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Rick Pollack · on Greed
November 15th, 2008
Question for ALL…
Do you think greed is the elemental motivation behind a robust economy? per Peter Schiff
“Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. Everyone wants to make money, but everyone is also afraid of losing what he has. Although few would ascribe their desire for prosperity to greed, it is simply a rose by another name. Greed is the elemental motivation for the economic risk-taking and hard work that are essential to a vibrant economy.”
Agree, disagree, or ??
Last 5 posts by Rick Pollack
- Open Fabrication - Part III - November 12th, 2009
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November 15th, 2008 at 3:56 pm
(Slightly off topic from Schiff’s diatribe on federal policy)
More people, I think, are reaching an insight spelled out by Ghandi:
“Earth provides enough to satisfy every man’s need, but not every man’s greed”
November 15th, 2008 at 4:05 pm
There is probably a reason why greed is one of the seven deadly sins.
November 18th, 2008 at 2:32 am
I think that there are greedy people, but that most of us are not motivated by greed. A robust economy has many motivations and some market participants are greedy, but greed is not the central essential element of markets. Markets are places for exchange of information and goods, and their proper functioning results in disparate peoples being bound together in trading relationships that benefit all and reduce the risk of conflict.
Thousands of years ago, markets were a way by which coastal tribes could trade shells used to make jewelry for obsidian used to make knives. Or for tribes in salt rich areas to trade salt used to season and preserve meat for other goods–the origin of the trade routes across the Sahara. Or for exotic spices used to flavor and preserve food to be traded between Indonesia and Holland; breaking the overland trade route that gave Venetian merchants so much power in the import of spices to Europe was a large motivation for the seabound European exploration of the rest of the world.
The main motivation for markets is to create fair places for people to trade with each other to the benefit of both parties.
Now, markets must have rules and governance and when the rules are broken and governance is poor, it can interfere with proper market function to the disadvantage of some parties. Greed can cause people to break the rules: pricing cartels and insider trading are two behaviors we have made illegal and that, when uncovered, we prosecute.
The current obsession that critics of markets have with greed is misplaced. Very few people, if they are being honest with themselves, would take a lower salary than they could get in the open market. Very people would take less for a good they are sellling than what a buyer is offering. It is misplaced to call these people greedy and to focus an analysis of market imperfections on the moralistic condemnation of greed. John McCain, I think, lost a lot of votes when he took that approach.
The proper focus of attention should be on making sure that market rules are fair, transparent, enforceable, and enforced, and that governance is proper. Under these circumstances, it is harder for the subset of people motivated by greed to have their way.
November 19th, 2008 at 5:16 pm
Thank you for the comments. Jonathan, I appreciate the thoughtful response.