Democracy and Greed

by Don Boudreaux on August 31, 2009

in Seen and Unseen

At a conference this weekend, a question was asked that is often asked about markets; it goes something like this: do markets create greed, or do markets at least unleash greed to a degree that greed would not be unleashed if markets were less prevalent in human society?

This question, being one often asked, is often answered.  And there are many good answers to it.  But hearing this question again this past weekend made me wonder why the following question is almost never asked: does majoritarian democracy create greed, or does majoritarian democracy at least unleash greed to a degree that greed would not be unleashed if majoritarian democracy were less prevalent in human society?

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Anonymous August 31, 2009 at 9:28 pm

The more important question – is the greed for money a bad thing? The way I view it, as long as negative externalities do not result, I don’t have a problem with unlimited greed for money. I do have a problem with some people’s unlimited greed for power to control everyone’s life.

Justin P September 1, 2009 at 2:07 am

“Greed is good.” Walt WilliamsAvarice on the other hand is bad. I think the problem here is the language being used. Most people in the US don’t really have anything more than Jr High level vocabulary set, and they are eroding everyday. I dare you to ask most incoming college freshmen to distinguish between Greed and Avarice. I’m sure you’ll get a lot of confused puppy dog faces. Greed unto itself is good and necessary. Greed is what drives everyone to do make something of themselves. People always want more than they have, that is greed. Avarice is when you intentionality hurt others to acquire things, be it money or property. Avarice is what drives the theft to steal. If the theft were merely greedy, he would get a job and earn the money needed to satisfy his greed.

Anonymous September 1, 2009 at 2:33 am

It doesn’t really matter what the real definitions are. The socialists have successfully brainwashed the kids into thinking “capitalism is greed”.

Anonymous September 1, 2009 at 11:40 pm

A just saw a few minutes of a movie called, I think, “The Kite Runner”. The father tells his son to ignore the teachings of the Mullahs, and that there is only one sin, from which all others derive–theft. Murder is theft of life, etc. Unusual wisdom from a film.

MWG September 2, 2009 at 12:06 am

A great line from a great film.

Ike Pigott August 31, 2009 at 9:51 pm

1) Markets do not “create” greed. They channel it in mutually-productive directions.

2) Majoritarian democracies do not “create” greed either. However, because they attempt to force solutions from the top down in a one-size-fits-all fashion, they very rarely produce mutually-productive outcomes. This is because the currency in a majoritarian democracy is Power, and not Wealth.

JohnK September 1, 2009 at 11:08 am

Majoritarian democracies allow people to create laws that legitimize the initiation of force upon others, often in the form of institutionalized theft. This creates an attitude of entitlement where people honestly believe that they deserve the fruits of another man’s labor with nothing in return.
Markets on the other hand are voluntary, so they create an attitude of fairness.

Anonymous September 1, 2009 at 11:33 am


With power comes wealth. Power held for any length of time will inevitably attract wealth like iron dust to a magnet.

Wealth can buy power, it can also produce power.

Power will attract wealth.

There is the circle of life in politics.

Are there wealthy people who shun power? Some think so, but the wealth still causes many people to subconsciously defer to them whether they ask for the deference or not.

Are there powerful people who shun the wealth that is attracted? Certainly not in politics.

Anonymous August 31, 2009 at 10:04 pm

This is the way I see it. When you had well contained greed it is channelled for the better of society.

There was a day when the top tax rate was 90%. Then greed and money was channelled into making ones company the best to the benefit of everyone.

We got rid of that and now billionaires literally say their main goal in life is to become the richest man alive. It’s resulted in an attitude and corporate policy that incentivizes personal greed overall else including the good of the company and the profit motive.

Listen to John Bogle on one of Russ’s previous Econtalks and he explains what has happened quite elegantly.

Ron August 31, 2009 at 10:10 pm

While the oft quote maximum tax rate 90% is accurate it is somewhat misleading as there were also extensive tax deductions, which were often very creative. Although I don’ t know off hand, one must wonder what the net or effective max tax rate was at the time.

Anonymous September 1, 2009 at 11:42 pm

I wonder too, and don’t know. But outside of war, the total fraction of taxes the government has been able to extract from the GDP has been pretty constant.

Anonymous August 31, 2009 at 10:18 pm

Excuse me if I’d rather be a creative employee rather then another cog in the machine of 1950s corporatism.

