Greed – Good Or Bad?
Most Americans are greedy most of the time.
If we own a business, we want as much profit as we can generate. If we buy stocks, we want the price to go way up. If we work, we want to be paid as much as we can get. If we sell a house or a car, we want to get as much as we can. Of course, when we buy a house or a car, we want to pay as little as possible.
In every single transaction, we want to get the better of the deal compared to the person on the other side of the table. Is this a good thing – or an evil we should strive to stamp out?
Strangely, most Americans do not support the idea of being greedy. We hear phrases like, “Greedy oil companies” or “Selfish Profiteer” or “Price Gouger,” but never the opposite – we never hear calls for raising prices of things we buy, or voluntarily lowering our salaries.
I suggest that such prejudices are merely an outcome of the widespread lack of Economic understanding throughout the land, including among the mainstream practitioners of Economics. Most Americans think that the other guy’s profit advantage is a bad thing, especially when it collides with your own best interest.
Within Economic systems, there really are only two choices. Either the parties to a trade decide the price, unhampered by outside meddling, or some third party dictates the terms.
The former, only the involved parties set the price, is called by several names: Free Markets, Capitalism, Laissez Faire, and others.
The latter, where an outsider – usually the government – enforces the price or other terms – to the disadvantage of one or the other trader, also has several names including: Socialism (the overall term including all the others), Communism, Fascism, Mixed Economy, Welfare State, Crony Capitalism, and others.
So, when milk is sold at retail, at a government fixed minimum price or higher, that’s Socialism. When you buy gasoline which must have at least 10% ethanol, that’s Socialism. When you can volunteer your time, or else work only for at least the Minimum Wage, that’s Socialism. When you buy electricity, but it can’t have been generated using coal power, that’s Socialism. When you can buy a medication, but not from a Canadian pharmacy, that’s Socialism. When your business can compete for every customer it can earn, but if you’re penalized if you earn 100% of the customers (a monopoly), that’s Socialism.
There are thousands more examples, but I think the point has been made. The historically quintessential Capitalist country – the United States – largely is a Socialistic country today. This is the mentality which is taught in our public (non-Free Market) schools, and this helps to explain why Americans hate greed.
But the profit motive is what made our country great in the first place. Without all the Economic growth and technological advances made during the era when the US was mostly a Free Market Economy, our country would have joined other countries which have gone down the tubes, like the USSR, Maoist China, Zimbabwe, Weimar (and Nazi) Germany, or Argentina (several times).
So, what’s so good about the profit motive?
The profit motive offers the ability to measure. Once we can measure, then we have a rational way to decide where to put our money. If we have money to start or invest in a business, the profit – the return on investment (ROI) – can help us choose wisely. The more profit, the greater the possibility of expansion, providing more jobs. And, since those profits came because your customers thought that you gave the best value, then your expansion gives them more opportunity to benefit from the value you provide.
If somebody in Washington decides where money gets invested, then we’ll have more Solyndras, where the money – the Capital – is lost to our Economy, making every American poorer.
When you can choose to have healthcare insurance, then your employment options are greater – you don’t have to settle for part time when you want full time work. Without a Minimum Wage, if you’re trying to get that first job in order to gain the skills and work experience which will make you more valuable in the future, there would be jobs available, at some price, for EVERY American wanting to work.
Some say that, “Nobody should have to work for less than the Minimum Wage.” I agree. Unfortunately, by prohibiting it by government edict, you remove that choice, meaning many people will be unemployed. If you support the Minimum Wage, you should be honest enough to take the blame when people remain out of work. It’s NOT the greedy Capitalist – it’s YOU.
The heavy tax load drains away funds from the private, productive sector of our Economy. And the layer on layer of regulation reduces the flexibility and kills the initiative within our Economy.
Unless we want to become a third world country, we need to get rid of the massive bureaucracy and the heavy tax load that pays for it, along with all the laws which hobble our Economy.
Action Item: Free our Economy to grow.
- Scrap ALL regulation and then decide which ought to be re-enacted – where benefits exceed costs to the Economy
- Lower government spending, which will allow taxes to be reduced, becoming less of a drag on our Economy
- Require our schools to teach the benefits of Free Market Economics – not just the current Socialism
- Require than our elected officials have an understanding of Capitalism before they may vote on any Bill having Economic consequences
It took many generations for our country to grow Economically strong. The last few generations of Socialistic leaders have dissipated much of that strength. We must reverse the decline while there still is time.
Robert (Bob) Shapiro is self-taught in Austrian Economics and has consulted briefly for the governments of Mexico, Greece, Portugal and Spain. He has traded Gold & Silver and their stocks since 1970. Bob Shapiro’s blog is http://us-issues.com