Sunday, November 13, 2011

Greedy or Simply Needy?

I lived in Denver for a few years, back in the 1980s. It was a great experience for a guy who grew up in NY and I wouldn’t mind going back someday. I worked in a national credit card business at the time so the local economy didn’t affect me too much. Others weren’t so lucky.

Colorado is a boom or bust state. In the 80s, it boomed early on high oil prices. It went bust later on the collapse of oil prices. Big Oil closed all their Denver operations when it became economically infeasible to explore for oil in the Rockies. The contractors, most of whom were geologists and engineers went bust along with them. Many left town leaving a declining real estate market and failed regional banks and S&L’s behind.

Sound familiar? It was a microcosm of our national banking crisis. The difference? The banks weren’t too big to fail. The Federal Deposit Insurance Corporation (FDIC) spent about $900B to take over failing banks (an amount which they later recovered by raising rates on its member banks), the banks’ shareholders lost all of their stock, none of the executives walked away with multi-million dollar severance packages and no one occupied Denver.

Too bad it didn’t work that way in the financial crisis of 2008.

Last week, the press reported on an Organization for Economic Cooperation and Development (OECD) study that concluded that the wealth gap between young and old is growing. The report went further in concluding that economic mobility from lower to upper income strata was more evident in Canada and many European countries than it is in the US.

Naturally, this information is used as fuel for those sympathetic to the Occupy Wall Street movement (OWS). I wonder how many of those who reported on the OECD study actually read it (which you can do by clicking HERE).

What the report actually said was that upward mobility was primarily a function of parental influence on education starting in early childhood and extending through college. The gap between young and old, rich and poor is the result of how well educated you are.

To quote directly from the report: “Parental or socio-economic background influences descendants’ educational, earnings and wage outcomes in practically all countries for which evidence is available.”

Many pundits have speculated that the fervor behind OWS will peter out when the weather turns too cold to camp out in city parks. Even if that happens, the underlying problem – young adults who have worked hard and played by the rules can’t find jobs – will not vanish with the first snow. However, over time something must change.

Here’s my prediction: in the absence of jobs, many will start businesses. Yes, comrades, they will become capitalists. They will go from being needy to being greedy. As one pundit put it, their Plan B will become Plan A. And, there’s an app for that. "Start Your Own Business" will set you back $.99 in the iTunes store.

I have sat in on many presentations on how the Internet – Google, Facebook,,, YouTube, etc. – are changing the way business is done. When they are over, the middle aged listeners in the audience usually remark that they don’t get it. If I were 25 today, I would see those folks as too fat, dumb and happy to stand up to the competition I can offer.

Those too sluggish to adapt to the new world will end up like the last buggy whip manufacturers. We live in a world where $600 can buy a disk drive that would store all of the world’s music, where 5 billion mobile phones are in use and 30 billion pieces of content are shared on Facebook every month (according to the McKinsey Global Institute).

Creative entrepreneurs have figured out how to use technology to destroy old business models in healthcare, music, journalism, libraries, education, travel, supply chain management and the credit card industry – among others. Just as the transition from an agricultural to an industrial economy caused economic disruption – lost incomes among those whose skills weren’t adaptable – the transition to a global information/Internet based economy is doing the same right now.

And, just as the OECD study concluded, education is critical to making the adjustment.

What if you’re not an A student and can’t figure out how to disrupt an old business model? Dilbert cartoonist Scott Adams wrote of his experience creating new businesses for himself while in college in an Op-Ed piece in the Wall Street Journal last April. Titled "How to Get a Real Education", he outlined the real world skills required to make a business work – any business. Not just those that are disruptive.

Free market capitalism has been the basis for American prosperity since our nation’s founding. Successful business people act in their own self-interest. It doesn’t result from greed; it results from need. That one man’s success can cause another man’s failure is part of the natural order. Those who seek to change it must consider that our prosperity will suffer.

Back in Denver, one enterprising geologist opened a micro-brew pub in an old industrial part of town called LoDo (Lower Downtown). Wynkoop Brewery became a popular restaurant in a bad part of town. His Plan B became Plan A.

