Is greed an inherent problem for free enterprise?

[tafan]

I’m new at this sort of knowledge, but relatively speaking, I believe China and Cuba have a much less of a problem with greed. The same may be said of Canada and the more socialistic Scandinavian countries.

ha, you have got to be kidding. Have you kept up with China at all? The state started allowing capitalistic practices, private enterprise (I won’t use the term free-enterprise, because it is not that) over the last 2 decades. The country is rife with corruption of all types, a uber-rich class of people, etc.

Cuba is simply a very poor country. Its not that the people are not greedy, its that there is almost no wealth in the country. Very similar to how China and Russia were in the 1980s. When the economic controls were loosened in those two countries, greed quickly became the dominant factor in the economies. I am sure the same thing will happen to Cuba when communism goes away there.

Canada and Scandanavian: you are closer to the truth, but not quite there. In the Scandanavian countries, you have economies dominated by a few very large corporations and by the government. How much greed exists, I do not know. I do know that I was in Sweden on business several years ago and a Swedish collegue explained to me that they could not get young people to fill up their universities. He had a masters in engineering and he pointed to the waiter and said the difference in their life style was he could own a car: but that was about it. Hence kids were too lazy to go to university. That I think is greed in a different form: I am owed a living by the government, I do not have to work for it.

Canada: if you look at what some of the huge petroleum companies are doing there, you would have to think greed is alive and well.

The best you can say about those two countries is if you give people enough of a social security net, they won’t be as greedy: but I am even skeptical about that. They certainly have their ultra-wealthy class, but it is mainly old-money. They simply have removed (through tax system) the hope of many people moving up to the upper-class.

 

[Ridgerunner]

I’m new at this sort of knowledge, but relatively speaking, I believe China and Cuba have a much less of a problem with greed. The same may be said of Canada and the more socialistic Scandinavian countries.

Not easy to know much about what’s happening in China or Cuba. But if you look at the history of the Soviet Union, greed was rampant and murderous, and pervaded every level of society on an almost bestial level. I recommend that you read all three volumes of “Gulag Archiepelago”. You’ll see greed, and plenty of it.

 

[Ridgerunner]

Cuba is simply a very poor country. Its not that the people are not greedy, its that there is almost no wealth in the country. Very similar to how China and Russia were in the 1980s. When the economic controls were loosened in those two countries, greed quickly became the dominant factor in the economies. I am sure the same thing will happen to Cuba when communism goes away there.

From what little seems to be available about conditions in Cuba, there’s plenty of greed, you just have to be a high party member or a criminal in collusion with the party to succeed in your greed. And succeed they do.

 

[St_Francis]

I suppose one could have a business in which all funding was acquired through borrowing and not through equity. That would be a company which offered bonds but never stock. A bondholder has a greater claim on the company assets than a stockholder, but he can still lose if the company goes under. A stockholder’s share can become worthless, and it not infrequently has done just that, but he may also be able to share in the company profits through dividends or share in the company’s growth by capital gains.

I just don’t see the inherent evil in that.

I don’t think there is necessarily an *inherent *evil; maybe it’s one of those creeping things. IIRC, corporations started out as a group of people getting together and financing a ship to go East and get silk and spices to sell in the group’s native land. That was how I got the idea of a temporary sort of situation.

And a lot of time, the individual things corporations do are not so bad. But in terms of what the popes have said about regulating business… ransnational corporations are really out of the reach of governments, aren’t they? They just slide their activity to a more friendly country.

And when you have the type of crony capitalism you have here in the States, where the corporations regulate the politicians rather than the other way around, you also lose the regulation of business which the popes have said is a *necessary *component of a business economy.

Sure it’s possible for a billionaire to buy up a controlling interest in a company and he could do damage as a major stockholder, but so could any owner who mismanages a company, even a family owned business.

And anybody with money, not just corporations, has a lot of political power. Politicians seek out people with money because they need it for all those saturation TV ads.

 

[stinkcat_14]

I think there is a difference between greed and self interest. I go to work because of my self interest and most of us do things that are in our self interest. The problem is that there is a line that can be crossed where self interest becomes greed. Adam Smith was well aware of the problem of greed, one of his quotes is: " People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Think about that for a minute. For example, consider regulation, how much regulation is designed to keep out competition rather than protect consumers.

