Selling the Greed

"Buy the greed, sell the fear," so the saying goes, but as we emerge from a period of our economic history in which this philosophy has been practiced to the nines, and the result has been to cultivate a culture of corruption and crisis, the small number of beneficiaries and their huksters now need to sell the greed and persuade The People to buy the fear.

"Greed is good," so the argument goes, and we must now manage the crisis component of this practical, utilitarian philosophy with the neo-conservative element, like the McCain camp, arguing that The People must buy into the fear of socialism in order to preserve what motivates the creation of wealth and, therefore, the privilege of determining its distribution.

Wealth shared is wealth squandered by not making the scarifice necessary to create it, so they argue, but The People are not seeing an empirical verification of that hypothesis. The utility is not verified, but disconfirmed by the clearly observable evidence.

Yet, we still have the aspiring non-elits that cling to the absurd belief that if we share the wealth, the wealthy will no longer be wealthy and the poor will still be poor. The result is a Non-Pareto Optimal, dead-weight loss in which everyone loses.

The argument is irrational because it is the product of greed, an emotion accepted, bought, as a practical philosophy instead of an indicator for behavior modification that avoids an impending crisis of a few that have too much at the expense of everyone else having too little--what we have now.

Conservatives argue that the criticism of the utility of greed is overly academic. We are thinking about it too much. That a sacrifice has to be made for the production of wealth, savings, is obvious, and the elite, they argue, are best suited to own and manage that sacrifice, the savings, so that we can have more savings by it being deprived of The People. It is, of course, illogical to claim the deprivation of value adds value. No, it redistributes the value to cause an easily avoidable crisis--a cyclical liquidity crisis characteristic of a debtor economy.

Since the elite are best suited for managing the capital (the savings, the sacrifice), they must be rewarded with the "privilege" of not having to share in that sacrifice, conservatives argue, because they will not, then, take the risk to organize the production of wealth we all enjoy. The privilege is the reward for successfully providing The People with what they want, and that is motivated by the emotion of greed with the result being an accumulation of wealth that indicates the value added in the form of the capital.

The problem with the conservative argument is that the value was not added, it was accumulated. The result is a debtor economy (a leverage economy in which more value is added than produced) that is always being managed, organized, to buy the greed and sell the fear even when it is illogical and empirically not beneficial for The People that give it both the value and the legitimacy of its power.

Conservatives argue recognition of the problem as socialism. The logic required to solve the problem is reduced to the fear, the emotion of it, which otherwise serves to indicate danger to protect and promote the welfare of the species. Conservatives are utilizing this primordial survival instinct to destroy its utility for The People. Reversing that would be to, as they say, think about it too much. Providing for their welfare, I dare say, is what The People want, and providing for recurrent crisis does not, then, fit the reward of privilege.

The privilege of accumulating value by leveraging it into an artificially added value is supported by the innovation of productive capacity. The more per-unit production added per dollar invested, the more value can be added, or accumulated, to be greedily reinvested for more accumulation through innovation. The problem is that the accumulation does not allow for a competitive reinvestment based on the profit margin. The result is to greedily innovate ways to add value without growth, which leads to the crisis of overproduction in which demand is overburdened with debt, like we have now.

The growth that occurred was largely in the real estate development sector, where you can get rich quick, but because the wealth is greedily accumulated, instruments of finance were innovated to allow the demand to be driven by debt that could not be paid. The result is the crisis of overproduction, or the inability to pay--the foreclosure crisis.

According to conservatives, the capital is greedily invested to innovate production which adds wealth. If the reward of greed is denied by sharing the wealth, it will not create it. If we do not allow the reward to be fully enjoyed by the risk taker, the risk will not be taken, and the reward will not be had to be unduly redistributed with a socialist model, or reinvested to cause competition and disinflation with full employment and maximum consumer choice provided by a free-market model.

Greed drives the incentive to risk the capital. Without it, risk, or innovation, will not occur. This equates risk of loss with productivity and innovation. If you are not productive and innovative--greedy, you lose.

So, the argument goes, we were much better off before we started flirting with spreading the wealth around. That has made the capital not willing to take the risk of growth and innovation. It becomes illiquid. If we do not allow greed to operate, we will self-determine, choose by operation of our intellect, an extreme deprivation. We are all better off if we all embrace the reality of our greedy impulses and ignore the latest fashion of intellect.

Never mind that greed is likely to result in the indifferent deprivation of others, which brought us to the crisis of illiquidity. It was the greed--the overwhelming, irrational, fearless passion for risk and reward, the supreme confidence in its virtue without thinking about it too much, not the lack of it--that caused the illiquidity. If greed is the problem, how is it the solution?

Now that the greed has been overbought into a major crisis, the fear is now oversold. The People are not buying it. It is illogical. It is unreasonable to accpet the problem as the solution.

Where The People once accepted the business cycle as a naturally recurrent event of undirected determinism, like the weather, We now know it can be the directed product of our self-determination, not driven by greed and fear, but the virtue of our intellect.

Obama/Biden!