Greed is Good


From Thursday's SCMP:

Let profit be our guide

It appears that free-market practitioners find it difficult to articulate their environmental position. Maybe a layman can help.

As we know, Hong Kong's success is built on its accomplishments in business. Success in business comes from strict adherence to the principle that greed, counter-intuitively, benefits mankind, whereas compassion (as in discredited ideals such as socialism and communism) does not. The key point is that the free-market system needs little maintenance, and any misguided meddling by populist lobbies has disruptive effects.

Once this concept is grasped, it becomes blindingly clear why calls for business morality are actually counterproductive. Pollution is neither good nor bad, only profitable or unprofitable. If business cannot profit by reducing air pollution, it will profit by creating it.

I would therefore suggest that our free-market practitioners carry on as they were and our nattering prophets of doom on global warming mind their own business.

JIM SWAN, Kowloon

On the one hand, part of me thinks that this is evil. "Compassion does not benefit mankind". If that were true, we wouldn't be human. We would be Kif or Vulcans or some other race where we would leave our children out to starve and only the strong ones would come back to us.

On the other hand, a part of me (a very small part) admires the succinct way the argument has been presented in pure market terms. It's boiled down a complex argument to the balance sheet and demonstrated why corporations are not reacting to global warming.

But on the gripping hand, it also highlights a shortcoming of the free-market system as it exists today. It only looks at the extreme short term and it ignores external effects or costs which can be passed onto others. "There is no profit to be made from recycling, cutting carbon emissions, or curtailing deforestation *today* therefore we will not take action".

But what about a longer term view? If nothing is done about air pollution now, what happens when it makes working and living here impossible? All of those businesses who ignored it will go under. It turns out that a decent environment is actually a critical long-term consideration for business, but it has no apparent immediate profit.

If the cost of cleaning up after themselves was imposed on corporations, they would behave more responsibly. As it is, they behave like sociopaths, ignoring the costs of their actions on others as long as they percieve some benefit to themselves.

The short-sighted view of the free market Mr Swan espouses ignores some of the inputs to making a free market work. The market won't work if there are no people to work it, no air to breathe or no place to live. In short, the free-market is not independent of a functioning society or a healthy environment, no matter what the Randroids would have you believe.

Of course, the key point that "the free-market system needs little maintenance" isn't true either. Any market needs regulation to prevent abuse. Unrestrained free trade (laissez-faire) leads to monopolistic abuse.

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This page contains a single entry by dave published on October 5, 2006 2:59 PM.

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