David R. Henderson  

Friday Night Video: Greed Is

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This is one of the best of Milton Friedman, all in 2.4 minutes. He's not saying greed is good. He's saying greed is. The big question is which institutions harness that greed for good outcomes.

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CATEGORIES: Economic Philosophy

COMMENTS (11 to date)
AC writes:

It's a great clip, but I wish he hadn't used Einstein as an example. You know what the objection will be to that one.

nazgulnarsil writes:

Answering people who frame things in normative terms can be tricky, not falling prey to these sorts of traps was where Milton really shined.

allen writes:

Uncle Milty also had a marvelous ability to avoid confrontation while disagreeing.

My only disagreement with this clip is that Friedman didn't lay enough emphasis on the fact that greed's a human characteristic. A social system based on the suppression of greed is as realistic as a social system based on the suppression of "tall".

He certainly implied the inescapability of greed and clearly caused Phil Donohue to consider the proposition but a clearer exposition might have forced Donohue to consider his own greed.

Of course that might have been a step too far since lefties who are relentlessly greedy in service of their desire to see themselves as exceptional have a limited tolerance for exposure to the egalitarianism they are certain they espouse.

Andy Hallman writes:

Thanks for posting the link, David. Friedman's line at the end, "Where do you find these angels who are going to organize society for us," is one of my favorite quotes.

I have to take issue with one thing commenter allen said:

My only disagreement with this clip is that Friedman didn't lay enough emphasis on the fact that greed's a human characteristic. A social system based on the suppression of greed is as realistic as a social system based on the suppression of "tall".

Greed is a human characteristic but it can be controlled in a way height cannot. How greedy a person is depends on whether they think being greedy is normal.

Gerald Marwell and Ruth Ames found that economics majors (who assume individuals are motivated principally by self-interest) contribute less to public goods in experimental games than do non-economists.

There is also research suggesting that economists do not cooperate in the prisoner's dilemma game because they are aware that defecting is more profitable and assume their playing partner will defect. There is a good web page about that material here.

This suggests to me that studying the self-interested model of behavior can be self-fulfilling.

Mike Rulle writes:

He did not need to use the term "greed" to get his point across, but I like that he did----as it is the worst possible characterization of liberty and the pursuit of happiness. If he could make that word work in the context of his argument, then less emotionally charged words would make it that much easier to make his point on other occasions.

I think he was messing with Phil a bit by using the term. Self interest and greed are not the same thing, as greed implies the absence of empathy. Think of the clown character in Wall Street movies played by Michael Douglas----here was a narcissist for whom "greed was good".

Free markets are good. Greed actually is not good. I certainly agree with his point about finding angels. I made a similar point on Arnold's later post.

John Donnelly writes:

I agree with Mr. Rulle; self-interest and greed are not interchangeable. Greed exists in some and not in others yet we all pursue our own self-interest.

Jack Abramoff, for example, shows us the characteristics of greed and avarice. As a businessman my goal is to give value in exchange for my sales and revenue that is consistent with long term success and goodwill.

Mr. Freidman's point was that capitalism is better than other social systems simply because it leaves us free to pursue our own aims. Phil Donahue was asking what it is about our brand of capitalism that creates strange inequalities and other bumps in the road to prosperity for all. The answer is greed in many cases.

As our institutions grow and the concomitant body of law as well, we find ourselves pusuing our self-interest through political processes rather than economic ones. Much like Russia.

[broken blog link fixed. Please check your url after you paste it into the box. Use the letters "http" only once. --Econlib Ed.]

John Donnelly writes:

Just had to post this link to a recent WaPo study. This is greed.

[broken blog link fixed.--Econlib Ed.]

David R. Henderson writes:

@Mike Rulle,
He did not need to use the term "greed" to get his point across,
Actually, he did. Look how Phil introduced the issue.

stuhlmann writes:

I look at greed as being like sex. Greed is innate to human behavior. Both greed and sex are essential to the survival of the species.

That being said, almost all cultures impose some limits on sex, setting boundaries on when, where, how, and with whom sex is appropriate. Societies have determined that there are some negative externalities for society associated with unregulated individual sexual behavior - STDs, illegitimate children, jealously, divorce, etc. Societies declare certain types of sexual behavior to be immoral or even illegal.

Why should not societies also attempt to regulate greed? There are also negative externalities for society associated with individual greed - loss of social cohesion, short-term thinking, concentration of power, etc. Why shouldn't societies place limits on greed and declare certain types of greedy behavior to be immoral or even illegal?

Joe Cushing writes:

I think we could go a step further and say that socialism is greedier than capitalism. Under capitalism, a person works hard, smart, and/or lucky--usually and-- and they EARN lots of wealth. I don't think it's so greedy for them to take that wealth and invest it to create more wealth. On the other hand, I think it is very greedy for somebody to become jealous of that wealth and try to take it from them--even if they want to take it to give to a 3rd party. I'd much rather leave wealth in the hands of people who know how to create it than people who know how to hire thugs.

Ken B writes:

I am always struck on these older Miltie videos -- which are always great -- by how civil and useful the interviewers are. Phil Donahue clearly doesn't agree, and I suspect simply does not get, what MF is saying. But there's no Olberman shouting, there's no Maddow sarcasm, there's no Glenn Beck whooppee cushion. It's even more striking on the clips from the 60s.

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