Greed and Fear — and Markets and Government

by Don Boudreaux on September 3, 2009

in Politics, Weblogs

Here’s a comment that I posted recently on Paul Krugman’s blog:

David Lentini asserts that “fear and greed” are the “great drivers of laissez faire economics.”  This assertion seems wildly incorrect.

Is it really true that the more frightened people become, the less likely they are to turn to government for protection (however illusory such protection is in reality)?

And is it true that greed uniquely drives free markets?  While markets are often accused of making people greedy (or of uncorking the greed that looms within us all), it’s evident to me that majoritarian democracy – certainly as much as markets, and arguably much more so – is driven by greed.  What is it if not greed that prompts retirees to vote to tax working people so that these retirees’ public pensions remain funded?  What is it if not greed that motivates domestic corporations and their workers to lobby government for protection from foreign competition?

Examine democratic politics objectively; greed is woven tightly throughout it.

Don Boudreaux

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{ 16 comments }

Anonymous September 3, 2009 at 9:26 pm

I thought the great drivers of laissez-faire economics were voluntary trade and mutual gain. Sounds instead like a peaceful solution for what we fear.

Anonymous September 3, 2009 at 10:15 pm

If by “majoritarian democracy”, you mean an unlimited welfare/regulatory state in which individual rights — including, especially, the right to property — are eliminated and the “will of the majority” is supreme, such that the majority may vote to liquidate the minority and/or eliminate anyone’s freedom for purposes of achieving whatever alleged “interests” the majority may have — I would not say that such a set-up can be explained by simply saying the motivation is “greed”. Rather, it is motivated by a combination of a lust for power on the part of a handful, who exploit a lust for the unearned that is present in the majority.

“Greed” is a morally neutral term. A “greed” for what one has earned and what one is due and a “greed” for freedom are just and proper — a “greed” for what one has not earned, like a “greed” for power over the lives of others, is a “greed” for injustice and reflects a desire to exist without effort, especially without the effort of thinking.

Instead of calling it a “majoritarian democracy”, let’s call it what it actually is: “Enslavement by vote”, i.e. the involuntary servitude of the productive minority to create and make possible the granting of unearned benefits to those who did not produce them.

Gil September 4, 2009 at 5:42 am

‘Enslavement by vote’, eh? Why just say the majority are ignorant and dangerously selfish and will steal if given half the chance? Hence voting should only return to those who hold a significant amount of property (i.e. those who are most likely to be Libertarian).

Anonymous September 3, 2009 at 10:41 pm

Since I have no formal economic training I will address this:

“Is it really true that the more frightened people become, the less likely they are to turn to government for protection (however illusory such protection is in reality)?”

I’d have to say it would depend upon what they are afraid of, what do they fear?

Most of the people I know would, if not turn to government, certainly not turn away. Why? Because they have been carefully taught that government is the answer, it is the sugar tit, it is the protector, it is the ultimate provider.

Myself, I fear the government and trust the market.

Thank you very much.

Anonymous September 3, 2009 at 10:48 pm

The incentive problem with government is that it can immediately benefit the few, but only at great expense to the many. Thus everyone has a personal incentive to be the first rush to government.

Anonymous September 4, 2009 at 2:34 am

VV, I agree except to limit your last sentence to most, not everyone. There are still some who will, who want to, and who can go through life with a very limited government. One say, that adheres to the common concept of the Constitution.

mobile September 3, 2009 at 10:45 pm

I’m normally only half as provocative as that when I try to post a comment on Krugman’s blog, but I never get through. Which member of the NY Times blog moderation committee are you sleeping with?

(I’m kidding, I’m kidding. Really my comments get posted about 10% of the time).

Justin P September 3, 2009 at 11:17 pm

I’ve never had one of my comments go through his blog commissar.

