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Well-regulated greed is good

Jack Balshaw 7/17/02


In the 80's, greed was good, success was measured by how much personal wealth a person accumulated, the Reagan era emphasized this type of success. In the 90's it was the same but it wasn't called greed because so many people were now playing the game and you don't want to insult the masses. Making money in the stock market wasn't greed directly because the profits simply came from "smart investment". If some of the company CEO's were greedy, that didn't spill over on the investors.

Now, with the fall in the stock market since 2000, greed is bad again. Someone has to be blamed for the losses and of course it's those same people whose 80's and 90's greed brought so much pleasure and profit to the investors in those years. CEO's that were treated like rock stars are now taking the fifth before congress. But, have the basics really changed?

Greed, or well-regulated greed, can be a very beneficial motivation. If we look at our own personal lives we would have to admit that we're motivated to increase our own personal income. We want pay raises or increased profit. Except in the upside potential, what's the difference between stock options and bonuses? We don't call this greed because we mostly don't have the option or the control to grab excess success for ourselves.

Greed implies being in a position and having the opportunity to take UNFAIR advantage of situations solely to benefit ourselves personally. If you don't take UNFAIR advantage of a situation, then all you're doing is making good decisions. But come on now, isn't it a little bit of greed that makes a person want to double, triple, quadruple their net worth?

I don't think greed is bad. It's only bad when others get hurt as the results of the greed of small groups of people who are only interested in maximizing their profits. If the companies' shares and the stock market were still going up do you think anyone would care? No, our present reaction is only because we want to make someone pay for our losses.

How could this all be straightened out? Simply by putting into place laws and regulations that would take away from the greedy what they most desire (money and/or power) if their actions became excessive.

I get a kick out of some of the proposals to do this. One is to put in place a law or regulation that would force anyone who got caught unfairly profiting from such behavior to pay back his ill-gotten gains. Wouldn't car thieves and burglars like to have such an option, get caught and give the item back but if you don't get caught you get to keep it.

The measure of how fairly this problem is resolved will be if we, the public, think it would be fair to treat a common crook the same way, and that includes a fair amount of jail time.

As this topic is mainly about the stock market, the solution must focus on that. To regulate the market to the extent necessary will be costly but easily paid for. A simple mechanism would be to charge a regulation fee of one penny for each stock traded. The daily sales on just the NYSE and NASDAQ would bring in $25 million a day or over $6 billion a year. The Security Exchange Commission's annual budget is only about $500 million a year.

A wild idea - we could fund the country's whole health care deficit with only a small charge on each stock trade.

But getting serious again, the money needed is readily available, only the political will is in question. This will be a good test of whether our legislators care more for the special interests or the common people. Don't bet your life savings that the common people will win.


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