RDN on BBC1 Sunday Morning Live
SML had me make a little movie on the value of greedy and especially greedy bankers (my script is below) and then debate the issue with Diane Abbott and Rosie Millard. Luckily, Ruth Porter of my beloved IEA and Jamie Whyte, the free market philosopher, Skyped in to say some of the things which I ought to have done. Here’s what I wanted to say and nearly did (these things never go quite to plan)…
My main line is and was that greed is an essential part of capitalism and its vigour and that (contrary to the wisdom of one’s mother’s knee or simplistic Christians) it is not a sin. It is, of course, an appetite and a temptation. But it is greed – aggressive hunger and ambition for wealth – which powers much crucial entrepreneurship and not least banking. The point is, of course, that everyone needs to operate their capitalistic enterprise within strong discipline. For my money, that is best imposed by the market, with bad firms being penalised in their profits, if need be by bankruptcy. There are problems in banks going bust, of course: savers need protection, and there is a vital discussion to be had about how to do that. But law, regulation and policing have a crucial role: fraud, especially, should be hounded down.
I am pretty sure that there has been a failure of character at the top of our various elites, from politics to finance. My own preference is to discuss the role of professions and professionalism wherever people have a public duty but conflicting cash incentives (I am thinking of doctors, engineers, and at least some bankers). Where markets, regulators, shame and the police fail it may be that individuals should lose not only their jobs but their licence to operate.
Here’s the script of the little film I made. It’s a bit longer than the one broadcast:
Look at all these headlines. Anybody would think that banking and capitalism are in deep trouble and it’s because people got too greedy.
Capitalism has lifted people out of grinding poverty and is still doing so. It didn’t do its good work because of masses of nice people co-operating together. It did its good work because in every society there are a few massively motivated, greedy people who want to get rich.
We don’t have to like these greedy people, though they may be quite kind to their mothers and quite fun around a dinner table.
But we do have to hope there are lots of them. These are the risk-takers, and quite often they are the alpha-males of the species. It’s the greedy few who provide the goods and services, and the jobs, for the rest of us who are less red-blooded.
Capitalism does its best work by allowing greedy, aggressive people to go head-to-head as they compete for our business. We may envy them their Ferraris and speed boats, and their mansions, but we are right to recognise the value of the work they do.
It’s a Darwinian world out there. Business is one long quest for efficiency and survival and the right to spawn other businesses. The weak go to the wall, and that’s good.
Bankers don’t need to be highly moral: they don’t need to worry about being or even doing good. We shouldn’t want our bankers to come over all soft and caring and community-minded. We shouldn’t want to vote for them, or like them.
Indeed, we should try to interfere with them as little as possible. We will have safer banks when greedy bankers compete for business with very few rules. Some will go out of business and if the market’s working well, savers and investors will have a fair idea of which ones are risky. Some greedy bankers will get very rich by showing how safe their banks are for timid investors, others by taking big risks for big profits.
But we won’t get better bread, or cars, or banks by disapproving of greedy people getting very rich or by wanting them to undergo moral conversions.