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Greed

Caeli: Hi!
Elliot: Hi, Caeli.
Caeli: Is it a problem if people are greedy?
Elliot: No.
Caeli: Why not?
Elliot: Doing something because it's in your interest is good. Doing it because you are forced to is bad.
Caeli: Why are you talking about interest?
Elliot: Greed means trying to get stuff you want. It could be money, it could be other stuff. It is the things you value. Things you consider to be in your interest.
Caeli: But when people say greed, they always mean money.
Elliot: They are cheating. When one person gets what he wants, and it isn't money, they don't call it greed, even though it's equally self-interested. When another makes money, that is greed. And by the way, money is just an "I owe you" for actual, real stuff. Money should not be the object of scorn anymore than wheat is. Money is actually quite nice: it's easier to carry around and doesn't go bad.
Caeli: Doesn't doing things for money make people ignore other things, like treating their customers well?
Elliot: Treating customers well is profitable.
Caeli: Not always. If you can trick them, you can get something for nothing.
Elliot: That doesn't mean treating customers well isn't profitable. It is.
Caeli: Isn't that kind of pedantic?
Elliot: No. It's important that treating customers well is a way to make money. It works. We shouldn't overlook that.
Caeli: OK, but maybe you could make more money by tricking people, so a greedy person would prefer to do that.
Elliot: If you trick people, or do anything else but sell/trade something valuable, then you are working against people. You have to outfox them. That is far harder than cooperating with them. Now and then it has spectacular results, to be sure. But frequently it has bad results. But Cooperation consistently has good results, and also has more spectacular results.
Caeli: I guess your point is that more wealth is created when people don't work against each other.
Elliot: Yes. Fighting with people over the wealth that already existed is a silly strategy, when you can just make more.
Caeli: What if you cut corners, but your customers don't know?
Elliot: Then there is an opportunity for someone else to sell a similar product, but in a more transparent fashion. Or for him to inform people about your shoddy work.
Caeli: What if no one finds out?
Elliot: Then you've managed to trick the entire world. Congratulations. But that's very hard. Your workers could talk. How will you stop them? By paying them a lot?
Caeli: Sure.
Elliot: I thought this was about narrow-minded greed. But now you want to pay your workers well.
Caeli: Good point. But it might be worth it to fool everyone.
Elliot: The better you do, the harder it will be to prevent leaks, and the more rewards are available for someone who spills the beans. There are other issues as well. Consider new hires. They have nothing invested in the company. For many of them, being fired in their first week wouldn't be that big a deal. How will you keep them quiet?
Caeli: I'll pay them.
Elliot: Having to pay a lot of money to all your workers, and more besides to new people, just to keep a secret, doesn't sound like the best way to get rich. Secrets are expensive. But it's worse than that. Not everyone will accept money. Many people have principles.
Caeli: OK, I give up.
Elliot: Greed doesn't motivate people to do bad things, because doing bad things does not make your life rich and fulfilling. Doing bad things turns people against you, and it is bad to be that way and makes it hard to be creative. The greedier someone is -- the more he cares about achieving things -- the more he will want to ensure he gets it. And there's only one reliable way to do that: create valuable, good things.
Caeli: What about people who want stuff besides money?
Elliot: They, too, should create valuable, good things. Like philosophical dialogs, or Warcraft III maps. This can bring them fun or knowledge. Or if they want to attract a desirable wife, the best way to do that is to be a worthwhile person with good, valuable things in his life.
Caeli: What are the alternatives to greed?
Elliot: If you aren't trying to get good things for yourself, then you're not greedy. This is very dangerous. What will you try to get? Common candidates are to increase the fairness of the world, or the proselytize for a religion, or to try to hurt people.
Caeli: What's wrong with fairness?
Elliot: It means going around interfering with people. It means deciding that their way of living is unfair, and doing things to them by force. Like taking their stuff and giving it to poor people.
Caeli: Don't poor people have a right to have stuff?
Elliot: No. Not unless they make it.
Caeli: But wouldn't it be better if everyone could have a nice life?
Elliot: Yes. And everyone can. They should get jobs. It's easy. No one is stopping them.
Caeli: But maybe they need help.
Elliot: Then help them, on your own time, with your own wealth.
Caeli: OK, what if I do. Is that good?
Elliot: It's OK. But in general poor people are the ones who have made bad decisions about what to do with resources. That's why they don't have any. They squander wealth. Helping those people is often a waste.
Caeli: Who is it better to help?
Elliot: Productive people who have a large effect on the world. If you can make a brilliant scientist just a little bit happier, so that he makes better inventions, that could make the whole world drastically better.
Caeli: Only if you get lucky.
Elliot: Well, in the abstract, consider this: there are people who are skilled at using resources in good ways so that they have large, beneficial effects. They end up with more resources, and so does everyone else. People like that, due to logic, are likely to end up rich. And on the other hand there are people who constantly make bad decisions. Every time they use wealth for something, it turns out badly. Those people will end up poor, due to logic.
Caeli: OK, I guess there must be those kinds of people. And I see that helping the first time is very efficient, and helping the other type is best avoided. But do the two types correspond perfectly with rich and poor people?
Elliot: They don't. There are people with inheritances who are not doing much of value. But never fear: those people will either soon be poor, or they will hoard their money so it won't do anything bad.