 

[Michael57]

I voted “No” because, in my opinion, the question is too narrowly focused on “free enterprise” as if that is the source of evil in society.

Where you have people, you will have greed, and all manner of unseemly behavior. There is no perfect human involved system. Capitalism and free markets or “enterprise” are human involved and because of that will be subject to human error. The same with all other human created systems.

Communism and Socialism have failed wherever they have been attempted, because of human greed, avarice, envy, lust, and every other vice. Even Democracy has failed at times due to human flaws.

In so far as we can see in history, wherever “free enterprise” is allowed, without interference from government or people of bad intent, people of good will are able to; meet their daily needs, create wealth and prosperity for themselves, their families, and their community.

Do people take advantage of those less able and less fortunate? Yes, sadly so. But this is the least oppressive form of social function when compared to all others tried thus far in history.

There is no pure human invention of a system that when people are involved does not show the worst flaws in human behavior. The best are those that allow the message of the Gospel to live and flourish.

When people behave with kindness and fairness toward one another, we begin to see the Kingdom of Heaven. Again, my opinion only.

Peace be with you all.

 

[Robert_Sock]

In so far as we can see in history, wherever “free enterprise” is allowed, without interference from government or people of bad intent, people of good will are able to; meet their daily needs, create wealth and prosperity for themselves, their families, and their community.

Try telling that to the 1.2 billion people living on $1.25 USD or less worldwide. True, free enterprise does not exist in all the countries with extreme poverty, but the bulk of my argument stands.

 

[JimG]

Try telling that to the 1.2 billion people living on $1.25 USD or less worldwide. True, free enterprise does not exist in all the countries with extreme poverty, but the bulk of my argument stands.

And often poverty is related to the lack of free enterprise. In nations where free enterprise is allowed to exist, extreme poverty can begin to be alleviated. Without free enterprise, not much can be done to help.

 

[stinkcat_14]

And often poverty is related to the lack of free enterprise. In nations where free enterprise is allowed to exist, extreme poverty can begin to be alleviated. Without free enterprise, not much can be done to help.

One of the problems in many countries is lack of access to capital. If you are making a dollar a day in your business it is hard to accumulate capital to expand since you spend most of your income feeding yourself.

 

[JimG]

One of the problems in many countries is lack of access to capital. If you are making a dollar a day in your business it is hard to accumulate capital to expand since you spend most of your income feeding yourself.

Yes. In some cases access to foreign capital can help them to begin to get on their feet. Foreign corporations, foreign companies hiring local workers. It is in many respects inevitably exploitive, since the labor and land is cheap. But it’s one way of beginning to rise out of poverty.

 

[Ridgerunner]

I think there is a difference between greed and self interest. I go to work because of my self interest and most of us do things that are in our self interest. The problem is that there is a line that can be crossed where self interest becomes greed. Adam Smith was well aware of the problem of greed, one of his quotes is: " People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Think about that for a minute. For example, consider regulation, how much regulation is designed to keep out competition rather than protect consumers.

A great deal of regulation is uncompetitive because so much of it is written by the regulated who understand their industries where the regulators don’t.

But I think Smith is overstating the case in that quotation.

There is still a lot of “non-conspiracy” going on out there. If I want to buy ten heifers, I am free to choose which ones and where, or defer it or not do it at all. Nobody has fixed those prices, and nobody can command me to buy them; one of the big reasons being that there are too many people selling heifers in competition with one another. If I want to get together with another fellow and build a strip center, I can. We would certainly “conspire” in a “planning” sense, but it would not be a “conspiracy” against the public, because we don’t have the economic power to do it, nor the inclination.

Some do have both the power and the inclination, but many who do are chary of actually conspiring if, for no other reason, because one becomes subject to the whim of one’s co-conspirator. Today’s co-conspirator is tomorrow’s rat who’ll sell you to save himself or simply to get you off the stage.

But I’ll certainly agree that to the extent the regulated write the regulations, it’s a bad thing to the extent it serves to eliminate competition (not always the case). But is that truly the fault of “free enterprise” or of a society that thinks everything ought to be regulated down to the last jot and tittle?

 

[Ridgerunner]

One of the problems in many countries is lack of access to capital. If you are making a dollar a day in your business it is hard to accumulate capital to expand since you spend most of your income feeding yourself.

