Moments ago President Obama announced several new rules for executive compensation for any corporations receiving “exceptional” amounts of public funds. One rule is that executive pay is capped at $500,000 and their stock options cannot be cashed in until every penny of public money has been repaid. Third, he said executive pay and perks would be public
While the President did not describe the current executive culture as greedy, he did call it shameful in no uncertain terms. He also used the words “culture of narrow self-interest.” Is it not greed when executives pay themselves many millions and even billions while simultaneously their corporations implode financially and thousands of lower level employees are fired?
The dictionaries generally agree: greed is an excessive desire to acquire or possess more than what one needs or deserves. Last year’s book Richistan, which I reviewed in a earlier post, describes a greed-driven social class of the newly, ultra-rich. An estimated 10 million Americans belong to this social class, some of whom like Madoff ran billion dollar fraudulent schemes, unable to control addiction to money and ultra rich lifestyles.
The lucky rich, as I dubbed them, are not the only greed-driven Americans. Greed appears to have clouded the judgment of millions of Americans who signed for mortgages they could not afford or put tens thousands of dollars on their credit cards.
So, greed may be the most succinct lens to view the current financial crisis. Not only does it help to explain why it happened, but it suggests a way to get out of it. Continued acquisition of material goods and services that are not essential would stabilize the economy. It would not return us to the previous growth in GDP, but it would be the foundation for a culture and an economic foundation that emphasizes productivity and social well-being. It would be a society oriented toward the future not immediate gratification.
This model of society is highly compatible with President Obama’s goals for our country. In his Chicago acceptance speech he advocated a society where we “look out for others as well as ourselves.” Now, that is a recipe to avoid falling into the pernicious pit of greed. And it applies equally to bailed out corporate executives as well as the rest of us.