Some Greedy Profiteers are More Equal Than Others

by Alberto Arredondo

It has become popular to disparage capitalism as a system that requires tempering by the government. People believe that unchecked interests of powerful players in the market lead to unjust gain. These same people are also led to believe that the government will right those perceived wrongs by penalizing those seen as imposing their will on the market.

The great villains are greed and profit. Highly paid executives are the poster children used by the government to persuade the people that profit is greed. People are comforted in knowing that the government may limit the earning power of executives of companies aided by the recent bailout. No thought is given to the fact that these executives have alternatives and will likely seek positions in industries untouched by the bailout. Surely, the public might believe, if there were an exodus, others would fill the void and be willing to take the reduced pay. Only those not able to compete for the higher salaries at other companies would do so. The salary anyone commands is a signal in the labor market and the fact that this group of well-meaning, humble people ready to take over an executive position from a greedy person does not already command high-pay means that they do not have the skill set or experience to do the most competitive jobs. The perception though is that the door normally shut by the greedy executive class would be opened to the proletariat.

The public can feel self-satisfied if the government succeeds in restraining capitalism in this symbolic way. How can we open the eyes of the public to the fact that people acting in their own self-interest (being greedy), even if commanding a multi-million dollar salary, need not be tempered by regulation? Simple, even the most ardent anti-capitalist naturally seeks to purchase things at a discount. Everyone has bought something on sale, even those who would back the government's regulation of executive salaries. Even though a consumer doesn't technically make a profit, they can be party to a transaction where they give up less money than they might have been willing to part with. This is effectively a profit since that person would end up with some good or service they needed and a slightly larger pile of cash than they would have otherwise. Is this greedy? Yes. Can anyone be convinced that this is a problem? Of course not. Self-interest does not need checking by the government, no matter how meager or grand the results may be, as long as one's self interest harms no one.

People naturally want to conduct their own business in a way that follows market principles. When you see someone cheering on the government in its continued assault on capitalism, ask them if they got their new shoes on sale.