Do free markets run on greed? Is greed a good thing?
The answer to both questions is a resounding “no.”
The Gordon Gekko-inspired idea that greed is good is actually a complete perversion of freedom. Free markets don’t run on greed; they run on service.
This might come as a surprise to a lot of students, many of whom are taught in school that love of money is what powers capitalism.
But just think about it: the most successful businesses don’t cut corners—those guys end up in jail.
The people that succeed are the ones that serve their customers. If you want to make money in the long term, you have to focus on making the world a better place.
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One of the questions I get all the time as an economist is, “Don’t free markets fundamentally run on greed? Isn’t greed good? Isn’t that the Gordon Gekko line?”
The answer I have to give to this is, “No.”
That’s exactly backwards. Free markets do not run on greed. Gordon Gekko wasn’t right.
Free markets fundamentally run on service. I know that sounds crazy to people. Is that really what is at the heart of it? It is.
Think about it for a second. Think about the businesses that succeed over the long term. They’re not the greedy guys. They’re not the guys who cut corners. Those are guys who end up in jail. Those are the guys who end up out of business.
The great businesses in our world are the ones that serve customers time and time again. They’re not greedy. They’re interested in making the world a better place.
As crazy as it sounds, if you want to make money over the long term, you have to actually make the world a better place.
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