Walter E. Williams: Greed is Good
In the video above, Professor Walter E. Williams explains why greed is noblest of all human motivations.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Friday, May 18, 2012
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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40 Comments:
Greed is good, Walter Williams is even better.
Thank you for the video, Mark.
Are we talking about the same kind of greed that led to slavery Mr. Williams?
I guess not.
Greed is good in FREE MARKETS.
Moe, if you think greed was the primary driver behind slavery, you don't know much about slavery.
Moe, if you think greed was the primary driver behind slavery, you don't know much about slavery.
Right. I'd argue "Christian charity" and the White Man's Burden are much larger factors.
It was - and I do.
Moe: If the farm owners were truly acting on greed, they would pay efficiency wages to attract the best workers and maximize their yields.
Pay for workers...as opposed to getting them free? uh, OK
According to Merriam Webster:
Greed: : a selfish and excessive desire for more of something (as money) than is needed.
Here's the definition I use, not the "feel good" version espoused by Mr. Williams.
Slave = Farm equipment. John Deer wasnt around.
Greed is most definitely be behind slavery in one way or another. They had a different set of cards in their hand than we do today. I'm no slavery expert though.
great clip by the way
Oh and slaves were NOT free. YOU paid to collect them, feed them, put them somewhere,ect.,instead of paying them and letting them take care of themselves.
If it was seen as prestige to have many slaves than yes there would be greed to have many slaves.
Good Lord. Knowledge of history here is pathetic.
The institution of slavery is many thousands of years old and until the latter part of the 18th century its morality was never questioned. Usually, populations that lost in battle were enslaved as part of the booty of war.
None of it had anything to do with racism or any of the other junk you learn in American schools. The slave trade just happened to be centered in Africa (where it still exists, btw) at the time the United States was formed. African slaves were sold to other Africans as well as to the Middle East at the time.
The word "slave" comes from the word "Slav", as in "Slavic people". Which is what I am - a Slav. So often were our weak tribes beaten in battle (often by Germanic tribes) and taken as slaves that we came to define the term. That's white on white, in case the public school system is as bad as it appears to be.
Although, it's good to know that every time a libtard looks at a black man who is probably worth 10
of himself, his mind immediately associates that black man with slavery.
Wait for them...they'll be wearing white coats.
Moe,
Pay for workers...as opposed to getting them free? uh, OK
Seriously? Is this your level of understanding?
If I forced you to work in my fields under the threat of a whip, how hard would you work? Just hard enough that I wouldn't whip you.
If I paid you to work and offered to pay more the more you produced? You'd work hard and come up with all sorts of ways to be more productive.
Learn to think before you comment and you won't sound so stupid. Or at least learn the basics of economics.
Ken has got the idea. This happened in China. They let a few farmers keep some of what they grew. As a result the farmers grew a hell of a lot more than before. Greed drives all.
Methinks- kudos, I don't even know how the hell slavery was even relevant to this. Moe's a jerkoff, and I fell for it.
Pay for workers...as opposed to getting them free? uh, OK
There's no such thing as free slaves ;) Slaves cost a lot of money, a lot more money then market laborers. You've got to feed them, you've got to house them, you've got to clothe them, you've got to provide security, you've got to keep children and old people around and their productivity is going to be much lower because of low morale and no growth opportunity.
Slavery was just "convenient", but not competitive. If slavery was efficient, the Germans would have won WW2 since they had so much slave labor. Instead, they discovered that they got poor quality and poor productivity. They should have just bought their bombs from some US manufacturer instead.
Slavery was just "convenient", but not competitive.
Right, AIG. In fact, there is a paper from near the beginning of the Civil War arguing for abolition on the grounds that slavery was driving plantation owners bankrupt.
If "greed is good" you can then justify a lot of dubious activities - because it's all about the "end" and the "means" become inconsequential.
One can easily - based on Mr. Williams definition - justify slavery, which was just a means to an end.
Your name calling doesn't bother me Ken. It amuses me. It’s something most people drop once they reach adulthood. Those that continue, especially anonymously on the internet, do it to make themselves feel superior. Glad I could help.
