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If greed is good - The Ex-Communicator

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November 28th, 2010

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08:45 am - If greed is good
Economics at the moment is like medicine was in the Middle Ages - the mainstream theory is really crap and will probably kill you. Nevertheless it is believed by the people on the right, so you can use it to understand their behaviour. What neo-classical and Austrian-school economics say is that if all people strive to maximise their own individual economic interests, the overall system will tend to improvement: famously rendered as 'Greed is Good'.

I think we should consider what this means for the behaviour of politicians (or business men) who believe these theories. One view is that they will make policies that support the model they believe in. I mean that sounds likely doesn't it? But in fact there is a further step they can take. I think business men took this step in the eighties, and right wing politicians are doing it now.

This step is to stop 'supporting' the model, and start living it. After all, if the theory is true, live by it. Do it.

So, rationally and indeed by their own lights ethically, they must concentrate on maximising the income of themselves and their families and friends. In the eighties, business leaders cottoned on to this idea, or perhaps felt empowered to follow it to its logical end: buy and asset-strip industries. In the past decade bankers have felt empowered to live the theory: take out money for yourself from the system, and don't worry about breaking it, because you are too big to fail.

I think George Bush lived this theory, particularly as his time in power came to an end. I think he was handing out government contracts to his associates. I heard stories of big trunks full of US dollars being given to contractors in Iraq. Other right wing leaders - such as Glenn Beck and Sarah Palin - are unashamedly running money-making scams, for example selling overpriced gold.

By the theory they believe in - for all I know sincerely and ethically believe in - this is the right and proper way to behave. Greed is good - not as a clever thing to say, but as a sincere belief to live by.

I don't think political comment in Britain has yet cottoned on to the fact that our new government sincerely believe in this model. By his own beliefs Osborne should be taking as much money as he can from the British economy and transferring it to his banker friends. Do this job for a few years, asset-strip the exchequer, and then go on to a better paid job. Well, the next step is not really about a job with a salary, it's about living on accumulated capital, but in any case. That is his rational interest, so why would he not pursue it?

If someone tells you they think it's right to take the money and run, one should not be surprised if they do it. They told you first.

(5 comments | Leave a comment)


[User Picture]
Date:November 28th, 2010 07:05 pm (UTC)
I first had to study economics as part of my MBA degree. A lot of the class came from completely different background and found the subject hard to get their heads around.

It should be noted that the theory hold that ethical behaviour is necessary for profit maximisation. It is just that a lot of people in our society here do not believe this. Indeed, most of the businessmen in this country have little understanding of economics at all.

Where the whole thing fell in a heap was in the axiom of economics that people would act in their own best interests. So companies would not not take on undue risk in the search for profits. This proved to be shatteringly incorrect.

Moreover, no reputable economist supports what they are doing in Britain, which is purely based on ideology. Here's Nobel Prize winner Paul Klugman:

British Fashion Victims
[User Picture]
Date:November 28th, 2010 08:37 pm (UTC)
Well, I'm not arguing that all economists are Austrian School or neo-classical. And I personally think Klugman is right and the Austrian school is wrong. But I'm saying that studying the mistaken simplistic theories which our right wing claim to be inspired by can tell us something about what they believe, what their personal moral values are. But - no - I agree with you, I think they are woefully incorrect, like quacks bleeding a weak patient.
[User Picture]
Date:November 28th, 2010 11:04 pm (UTC)
Isn't that 'greed is good' thing like 'rising tide lifts all boats' or the 'trickle down' economy? All, in my opinion, are basically ways of justifying purely self-interested wealth-creation by and for the rulers and their friends, as backhanded concern for the interests of the ruled. It's the nature of unregulated capitalism to make as much profit as possible, without regard to the effect on the workers, (and the society, the financial or social or ecological environment,) producing that profit but not sharing in it.

I think it's nice of you to think that the people doing this are being true to their own code of ethics, and perhaps I'm just cynical, but I'm not so willing to give them credit, no pun intended. I think people like Sarah Palin and similar right-wing persons are simply greedy people who will say and do anything to serve their own interests. IMHO, they even only believe in God so that they can disrespect people of other faiths and people of none. It's all about them. The concept that other people in their country are their fellow citizens (even the poor ones, even the atheist or Muslim ones, and so on) with equal rights and entitlements to them wouldn't enter their heads.

I'm sure they do sincerely believe that greed is good and that is this is the correct way to behave, but I don't think that it could be described as ethical, unless by ethical, one means true to one's own code, which is so subjective a measure of 'good' that it is in effect meaningless.

If someone tells you they think it's right to take the money and run, one should not be surprised if they do it. They told you first.


[User Picture]
Date:November 29th, 2010 07:55 am (UTC)
It's so hard to work out what someone's real beliefs or real values are. Sometimes people have beliefs or ethics that seem suspiciously convenient. But I don't know any way of pinning that down, or being sure of it.
[User Picture]
Date:November 29th, 2010 09:48 am (UTC)
Sometimes people have beliefs or ethics that seem suspiciously

As usual, you can say in ten words what I can't articulate in ten paragraphs.

Yes, indeed.

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