Anonymous September 1, 2009 at 5:46 am

This hypocrite, Yasafi, complains about the money other people make, yet Yasafi is so well-off that he takes frequent carbon-intensive trips to Alaska, Mexico, and Yosemite. All this leisure time, because our greedy little Ducktor makes such horrific profits in the health care industry.

matt August 31, 2009 at 10:24 pm

Markets don’t create greed; people create greed. It is an externality of freedom. What most people never stop to realize is that a democratic government can be (and often is) as tyrannical as a monarch. What freedom does is make the negative externalities of greed concentrate on the person being greedy and anyone who misjudges the breadth of that greed.

Anonymous September 1, 2009 at 11:45 am

Matt has it right. it is only ignorant, superstitious, or stupid people who think inanimate objects or tools have character or emotions. Humans (and some other species) have character and emotions, and that determines how the tool is used.

Capitalism is a tool. A market is a tool. A government is a tool.

mfarmer August 31, 2009 at 10:40 pm

Excellent. This is a point I make over and over, to no avail.

Anonymous August 31, 2009 at 11:05 pm

Yet we should go back to the golden 1950s when the 90% top rate prevailed all was well.

Anonymous August 31, 2009 at 11:00 pm

“…does majoritarian democracy create greed, or does majoritarian democracy at least unleash greed…”

The greed always existed. But, greed is not the best word. I prefer extortion. Majoritarian democracy enables extortion of the minority.

Justin P September 1, 2009 at 2:08 am

Exactly, but I prefer to use the term Avarice.

Anonymous September 1, 2009 at 11:57 am


Between the definitions of greed and avarice there isn’t enough difference to argue about.

But does insatiable lust for wealth drive the typical thief? It takes the exceptional thief like Teddy Kennedy to be wealthy yet steal from other people for his own self promotion in politics. Teddy’s greed was for a wealth of adulation, admiration, power, and possibly to try to erase the guilt of Mary Jo.

Markets and majoritarian democracy merely open the opportunity for the flawed human character.

joenorton August 31, 2009 at 11:38 pm

Has someone been reading some Hans Hoppe? When I heard Hoppe give a lecture this summer at Mises University, the summer program at the Mises Institute, I literally got my mind blown. I was taught growing up that democracy is the end-all be-all, and the best, most egalitarian method of governance. After hearing Hoppe’s lecture on ‘the politics of decentralization’ (which can be found here: I couldn’t buy Hoppes “Democracy: The God That Failed” fast enough. Haven’t gotten to it yet, but I’m excited.

Perry Eidelbus September 1, 2009 at 1:06 am

As I recently put it on a friend’s blog, it’s socialist greed that is destroying us, not capitalist greed. The difference is quite simple. The capitalist wants more — of whatever tickles his fancy — and so creates it. The socialist can only take from what is already created…by capitalists.

Anonymous September 2, 2009 at 1:28 pm

Excellent. We need to spread that phrase around. Socialist Greed.

Perry Eidelbus September 1, 2009 at 1:07 am

Oh, forgot to include one of my favorite movie quotes: “The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms, greed for life, for money, for love, knowledge, has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”

Anonymous September 1, 2009 at 2:34 am

One of the best speeches in movie history. Ironic that socialist Oliver Stone wrote that.

Anonymous September 1, 2009 at 3:55 am

Not ironic that he wrote it–ironic that you would take the message as sincere.

Anonymous September 1, 2009 at 4:24 am

It’s hard to not take the message as sincere. Gordon Gekko comes off as a pretty brilliant guy and what he said was absolutely true.

Anonymous September 1, 2009 at 11:45 pm

He didn’t write it so much as he stole it from Milton Friedman.

Sam Grove September 1, 2009 at 1:52 am

I’d like to redefine greed.Greed: the desire for unearned wealth.

Justin P September 1, 2009 at 2:16 am

There is already a term for that, Avarice; excessive or insatiable desire for wealth or gain.This is why language is so important. What did Orwell say? “But if thought corrupts language, language can also corrupt thought.”

Sam Grove September 1, 2009 at 3:26 am

There is already a term for that, Avarice; excessive or insatiable desire for wealth or gain.

But isn’t that how “greed” is commonly used?

Avarice is not in common usage and it also makes no reference to whether the desire is for unearned wealth.

Who would argue with an insatiable desire for the wealth that one earns?

I’m trying to get at the desire of politicians and their many supporters who seek to use political power to obtain what they have not earned.

There is a greed in that desire.

