
The Capitalist Manifesto: Greed Is Good (To a point) - swombat
http://www.newsweek.com/id/201935?from=rss
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gaius
What Gordon Gekko actually said:

 _The point is, ladies and gentleman, that greed, for lack of a better word,
is good. Greed is right, greed works. Greed clarifies, cuts through, and
captures the essence of the evolutionary spirit. Greed, in all of its forms;
greed for life, for money, for love, knowledge has marked the upward surge of
mankind. And greed, you mark my words, will not only save Teldar Paper, but
that other malfunctioning corporation called the USA._

~~~
bwd
And remember that Gordon Gekko was Oliver Stone's foil for Carl Fox (the
father of the main character) who was meant to embody the evil of the 80s
takeover era. This speech was based on a University of California speech given
by Ivan Boesky, in which he said: "Greed is all right, by the way. I want you
to know that. I think greed is healthy. You can be greedy and still feel good
about yourself."

~~~
gaius
Gekko was the embodiment of capitalism itself and therefore _amoral_ , not
evil.

 _The new law of evolution in corporate America seems to be survival of the
unfittest. Well, in my book you either do it right or you get eliminated. In
the last seven deals that I've been involved with, there were 2.5 million
stockholders who have made a pretax profit of 12 billion dollars. Thank you. I
am not a destroyer of companies. I am a liberator of them!_

~~~
bwd
I disagree. There is a huge difference between insider trading and buying a
company to sell off pieces of it and make the remainder more efficient through
reorganization, even if the reorganization includes layoffs. In the former
case, you are abusing your access to information that others do not have in
order to make a profit at their expense, and this is why it is illegal. In the
latter case, you are making a positive contribution to the wealth of the
stockholders of a company, even though this might cause hardship to some of
the employees who will have salary/benefits cut or even lose their jobs. Gekko
embodies both of these behaviors (as did some of the participants in 80s
takeovers), but I don't believe that insider trading properly represents
capitalism.

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lionhearted
A good piece. I have a serious question for people smarter than me about the
following:

\--

"Then there was the 1997 East Asian crisis, during the depths of which Paul
Krugman wrote in a Fortune cover essay, "Never in the course of economic
events—not even in the early years of the Depression—has so large a part of
the world economy experienced so devastating a fall from grace." He went on to
argue that if Asian countries did not adopt his radical strategy—currency
controls—"we could be looking at the kind of slump that 60 years ago
devastated societies, destabilized governments, and eventually led to war."
Only one Asian country instituted currency controls, and partial ones at that.
All rebounded within two years."

\--

How'd Krugman ever get accepted as an economist? He seems to be a massive
doomcrier who is consistently wrong, and uses a lot of anecdotes and very few
hard numbers. Which works great for Gladwell, but not so good for economics
(heck, I dropped economics as my major because I didn't want to deal with
econometrics - but I still have a healthy respect for it).

There's some tremendously intelligent economists that I disagree with their
overall message, but very much respect their contributions. If you take the
time to read and decipher Marx, Gramasci, and Keynes, they said some really
brilliant things. Very, very smart people.

But Krugman? The guy seems totally bankrupt. And I've tried to read his stuff,
and I keep seeing anecdotes, doomcrying, and him just being provably wrong
often without being verifiably correct ever. Can someone point me to some
smart reading material of his, not babysitter scrip anecdote nonsense? I'd
like to learn from the guy if he has made some good contributions, or get to
the bottom of why he gets respect if not. Always been curious about this one.

~~~
nazgulnarsil
there is a selection effect going on in the higher levels of economic analysis
whereby those who tell politicians the narratives they need to justify power
grabbing are the ones promoted into the public sphere. most economists will
decry such shameless behavior (but who is to say how much of this is
jealousy). the other economists you mention are guilty of the same thing.
Keynes in particular just bases entire chapters of his General Theory on
trivially fallacious theses. Marx isn't even wrong, he's just exploring a
world that isn't related to reality (there is no working model of the labor
theory of value that makes predictions).

~~~
lionhearted
> there is a selection effect going on in the higher levels of economic
> analysis whereby those who tell politicians the narratives they need to
> justify power grabbing are the ones promoted into the public sphere.

That makes sense, good point nazgulnarsil. Thanks.

> Keynes in particular just bases entire chapters of his General Theory on
> trivially fallacious theses. Marx isn't even wrong, he's just exploring a
> world that isn't related to reality

Definitely true - but both of them made observations that were true and
correct, which lends a bit of credibility to their work. Keynes for instance,
"workers resist a reduction in monetary wages, [but] it is not their practice
to withdraw their labor whenever there is a rise in the price of wage goods"
(General Theory, p9). Which is true and correct - laborers don't notice
gradual inflation, so governments can use it to lower wages and increase tax
revenues under a progressive tax system (wages gradually rise, tax brackets
remain fixed, therefore a greater percentage of GDP goes to tax revenues
without an official tax increase).

These aren't good reasons to do what he advocates, but Keynes at least has
some correct observations. Really insightful ones actually, if you listen to
people who violently disagree with Keynesian economics, many of them have the
utmost respect for him. (Friedman is the first one to come to mind, who always
spoke well of Keynes).

But bringing it back around - Krugman... I haven't seen _anything_ intelligent
from him, ever. Not a single observation of the way the world works or
implication that seems correct. He seems like a two-bit fearmonger, and he
doesn't back off when he's proven wrong. I'd like to be wrong though, if
there's any admirers of him that have links to good work by him. It doesn't
have to be popular economics either - a link to a good academic paper would
work too, if there is one. I really cling to a hope that it's not possible for
an economist to get mainstream recognition just by partisan sucking up - I
really hope so, as economics has such huge implications for society.

