I have seen several articles about the demise of greed and that we are now in a new age where we have learned of our mistakes. However, there are several signs that ‘greed’ might have taken a few blows but it is by no means dead.
There are different perspectives on why people are what we would call greedy. One would be that greed is the same as being evil or bad, another is that we as people wants what is best for ourselves and the people that we care about. But that sometimes the accumulation of wealth just gets the upper hand and we can’t control the process anymore.
Greed is part of human nature we all want something either in the form of capital, power, social standing, recognition by our peers or by the public. Greed has many forms and it is not only a matter of monetary accumulation but can be any number of efforts to acquire more of something. Sometime we call greed something else when we see it such as ambition, dreams, entrepreneurship or aspiration but in essence it is the same thing.
Our financial system is fine-tuned into greed. If people did not have ambition, had hunger for more or were not curious as what happens in other parts of the world our global financial system would collapse. We are simply relying on that other people want to have more even though they might have enough.
But because greed is branded as something bad the financial system call it other things. When business students around the world go to class they are never thought what greed is or how to identify greed in one of its other forms. In the business discourse we call it Profit margin, Earnings Per share, remuneration or compensation plans or maybe stock options incentive schemes. The child has many names.
In the recently released FCIC report greed was mentioned nine times in the over 660 pages of document while agreed (which is striking a deal or making an agreement between two parties for mutual benefit) featured 76 times. So what really put the whole system under pressure were not people who were evil but rather two people who could see a mutual benefit in agreeing and making a deal. The word bonus was used 34 times and profit or profitable was used 106 times in the document.
In Denmark the Amager bank just failed after it had to take a loss of around 3 billion Danish kronor (around 400,000,000 €). The bank really had it coming after it had have endeavoured into the world of high risk real estate investments. In the struggle to survive the bank tried again and again to raise capital flashing one attractive stock proposal after another. And people bought it. They thought that what the bank told people was the truth that they did not have any other agenda than the well being of the bank while they in reality was just pouring water on a already stranded whale. If the investors had taken the opportunity to take a walk around Copenhagen and looked at the projects that the bank had invested in it would be obvious that what was claimed and what was happening in the real world did not match. I wrote a piece a few weeks ago on the bubble building up in China and one can see that if reality and the proposal on paper does not match it is properly because something is about to go terrible wrong. The same lesson goes for the Amager bank. Its financial proposals defied common sense, but because of greed and the unwillingness to identify if there were any connection with the real world investors lost all their money.
So when reading the news or when you are going through the financial statements of the companies in your pension fund ask yourself if you can find greed. Among all the big numbers that companies toss around ask yourself if the management of this particular company, have left planet earth and gone to another system where reality does not really matter. Because if there is something that greed really hates it is the use of common sense.