Greenspan on "Infectious Greed"

[Previously], I wrote:

"Those on the moral code of altruism have to view all businessmen as guilty, guilty by nature, since their life's work is to seek selfish gain. The current legislative frenzy is just the latest manifestation of the altruist premise: the attempt to cage "the beast" that is selfish greed."

When I wrote that, I did not know that the very same day Alan Greenspan had said to the Senate:

"Why did corporate governance checks and balances that served us reasonably well in the past break down? At root was the rapid enlargement of stock market capitalizations in the latter part of the 1990s that arguably engendered an outsized increase in opportunities for avarice. An infectious greed seemed to grip much of our business community."

Given Greenspan's record, I shouldn't have been shocked, but I was. His use of the "greed" smear goes to the very heart of the issue of capitalism vs. statism: egoism vs. altruism.

Like the popular use of "selfishness," "greed" is a package-deal, a smear-term that blackens the honest pursuit of earned gains by associating it with the lust for the unearned. Now that smear has been loudly endorsed by the man who holds "the second most powerful position in the world."

The New York Times had no trouble grasping the import of Greenspan's language. In an editorial, the Times declared:

"The Federal Reserve chairman, Alan Greenspan, memorably defined an economic moment when he declared in late 1996 that the fast-rising stock market was caught up in 'irrational exuberance.' He did so again yesterday when he warned Congress that the business world had been gripped by an 'infectious greed' and that government must take strong steps to clean up corporate leadership. With Congress divided on how to proceed ... Mr. Greenspan's words give powerful ammunition to those arguing for a hard line."

[...]

"The White House has tried to fix blame for Enron, WorldCom and other scandals on a few 'bad apples' in the nation's boardrooms, but Mr. Greenspan made a strong case that the problem is systemic."

Now, it may be true (or false) that the rotten half of the package-deal which "greed" represents did occur in some quarters. That is, it may be true that the rising stock market, seeming to point only upwards, served as an occasion for some businessmen and investors to evade risks, to over-leverage themselves, and to think they could make the "fast buck" and never have to reckon with long-term consequences (and didn't John Maynard Keynes tell us "In the long-run, we'll all be dead"?).

But that point, if Greenspan thinks it is true, could have been conveyed by a phrase from the proper philosophic context. For instance, he could have criticized "the short-range mentality," or "a public lulled into a false sense of security" or "an environment in which the fraudulent few can operate," or "blind disregard of one's own rational self-interest," etc. He might also have noted what many observers have decried: the whole culture's wink at dishonesty in all facets of life (including Clinton's) for the past decade or more.

Instead, Greenspan, who is famously obscure in his speechifying, crafted a memorable phrase, "infectious greed," which makes the blame "systemic"--i.e., a part of capitalism's success in making people wealthy. At the least, he gave a weapon to the altruists that will echo through history.

In a column by John W. Berry, that someone sent me, Greenspan is also quoted as having said:

"The trouble, unfortunately, is that the shock of what has happened will keep malfeasance down for a while. But human nature being what it is -- and memories fade -- it will be back. And it is important that at that time appropriate legislation be in place to inhibit activities that we would perceive to be inappropriate," he said.

"Human nature being what it is ..."

In other words, man is a sinful creature, just like the Bible says. The message is, as a friend of mine put it: just as power corrupts, so money corrupts--and the more of either, the more corruption. That's the package-deal of economic power with political power that I have described as the major anti-capitalist weapon, rooted in altruism, that the left never fails to use.

"Legislation ... to inhibit activities that we would perceive to be inappropriate..."

This is a subjectivist, open-ended call to bring the government down on any selfish, un-Christian behavior. I know that he didn't put it that way, but that is, as he must know, how it will be heard by the public.

Again, he didn't talk about bringing legislation to bear on actual fraud that violates individual rights, representing an indirect form of physical force. No, he talks about what "we" will "perceive" as "inappropriate." In other words, if someone acts against "our" code of morality--which for most of "us" is altruism--the police should break down the door.

All this is much worse than having saved social security. This is philosophic treason.

That it was done by a man associated with free markets--and with Objectivism--makes it much worse. And it makes much harder our job as defenders of capitalism and egoism.

-- The above was an email from Harry Binswanger's List, and is reprinted here by permission. The Harry Binswanger List (HBL) is an email list for Objectivists, moderated by Dr. Binswanger, for discussing philosophic and cultural issues. The HBL is $10 per month or $100 per year; a free one-month trial is available at: http://www.hblist.com/

Dr. Binswanger, a longtime associate of Ayn Rand, is a professor of philosophy at the Objectivist Academic Center of the Ayn Rand Institute.

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