Greed Makes the World Go 'Round

"Most of the harm in the world is done by good people, and not by accident, lapse or omission." -- Isabel Paterson, "The God of the Machine"

Now that we’re in the thick of the holiday season, we’re again being warned to be wary of the commercialization, corporatism and greed that comes with Christmas. In last week’s issue of Newsweek, columnist Anna Quindlen (search) lamented the holiday buying spree. The anti-corporate activists at Adbusters attempted a failed campaign this year to keep Americans home from the stores on the Friday after Thanksgiving, often called “Black Friday,” (search) because it’s the first day of the calendar year many retailers begin to make money. 

The quote above from Paterson, a passionate writer on freedom and liberty from the 1940s, is an indictment of humanitarianism, or more generally, the nagging need some people have to act “in the best interests” of others, be it through welfare programs, nanny-state legislation, excessive government regulation -- even charity and philanthropy. The corollary to Paterson’s quote, which she delves into in some detail later in her book, is that most of the good in the world has been done by greedy people -- people out to better themselves. 

Perhaps there’s some truth to the axiom that was hammered home to us as kids each time the holidays rolled around -- “’tis better to give than to receive.” But if we’re talking about bettering the human condition, it’s better to want than either to give or to receive.

Want and greed are why humanity today is freer, healthier and more comfortable than it’s ever been. Nearly every significant innovation, invention or improvement that man has so far come up with resulted from the innovator, the inventor or the improver’s desire to better his own condition, or, put differently, to get more stuff. It is greed and the want of stuff that drives us to work longer hours, to build better mousetraps, and to take the kinds of risks that shake up the marketplace, and move the whole system forward. 

Today, biotech firms are figuring out ways to feed the world’s hungry by producing more food on less land with less water, less nutrients and less need for pesticides. If governments would get out of the way, they’ll probably succeed. But they won’t succeed because they’re good people selflessly working for free to eradicate world hunger; they’ll succeed because the scientists doing the research want the peer recognition, the place in history, and the acclaim and financial rewards that come with figuring out how to do something we already do better. They’ll succeed because the CEOs of those firms want the bonuses, clout, and approval of boards of directors that come with a company’s success. 

And they’ll do it because the shareholders have invested money in those companies on the expectation of the windfall that might come to the first company that, for example, can figure out how to genetically insert a typhoid vaccine (search) into a sorghum plant.

This is all motivated by greed. But if the result is muscular crops that lead to fewer hungry people in the world, does it really matter if the motivator that led to those crops was greed or benevolence?

Let me give you a real world example. Last year, it was revealed through divorce proceedings that former General Electric CEO Jack Welch (search) was recipient of all sorts of lavish perks that even thee most ardent capitalist would have to concede were a little ridiculous. The revelation only confirmed the biases of those already critical of Welch, who began his tenure at GE by laying off close to 100,000 people, and whose management style put, to borrow a phrase, “profits over people.” Welch has never been accused of fraud or deceit -- he’s no Ken Lay. But rather, Welch for some has come to epitomize the excesses of capitalism, profiteering and greed.

On the far-other end of the spectrum is Aaron Feuerstein (search). Feuerstein was CEO of the Malden Mills company, a clothing outfitter in Massachusetts. In 1995, three of Malden Mills’ main factories burned to the ground. Feuerstein vowed not only to rebuild those factories, he vowed to rebuild them in a manner that was more worker-friendly and more environmentally friendly than the previous plants, no matter the cost. Feuerstein also vowed to continue to pay his 3,000 workers at full salary until those plants were rebuilt.

Feuerstein was beatified by media and politicians everywhere for his good deed. He got a seat at Bill Clinton’s State of the Union address. He was awarded honorary degrees from universities across the country. He was flatteringly profiled on 60 Minutes.

In November of 2001, Malden Mills declared bankruptcy. Feuerstein’s vow to rebuild the company’s factories on borrowed money while continuing to pay every employee ran Malden Mills into the ground. His benevolence nearly cost 3,000 people their livelihood. Instead of short-term hardship endured while the factories were rebuilt, those people nearly lost their jobs completely.

I say “nearly” because there’s a somewhat happy ending to the story. Malden Mills was saved, thanks in part to a last-minute investment by an outfit called GE Capital. GE Capital is of course owned by General Electric, a company that under the “ruthless” leadership of Jack Welch grew from a maker of refrigerators into the kind of multinational behemoth that can spin off venture capital subsidiaries, which can then invest in struggling companies like Malden Mills.

I’m sure the 100,000 or so people Jack Welch laid off to streamline GE in the early 1980s still don’t think much of him. But his leadership eventually replaced those jobs several times over. 

And the 1,200 people who work at Malden Mills today owe their jobs not to Aaron Feuerstein's kindness but to Jack Welch's greed.

Radley Balko is a freelance writer and publisher of the weblog:  He's also the author of the new Cato Institute paper, "Back Door to Prohibition: The New War on Social Drinking."

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