Correction, Moe.
YOU can easily justify slavery. Also, YOU easily jump to and ends justifies the means argument. I think I can safely say I'm speaking for a great many Carpe Diem fans when I say that most of us can't.
I also think sexual lust is good, but that doesn't justify rape.
A thoughtful person should be able to understand that if something is good, it's not good at all cost.
One can easily - based on Mr. Williams definition - justify slavery, which was just a means to an end.
It is clear that you did not watch the video, and it is clear that you are not familiar with the argument being made.
When you enslave someone, you are not engaging in any sort of market interaction. That should be sufficient to explain to you are completely wrong.
But, in the real world there are a lot of non-market interactions, such as slavery. The question is, what, besides GREED, limits those extra-market interactions and uses of force? If I am a GREEDY slave-owner, I have to compete with a GREEDY capitalist who hires labor...and we compete for the dollars of the GREEDY consumer. The consumer will give their dollar to the best price/quality combination he can find. If the GREEDY slave-owner cannot provide the best service to the GREEDY consumer, he will go out of business.
Slavery and other such types of arrangements exist only in places where free markets don't exist. Of course, for most of human history and in most places, it has not existed.
But Williams is making a very simple argument, and you're not remotely addressing his argument.
Also, lets assume that yes, greed is bad. Greed is evil. Ok, whatever. Can you tell me of any economic or political system that has reduced or gotten rid of greed?
Saying greed is bad is like saying...sex is bad. Greed is the most basic function of any life form. Others have made the argument that "nature" is bad, but those that have those arguments haven't really contributed very much to humanity...at least not in my opinion.
The question isn't to "change human nature", but rather what economic system harnesses human nature to produce the best outcomes.
Even OWS-ers are greedy :)
"Pay for workers...as opposed to getting them free? uh, OK"...
LMAO! Free, eh moe?
Hey moe, check out just how just how free those slaves were...
Moe,
One can easily - based on Mr. Williams definition - justify slavery, which was just a means to an end.
No you can't. He qualifies it, plain as day, starting at the 46 second mark. Did you even watch the video? Or are you just stupid?
Moe,
Your name calling doesn't bother me Ken.
In my first comment (at 2:21), I didn't call you a name. We can all now add reading comprehension on your list of mental disabilities.
As far as definitions go, greed is a moral-theological term. I think this is why I would disagree with Mr. Williams' emphasis on greed. SELF-INTEREST is good, moral. Legitimate self-interest not only serves the self, but inherently helps others. Markets channel self-interest for the common good, as it incentivizes providing value and listening to the market's signaling devices to best serve customers.
I would define GREED, on the other hand, as a distorted understanding of self-interest. I would categorize actions such as cronyism and rent-seeking as acts of greed. It could also be described as ignoring market signals by swindling customers.
As far as definitions go, greed is a moral-theological term. I think this is why I would disagree with Mr. Williams' emphasis on greed. SELF-INTEREST is good, moral. Legitimate self-interest not only serves the self, but inherently helps others. Markets channel self-interest for the common good, as it incentivizes providing value and listening to the market's signaling devices to best serve customers.
I would define GREED, on the other hand, as a distorted understanding of self-interest. I would categorize actions such as cronyism and rent-seeking as acts of greed. It could also be described as ignoring market signals by swindling customers.
Very well said, Trevor.
Trevor and Jon Murphy,
Sorry, but I do not see how self-interest and rent-seeking are different. Or, rather, rent-seeking is just another form of acting in one's self-interest. You both seem to feel that rent-seeking is a "distorted understanding". I think it is human nature, and exactly what we should expect from anyone who is truly acting in his self-interest.
I define rent-seeking as an attempt to gain economic benefits through the political arena. I see no reason to demonize the rent-seeker. I believe it foolish to expect humans not to seek rents.
As I see it, the only ways to reduce rent-seeking are:
1. reduce political power;
2. punish the rent grantors by exposing them and removing them from office.
