greed

I can't count the number of times that I have heard people complain that the current (or a previous) economic crisis is due to greed. While I do not think that greed is good and I do believe that greed plays a role in the whole process, simplifying all of the ills of the economy to other peoples' greed seems a little lazy and a lot convenient.

Before I get into this, I should note that I do believe that while we allow greed to control us we cannot concurrently be serving God. To the greedy man or woman, that is the worst sin he or she could commit because it is what keeps him or her from God. Jesus didn't say that we couldn't serve both God and money without purpose. He wasn't even speaking to rich investment bankers when he said that, either. The illustration Jesus gave of this point was His monologue on worrying about food and clothing, which does not imply a wealthy audience (Matt 6:19-34).

That greed is not good spiritually does not mean that it is the main cause of our financial pain, though. The phrase, "Greed is good," was popularized by the movie Wall Street and its portrayal of a sleazy investor who would do anything to make a dollar. The concept is actually much older and much less distasteful than it is portrayed in that movie, though. Adam Smith, a very influential economist from the eighteenth century, used the metaphor of the invisible hand to essentially say that greed is beneficial. His idea was that when entities seek their own economic self-interest they more or less accidentally benefit others. For example, most entrepreneurs open and run their businesses for their own self-interest, but in so doing they provide employment at the wages that the market demands and provide customers with the products that they actually want at competitive prices. Obviously, this isn't always the way it works, but capitalism is founded on the principle that it works that way more often than it doesn't and that the market will punish those who try to pay too little or charge too much. The historical relative economic strength of market-based economies when compared to other sorts of economies supports this view.

There are obviously times when people do not act in the interest of others, and those get reported on a lot, but while most people believe they are upset at those greedy individuals' greed, there is usually far more to it than that. The following are the things that I believe caused the current problems in order of the effect that they have had.

Stupidity and/or Lack of Willpower

Most of what caused the current economic crisis was not greed but stupidity. I am certain that the stupidity was enabled by greed as it often is, but it was the stupidity that had the greatest influence. A person who spends too much money in a casino is guilty of greed for sure, but his or her main economic crime against himself or herself is not his or her greed but rather his or her stupidity or lack of willpower. Greed may induce someone to put $100 that he or she needs for groceries on a single number at the roulette table, but only stupidity or a lack of willpower will allow that greed to manifest itself in the $100 bet.

A better example comes from the current crisis. If the banks that are currently having troubles had been greedy but smart they would never have made the bets on housing that they did, and they would have put their money somewhere wiser (but equally greedy). The key variable here is therefore not greed. Had they invested wisely not nearly as many people would be crying foul over greed because that greed would not be hurting them personally. The implication of this is that most people only care if someone else is greedy when they believe the greedy person is doing something that will harm them rather than help them. From a Christian perspective beneficial greed and detrimental greed are equally bad because God cares about the heart more than about the economy.

Idealism

This can be seen in Alan Greenspan's handling of the economy during his term. I actually think that he generally did a good job in a lot of respects, but he did fall prey to a weakness that almost everyone deals with and that made him a very key contributor to the current problems we are facing. He did not account for scenarios where his personal philosophy of governing would not work.

In most situations, Greenspan's opinion that the market would take care of things would actually work. Under-regulated markets usually perform much better than over-regulated markets. Markets are usually very good at valuing things like real estate and bonds. However, there are times (generally referred to as bubbles) where markets become irrational. Greenspan knew this, but it is my perspective that he did not understand how devastatingly and irrevocably irrational unregulated markets could be. My understanding is that he philosophically believed that the market could offset enough of the stupid people that any economic bubbles would not threaten the system as a whole, and in so doing refused to allow controls that would limit the actions of the stupid.

Greed

I do think that greed has played a serious role in the current economic downturn, and I have already noted that, but to say so and leave it at that ignores that greed plays a role in almost everything that happens. It will play a role in any economic upturn we see. I am sure it has played a role in all of the government attempts we have seen and will see to address the downturn. It even plays a role in most of the personal decisions that we all make. I know that my main concern about downturns like this is my ability to earn a paycheck. I am sure I am not alone on that. That is a greedy response, though, that isn't likely to change any time soon.

So, in conclusion my point is this. If you complain about greed because greed has harmed you, you should also note when greed has helped you. It is even more important that you identify where in your life you are actually acting in greed. Finally, stupidity and philosophical stubbornness often have more of an impact than greed does. Be sure you are blaming the right thing.