Published in the Sydney Morning Herald, 30 December 2008
Complicated times provoke simple answers. As the global financial crisis keeps unfolding, the no less global intellectual elite has readily identified the culprit. Political and religious leaders, artists and even some economists are convinced greed is to blame for our economic problems. A combined Google search for “global financial crisis” and “greed” delivers no fewer than 87,900 results.
But is greed really the culprit or just a convenient scapegoat? And is greed an economic category at all?
In fact, it is not quite clear what greed means, so let’s look it up in the dictionary. Merriam-Webster defines greed as “a selfish and excessive desire for more of something (as money) than is needed”. If this is anything to go by then we should all sprinkle ashes on our heads and plead guilty. Not many people in Western society could honestly claim not to own more than they need. A microwave oven? Go cook on your stove! A plasma TV? Entertain yourself with a good book from the library! A car? Get on yer bike, mate!
Is it inappropriate to include these common possessions in the definition of greed? Should one draw a line between these normal, everyday luxuries and real extravagances? Maybe so, but then you would have to define where “normal” ends and greed begins. That could be more difficult than it sounds.
Take Theo Albrecht, for example. You have probably never heard of him, which shows he is certainly not greedy for attention, although he is 16th on the list of the world’s richest people.
Mr Albrecht is one of the founders of the retail chain Aldi. Starting with a single corner shop in the 1950s, he has made his fortune by opening hundreds of highly profitable discount stores worldwide. But from the little that is known about him, he is still leading a simple life in his home town of Essen in Germany, collects old typewriters as a hobby and plays golf. When he was kidnapped in the 1970s his abductors insisted he show them his passport for identification because his suit looked too cheap for a man of his wealth.
Mr Albrecht’s lifestyle hardly sounds like one driven by excessive greed, yet it was enough to amass a fortune of $US23 billion. Not bad for him, but probably even better for millions of his customers. The Federal Government’s GROCERYchoice website recently reported that Australian consumers could not get their basic staple products cheaper anywhere than at Aldi’s. They may help to make Mr Albrecht richer still, but they are certainly getting a good deal themselves. Or could it be that they are a little greedy, too?
The story of Aldi and its customers is quite revealing as it shows how meaningless it is to discuss business behaviour in categories such as greed. Would we regard Mr Albrecht as greedier if he wore more expensive suits? Or are we more likely to accept a fortune made in retail because we think we understand it better than, say, the business model of hedge funds and short sellers?
Greed as a moral category is hardly apt to describe the business world. Business people may be ingenious and clever, they may make a lot of money and strive for ever-higher margins, but this does not say anything about their personal morality. And this kind of business spirit is the engine of our prosperity. Call it greed if you want to but without it you would hardly be able to fill your dinner table. As Adam Smith famously wrote: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest.”
We are ready to accept the idea of self-interest when things go well and everybody benefits. Yet as soon as things get a little more difficult, we are equally quick to blame others and call it greed.
If we were honest, they probably do not behave more selfishly than we do when we do our weekly shopping, and in principle there is nothing wrong with this.
The global financial crisis might have sparked a new wave of moralistic blame games. But by playing them, we do not get any closer to understanding what actually caused our economic problems. Analysing lax monetary policy and insufficient regulatory systems would be a better way to find out about that.
But why hold ourselves up with details? Claiming the moral high ground by condemning others is the easier option when things are complicated.