Saturday, September 01, 2007

On Greed

Greed is one of the deadly vices in old-time Christianity. Not so much in some of the newer interpretations seen among the fundamentalists in the United States. I've read about churches where the sermons are all about how Jesus will give the faithful more stuff in this life, too. Does that remind you of the old Janis Joplin song about her asking God for a Mercedes Benz and a color tv?

When did greed turn into a virtue? Probably quite a long time ago, because capitalism does require it to be rehabilitated. But it's the combination of greed and ignorance that has fueled the housing markets crisis; greed mostly on the side of the sellers of loans and ignorance mostly on the side of the buyers of loans, though not completely.

What IS greed? I'm sure there are good definitions to be found by the click of the mouse, but I don't want to know what they are because then this post would end right here. It's more fun to try to figure a definition out of the pure air that floats inside my head.

The first aspect of my definition would be that greed doesn't really apply to, say, a starving person's dreams about fantastically excessive meals. That person is not being greedy; only starving. In a similar vein, a poor person wanting to buy a modest house he or she can't really afford is not greedy. Thus, wanting something very much is not in itself a sign of greediness. We all have dreams and desires and needs.

The second aspect then has to do with the inappropriateness of certain dreams or desires. If you already have enough food and enough shelter and so on but you still want more then you are probably greedy. Now, this is not a definition from traditional economics course where a consumer is always assumed to be on the road to ever higher levels of consumption and only held back by the inevitable constraints of money and time. But in reality people do sometimes sit down and say, in a quiet and zen-like voice: "I have enough material possessions."

Note that the question of what is "enough" is not something easily determined from the outside. But clearly one can have too many cheesecakes and even too many Rolls-Royces. The sad part of greed is that a genuinely greedy person will never be satisfied, by definition. Perhaps that is what made the early Christians view greed as a vice: it hurts.

How do greed and ignorance dance together, then? I pointed out those two as the culprits in the housing market collapse. Ignorance in that context has to do with three things: First, most mortgage-seekers have very little understanding of interest rates and defaults and so on. Those are hard topics to understand without some training. Second, humans tend not to take the long view in general, and even less so when times are hard right now, say. If you live in a crisis, you want to struggle your way through that crisis and then think of the rest of your life. But if life is nothing but a crisis after crisis, well, you will live in the short-term by necessity. Focusing on the near future makes things like balloon loans seem harmless, and an adjustable rate mortgage something really helpful. But today turns into tomorrow and so on, and suddenly you can't afford the new higher interest rates and bankruptcy beckons.

Third, the mortgage lenders also suffer from ignorance. They may be aware of their greed, at least some of them. But they may be ignorant of the overall effects of their individual acts. It wouldn't matter if one lender seduced borrowers into bad loans, but it does matter when many, many lenders do that at the same time. The outcome is a lot of people working in the lending industry losing their jobs.

If you watch commercials on television or ads on the net you know that greed is encouraged every day of our lives. There is always a solution to something that should bother you, and the solution is achievable by just paying some money. It was only a few days ago that I learned I could get a 500,000 dollar mortgage for less than a thousand a month! Honest. Of course I didn't read the small print on the offer, and by now the offer has disappeared into the Orwellian Memory Hole.

The short point of all these musings is that we have to decide how to deal with greed. Is it the engine that drives the society? Or is it a vice? And whose greed is it that matters here?