~~~
nazgulnarsil
Krugman's contributions aren't widely discussed because they are in the realm
of quantitative economic analysis. Heavy in math and not prone to simple
explanations. Most of quant econ revolves around trying to use mathematical
techniques to derive a more accurate model of what's going on with large scale
scale economic aggregates (GDP and CPI are the most well known due to the
media).

Of course the critique of the entire field is that it is blatant curve
fitting, descriptive rather than prescriptive.

P.S. The nobel prize in economics was not one of the prizes originally
enumerated by Alfred Nobel.

~~~
rms
Krugman was very influential in the development of a theory of international
trade not involving perfect competition. Whatever you think about economics in
general, it seems to be a pretty clear step towards more closely modeling
reality.

~~~
nazgulnarsil
the problem is that it is impossible to audit said models. unlike real science
the social sciences can't isolate variables in order to test predictive power.

~~~
berntb
Like e.g. palaeontology, economists can't do experiments. You must remember
that about economy.

I've read a bit too much criticism of economy as a science using the same
argument you see from creationists against palaeontology. (That is,
assumptions that all researchers are idiots and/or in a conspiracy against the
creationists/left wing extremists.)

~~~
nazgulnarsil
well pure paleontology is abduction is a sense. but the thing about
paleontology is that it is based on biology in which we can do experiments.

~~~
berntb
Economy is arguably based on cognitive psychology and game theory. (A bit less
strictly, but it should even out with all the lacking environmental parameters
in paleontology...)

------
bokonist
Any exchange between two actors can be in one of four categories:

1) voluntary in-kind exchange ( Christmas presents, buying each other rounds
of drinks)

2) coercive in-kind exchange ( corvee, slavery, conscription, bound serfdom)

3) voluntary monetary exchange ( buying food at the super market )

4) coercive monetary exchange ( taxes )

#1 is great, but unfortunately is does not scale. It works very well among
family, friends, and small communities, but it quickly breaks down in larger
economies.

Of the remainder, #3 seems obviously the superior way to engage in
transactions. And #3 is free market capitalism. Capitalism is not good because
greed is good. Capitalism is good because it forces greedy people to actual
produce something of value and exchange it, rather than just taking it from
others.

The financial crisis is not an example of #3 but of #4. The "too big too fail"
and "lender of last resort" policies have been in place for decades. They
allowed banks to take huge risk, and then when the risks failed, the
government uses its coercive powers to tax the public and bail out the
financial system, thus encouraging even more risk taking.

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nazgulnarsil
us free marketers have already lost...capitalism, greed, these are terms
invented by anti-free market ideologues. the free market existed before the
term capitalism was coined by Marx, what is greed but self-interest? those who
pretend to be concerned with something other than their own welfare are in
denial at best, and manipulative liars at worst.

If we only ever debate on their terms we can not hope to avoid the stupid
Randian take on liberty and markets that dominates most people's thoughts
about capitalism.

~~~
gort
"those who pretend to be concerned with something other than their own welfare
are in denial at best, and manipulative liars at worst."

<http://wiki.lesswrong.com/wiki/Typical_mind_fallacy>

You are not me.

~~~
nazgulnarsil
my statement wasn't based on anecdotal evidence.

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johnnybgoode
There's a big problem here. When people like this use the word "capitalism" to
mean the massive, ultra-financialized, state corporatist economy we have
today, they confuse many into thinking this has something to do with free
markets based on voluntary exchange.

So people who are understandably annoyed that Wall Streeters make millions
without contributing very much, if anything, are unnecessarily encouraged to
support state socialist policies. In reality, it is the lack of free markets
which caused such problems in the first place.

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viggity
"It is not from the benevolence of the butcher, the brewer, or the baker that
we expect our dinner, but from their regard to their own interest." - Adam
Smith

------
rue
As Marx summarised it, capitalism is characterised by a pattern of cyclical
booms and crashes, generally crashing deeper each time.

He was not, actually, positing that it would eventually collapse but that it
may survive its cycles so long as there are enough "willing" people to take
the brunt of the crashes and least of the booms at the bottom rungs of
society.

Of course, he probably had less of an idea about the resource problems we will
be facing in the near- to mid future, complicating capitalism's crash-
recovery.

Personally, I think it will take at least two more of these before there is
anywhere near enough support for abandoning capitalism.

------
known
I think Greed seeds and stimulates Passion to some extent.

------
Ardit20
We are self-interested creatures. We are selfish. Evolutionary psychology will
go as far as to say that altruism is selfish. The question is, assuming that
each for his own self is a natural state of being, is it a good thing?

If we all act for our own interest, then there is competition and I suppose
the more adapted will win, which as it happens is the foundation of evolution.
So to speak of checking our own moral compass is empty rhetorics because
morality as such does not even exist. Only jusgments as to what is right to do
for my own interest and what consequences there are.

Therefore, supposing that morality does not exist, the only way to enforce
this "moral compass" is by legislation or culture. The culture in such places
is greed and perhaps rightly so as if someone makes money, that money will go
somewhere surely, hence making more money, etcetera. If the culture is greed
therefore, the only way is imposing a code of conduct supervised by some
governing body and or imposing legislation and or, there are ups and downs in
life, why should we expect the economy to be up always and never go down.

I think the system is fine, I would have liked to see the banks fail to be
honest. If they did not do their job properly they should be out of a job.
Otherwise we are just feeding an artificial creature which does not adhere to
the laws of evolution and by association competition, perhaps to the detriment
of us all.

