Greed and Gravity; D. Lee

THEFREEMAN IDEASON LIBERTY Greed and Gravity by Dwight R. Lee P ~ople ha.ve a tough time discussing self Interest In a morally neutral way. While morally charged arguments about self interest can be philosophically intriguing, they are usually beside the point. Self interest, or greed as it is often called, is like gravity: a pervasive force remarkably unaf fected by philosophical discussions of right and wrong. When confronted with such a force one should recall the Alcoholics Anon ymous prayer, "Lord, give me the courage to change the things that can and ought to be changed, the serenity to accept the things that cannot be changed, and the wisdom to know the difference." Discussions of self interest typically reflect little serenity and even less wisdom. Although self-interest does have its de fenders, its detractors are far more numer ous and influential. Self-interest is com monly seen as a negative characteristic that people should try to overcome. In this view, self-interest and greed are synonymous, and the world would be a better place if people discarded them as they would bad habits. Some people distinguish between greed (bad) and "enlightened self-interest"

(good). But the person who applies the adjective "enlightened" often does so to champion action that he approves and which commonly does more to promote his well being than that of those urged to take the recommended action. The defenders of self-interest base their arguments on deeper philosophical insight Dr. Lee, Ramsey Professor ofEconomics at the University of Georgia, is this month's guest editor. into human nature, and have made a strong case for narrowly focused self-interest what most people would refer to as greed. Those who defend narrow self-interest rec ognize that people are capable of malevo lence as well as benevolence when concern ing themselves with the interests of others. And given the history of man's inhumanity to man, malevolence is probably a stronger impulse than benevolence. In Defense of Commerce Indeed, the major advantage some eigh teenth-century writers saw in the emerging market-based economy was that it moti vated people to substitute commercial ava rice (or greed) for more disruptive passions, such as the lust for power and conquest.

This view was succinctly captured by Sam uel Johnson when he observed, "There are few ways in which a man can be more innocently employed than in getting mon ey."t In his famous 1748 treatise, Spirit of the Laws, the French political philosopher Montesquieu stated: "It is almost a general rule that wherever manners are gentle there is commerce; and wherever there is com merce, manners are gentle. ,,2 The Scottish historian William Robertson wrote in 1769, "Commerce tends to wear off those preju dices which maintain distinctions and ani mosity between nations. It softens and pol ishes the manners of men. ,,3 More recently, even John Maynard Keynes saw virtue in narrowly focused self-interest: Dangerous human proclivities can be cana lized into comparatively harmless channels 616 by t~e eXistenc~ of opportunity for money makIng and pnvate wealth, which if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of per sonal power and authority, and other forms of self-aggrandizement. It is better that a man should tyrannize over his bank balance than over his fellow-citizens.... 4 But the defenders of self-interest and their arguments, are not widely k~own.

Most people see the defenders of self interest as villainous characters. Certainly popular entertainment promotes the view that self-interest, particularly commercial self-interest, is a corrupting influence in society. According to one study, during the 1980s almost 90 percent of all business characters on television were portrayed as corrupted by greed. 5 Politicians do the most to foster and exploit the negative view of self-interest. They constantly rant against the greed of those who put their private interest above t~~ public interest. Invariably when a poli tiCIan engages in such a diatribe, he is ~ationalizing the failure of some public pol ICY that he favors. Few things would do more to discredit silly political statements and derail pernicious public policies than to recognize that self-interest is not good or bad, it just is. Imagine an aeronautical engineer who kept designing airplanes that either never got off the ground or crashed almost imme diately if they did. Consider our response to such an engineer if she claimed that there ~as nothing at all wrong with her engineer ~n~, and that her planes would fly just fine If It weren't for gravity. She would imme diately be dismissed as a raving lunatic. But is her argument really any sillier than those we hear from politicians and statist policy wonks every day?

Recall the recent healthcare debate. Government policy has led to healthcare arrangements where most medical services are paid for by third parties, with neither patients nor physicians having much moti vation to take costs into consideration. The predictable result has been escalating prices for healthcare services and, of necessity, 617 increasing health-insurance premiums. But the constant refrain from the healthcare ~ngineers in Washington is that the problem IS greed, not the collectivization of health care decisions. Indeed the recommendation has been for more collectivization. The recommended healthcare system would work just fine, with the finest care at the lowest prices for all, if only physicians, drug companies, and insurance companies weren't so greedy. .As government has grown larger, control hng an increasing share of the national income, organized interests have predict ably devoted more effort to influencing gov ernment policy. The noble objectives that it is easy to imagine being achieved by an expansive government invariably fall victim to perversities of interest-group politics. Yet good-government types are convinced that bigger government could be the source of ?igger benefits if only the greedy special Interests would quit putting their narrow concerns ahead of the general welfare.

Greed is the problem, not the design of government programs and policies. So all that is needed is the right campaign reform and lobbying restrictions to banish the cor rupting influence of greed from politics. Other examples could be given of social engineers blaming greed and self-interest when their policies fail to achieve liftoff, but the point is clear. The public would be well served if politicians and policy makers be gan recognizing that self-interest is not good or bad, but an unalterable fact of life. Until they do, they will continue to design cum bersome and costly public policies that do far more harm than good, and then blame their failures on greed. D 1. James Boswell, The Life ofSamuel Johnson (Middlesex England: Penguin Books, 1979), p. 177. ' 2. Quo~ed on p. 1464 of Albert O. Hirschman, "Rival InterpretatIons of Market Society: Civilizing Destructive or Feeble," Journal of Economic Literature, D~cember 1982' pp. 1463-1484. ' 3. Quoted in Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism Before Its Tri umph (Princeton University Press, 1977), p. 61.

4. The Gene~al Theory ofEmployment, Interest and Money (London: MacmIllan, 1936),p. 374. Also quoted in Hirschman (1977), op. cit., p. 134. 5. See page 146 of Robert Lichter, Linda Lichter, and Stanley Rothman, Watching America (New York: Prentice Hall, 1990).