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The one thing everyone from Jim Wallis to John McCain seem to agree on is that rampant greed is a main cause of the financial collapse.
I don’t buy it. I’m not saying greed is good, just that greed is. It’s a constant. It’s part of human character and I find no evidence that the intensity of this basic human instinct suddenly increased in the last ten years.
What’s changed is that the checks on greed have dissipated.
Yes, that partly means government regulation. One of the things that pure free marketers rarely understand is that government regulation enables capitalists to be whole-heartedly greedy. If the regulators are watching, business people can push the envelope to make more money – and that often is a source of great economic creativity. We don’t want a system in which we’re relying on the internal ethical code of investment bank presidents to balance growth with national interest. The government should say: you go ahead and be greedy. We’ll make sure that your greed helps, not hurts, the rest of us.
Most important, this crisis results from a failure of memory. On my office wall, I have some cover stories I wrote for Newsweek in 1990: one called “Bonfire of the S&Ls” and the other called “The Real Estate Bust.” Sound familiar? Business schools should spend less time on business ethics and more on business history.
And it’s not just big-shots who do this: everyone who took out a sub-prime mortgage was making a bet that real estate and their incomes would keep appreciating.
Which brings me to religion. When I asked Dilshad Ali, one of our editors who is Muslim, how her faith affects her finances, she said that because of Islam’s strong cautions against debt and usury, “we try so hard to pay credit cards on time, not take loans, etc — it’s a challenge, but it also keeps us financially stable and on our toes.”
Greed is not worse than ever. The problem is that we’ve surrendered our best anti-greed weapons.