Caeli: Isn't hoarding money bad?
Elliot: Quite the opposite. If the silly rich person sit around with pieces of paper, that is absolutely great. He isn't causing any trouble, and meanwhile some other person has the actual stuff the paper represents, and will do useful things with it.
Caeli: But won't the rich guy get interest and become richer?
Elliot: Perhaps. But no matter. Loaning money is a great thing: it gives poor people an opportunity to control a lot of wealth. This means that poor people who are skilled with wealth can get a chance to use some, and do good things.
Caeli: Oh, that's cool.
Elliot: Yeah. So as I was going to say, there are also poor people who are not incompetent and stupid. But, again, never fear: they can and will move up in the world. They will make good decisions, and their wealth will increase. And, as we've discovered, if some rich person will loan them wealth, that will be great. Both people will benefit: the rich man took a risk on this person, and will be paid for it. And the poor man will make a huge profit and keep a lot of it. Their mutual greed lets them cooperate.
Caeli: What happens if the person who gets the loan fails?
Elliot: That is a very important possibility. The result is that both people will be poorer. And that's as it should be: the rich man had bad judgment to loan this person his money, and now he won't be able to make that mistake again. And the poor man squandered money, and now no one will want to loan him money again. So the whole system is self-correcting. The people who do well have more power to make decisions about what to do with wealth in the future. And the people who do badly, end up with less power to make decisions.
Elliot: I want to add at this point that lending money is a very important skill. It is not a way that rich people hurt us. A man who has a talent for finding skilled people who lack capital, but who want to do great things if only they could get started, is very important. He irons out the bugs in the system. Instead of having government wealth redistribution, we have loans. We have people who actively seek out people who should have wealth distributed to them, and who personally give them money. That is wonderful.
Caeli: I'd like some money.
Elliot: What would you do with it?
Caeli: I'm not sure.
Elliot: It's a good thing that people are too discerning to give you much, then.
Caeli: Actually, they will give me thousands of dollars.
Elliot: That's true. That's a small enough amount that it's no big risk to a rich person. And even someone who works at minimum wage will make many thousands of dollars per year. So anyone can pay that back.
Caeli: But I can get it now, before I make it. It could help me get started. Say I wanted to work with computers, but first I needed to buy a computer and take a few classes. I could get money, now, to do those things, and pay it back later. That's so useful.
Elliot: Yeah. Without people willing to take a risk on you, it'd be harder.
Caeli: You've mentioned force a few times.
Elliot: When people trade, they both think they are benefitting. And they usually really are, because they have different needs and priorities. This is purely good, and it's purely voluntary. The reason people trade voluntarily is that it helps them. Their greed -- their desire to benefit themselves -- makes sure I have plenty of people to trade with. If they weren't greedy, they wouldn't be motivated to trade with me. They wouldn't bother. That would suck.
Elliot: If someone was doing something at gunpoint, no one would call that greedy. Greedy actions always refer to things people choose to do, voluntarily, because they want to. It's meant to slander their motives. But never mind that. It proves the person is living freely. That is great.
Caeli: But what if their motives are bad?
Elliot: Who cares? As long as they don't hurt people or do criminal actions then you have nothing to complain about.
Caeli: What if I don't like it?
Elliot: As I've said, he hasn't hurt you. He's just living his own life. Leave him alone. Just as you want to make your own choices, let him make his. That's what living in a voluntary way means. No one does anything they don't want to. People have a right to their own lives.
Caeli: But that could lead to disasters, when smart people are prevented from intervening and helping avoid disasters.
Elliot: Interventions are also capable of leading to disasters, and in fact they frequently have.
Caeli: But imagine I'm really sure I should intervene. Then if I only intervene very selectively and carefully might that be best?
Elliot: No. If it's such a good idea, then what's the point of using force? Persuasion will be easy.
Caeli: What if it relies on something only I know?
Elliot: Tell your idea to people.
Caeli: They might not understand.
Elliot: You could solve this by figuring out how to explain it better. So that's one solution available to you. You could also solve it by explaining to them that you know something, and it's very important, but they don't understand, but despite that you'd really like them to take a certain action that will have good results. You could persuade them to do this. So that's another solution available to you. Third, you could think of a way to make their intended course of action not cause a disaster.
Caeli: That's cool. But will I really be able to make their mistake not cause problems?
Elliot: Often, yes. There's a very common example of this. Suppose an airline company is going to need a lot of fuel, and you know the price is going to go way up soon. What do you do? Well, you could tell them to buy a lot, so they don't go out of business. But the don't believe you. Now what? Easy. Buy fuel yourself. As the price goes up, sell your fuel, thus increasing supply and keeping the price from going up as much.
Caeli: That's great. Not only have I helped keep the price down, to protect the airline, but I've also made a profit. Greed could motivate me to save a lot of companies.
Elliot: Yeah. Keeping prices stable is very profitable, and it helps people a lot.
Caeli: I'm going to go. Any parting words?
Elliot: "Greed is good" is a cheat code in Warcraft III.

Elliot Temple on October 22, 2006

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