Posted by Ilya Somin:
Larry Summers Channels Gordon Gekko:
http://volokh.com/archives/archive_2009_03_08-2009_03_14.shtml#1236972063
Obama economic adviser Larry Summers is sounding like Gordon Gekko
these days, a[1]rguing that we need more "greed" to revive the
economy:
�In the past few years, we�ve seen too much greed and too little
fear; too much spending and not enough saving; too much borrowing
and not enough worrying,� Summers said Friday in a speech to the
Brookings Institution. �Today, however, our problem is exactly the
opposite.�
In remarks to a private dinner at the U.S. Chamber of Commerce on
Wednesday, Summers was even blunter, according to an attendee:
�Before, we had too much greed and too little fear. Now, we have
too much fear and too little greed.�
It definitely reminds me of [2]Gordon Gekko's famous "greed is good"
speech from Wall Street, where he said that "greed -- you mark my
words -- will not only save Teldar Paper, but that other
malfunctioning corporation called the USA."
However, Summers is wrong to suggest that American investors and
corporations have lost their greed. To the contrary, the constant
lobbying of every interest group under the sun for more and more
government bailout money suggests that they are just as greedy as
ever. [3]Even firms that have already received a hefty dose of
handouts are lobbying for more. The problem, of course, is that their
greedy impulses are being channeled into the unproductive activity of
lobbying for handouts rather than into the development of more and
better products for consumers.
In and of itself, greed is neither bad nor good. The key question is
whether it is channeled towards socially beneficial activity that
increases wealth and promotes economic growth or whether it is
directed towards lobbying the government to take away money from one
set of interest groups and direct it to another. At this point, it is
often easier for corporations to satisfy their greed by lobbying for
government funds than by engaging in productive activity. As Gordon
Gekko put it in his speech, "[t]he new law of evolution in corporate
America seems to be survival of the unfittest." Failing firms are
using their very failures as justification for seeking bailouts.
It is also ironic that Summers cites an excess of "fear" as one of the
main dangers facing the American economy. Ironic because [4]the
administration he serves has itself been stoking that fear in order to
undercut opposition to its programs. [5]As White House Chief of Staff
Rahm Emanuel puts it, the crisis is "an opportunity to do things you
could not do before . . . You never want a serious crisis to go to
waste." An obvious corollary to this notion is that the "opportunity"
will be even bigger the more "serious" people believe the crisis to
be.
References
1. http://www.politico.com/news/stories/0309/19972.html
2. http://www.americanrhetoric.com/MovieSpeeches/moviespeechwallstreet.html
3.
http://www.nytimes.com/2009/01/24/business/24lobby.html?_r=2&partner=rss&emc=rss
4. http://www.ibdeditorials.com/IBDArticles.aspx?id=319768125902184
5. http://volokh.com/archives/archive_2008_11_23-2008_11_29.shtml#1227657689
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