The Big Idea
Greed may not be good for the economy, but envy is worse
Greed may not be good -- but envy is worse
"Greed, for lack of a better word, is good. Greed is right. Greed works."
Gordon Gekko's infamous speech in Oliver Stone's 1987 film "Wall Street" came to embody the excesses of 1980s high finance. Now Gekko, fresh out of prison, is back in Stone's "Wall Street: Money Never Sleeps," which features the financier (played again by Michael Douglas) warning of the impending economic crisis of 2008. Turns out greed caused some trouble while Gekko was locked up.
But is greed capitalism's worst sin? Not so, argues economist Victor Claar. In a speech at the American Enterprise Institute last week, Claar posited that another deadly sin -- envy -- is an inherent part of the free-market system and can prove even more insidious.
Claar, a co-author of "Economics in Christian Perspective," relied on Thomas Aquinas's definition of envy: sadness at the good of another. He cited the biblical parable of the prodigal son, in which the older sibling is envious of his dissolute brother, whose return home sparks a big party. "It sounds like blue-collar frustrations that we hear today," Claar said. " 'I did everything the right way, I played by all of the right rules -- and here I am.' "
Whether because of differing intelligence, skill, ambition or luck, free markets produce different outcomes for different people, so envy is inevitable. And in democratic systems, "envious majorities" can push for policies that "narrow the gap between them and the targets of their envy."
But Claar worries that this road can lead to initiatives that, "in the guise of social justice," produce greater unemployment or less overall wealth. And those results in turn lead to "outrage at the system that generated the outcome."
Was Claar talking about President Obama's policies? "The current administration does seem to be keen on taking from the rich to give to the poor," he said in an e-mail. "Sometimes the tone is not mean -- 'spread the wealth around' -- yet at times it is, suggesting those making over $250,000 should feel guilty for the hard work they have done to contribute something others find valuable enough to voluntarily pay for. So our efforts to reduce envy may very well reduce long-term growth by discouraging effort, invention and discovery in the most talented among us."
But that doesn't mean Gekko had it quite right, he concludes. "Greed -- the pursuit of embarrassing riches -- is not good; it's a deadly sin just like envy is," Claar said in his speech. "But pursuing self-interest in a system that allows you to be rewarded for pursuit of your own self-interest and at the same time in the service of others? That's certainly better than the alternative."