Anonymous September 1, 2009 at 4:04 am

My dictionary defines avarice as ‘extreme greed.’ So the distinction is one of degree more than of quality. Greed is certainly not always for “unearned” wealth. Marxists would consider “wealth without work” (meaning, of course, labor) evil; we capitalists consider it the foundation of our economic system. As most of the posts here have noted, greed in an of itself is not a bad thing. It has been the impetus for the innovation and production of virtually all that we have that makes life better, healthier, cleaner, etc. than it ever was before.

Sam Grove September 1, 2009 at 4:54 am

I acknowledge your dictionary’s definition, but even so, the definitions you’ve presented are laded with subjective qualifier’s.

Of, course that’s part of the reason “greed” is a favored charge of the left, they don’t have to define exactly what they mean by it.

If greed is the desire to profit from one’s endeavors, then all humans are greedy and the term loses it’s value as a distinguishing adjective.

If we were to apply my definition, then greed can be used quite specifically.

In fact, I would like to refine my definition to: the desire for that which belongs to others.

Anonymous September 1, 2009 at 12:05 pm

Webster’s New Collegiate Dictionary, copyright 1973

Avarice: excessive or insatiable desire for wealth or gain: Greediness. Cupidity

Greed: Excessive or reprehensible acquisitiveness : Avarice

And, the difference is?????????

Anonymous September 1, 2009 at 10:10 am

I think you’re pushing this a little too hard. The two are synonyms. Avarice may have slightly different connotations, but the difference isn’t as stark as you’re trying to make it.

Randy September 1, 2009 at 12:18 pm


Agreed. “Unearned” is the key word, because its not the quanitity of wealth that matters, but the methods used to obtain it.

Noah Yetter September 1, 2009 at 2:17 am

Such questions miss the point entirely. Greed is the word we give to the desires of others that we — purely subjectively — judge to be excessive. Saying that markets cause greed, or harness greed, or etc. simply makes no sense at all.

Gil September 1, 2009 at 3:39 am

Weren’t the good old days the time when the vote was restricted to well-to-do landowning men and politicians were unpaid? Only those who have suceeded in the marketplace are wise enough to make any decisions in the political sphere? The average schmoe who can’t handle a credit card has no business voting on anything?

Anonymous September 1, 2009 at 4:09 am

I wouldn’t go that far, but I could argue that anyone either dependent on transfer payments or directly employed by the federal government could legitimately be barred from voting. Considering the trends, soon these categories will become the majority (I hope they are not already), and they have a significant conflict of interest against fiscal responsibility.

Anonymous September 1, 2009 at 10:05 am

I never like the use of the word “greed”. I don’t think “greed” has anything to do with the market. And it’s funny, whenever I attribute something to “animal spirits” on here, someone often fires back with “so you think animal spirits and greed are the cause of all this”. No – not greed, just animal spirits. Irrational expectations.

The problem I have with “greed” is that it’s such a value-laden term. It’s an unethical pursuit of your own ends. The questioner should focus on “self-interest”, not greed. Maybe I’m parsing too finely here, but I think it gives the market a bad name. Is wanting a lot of money a morally bad thing? I don’t think so, so I don’t think it should be labeled “greed”. It’s “self-interest”.

When you pursue money to the point that you leave your family and friends by the wayside and you consider unscrupulous ends to get it, feel free to call that “greed” – but that has nothing to do with the market.

Seth September 1, 2009 at 1:55 pm

I agree. Setting the “greed” trap is a tactic used when retreating from the issue at hand. Get someone caught defending greed and they look like the bad guy. That is a typical response to question Professor Boudreaux heard at the conference. His response is better. Another option is to state that greed exists in all forms of human organizations, it’s different from self-interest and it’s not what we’re discussing.

Anonymous September 1, 2009 at 2:01 pm

But it is unfortunate that expectations arguments of asset bubbles get tied up with the silly “greed” disputes. I think even among reasonable people, expectations arguments get discredited precisely because they are associated with the greed red herring.

Lee Jamison September 1, 2009 at 11:34 am

Your rephrasing of the question we always here simply continues the failure to discuss the question we almost never hear. “Does government service eliminate greed, or does government service camouflage greed to an extent that permits it to run rampant to the detriment of human society?”

Anonymous September 1, 2009 at 11:44 am

Greed is a word which has always fascinated me. It is never used correctly. Its usual use is as an all-purpose derrogatory term. It is defined as the desire for more than one needs. The desire. Not the acquision. Not the having. The desire. Even the poorest of the poor have a desire for more than they need. They just never get the chance to actualize on that desire. The usage, as opposed to the definition, refers more to conduct than to thoughts. I did a radio show on this. See

Anonymous September 1, 2009 at 11:53 am

It’s probably worth noting that long before anything like capitalism or free markets, Plato and Aristotle were clearly cognizant of the rapacious appetites of democratic majorities — appetites that would consume an entire society’s wealth without any social gain if they were allowed the chance. That’s one reason they were so skeptical about the merits of democracy.

