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Academic

: Conglomerate

Greed Apparently Not So Good

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

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As I have been soaking up the various perspectives on the causes of, and potential cures for, our current economic turmoil, I have gotten the sense that while there exist disagreement on these issues, most people seem to believe that much of the blame relates to corporate greed. Along these lines, Frank Pasquale at concurringopinions has a post about greed. From this perspective, greed appears to be reflected in the willingness to engage in risky behavior without sufficient regard for, or assessment of, the repercussions of that behavior. And hence presumably less greed may have ensured more responsible behavior. This idea that greed played a key role in creating our current crisis reminded me of?and in fact stands in contrast to?the speech by Gordan Gekko (played by Michael Douglas) in the 1987 movie Wall Street proclaiming that ?greed is good.? So I went in search of the text, which goes as follows:

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.

To be sure, Gekko?s speech was given as an attack against corporate directors at the fictional Teldar Paper who had failed to make their company profitable, did not have significant stakes in their company, but nevertheless, as Gekko phrased it, benefitted from perks such as ?corporate jets and golden parachutes.? In this regard, the speech may have been aimed at suggesting that greed is good because it could serve to motivate otherwise apathetic corporate directors and officers to engage in profit-making activities. And hence that greed, in the form of an active quest for increasing the bottom line, could prove beneficial to shareholders. And yet the current crisis reveals the destructive side of greed, and hence the reason why most people do not look favorably upon the word. Indeed, to the extent that greed represents at least part of the reason why some may have failed to properly evaluate risk, greed has sparked a downward surge that put companies as well as that ?corporation called the USA? at risk.

Of course this observation about the negative connotations of greed should not be surprising even in light of the Gekko speech. After all, the Gekko speech was merely a good movie moment; not a philosophy to be adopted by those outside of the world of make believe.

Full post as published by Conglomerate on September 18, 2008 (boomark / email).

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