Justin P September 3, 2009 at 11:17 pm

I still stand by my other comments that Greed is good and it’s avarice that is bad. However subtle the distinction maybe, there is definitely a distinction. Greed is an emotion that is in us all, we are greedy everyday. Avarice on the other hand is something dark that must be kept in check.I’d argue that capitalism keeps avarice in check for the most part, due to the nature of the profit/loss system. It’s only when governments distort the profit/loss system to a profit/bailout system, that avarice becomes rampant. Politics on the other hand leads to higher levels of avarice than just greed. Politicians constantly are trying to pull the wool over the eyes of the public, taking property through taxation and just generally corrupt. which is pure avarice in my mind.

Anonymous September 3, 2009 at 11:32 pm

I work pretty hard. But I rarely ever rub my hands together and mutter, “Ooha-ha-ha-ah!”

What happens is we replace the word greed with enterprise? Sure, I work hard, but I don’t delude myself. If the market determines that either the product or the way I bring the product I produce is no longer in demand, I lose.

What makes me more effective than my competitiors? It definately is not greed. I happen to feel that they demonstrate–through their trade practises–that they may act more from greed than I, but I don’t think I could be motivated simply by greed.

Do I want to earn a return on my work and investment? Sure. Would I love getting rich? Why not? But I cannot seem to develop a business model that relies solely upon greed for its successful implementation.

Enterprises based solely upon greed? Mebbe bank robbery. Or politics?
.

Anonymous September 4, 2009 at 3:20 am

Is it greed that is the exclusive drive to maximize one’s ability to produce wealth? I don’t think that is necessarily the case for all people, or even all businesses.

If we use the definition of greed or of avarice that I quoted from Webster’s on a previous thread, then I don’t think of myself as greedy; but, at the same time I sometimes wonder if at the root, that is indeed what motivates me, not to excess, but to maximize what I do.

I have put two friends into the videographer business. They had need, real need, and I guided them in selecting their equipment, trained them, took them with me on jobs and let them side-saddle, and then gave them my entire contact list and references and coached them on how to approach the firms. They became my competition, so to speak.

I never lost a dime on, or because of, either of them. They never cut into my business to any measurable degree. But, at the same time I certainly did not want them to put me out of business, either. Is that greed, I wonder?

I did not teach them or train them on my customer relations program, so perhaps after all my greed showed through. I don’t know about that.

I am personally not comfortable with those (and this is not even obliquely addressed to you) who talk about greedy corporations and never specify which corporations they think are greedy. I can drive around any city or rural area and pass corporation after corporation that hums right along day after day and treats it employees and customers as valued brothers and sisters, not a trace of greed; yet those whiners paint them all with the same brush because they don’t like a few prominent ones.

In summation, I agree with you, “enterprises based solely upon greed” I just don’t see that many. As a matter of fact I think we would be hard pressed to prove more than could be counted on the fingers of one hand (discounting politics of course).

mesaeconoguy September 4, 2009 at 12:22 am

Nice comment for deaf ears, Don. But well said.

I would simply add that the “unregulated markets” canard is horsecrap, which neither this clueless Mr Lentini nor Mr Krugman understand.

Oh, and examine Democratic politics objectively: greed is the norm.

Anonymous September 4, 2009 at 2:44 am

The revelation that congress can “insider trade” in the stock market with total immunity just might explain how Charlie managed to put together the money to make those investments. I certainly wouldn’t want to accuse a fine upstanding member of the democratic caucus as taking graft or bribes from lobbyist now, would I? No, of course not…..ha ha ha ha ha ha!

John E. Vincent September 4, 2009 at 3:21 pm

Please avoid getting caught in the strawman of the word “greed”. The problem is that the word greed hinges on some third-party criteria that is anathema to freedom. What right does anyone have to dictate what I “need or deserve” or what is “excessive” for me? As Rand said, there’s a difference between greed and greed at the expense of others and using the secondary (and unrelated) interpretation clouds the value of the first.

There’s a great failure in people to define terms before engaging in debate. Too many people argue that “greed” is good when the other side is using the unrelated and unrelated postscript of “at the expense of others”

Anonymous September 4, 2009 at 8:06 pm

As Dr. Milton Friedman said in his famed Phil Donahue video – “Is there some society you know that DOESN’T run on greed?”

Anonymous September 5, 2009 at 1:52 pm

Once again, the phrase socialist greed, is appropriate.

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