Today that successful entrepreneur is governor of Colorado.


  1. The fulfilment of needs = good
    The fulfilment of greed = bad

    The current economy is an economy not based on need but on greed and power. We need to go back to an economy based on needs. This will inevitable include the collapse of free market capitalism since this system fuels greed with its basic tenets.

    Possible alternatives to capitalism :
    Posted by John

  2. Welcome back, John. I am surprised you didn't mention communitarianism.

  3. Marc Farris • The OWS with whom I have spoken, and seem be be interviewed by the press have no idea why they are there. It is a party with issues as an afterthought.
    Issues such as "My student load debt is too high for me to service with jobs available to me".
    I manage a precinct voting poll for elections in the county in which I live. I had a poll worker who had just graduated law school, who had an horrendous student load debt. He bragged that he could have worked to earn some money during Summers and other breaks, but "he deserved" a ski trip, or a trip out of the country because of his hard work. He was able to borrow money under the student load program to take these trips, which he must now repay. He was hired by a large law firm as an associate at a large salary that, according to him, he still could not make student loan payments. He was laid off by the lawfirm, and I would assume it was because he had the same work ethic for them as he displayed at the poll.
    He felt owed a lifestyle of his choice, on someone else nickle.
    This is the projection of OWS I see.

  4. Ken Mayeaux • John another intuitive piece. My read, is that there are always too options:
    1. You can sit on your ass and complain about whatever
    2. You can get off your ass and do something about whatever and find a way to make it work.

    Obviously for what I would assume to be the majority of those that make up OWS, they have chosen Option 1. To me, this goes back to one of two causes:
    1. Poor parenting which entails teaching them to succeed and not empowering them to fail
    2. Just how the extreme Liberal bias of our education system and supported by the Liberal MSM is not preparing these young people to enter a world driven by capitalism and not by socialism

    The best line I have heard about the OWS street crowd was offered up by a comedian, I think by the name of Angus Hamilton. "OWS protestors don't know what they want, but they want it now." They are in opposition to all things corporate, which by and in itself is insane. If they were stripped of the products of the corporate world they would be standing in whatever location they are "occupying" totally naked.

    This country was born by the drive of the capitalists and it can only survive by that drive. Greed and Need drive capitalism just as it drives socialism. Unfortunately socialism is a trainwreck, which these OWS protesters were not taugh during the course of their $100K education. Which in a socialist society would not be needed to be paid back. Thankfully we are not there yet, but this administration is trying like hell to take us there and they are providing the support, organization, and approval for the OWS crowd, at least on the surface. Why, because it supports their political agenda of class warfare. They could care less about the plight of these poor misguided souls camping out. If they cared, then they would be helping stimulate an environment where jobs would be created instead of destroying the economic engine of this country and driving big and small business away. There is greed and need in politics too. Unfortunately the politics at hand is counter productive to the growth of our economy.

    Take me back to the time when people believed they were responsible for their own success and they had the examples and tools to get there. Is that being Greedy or Needy?

  5. Communitarianism is more of a social concept similar to nationalism. Each of the three economic systems is compatible with egalitarianism, communitarianism as well as nationalism.
    Posted by John

  6. Marc Farris • Universities have added remedial courses to re-teach coursework that should have been learned in high school. Georgia has just banned these courses for those on hope scholarships [funded by the State run lottery that put numbers running out of business.].

    Students can obtain student loans to "gain" degrees in psychology, and [pick your subject] studies, which ahve no real world application. It's great to study these things, but do so on your own, not in a structure the pretends to be educational.

    Professors salaries have inflated with their desire to no longer teach. Tenure has outlived it's usefullness, especailly with grad students teaching courses they have no desire to teach [& it shows].

    Education is key to upward mobility, but not education in just any subject. Law schools are churning out graduates that have no real purpose in sociiety, so they become government workers to create more work for future law school graduates.

  7. I think you know my position on this. Let’em fail. That’s what a free market does. Protect the consumer (FDIC). Let the banks take their huge write downs in effect making them smaller and perhaps cheaper to be bought in the open market. Just like houses. Would it be any more painful than now? Are the banks lending their surplus of capital now? I don’t see it.