I was interested to learn, some years ago, that British capital build almost all of the railroads in the U.S., brought in superior breeds of livestock and set up many an industry. Why? Because a lot of Brit capital found investing in American enterprises more remunerative than in their own.

What might be even more surprising is that, contrary to our serial beliefs that the Japanese, then the Arabs, now the Chinese will soon own everything in this country, the Brits still own more assets in this country than all other foreigners put together.

Sometimes foreign capital can be the best friend a developing country can have. Unfortunately, a lot of countries prohibit, hound, harrass or otherwise impede its entry out of a foolish belief that somehow it’s “imperialistic”. Marx (wrongly) asserted that “the proletariat has no fatherland”. Perhaps even more true is that “capital has no fatherland”. It will go where it finds opportunity.

 

[JimG]

As a former federal bureaucrat myself, I can say that quite often we found ourselves meeting with the businesses subject to our regulation.

And almost of necessity, the regulated industry has a great deal of (name removed by moderator)ut into the writing of regulations, because they know the industry better than the bureaucrats (unless the regulators came from the industry.) In any case, things move pretty fast in business world, and often regulators find themselves two or more steps behind actual work practices–in some cases trying to regulate things that are inapplicable to current business practices.

But the bureaucracy still has an extraordinary amount of power. I was amazed at how easy it is to write binding regulations and essentially force them on an entire industry: write a proposed reg, publish it in the Federal Register with a 60 day comment period. At the end of the comment period, write a final rule, dismissing the comments you don’t like, and behold, a new regulation is born!

 

[stinkcat_14]

A great deal of regulation is uncompetitive because so much of it is written by the regulated who understand their industries where the regulators don’t.

There is also a kind of rational ignorance among the voters that encourages regulations that keep out competition. For example, most of the public does not know the difference between what physicians and nurse practitioners are able to competently do. Also, with all the things competing for our attention we have little incentive to learn such information. Therefore, physicians can lobby for limiting the scope of practice of nurse practitioners under the guise of protecting the public when what they are really doing is protecting their profits.

But I think Smith is overstating the case in that quotation.

There is still a lot of “non-conspiracy” going on out there. If I want to buy ten heifers, I am free to choose which ones and where, or defer it or not do it at all. Nobody has fixed those prices, and nobody can command me to buy them; one of the big reasons being that there are too many people selling heifers in competition with one another. If I want to get together with another fellow and build a strip center, I can. We would certainly “conspire” in a “planning” sense, but it would not be a “conspiracy” against the public, because we don’t have the economic power to do it, nor the inclination.

It would be hard to conspire in the feeder cattle industry, there are just too many participants and too few barriers to entry. On the other hand, conspiracy does occur with opec, although they are pretty open about it, but their goal is certainly to raise oil prices. If Smith were alive today he would probably see much of our regulations as a form of people in the same business conspiring.

Some do have both the power and the inclination, but many who do are chary of actually conspiring if, for no other reason, because one becomes subject to the whim of one’s co-conspirator. Today’s co-conspirator is tomorrow’s rat who’ll sell you to save himself or simply to get you off the stage.

But I’ll certainly agree that to the extent the regulated write the regulations, it’s a bad thing to the extent it serves to eliminate competition (not always the case). But is that truly the fault of “free enterprise” or of a society that thinks everything ought to be regulated down to the last jot and tittle?

I am not sure it is the fault of free enterprise, but as Adam Smith said, businessmen prefer to sell more themselves and have less competition. So such activity comes primarily from the human condition.

 

[Abu]

stinkcat_14 #48
Now a very relevant question is whether our society is structured in such a way to encourage or discourage greed. So the question is far from foolish.

An extremely foolish question for it is a mania inherent in the poster, who blindly refuses to acknowledge that the teaching of Pope Emeritus Benedict XVI is the relevant truth: “Society does not have to protect itself from the market, as if the development of the latter were ipso facto to entail the death of authentically human relations…Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Caritas et Veritate, Benedict XVI, 2009, #36).

As greed is present in mankind, it is present in everything and everywhere to a greater or lesser degree and this has been stressed ad nauseam to the myopic Sock who continues to tilt at windmills as the enemy is not in free enterprise *per se *but in individuals. That’s precisely why we have laws to seek and punish those who steal, cheat, swindle, and against monopolies as people can, and some do, undermine the common good, and the primary role of government is to support families in solidarity, and the role of the Church in subsidiarity and, yes, the common good.