Here's a few more examples of greed. Modern day slavery in Brazil to improve the profits of Ford, GM, and BMW. Debt slavery in Thailand to improve Wal-Mart profits. Sweat shop laborers chained to their desks, forced to get abortions in Saipan. Death squads in El Salvador. Dictatorship in Russia, Chile, Argentina, Haiti, and throughout Africa.
Williams says that the virtues of greed go unnoticed by the critics. I'd suggest that Williams is the one that is failing to notice what is really happening. Everyone understands that mutual aid and service benefits not just the one being served but also the one doing the service. We are not islands. It's a symbiotic relationship that we have with others. But even Socialist economies try to service their fellow man in the way that Williams describes. Even a Socialist wants a good price for his house, so he might plant trees and take care of his yard. The real debate is about what distinguishes the left and the right. On Capitalism endless accumulation is kind of built into the system. You really need it. You kind of need waste and inefficiency to keep the economy moving. That's why WWII was great for the US economy. The tsunami in Japan has helped their economy. And Paul Krugman notices, correctly, that an alien invasion would do our economy wonders right now. The question is, is this a rational, sustainable system?
The answer is no. Capitalism destroys itself. Destroys other people. Destroys the environment. Actually yearns for wars, tsunamis, and invasions. Is that good?
Perfection is never an option. Greed isn't perfect, but neither are any of the alternatives. Walter is saying that greed is the best outcome for the greater number of people compared to the alternatives. When greed/free markets/competition are not allowed to operate, you get the worst possible outcomes, e.g. Cuba and North Korea, with widespread poverty and misery - read Yoani Sanchez's blog to get daily accounts of that misery.
Why did millions of Europeans come to America, and why do people today risk their lives to come here? They're attracted to a system that operates on greed - it's the best, if imperfect, outcome.
Are we to believe that the only alternative to Williams style greed, with all the various consequences I described above that impose suffering for the benefit of investors, is a N Korea style dictatorship?
Life is tough in Cuba. But what was life like in Cuba under the US backed Batista dictatorship? Today life expectancy in Cuba is near that of the US. Compare with every other Latin American country under US domination (Haiti, Nicaragua, El Salvador, Guatemala). Despite enduring 50 years of terrorism from the US as well as an economic embargo condemned the world over Cuba is still the leader in terms of life expectancy and low rates of starvation/homelessness.
And that is the real threat Cuba poses. The threat of a good example. Why are we still making war on Cuba even though the former pretext (the Soviet Union) has evaporated? Because the real threat was never military. It's the threat posed to the greed of investors. If Cubans control their own destiny rather then allowing foreign investors to control all of their resources, then their lives will improve dramatically. This good example is a virus that will spread to other areas, which will further deprive investors of the profits they seek. This is not just my own personal conspiracy theory. This is the admitted rational revealed based on the US State Department's internal record. Suddenly Vietnam makes sense. Greed produced the war in Vietnam, Cambodia, and Laos, killing 4 million people. If the Vietnamese controlled their own resources, capitalists are aced out.
There are plenty of alternatives, and the rich know it. These alternatives make the lives of the great mass of population better but perhaps depriving the super rich of astronomical wealth. And so these alternatives are resisted violently.
Absolutely, Mark Perry.
My family risked our lives to come to the United States from the Soviet Union for that very reason.
By Soviet standards, we lived well. We had a privatized apartment and my family was relatively well connected - which is all that counts in a Socialist system.
But, we were greedy for more - for more opportunity, for liberty.
It's difficult to describe in words how soul-sucking Socialism is, how it destroys the very best in humans and enhances the very worst. The difference between the United States and the USSR was apparent immediately. Give me greed!
Jet Beagle,
Perhaps. We are making normative statements, and thus each person may have differing moral bounds of what is an acceptable level of greed/self-interest. I choose to define self-interest as pursuing human nature within the legitimate/legal context of markets. As rent-seeking attempts to undermine the efficiency of markets through political advantage, I think this is illegitimate. Markets can't work if they can't punish rent-seekers for not creating the most value in society. This is why I would define deliberate rent-seeking as greed, a form of self-interest which seeks to gain advantage through illegitimate means.
