The Ethics of Greed

Over the last few weeks we’ve finally started seeing some push-back from the far Right over the Occupy movement, with a surprising number of Wall Street insiders expressing indignant dismay and outrage over being treated like monsters and blamed for the current national economic crisis. Several of these individuals have gone so far as to call themselves “small businesspeople” and insist that none of the current economic problems are their fault, since they have broken no laws or regulations. Some of them would probably go so far as to argue that since they were able to earn money and generate wealth for their clients, make large salaries on which they (theoretically) pay taxes, and make capital accessible to companies that could use it to create jobs and expand the economy, they are actually doing more good than harm to the country, or at least the financial community. Given that this is literally 180 degrees from what the OWS movement would say about them, I thought we should discuss it further…

First off, it’s important to consider that there is nothing wrong with a strong desire to make money, assuming that you do it in a way that doesn’t unnecessarily harm anyone else. As we discussed in our post about CEO compensation, if an individual manages to make the company he or she runs successful, bringing a better income for the stockholders, higher wages to the employees, a better quality of life to the community in which the company operates, and generally improving both the local and national economy in the process, it’s hard to say why there is anything wrong with that CEO also making an extremely large personal fortune in the process. I would go so far as to suggest that as long as the CEO is doing things that improve the lives of thousands or millions of other people, I do not care why he or she is doing so, or how the company chooses to reward him or her…

That said, there is no question that some of the financial practices that were commonly used over the past few years did contribute to the current crisis, or that many of these enriched the financial institutions (and their executives) at the expense of poor and middle-class people. Clearly some of the responsibility must be laid at the feet of people who participated in their own downfall; the borrowers who took on mortgages they knew they could never pay in the hopes of “flipping” properties at a huge profit, or the people who borrowed more than the cost of the house (the infamous “110% mortgages”) so they could get into real estate without any of their own money down. But the deregulation that made such transactions possible, as well as the lack of new regulations that might have kept the real estate market from spiraling out of control four years ago, are the direct result of the banking industry fighting Federal regulation tooth and nail for decades on end – ever since the last international financial crisis in 1929, in fact…

You cannot in reason use the law as an excuse for your actions if you were responsible for the passage of that law (or the elimination of any contradictory laws) in the first place. But if we accept that convention, don’t we also have to accept that all of the people who aren’t captains of industry (or owners of hedge funds) should have demanded government oversight of an industry that could, if left unregulated, destroy our entire civilization and way of life? None of the practices that led to the collapse of the real estate market and the near destruction (but for a huge Federal bail-out) of Wall Street are anything that I couldn’t explain to a ten-year-old in a few minutes, and voting for candidates who would pass laws requiring fiscally responsible business practices would involve even less effort, especially if the people who would benefit from such legislation really do make up 99% of the country, as is so often alleged…

So is there anything inherently wrong with wanting to make a lot of money and then arranging the legal and financial conditions that will allow you to do so? Or is it more reprehensible to allow such conditions to exist through ignorance and apathy, and then demonize the people who took advantage of our society’s failure to stop them? How do we find an acceptable balance point between a demand economy (reference any of the attempts at communism over the past century) and no government regulation of anything (consider the Industrial Revolution in the UK and US), knowing that history has already demonstrated the folly of both extremes? And who gets to decide where that point would be?

It’s worth thinking about…