Consider benefits of greed
If we have learned one thing from this latest recession, it is that greed is bad. Even though the recession is technically over, the unemployment rate is still hovering around 10 percent, and it is all because of greed. In particular, those greedy bankers offered those greedy loans and mortgages and that greedy former President George W. Bush gave those greedy rich people those greedy tax breaks. Don't forget about those greedy regulators who spent the past decade deregulating everything in sight. All those politicians who droned on about corporate greed would not lie to us, the American people, would they?
What is greed? I am not greedy and neither are you. It is only that other person — that banker, that lawyer, that businessman — who is greedy. None of us would ever fall victim to the great temptation of greed. Right? Wrong. Greed is, to paraphrase economist Milton Friedman, when individuals pursue their own self-interest. It is perhaps the most common — and complex — human trait. To be sure, some people are less greedy than others. Mother Teresa displayed less greed than former President Richard Nixon, but to point out those rare saints among us does not disprove the basic point that greed is an innate human instinct.
Greed, contrary to all the rhetoric, did not cause this recession. Those "greedy" bankers that are so often lampooned and condemned actually play a vital role in the worldwide economy. They lend money to entrepreneurs to open new businesses, and those entrepreneurs hire workers — maybe you or your parents. Bankers did not suddenly become greedier in the past 20 or 30 years. Banking is a centuries old profession that is historically dominated by conservatives. Once they discover a profitable enterprise to engage in, they are unlikely to change course.
This last recession began with the housing boom and bust when many homeowners began to default on their mortgages. A large percentage of those mortgages were subprime. For decades, the predominate form of mortgages was the 30-year mortgage, which offered bankers stability and homeowners relatively low interest rates. If 30-year mortgages offer such stability, why then did banks develop subprime mortgages in the first place?
If bankers act out of economic self-interest, then politicians act out of political self-interest. They want to be reelected, and they want to exert influence over other people. Banks offer politicians the chance to do both. Politicians can compel and pressure banks to make loans to lower income people. While it may seem noble for politicians to want to help poor people, we should be suspicious of their motives. A politician who can claim responsibility for your house can lay claim to your vote. A politician who delivers speeches about "taking on big banks" is assured to receive applause, but there is nothing heroic or original in criticizing banks. Moreover, the pressure that politicians exerted on banks to make riskier mortgages ended up being highly destructive, and the unemployment rate is evidence of that.
Are politicians greedy? I do not think there is a single person who would argue they are not. Is political self-interest somehow nobler than economic self-interest? Many people act as if it is, but those who earn a great deal of money do far more to help society than those who seek reelection. By developing the personal computer and the accompanying software, Bill Gates did more to end human suffering than any politician. The facts are that individuals create wealth by pursuing their own self-interest, and the best way to end human suffering is to create wealth. By criticizing greed, we may feel morally superior, but pursuing economic self-interest has done more for humanity than pursuing political self-interest.
Why do people engage in such demagoguery against banks and other financial institutions? Maybe they are unaware of all the benefits they offer society or maybe they are jealous of their successes. While ignorance and jealousy probably do account for some of the hostility, I believe the true answer lies elsewhere. In all aspects of life, there are people who seek to assert their control over others. When you are young, there are bullies who steal your lunch money, and when you are older, there are do-gooders who believe that only they have the wisdom and the insight to lead and organize all of society. They establish rules about how to raise other people's children, about where they are allowed to smoke and about what they are allowed to eat. They order us to buy health insurance, but only the health insurance they deem to be acceptable. They instruct banks whom to lend to and how to function, and then they turn around and criticize bad banking practices. They are simply interested in controlling others. There is an infamous road to hell paved with good intentions, and these do-gooders are paving it with their own greed.
Noah Glyn is a School of Arts and Sciences junior majoring in economics and history. His column, "Irreconcilable Differences," runs on alternate Thursdays.