...truth is not a two dimensional simple one page explanation.
I wrote before that the current situation is a combination of so many partial factors that make up the whole. Artificially low interest rates by the Federal Reserve, easy credit, government sponsored privilege and loose oversight of Fannie and Freddie, huge deficit spending at the behest of the executive and legislative branches during the Bush years, it goes on and on. Yes, we need to analyze each of these issues separately, but the writer of the article makes an important distinction:
It is characteristic of the age in which we live to see the "moral dimension" as a matter of following yet more rules or dictated regulations. The ancients, however, seldom referred to rules or even principles. For them a moral life was not a matter of what you do but of what you are.
Better people make better decisions, and better decisions makes for better capitalism, regardless of rules and regulations.
Adam Smith reminded us in his first book, The Theory of Moral Sentiments, written long before his better-known work, The Wealth of Nations, all about what he called "the moral sentiments." He himself distinguished between self-interest, which he promoted, and greed. Self-interest is both good and essential. Greed is always wrong and bad. The key difference is the former uses self-restraint, which obviously requires a moral code and a moral compass. There are moral preconditions in a market economy: the sentiments of sympathy, benevolence and compassion, of approval; disapproval and indignation, which underpin the social order and make it possible to engage in business in the first place. Human beings are not just profit-maximizers. They have moral scruples, personal commitments and the desire for happiness. These set limits to their plans for personal profit, and also stimulate them to pursue profit in ways that honor their higher values and generosity.
Absent virtues, we kid ourselves if we think more government or more regulations will solve all problems. After all, Madoff and Stewart Parnell both knew the law, and it was not a sufficient deterrent to keep them from selling fraudulent investments or salmonella infected peanut butter.
I am a realist, and as long as companies get government granted privileges (LLCs, tax exemptions, subsidies, etc.), they should be subject to regulations that seek to counterbalance those privileges. The reality is we don't live in a virtuous world, and the legal system and markets simply don't catch every immoral or illegal act, so some level of proof of regulatory compliance is sensible. But go too far and everyone suffers while the bad guys continue to disregard the rules.
So yes, there are big picture decisions regarding our economy and government's role that must be analyzed and answered, but there remains a bigger crisis, a moral crisis, that requires stronger families, stronger educations, stronger communities, more personal respnsibility, and embracing both the rewards and risks of freedom.
That moral crisis cannot be dictated by governmental power or throwing money at "problems." One of the paradoxes of the "progressive movement" is that it has spawned public policies that have had as their collective consequence an end totally opposite to the one intended. Instead of offering temporary help to a needy few, we have expanded the ranks of those perpetually in need. Where communism failed to create "new socialist man" behind the former Iron Curtain we are succeeding in America. Instead of creating a society of free and responsible individuals, we have created the entitlement generation(s). Ever since we proclaimed that we should be free from fear, we have been afraid to be free.
4 comments:
The line between greed and mere self-interest is razor thin. And frequently, you don't realize you've crossed it until its too late. I don't think the I-bankers who played crucial roles in inflating the toxic asset bubble set about to swindle the entire economic system, yet they have.
The question becomes: is there any incentive to exercise self-restraint? I discern a lack of shame in our society - both economic and socially. Without a sense of shame, the only remaining recourse is (a) criminal or (b) punitive. Absent these two options, there is not deterrent to prevent one from boldly crossing into greedyland. I also admit that I haven't finished Ropke yet, so I can't comment on his theory.
DR. RR, If you believe that the line between greed and self interest is razor thin, you would like this article:
http://www.telegraphindia.com/1090212/jsp/opinion/story_10518666.jsp
A lack of shame is another way of saying pride. And those who possess egregious pride will always disregard the potential repercussions of their actions, criminal or punitive. Either the rules do not apply to them, or they won't get caught.
I see a clearer divide between greed and self-interest. Self-interest, as described by Adam Smith, is built on the barter system's premise of a win-win transaction that enriches the self by trading selling, or producing something of value to others. If this takes place in an environment that allows innovation, competition, and accountability, profit rates will decrease over time. Marx saw this and thought the workers would get the short end of the stick in the end (also see http://www.amconmag.com/article/2009/feb/09/00014/).
Greed is completely different in that is only considers self. The butcher, brewer, and baker in Smith's time had to deal with each other every time bread, beer or meat needed exchanging, so it was in their interest to maintain positive relationships built on trust. Do you know your butcher, brewer, or bake by name? There is therefore a reduced incentive to maintain positive relationships. Exchange becomes an adversarial business vs. customer, and self-interest morphs into disregard for anyone else, and greed enters.
The combination of a "faceless" economy dominated by global titans and a decline in ethical social structures paints a pretty clear picture to me.
The reason I see the line of demarcation as being razor thin is because I view Smith's "self-interest" as a continuum, rather than a discrete point. So win-win means each of the following: the customer is always right; the customer is sometimes right so long as the customer pays a premium to be right; the customer can go else where if she doesn't like my product, price or quality; the customer is just one of millions of mindless consumers who will eagerly give me their money; and all points between and beyond. But at what point do you cross into greedyland? I'm not so sure.
Its easy to identify greedyland when you're talking about the Peanut Butter scandal or the Chicago meat packing industry in The Jungle, but those examples are obvious. What about when someone cuts just a little corner that no one knows about, like sneaking in just one more sheep on the common? That sounds like greed to me, but not to everyone because of the whole "if you're not cheating you're not trying" attitude.
Admittedly, when you deal with folks on a daily basis that are continually arguing over who gets screwed worse, its easy to become jaded.
Actually, using your continuum, I don't think any of those would classify as greedy, as long as any transaction was made out of choice.
I would say greed enters when someone is trying to get something for nothing, or ignoring a known moral wrong embedded in the transaction. For a seller, that could mean ignoring pollution, product safety, or fraud. And as a buyer, greed is returning items to stores that have been used, not correcting the cashier when you get too much change, or spending on credit that one has no intention or ability to repay.
I know things get a little more muddled in your line of work. Oh that business could be more like golf, where each competes by doing their personal best, as opposed to football where dirty teams focus on maiming the competition's star performers.
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