ECONOMIC ANALYSIS: Talk of corporate greed falls flat with this economist

It is an election year again, and talk of corporate greed, that stalwart in the lexicon of electioneering, once again fills the airwaves. An economics columnist usually wouldn’t write about matters of sin. But attacks on greed always seem to have a policy message attached, and that is a big problem for all of us.

Formally, corporations cannot be greedy. Corporations, not being human, cannot feel the weight of sin and so do not exhibit greed any more than they do pride, envy or lust. (Recent news would suggest lust is the special province of the public sector.) Leaving these flawed rhetorical flourishes aside, there are bigger problems in targeting greed in an election-year campaign.

Corporate greed is a bit dodgy to define. Is it the accumulation of wealth, or the behavior of a corporation that is the metric of greed? Here’s where the campaign piffle becomes deep. Not having windows on men’s souls, we can look only to accumulated wealth or behavior to identify greed. Both measures will be found wanting.

The accrual of wealth cannot be a bad thing in and of itself. Even in the extreme, for every corporate scandal, there’s a Buffett or Gates copiously transferring his wealth for the good of others. Even more puzzling is that both men continue to accrue corporate wealth, while also engaging in private philanthropy. Further, sin (and that’s what I believe greed to be) is hardly the special province of the rich. The incidence of greed among pickpockets is at least as high as it is among corporate executives.

If we look to corporate behavior for greed, we will likewise be disappointed. Violations of such things as environmental standards, anti-trust laws and the like are judged bad (that is why we have such legislation). Here, again, the local gas station is at least as likely a culprit of both misdeeds as any international corporation.

Associating business practices with sin is simply lazy logic. The enduring strength of Adam Smith’s thinking debunked this notion two centuries ago. Writing in 1776, he tells us: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.”

Smith goes on to say that “every individual necessarily labors to render the annual revenue of the society, as great as he can … he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

Adam Smith told us something that might serve us well to remember: While greed is bad for the individual, it is irrelevant for the economy. Politicians who pander with talk of corporate greed have clearly exhausted their relevant ideas. They speak of greed, in hopes of exciting envy. And that is a real sin.