Methinks: Thanks for that personal example.
Trevor: "Markets can't work if they can't punish rent-seekers for not creating the most value in society."
Not sure how you intend to punish rent-seekers. I do not think it is practical to even attempt to use laws to punish rent-seekers.
Consider corporate executives. They are required by contract and by law to act in the best interests of the owners of their businesses - the shareholders. Not the best interests of their customers or of "society" (whatever that means). If seeking and obtaining rents - within the laws enacted by the representatives of voters - will increase the wealth of shareholders, then those corporate executives are legally and contractually obligated to do so.
So who's the bad guy when corporate executives seek rents? The elected and appointed government employees who grant the rents. The elected officials - not the corporate executives - are the persons who are required by law to act in the interests of the population they represent.
Jet-
Maybe an explanation like this can help:
There are two kinds of love. You have divine love (the love you feel for a family member or loved one or friend. Or the love of knowledge, etc). This love we want to encourage.
We also have perverse love. This is commonly known as lust. Blind sexual aggression, lust for power, vanity, things like that. This kind of love we want to limit.
It is the same with "self-interest." We have two kinds: the "profit-motive" where folks try to earn a profit for themselves, and "greed" where folks try to manipulate the game to gain an unfair advantage. Think of it as self-interest taken to an extreme.
Either way, our goal is to limit damaging greed. I know I am preaching to the choir here when I say free market capitalism is the only system that can limit the damage done by unchecked self-interest and perverse love. This is simply so because free market capitalism so ruthlessly and efficiently enforces rules better than any committee or body politic ever could. If you can't make the cut, then you are gone. No ifs, and, or buts. You sell a bad product, you won't be around. No bailouts. No protection.
I hope this has helped you understand where Trevor and I come from, even if you disagree.
Thank you, Jon.
Jet Beagle:
By "punish" I did not mean to imply legal punishment. I meant punish in the sense that firms will lose money if they ignore market signals, etc. The obvious example is the bailout. Government protection propped up firms which otherwise probably would have failed. Thus rent-seeking screwed with incentives: those firms will participate in more risky behavior if they have illegitimate political protection. If rent-seeking was not permitted, firms would be more fully accountable for the risks they take.
Corporate executives should seek out the best interest of shareholders. But the market aligns the best interest of shareholders with the best interest of their customers. In the long-run a firm will create the most wealth if they are providing the most value to their customers. They are not acting in their own self-interest if they ignore this factor. This is the same sentiment that Mr. Williams' borrows from Adam Smith in the above video: “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest."
Like Jon, I am not a moral relativist, and thus want to define greed in theological terms. Greed should be understood as perverse self-interest which seeks to take advantage of the free market through illegitimate means such as rent-seeking and monopoly and leads to a sub-optimal allocation of economic resources. When rent-seeking is valued more than productivity and value creation, it diminishes economic growth.
jon murphy: "We have two kinds: the "profit-motive" where folks try to earn a profit for themselves, and "greed" where folks try to manipulate the game to gain an unfair advantage. Think of it as self-interest taken to an extreme."
I do not understand how "manipulating the game" is "self interest taken to the extreme". It is simple self-interest. To expect anyone to not act in his own self-interest seems very idealistic.
I respect your opinions, Jon. But I'm struggling here to respond to you without writing something which might insult you.
Trevor, you're trying to change your argument. Now you're saying that rent seeking is not in the business owner's self interest because that business owner is not serving his customer. But that's not your original argument which was against all rent seeking behavior.
I still think you and Jon Murphy have got this backwards. There is nothing "good" or "bad" about seeking to influence politicians to act in your favor. There is much "bad" about politicians not acting in the interest of the voters who employ them
Rent granting is the evil. Rent seeking is human nature.
But I'm struggling here to respond to you without writing something which might insult you.
Haha don't worry about insulting me.
Let me think about this a little bit and try to come up with a better way to explain this.
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