Anonymous September 2, 2009 at 2:58 am

Ummm, sorry son, capitalism and free markets long predate Plato and Aristotle. They may not have carried those names but the acts, action, purpose, and practice was quite likely one of the first tools humans ever invented.

Mark LeBar September 2, 2009 at 1:07 pm

Exchange and trade yes, and respect for some forms of property, I think you are right about. Anything like the legal/political structures we recognize as establishing and sustaining capitalism and free markets, so far as I know there is no evidence for. Those forms of political organization represent a considerable and precious human accomplishment.

JohnK September 1, 2009 at 12:25 pm

Why do politicians never accuse someone of greed for wanting other peoples’ property, only for wanting to keep their own?

Pauld September 1, 2009 at 1:50 pm

I think that the word, “greed” is a loaded term with a negative connotation. It implies an unwillingness to be generous with one’s own time and money and a willingness to bend rules to get ahead.
Most successful people I know are “ambitious”, a term with positve connotations. An ambitious person can strive to make more money, while at the same time being generous to others with his own time and money.

Jesse September 1, 2009 at 4:59 pm

The definition of greed from “excessive or rapacious desire, esp. for wealth or possessions.”

It reminds me of your Freeman article on economic versus unconstrained wants. What are excessive desires if they are not the unconstrained wants, where costs outweigh benefits, which democracy is directly asking for from every single voter.

PaulD September 2, 2009 at 1:13 pm

It is pretty much impossible to reach a common definition of what is “excessive or rapacious” desire as there is a wide range of preferences regarding the accumulations of wealth. I personally could make significantly more money by choosing a job within my field that would demand that I work significantly more hours to make more money. I don’t because I value time with my family and leisure more highly than the desire to make more money. I do not, however, view others who make a different choice as “greedy”. I also recognize that I benefit from those who create value for everyone by working much harder than I in their chosen fields. The beauty of free markets is that as long as one follows the rules and engages in voluntary transactions, everyone benefits from the person who chooses to put in long hours and make lots of money.

Name September 1, 2009 at 8:45 pm

Massachusetts is neck-and-neck with New Jersey in the political-corruption derby. Democratic House Speaker Salvatore DiMasi was indicted for alleged influence peddling in January and resigned. He is the third consecutive House speaker to be indicted. State Sen. Dianne Wilkerson was busted last October after investigators allegedly watched her stuff bribe money into her brassiere — providing the only real evidence of inflation in two years. Gov. Patrick is under fire for appointing political cronies to high-paying posts despite a campaign pledge to end “politics as usual.” If that phrase sounds familiar, it’s because Obama’s campaign advisor David Axelrod also advised Patrick’s gubernatorial campaign.

Anonymous September 2, 2009 at 1:25 pm

There is Irony to the greed of majoritarian democracy. Of course it is greedy. People don’t notice their own greed though. Sense it is the majority how are the takers in this type of society the majority don’t see a problem with it. The irony is that the majority justify taking from the minority, who are the rich, by calling them greedy.

Anonymous September 2, 2009 at 4:02 pm

Too much abstraction! A market is nothing more than the aggregate of choices made by individual people. To say “market unleashes greed” is to say “restricting people’s choices suppresses greed.” This formulation clearly begs two questions: Whose greed? and Greed for what?

Justin P September 1, 2009 at 6:29 am

No there is already a term for “the desire for that which belongs to others,” it’s called Avarice.

Why do you want to debase the language even more so than it is already?
The problem is that the majority of citizens in the US do not have an even HS level of English vocabulary. Trying to dumb down the language even further only hides this fact. Otherwise there will come a time when we only use 20 words to try and explain a myriad of varying degrees of intent.
Greed and Avarice are used quite specifically. Greed is the wanting of things you don’t have, Avarice is the excessive desire of things you don’t have. They tell two vary different degrees of want.
If you say avarice to a literate person, then they will know exactly what your talking about. If they are not literate and don’t know the damn word, then you have yourself a teachable moment. I mean since when is learning something a bad thing? I know that’s not what your saying, but by trying to “redefine” Greed, your saying that people shouldn’t have to learn anything new.

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