© 2008 by Michael Swickard, Ph.D.
“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.” – Adam Smith, 1776
We are a nation lost on the road of good life, having lived so well for so long that we do not see our bounty. We live much better than our ancestors, yet are constantly discontent and envious of others who have more than us. Despite our blessings, we want to punish the “greedy rich.”
Some believe all business is theft, that profits and greed are a scourge upon our society. They reject Adam Smith’s ideas in the above quote, contending that the butcher, brewer and baker are harming us with their greedy self-interest in profits. Otherwise they could sell for less. They are wrong about this and they are wrong that greed is bad.
What is greed? According to the online dictionary Wikipedia, “Greed denotes desire to acquire wealth or possessions beyond the needs of the individual…” Our nation became wealthy with profits achieved by people using greed. But greed comes in two sizes, yours and mine.
Some cast envious eyes at Tiger Woods, Bill Gates and business CEOs, saying they have more than they need. After Woods made his first couple of million dollars, why did he not retire? After all, he had enough to live the rest of his life comfortably. Is he greedy? Yes, thankfully. I like to see him play golf.
I used a manual typewriter for years. I now write in Microsoft Word. Gates did not make my life better benevolently; I bought his product willingly. We both walked away from the transaction smiling. He built wealth, some say too much, and I got a better way to write columns, some say unfortunately.
Gates is slurred for having more money than he needs, yet this week the Multi-State Lottery Association is selling tickets for a $115-million prize. Instantly the winner will have far more money than is needed. Why are those people opposed to greed not calling anyone who buys a lottery ticket greedy because they want more than they need?
Most of the bounty in my life was provided by strangers for the purpose of each having more for themselves. I drive a car made by people who did not know, love and care for me. They were working because they wanted more. Greed is why many came to
Some say gas prices are high because of the greedy oil industry. However, the record profits made by oil companies were exceeded 250 percent by the taxes on those companies. The government made 2.5 times as much as the oil companies with you at the pump paying both the profit and taxes.
Further, those are just the overt taxes. Everyone who works to provide fuel, from the researchers and developers to the drillers and refiners to the transporters and stores, is taxed. You pay both overt and covert taxes when you buy gasoline.
We know that the high price of gas is caused entirely by our government not doing the right things to increase supply. It is stupidity, not greed, that makes gas expensive.
How much profit should people make?
How much profit should people make? There is a fuel stop in the middle of nowhere between
Everything is regulated by price in our country. If hamburgers were a quarter, more people would eat them. Gas costs what people will pay and no more.
Businesses should make as much profit as the market can bear. They have to make the minimum profit to keep their business going. They try to make the normal profit that they could get if they had used their investment somewhere else in the economy. Finally, the superprofit everyone complains about inspires more people to enter those markets for the unmet needs.
No one makes superprofits for long without gaining competition, which increases the supply of products, thereby lowering prices. When some products are introduced they have a high price, which lowers with competition and increased supply. The greedy first price is what inspires greedy people to jump into that market. The increased variety, supply and lowering price is made possible by greed. The only time this does not work is when government intervenes.
It does not matter to me if you do not want more. Some people live on the land, foregoing electricity, using only what they need. I would not stop them, but I do not want them to impose their lifestyle on me. I like greed. It is why our country has been and is so very prosperous.
Swickard is a weekly columnist for this site. You can reach him at michael@swickard.com.