Tuesday, April 14, 2009

Greg Melleuish, Wall Street, theories of state and greed is good

Gordon Gekko's never really gone away. Just when you think you might have driven a wooden stake through the vampire's heart (silver bullets and garlic not being up to the job), along comes the mantra 'greed is good' bobbing up here, there and everywhere. A while ago there was even talk of turning out Wall Street 2, but I guess recent events have made a work of fiction redundant.

You find the greed is good mantra in the strangest places, not just in Wall Street, its natural home, or in purveyors of financial derivatives, or even in Bernie Madoff's jail cell, but in the University of Wollongong, beating in the heart and the head of one Greg Melleuish, associate professor in the school of history and politics, as shown by his column Greed is good, lest we forget it.

Perhaps Melleuish has over-dosed on too many staff meetings, and filled out too many student results in triplicate, and suffered under wayward bureaucrats down at services and facilities, and now  dreams of the day when he can break free and make lots of moola.

But first it takes some pretty dancing on a pinhead to nail down the virtues of greed:

Greed is something that can be found in all human communities. Human beings seek to enrich themselves. They can do so by commerce, by crime and by war; it goes without saying that commerce is the only acceptable means of enrichment in a civilised community.

Greed cannot be eradicated from human nature. Kevin Rudd should know this to be the case. The other important thing is that there are other human propensities, such as the lust for power, that can be at least as harmful to civilised existence as greed.

Well yes of course commerce is the only acceptable way to decently service your inner greed, but what do you mean by commerce and what's acceptable and what's the finest line we can draw? Do you mean tax minimization, or do you mean Swiss bank accounts, or are we talking about the bottom of the harbor here? Or anything you think you can get away with? Or have you got your eye on my Cayman Islands account, because that's strictly off limits and out of bounds for any kind of theoretical discussion.

What's wrong with setting out on a genuine business opportunity selling diet tea, and then suddenly discovering the product doesn't work, or worse still, doesn't sell? 

And what happens when greed gets tangled up with the lust for power, and suddenly you have a millionaire Prime Minister? Like Ke ... like Silvio Berlusconi. With a really rich wife ... like Ther ... like Cherie Blair when that holy Roman christian Tony Blair was in office ...

Greed can have beneficial effects. It is because men and women seek to enrich themselves that they develop new industries and create new products, thereby creating wealth, employment and an enhanced standard of wellbeing. No one would want to see greed eradicated because, to paraphrase an old saying, private vices can indeed provide public benefits.

Well yes, if only someone had mentioned that to the hapless souls who toiled away on the idea of the internet, largely at the behest of the military and locked away in the confines of academia. Few of the original contributors got truly rich from their work, and some of them even had funny ideas about this form of information distribution as being a gift for all kinds of users, for the good of humanity, the kind of nonsense you still find occasionally bobbing up in the form of free ware and digital goods stripped of copyright control mechanisms. Warez rulz.

Now I grant you the internet is nowhere near as useful as financial derivatives, or junk bonds, or packaging up subprime mortgages to produce a global recession, or flipping houses after a day in your hands, or entering into private public partnerships so that you can socialize your losses and privatize any profits, or getting a television license so you can print money using space supposedly owned by the state (though end days for that rort are drawing nearer).

But let's just celebrate the wonders of greed, and in particular the virtues of entrepreneurs, who really do the vital work in society, by ripping off inventors of good ideas so that they can commercialize them and take them into the marketplace, while ensuring there's a fair, even generous, profit share (I'm thinking five per cent you, ninety five per cent me).

Now we've accepted greed is good, where does that leave us? Well it seems in the hands of mad fanatics who want to restore the Soviet Union's centralized policies to working order by putting all their faith in the state:

The big problem is that the alternative - putting all our activity under the tutelage of the state - is much worse. Many intellectuals make the preposterous assumption that the state and its employees are somehow more moral than other people. The fact is that those who run the state are also driven by greed and the lust for power, but that as their opportunities for enrichment are limited they compensate for this by the quest for power.

Talk about a straw dog. Bring me the intellectual who hungers for the Soviet Union or even thinks that giving Patty and Selma the power to hand out drivers' licenses is an unmitigated joy or somehow more moral - though I do expect teachers to have a little more on their minds about the joys of education than the notion that somehow education is an arena for greed and the lust for power. 

Surely ideas for their own sake are acceptable, a bit like art being for art's sake, or for the spiritual enlightenment of humanity as well as turning Picasso into a millionaire. (Not that he did much with the money, except turn out more bizarre abstract paintings of no use to anyone, except as an excellent form of financial speculation and peacock displays of greed).

Poor Melleuish is worried about the size of the state, and the end of the neo-liberal dream, and the ever-expanding power of the state, and its tendency to turn us all into form-filling state.

The history of the past 100 years in Australia confirms this argument. In its lust for power the state has grown enormously as more and more aspects of our existence have been seen as worthy of state regulation.

Where to begin with this old saw? How did that abstract idea the state suddenly develop its own metaphysical shape, and a lust for power? How did the social contract go so wrong? Why a hundred years ago we never had to worry about which side of the road a horse might canter. Now we have the state telling us that we must drive on one side of the road, stop at stop signs, and on and on, in an endless orgy, a veritable book of rules, we're supposed to learn so we can get a license (at our expense), just so we can crash into one another.

That bloody state lust for power. You can see it with guns. One time you could bung on a massacre and nobody much minded about you having a license. Now it's sit tests, prove you're a hunter, do this, do that. And as for those dudes sending squillions around the world in the form of electrons, why do they need any supervision at all?

