfish, the dishonest, the shortsighted, and even the larcenous among us. It should come as no surprise that the end result is a tendency for public officials to wallow in the spoils of legalized bribery while looting the public treasury to subsidize their coconspirators in the military-industrial complex.

I do not contend that an absolute equality of wealth is either attainable or desirable as a matter of public policy. Yet I do contend wholeheartedly that anarcho-capitalist ideology is an immensely harmful set of ideas rooted in falsehoods. These falsehoods are sustained by popular personalities who manage to combine shoddy analytical skills with an excellent ability to manipulate the emotions of their gullible admirers. Even as American civil rights, environmental conditions, economic vitality, public morale, and global prestige are being devoured by the politics of selfishness, millions of voting citizens will perpetuate their habit of endorsing a candidate based chiefly on false promises of fiscal restraint.

I have no trouble agreeing with the consensus of religious teachings that greed, far from being good, should be regarded as an anathema. Yet I also acknowledge that, in specific contexts, subject to reasonable restraints, greed can be useful. We do not need to take “self-interest” entirely out of the American way of life, but it is long past time to restore “enlightened” so as to strike a optimal balance. This balance permits collective action to solve real problems facing real people in our own times while also permitting individual action to produce individual rewards. Decades of policy from dozens of prosperous nations prove that this balance can be achieved. All we need in our own society is the will to make it happen.

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What You Should Think About Social Minima

October 17, 2007

“If the misery of the poor be caused not by the laws of nature, but by our institutions, great is our sin.”

–Charles Darwin

Earlier today America was witness to an extremely unusual event in 21st century politics. Our President subjected himself to public press interaction in which the questions and answers were generally not orchestrated by prior arrangement. A healthy national dialog would be supported by routine exchanges of this nature. Still, this is better than nothing. Any acknowledgment of public accountability by senior executive officials is a positive thing.

In today’s press conference, repeated references were made to the fact that families with an income as large as $83,000/year would be eligible for participation in a proposed program to subsidize health care for children. Depending on the specifics of the surrounding national economy, there could be a case for arguments about excessive taxation or better use for those funds. No such arguments were offered. Instead the President justified his veto on purely ideological grounds. It was as if breaking with a particular political orthodoxy were a wrong in itself, children be damned . . . and I mean literally damned.

It is fair to argue that a typical family with $83,000 in annual income would not be part of America’s neediest population. Yet not all families are typical. Children are not immune to horrible accidents. Children are not immune to developmental disorders. Children are not immune to chronic degenerative diseases. As it is Medicaid will provide for those families with enormous medical expenses only after they spend themselves into poverty before appealing for government assistance.

So, under the status quo, giving birth to a child with cystic fibrosis or watching your child cope with severe spinal cord injury after a bus accident is reason enough to experience poverty — regardless of however hard-working family breadwinner(s) might be. How does this mesh with the notion that economic status ought to incentivize productivity? How does this mesh with an ideology that makes no distinctions between what quality of life an individual merits and what financial resources he or she controls?

Hostility toward any form of economic welfare tends to emerge from one narrow view of the intersection between economics and justice. The question is typically framed as a matter of how much unproductive freeloaders “deserve” from the pockets of those with substantial personal income. Yet this misrepresents the natures of both society and income. It rests on faulty assumptions holding that personal wealth in any meaningful concentration could exist in the absence of social support. It also fails to recognize that not all wealth is merited (e.g. senior Enron executives) nor is all poverty is a reflection of personal worthlessness (i.e. starving artists, community activists, humble clergy, etc.)

The law of the jungle may have some bearing . . . in a jungle! I do not deny that a society so bereft of resources that entire communities may be one bad harvest away from ultimate doom cannot afford to provide generous economic support to its least productive members. However, I vehemently deny that the modern United States is in any way that sort of society. Again and again public figures boast that we are the richest nation in the world. By some measures that remains true. Yet that is all the more reason not to let our social policies be shaped by thinking as if modern America is precariously balanced on the brink of national destitution.

To some degree it is all a perversion of Darwinism. Prior to the fall of the Soviet Union, there were two comparably popular interpretations of the term “social Darwinism.” West of the Iron Curtain (or, perhaps more accurately, to the political right of basic human decency) it was argued that economic systems emphasizing a competition for survival between individuals would improve national gene pools. Of course this is nonsense, since the time frame of biological evolution is wildly out of proportion with the persistence of any regime, never mind an ideologically orthodox body of economic policy. Yet it was also nonsense because it equated fitness to live with ability to gain income — without any regard whatsoever for the ethics or consequences of that activity. Is it at all sensible to go through life believing Bill Gates or Paris Hilton is thousands of times more fit to live than a typical American citizen?

Yet social Darwinism has a different resonance when taken from a Marxist perspective. After all, in nature, competition between species is as, if not more, significant than competition between individuals. A collective approach holds that the best way to promote human fitness involves working toward common goals to improve the overall quality of life enjoyed by a society. There can be no doubt that Stalin corrupted a communist superpower with outright evil that was orders of magnitude worse than the worst abuses of power by any American President. That history does very little to shed light on the merits of any economic philosophy.

Personally, I believe that we can do better in framing our economic and social policies than to be guided by half-baked pontifications on the struggles of primal beasts. However, if one perspective must be favored over another, just why should anyone favor an approach that divides America between winners and losers over an approach that unites America behind common goals? A (typically misplaced) sense of personal superiority, contempt for poor people, satisfaction from the suffering of others . . . these are not the stuff of any noble vision, especially one fit to make its way into the laws of our land.

“Social Darwinism” means different things to different thinkers. On the other hand, “social minimum” is a concept used consistently by economists and philosophers from a wide range of traditions. That term defines an economic boundary beneath which members of a society are not permitted to fall regardless of circumstances (save voluntarily eschewing material possessions, of course.) In many societies with respectable rates of economic growth, a robust social minimum guarantees all citizens material subsistence, medical care, educational opportunity, and much more.

For the most part the United States has not endeavored to uphold a lower social minimum than the rest of the civilized world. That tendency is a fairly recent phenomenon coinciding with decades of deliberately expanded class divisions. Whatever ideological wallpaper is pasted over policy, the underlying reality is that it has been framed so as to hasten the concentration of American wealth and reduce the incidence of class mobility in our society. The England our Founding Fathers rebelled against was never so obsessed with making the rich richer. One might even question if the pre-revolutionary France under Louis XVI was more moderate in its plutocracy.

There is no choice that is not a choice. Nothing in the U.S. Constitution forbids subsidized higher education or socialized medicine or even outright income redistribution. To the contrary, if we are to honor the intent of the founders’ and such utterances as Lincoln’s immortal, “by the people, for the people,” sentiment, then it is anti-American to espouse flimflam about bogus technical obstacles to obstruct any public desire to legislate change.

President Bush is correct to argue that the children’s health care bill he vetoed would expand the role of government in meeting the needs of the people. Where he and his most loyal supporters go wrong in is standing on that argument alone, ignoring all practical consequences of their actions. This only perpetuates a system that demands poverty of American families guilty of no greater misdeed than having an extremely sick child. It is shameful that such shoddy thinking is all that stands between the status quo and successful elevation of our own social minimum. After all, that same thinking also stands between genuinely desperate families and a significantly brighter future for their ill or injured children.