The Virtue of Greed

You can call it greed, selfishness, or enlightened self-interest; but the bottom line is that it's these human motivations that get wonderful things done. Unfortunately, many people are naive enough to believe that it's compassion, concern, and "feeling another's pain" that's the superior human motivation. As such we fall easy prey to charlatans, quacks and hustlers.

Since it's not considered polite to come out and actually say that greed gets wonderful things done, let me go through a few of the millions of examples. There's probably widespread agreement that it's a wonderful thing that most of us own cars. Is there anyone who believes that the reason we have cars is because Detroit assembly line workers care about us? It's also wonderful that Texas cattle ranchers make the sacrifices of time and effort caring for steer so that New Yorkers can enjoy a steak now and then. Again, is there anyone who believes that ranchers who make these sacrifices do so out of a concern for and feeling the pain of New Yorkers? The true reason why we enjoy cars, steaks and millions of other goods and services is because people care mostly about themselves. Now ask yourself: how much steak would New Yorkers have if it all depended on human love, kindness and feeling the pain of others? I'd feel sorry for New Yorkers.

This is what Adam Smith, the father of economics, meant in "The Wealth of Nations" when he said, "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 interests." Smith also said, "I have never known much good done by those who affected to trade for the public good." In other words, the public good is promoted best by people pursuing their own private interests. This bothers some people because they're more concerned with motives than with results.

Tactics broadly condemned as exploitative also serve a valuable social function. Let's look at price-gouging complaints when Hurricane Floyd took aim at the East Coast. After Florida and Georgia governors callously ordered evacuation of millions of citizens, there were complaints of gasoline station dealers raising the price of gasoline. Though the gasoline dealers were motivated by profits, their actions served the public interest. "Okay, Williams," you say, "explain that one." Say gas prices before the hurricane threat was $1.10 a gallon. You're running low or have a half-tank and just want to fill up. If the price stayed at $1.10, you'd fill up. But what if the price rose to $1.75? A lot of people would probably say, "I'm only going 100 miles inland so I'll make do with the half tank." Or, if you're riding on empty, at $1.75 a gallon, you just might decide to buy just a half tank and fill up when you get to your destination 100 miles inland.

Here's the question: in the wake of a mass evacuation, which is the preferable state of affairs - people's gas tanks filled half full enabling everyone to get away from the hurricane or many people with full gas tanks and gasoline stations out of gas and people stranded with empty fuel tanks? Another way to put this question is which would you prefer, particularly if you're driving on empty: gasoline being available at $1.75 a gallon or unavailable at the "fair" price of $1.10 a gallon? Again, gasoline dealers didn't intend to promote the public interest but by pursuing their own they did.

Free markets, private property rights, voluntary exchange and greed produce preferable outcomes most times and under most conditions.

Walter E. Williams
September 24, 1999
Return to Articles Page