Damn greedy state. All part of the lust for power which saw the state grow to enormous, ginormous size under George W. Bush. Funny neo liberals, thinking they could somehow downsize the industrial military complex while waging wars around the planet. What were they thinking? I guess it was lust for power. Or was it greed for oil?

But Melleuish is tortured - what if we silly leftie types, bombed out of gourds on coffee, think of the state as good? Well actually old sport, I think of the state as a somewhat abstract concept, a bit of sleight of hand, like a company, wherein you pretend that the shareholders are the dominant concern of everyone, while the board and the management make out like bandits. There's no intrinsic character to a state per se, so much as the character that emerges from the head chappies with their hands on the levers of the political association and the set of institutions designed to run it. (About the best you can hope for is to kick some of the bastards out after a few years, then wheel in a different set offering untold wealth and freedom from state powers, except in the matter of tax and assorted other crucial pickpocketing).

In that complex negotiation, there's always some particular special interest, or special pleading that suggests that one set of interests within the association are more deserving than others - like I need to make a squillion if you want to make this economy work, and you can make minimum wages because you're an uninventive drone, worker bee or dumbo. It's a neat variation on the droit de seigneur that royalty peddled, to no discernible benefit for the bulk of humanity, for hundreds of years.

Funnily enough, Melleuish is worried because the defects of a bureaucratic regulatory state might not be up to the problems we face in the future:

The sorts of problems facing Australia are, if anything, worse than those facing the country in the '80s. With an ageing population, we face the possibility of being overwhelmed by the expense of running an ever-expanding health and welfare sector.

But mate, I'm greedy. Don't think you're going to tax my hard earned bread to help out an ageing population, and an expanding health and welfare sector. Do you think I give a stuff? You don't think the government should be fixing this sort of stuff, do you? Let me put it another way:

...  I tell you what. I have an idea. The new administration is big on computers and technology. How about this, Mr. President and new administration. Why don’t you put up a website to have people vote on the internet as a referendum to see if we really want to subsidize the losers mortgages? Or would they like to at least buy buy cars, buy a house that is in foreclosure … give it to people who might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?

This is America!

How many people want to pay for your neighbor’s mortgages that has an extra bathroom and can’t pay their bills? Raise their hand!

President Obama, are you listening?

You know Cuba used to have mansions and a relatively decent economy. They moved from the individual to the collective. Now they’re driving ‘54 Chevys.

It’s time for another tea party.

What we are doing in this country will make Thomas Jefferson and Benjamin Franklin roll over in their graves.

Yeah, let's leave the ageing and the health and welfare sector to Rick Santelli. Did I mention my ambition is to be like Kerry Packer and never pay any taxes? Greed is good, and all this palaver about caring about funding doctors to buy BMWs and social workers to buy second hand Volvos is making me nervous.

We need to generate the wealth that will allow us to meet that challenge. That means tapping into the human propensity for greed. We cannot do without it.

Encouraging the growth of the state as the antidote to greed will ensure only that in 2020 Australians will no longer have the resources they need to meet the challenges of this century.

Well I guess that puts the kibosh on Kevin's grand plans for the Ruddstra network. Bloody greedy governments. Who'd have guessed it. They sell off Telstra so they can bring back Telstra, and despite  the privatization and the share price of Telstra working out ever so well for the country and the mum and dad shareholders!

Guess we're stuck with pure, unalloyed, unadulterated greed. No antidote is known at this time. Encouraging the state will only encourage Kevin Rudd, a well known millionaire, or Malcolm Turnbull, a well known multi millionaire. We're all doomed unless we get really greedy. Come on down Gordon, tell us how it's done:

Gekko: Well, I appreciate the opportunity you're giving me, Mr. Cromwell, as the single largest shareholder in Teldar Paper, to speak ... Well, ladies and gentlemen, we're not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company! All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent. You own the company. That's right ... you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes.
Gekko: Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I've been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them!

The point is, ladies and gentleman, that greed  - for lack of a better word - is good.
Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind. And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

Of course, after that fine speech, Gekko gets taken down by the SEC, and caught in a wire tap sting, with his mate wanting to do a deal on his sentence. And surely that's where, without wishing to sound too pluralist a theoritician, like some half baked Robert Dahl, most fair average states end up with a system of checks and balances. 

The world is now a big place, and government actually struggles to keep pace and to keep control of a world always on the move. Especially to stay ahead of very clever people without a moral bone in their body, who understand there's a sucker every minute, and a shake down is a great way to get ahead. And that the wheels of government and law enforcement grind very slowly, as do mechanisms to regulate finance and corporate life, leaving plenty of room for a bonus or two and a new life in Mexico.

Try getting something done in Mumbai without getting a gang involved to smooth the way for the deal; try following the road laws in Beijing, and see how long you stay alive.

The rogues and the greedy will always be with us, as will the power hungry, while the bulk of the citizenry will settle for a quiet life if there's a decent living to be made, a roof over head, the odd bit of entertainment, some occasional fornication, some hope for their children, and food on the table. 

Somehow contending that the state is bad and greed is good is as absurd as contending that the state is good, and greed is bad.

Everything in moderation please, or otherwise you'll have an obesity epidemic. What's that? We've got one. Maybe greed is bad, but only certain sorts. Put down that third doughnut now, for yourself and your country. Gosh darn, now I'm sounding like a state dietician, second class in the school canteen ...

(Below: Patty and Selma, the ugly face of state bureaucracy).

1 comment:

dorothy parker said...

sorry, comments containing over a squillion words, longer even than the loonish ramblings of the original loony post, will be deleted. Time to get your own blog, and loon away there.