That governments have failed miserably by allowing evil people, as well as misguided people who keep trashing free enterprise and failing to understand its benefits and acknowledge the progress which only free enterprise well employed can and has produced, while imagining cockamamie schemes which can only make matters worse – the rest of those in extreme poverty will remain so. To call the housing and credit crisis a failure of the free market or the product of unregulated greed is to overlook the myriad government regulations, policies, and political pronouncements that have both reduced the “freedom” of this market and channeled self-interest in ways that have produced disastrous consequences, both intended and unintended.

 

[Contarini]

An extremely foolish question for it is a mania inherent in the poster, who blindly refuses to acknowledge that the teaching of Pope Emeritus Benedict XVI is the relevant truth: “Society does not have to protect itself from the market, as if the development of the latter were ipso facto to entail the death of authentically human relations…Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Caritas et Veritate, Benedict XVI, 2009, #36).
.

You’re citing out of context, ignoring for instance this in the preceding paragraph:

Economic activity cannot solve all social problems through the simple application of commercial logic. This needs to be directed towards the pursuit of the common good, for which the political community in particular must also take responsibility. Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution.

He’s not denying the need for structural restraints on the market–he’s simply saying that the market is not in itself evil and shouldn’t be treated as an alien, hostile force that is somehow outside the sphere of justice and morality.

Your harsh and rather pompous language is ill-founded and does your cause no favors.

Edwin

 

[Robert_Sock]

As greed is present in mankind, it is present in everything and everywhere to a greater or lesser degree and this has been stressed ad nauseam to the myopic Sock who continues to tilt at windmills as the enemy is not in free enterprise *per se *but in individuals. That’s precisely why we have laws to seek and punish those who steal, cheat, swindle, and against monopolies as people can, and some do, undermine the common good, and the primary role of government is to support families in solidarity, and the role of the Church in subsidiarity and, yes, the common good.

And how do you separate the greedy CEO from the corporation which he/she is paid to represent?

How do you know my views on free enterprise when you never asked?

 

[Abu]

(name removed by moderator) #65
“greed” is not a problem for a free market system, it is an essential assumption. I suggest you take at look at Adam Smith’s concept of “the invisible hand”.

Only by those who don’t think straight as it is present in mankind NOT in the system so well developed by the Catholic Late Scholastics who Joseph Schumpeter called the world’s first real economists.

“The Catholic tradition has always recognised the risks and rewards of entrepreneurship. The rewards and of entrepreneurship provide benefits not only for the entrepreneur but for the whole community. Entrepreneurship is a social activity.”
[Foreword I by John Roskam of the Institute of Public Affairs, to *Entrepreneurship in the Catholic Tradition, Fr Anthony G Percy, Connor Court Publishing, 2011].

“In The Spirit of Enterprise, George Gilder…critiques Adam Smith’s ‘concept of the economy as a great invisibly guided “machine” in which capitalists are tools of the “market”.

“In rejecting the notion that the entrepreneur is simply an instrument of the market, Gilder expounds for us what Kirzner means by alertness. The entrepreneur is protagonist, a man who creates and sustains ,markets by developing business opportunities. All of this is far removed from the ‘unintentional’ and ‘unknowing’ entrepreneur Smith portrays. Rather the entrepreneur’s activity is intelligent and focused.”
[Fr Percy, op. cit. p 21].

 

[tafan]

And how do you separate the greedy CEO from the corporation which he/she is paid to represent?

How do you know my views on free enterprise when you never asked?

As to the second question, your views are fairly well established. You did write the following:

My personal opinion is that free enterprise promotes greed, and that a strong government is needed to circumvent it.

 

[mikekle]

IMO, greed is prevalent when NO amount of money is ever good enough, for a company it would be there if they are NEVER content with any yearly total gross amount, and alwsy want more and more. I dont care who you are, everyone has an amount they would be content with, and to want more than that…well, that is greed.

When no amount of money is ever enough and they always strive for more, that person/company is guilty of being greedy. I believe greed plays a HUGE part in daily life for many people, but probably more so in the US, where greed is seen as good to some!!

With this and some other things that seem to be mainstream in todays world(in the US), I seriously wonder whether God considers the US to be in the same category as Sodom and Gomorrah!! Just look at some of things we hold true in this country!!