Tag: Economics

From September 2011.

Thursday’s lecture in Wichita by economist Walter Williams featured a section covering how greed, or what some call enlightened self-interest, is the best way to produce good acts.

This lecture was presented by the Bill of Rights Institute and underwritten by the Fred and Mary Koch Foundation.

When government is used in an attempt to do good, it requires either elimination or attenuation of private property and market forces, Williams told the audience. But it is private property and the desire by people for more that motivates people to do the difficult and laborious things that benefit their fellow man. It all happens without government. In fact, government involvement in the market reduces the motivation of people to acquire, protect, and improve private property.

Here’s a transcript of Williams explaining how this works:

But do-gooders fail to realize that most good done in the world is not done in the name of good.

If you were to ask me “Williams, what’s that human motivation that gets wonderful things done? What’s the human motivation that you like?” I tell them greed. I love greed.

I’m not talking about ripping off people, fraud, and misrepresentation. I’m talking about people trying to get as much as they can for themselves. Now consider the following, because a lot of people don’t understand greed.

Last winter we had Texas cattle ranchers getting up in the dead of winter, running down stray cattle and trying to feed them, making a huge personal sacrifice to make sure New Yorkers had beef on their shelves.

This summer we had Idaho potato farmers getting up in the morning, doing back-breaking work, sun beating down on them, bugs biting them, making this personal sacrifice so that New Yorkers would also have potatoes.

Now, why do you think they’re doing that? Do you think they’re doing that because they love New Yorkers? They may hate New Yorkers — I’m not that wild about New Yorkers myself — but they make sure beef and potatoes get to New York every single day of the week.

Why? Because they love themselves. They’re trying to get more for themselves. And this is what Adam Smith was talking about in The Wealth of Nations: That the public good is served best by the private interest. That is, by people trying to get more for themselves. And in the free market, in order to get more for yourself, you have to find ways to please your fellow man, to make your fellow man happy.

How much beef and potatoes do you think New Yorkers would have if it all depended on human love and kindness? I’d be worried about New Yorkers.

Let me give you another example. Some people tell me “Well Williams, instead of saying greed, you’re trying to win friends and influence people, why don’t you say enlightened self-interest?” Well, that’s okay, but I like greed instead.

Let me give you another example of the virtue of self interest and private property. I have often said that I don’t care much about future generations. Some people think that’s awful. People have sometimes asked “Williams, why don’t you care about future generations?” And I ask “What have future generations ever done for me?”

I mean, some kid being born in 2050, what has he done for me? And if he has not done anything for me, how then am I obliged to do anything for him? Where is the quid pro quo?

But however, if you watch my actual behavior, my behavior would belie that sentiment.

I have a very nice house and property in Valley Forge, Pennsylvania. Several years ago I took $400 that I could have used to buy two bottles of Chateau d’Yquem Sauterne wine and selfishly enjoyed it all by myself, but instead I planted some trees on my property.

Now when those trees reach full maturity, I’ll be dead. There will be some 2050 kid swinging in my trees. Mrs. Williams, who is now departed, made extensive improvements to our house — built a big sunroom — with my money of course. That sunroom is going to outlast both of us, and there’s going to be some 2050 kid tracking mud in my sunroom.

If you ask the question “why did I make those sacrifices of current consumption to produce something that’s going to benefit somebody in 2050,” the answer’s very easy: The nicer my house is, the longer it will provide housing services, and the higher the price I get when I go to sell it.

That is, by pursing my own narrow selfish interest, I can’t help but make a house available for future generations, whether I mean to or not.

Now, would I have the same incentives if the government owned my house? Would I have the same incentives if there were a 75 percent transfer tax when I went to sell my house? Whatever weakens my private property rights interest in that house, weakens my incentive to do the socially responsible thing, namely, conserve on the scare resources of our society.

Let me give you one other example. … I was listening to NPR, a number of years ago, and people were picketing the UN because they were concerned about the extinction of the giraffe, the gorilla, and the lion. So I wrote down a list of animals that people were in a tizzy over the possibility of their becoming extinct.

Then I wrote down another list of animals, very valuable to us, but people are not worried about them. I said “How come people are not marching for the chicken? Why are people not forming save the pig clubs?”

What’s the difference between these two lists of animals? The essential difference is that with this list of animals — cows, chickens, and pigs — they belong to somebody. Somebody’s personal private interest is at stake. But this other list of animals — they don’t belong to anybody. Nobody’s personal private wealth is at stake. If you’re concerned about the extinction of various animals, I would recommend trying to privatize them.