Wednesday, January 27, 2010

“Greed Is Good” (Part 2)

In an earlier post I discussed the advantages of a capitalistic economy. Please see that post for background. Now I want to explore what the greedy Mr. Gekko meant by his statement “Greed is good.”

Is Greed Good?

One possible disadvantage of a capitalistic economy is that it is, to a certain extent, based on greed. That is why Gordon Gekko made his famous statement “Greed is good.” But using the term “greed” is mostly hyperbole. For the majority of people participating in the economy, “greed” is too strong a word and not appropriate. What investors, entrepreneurs, industrial researchers and inventors, innovative manufacturers, employees, and others participating in the economy are looking for is success. “Success” usually refers to a financial pay-out, such as:

-The stock you invested in goes up in value;
-The company you started grows, becomes more valuable, and its stock grows in value;
-The innovation you implemented resulted in increased profit for your company;
-Your invention is accepted in the marketplace and you receive a financial reward.

If people didn’t want their wealth to grow, there would be no banks, no stock market, no bonds, no innovation, and no research. So “greed is good” from the point of view that everybody wants their net worth to increase, their 401(k) to grow in value so they can have a decent retirement, and to get financial rewards consistent with good performance.

In a future post I’ll be concluding this series on capitalism and greed.

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