  8. Ken Tevebaugh, P.E. • I agree - sort of.

    The premise is that the leaders and entrepreneurs of the future will be well educated.

    While I was able to go to USNA for $600 and 5 years of my life - many of those aspiring to college today are looking at $100K to $200K of debt for their education.

    If we are to have a vibrant and competative youth - we need to get back to an environment in which post secondary education is low cost or free.

    That means that those of us who are past our prime must be willing to invest in the future with higher taxes.

    Security does not derive from money in the bank - it derives from a country that is competative on the world scene.

    As much as we wave our little plastic flags (made in China) and sing our patriotic songs - we are fast becoming an anachronism and will fade unless we suck it up and invest in our country.

    In my time, the top tax rate was 80% and we used a national draft to ensure that everyone had "skin in the game" in Vietnam and we had 5% unemployment and 10% annual growth in GDP.

    Today we are told that a top tax rate of 30% is way too high, wars are being fought by a very few, the unemployment rate is 10% and we are in a recession.

    Maybe we need to go back to a time where everyone pulled their share - not poor and the suffering - but those who are comfortable and have plenty.

  9. Kevin Hale • As an adjunct professor at a public junior college I see many students who are hoping an associate degree will lift them out of their rut. For practical as well as personal reasons I hope they are right. The problem for many though is even with degrees work is hard to find, and after 2 years of education the debt load can be very heavy. For my high school classmates attending civilian schools and graduating in the 80’s there may have been debt but nothing like today’s levels. But getting back to Ken's comment I agree that taxes should be higher especially on those who, and I specifically refer to hedge managers here, pay at a lower rate due to the current capital gains structure than many of their lesser paid employees. Moreover laws like the Glass- Stegall Act should be reinstated for the simple reason that during its tenure the G-S law worked. I could write on this for much longer but I only want to say I concur with the comment Ken wrote.

  10. Lee Cohen • Kevin - you echoed something we've all heard a lot: "hedge managers here, pay at a lower rate due to the current capital gains structure than many of their lesser paid employees."

    But aren't those cap gains subjected to the Alternative Minimum Tax? If they are, I don't think those managers pay a lower tax rate than lesser paid employees. And if those cap gains AREN'T subject to AMT, please send me the gouge about how those managers dodge that!

  11. John Kelley • The OWS crowd is all about big government and crony capitalism. They just want to be assured there is such a thing as a free lunch. While they stumbled on the problem of "too big to fail," which means too connected to fail, they advocate for more of what caused it. Since they were too transparent to share with the actual needy, they lost any credibility they might have had with the gullible. I guess it is too much to hope they will just go back to other Soros-funded or union-paid jobs or just sit on their trust funds and keep smoking pot. For others, they will want to continue as they want to have a continuous supply of new iphones, ipads, and victims to sexually assault with impunity.

  12. Zachary Sochacki • The raison d'etre of the OWS crowd is still valid in that it is an expression of the underlying frustration the public suffers from seemingly unyielding obstacles presented to them by the current political and economic environment.

    However, the "OWS Crowd" has lost some of it's "street cred" in my opinion. And recent violent outbreaks have done nothing but demean them further.

    From a pragmatic POV, they are "whiners" with no real solutions.

    Unlike protesters during the Vietnam War who were extremely well organized and projected a salient message, the OWS participants have no direction. It's devolved into a collection of "mobs".

    Frankly, it seems like just one big "bitch session". Who needs to listen to more bitch sessions?

    How about providing/suggesting a practical solution or two? Learn how to use the system rather than just railing against it.

  13. Terry Currey, MBA, PMP • You're right Zach. As contemporary and intuitive as the OWS mission appears to be on the surface, at depth we find there is no mission. There is no agenda – no list of specific grievances, no plan of action with specific solutions, no attempt to contact the opposition for the purpose of redress and reconciliation, and certainly no list of acceptable alternatives. In short, OWS has no leadership. With a mission, an agenda, a plan, open lines of communication, a list of alternatives, and real leadership, they could be very effective agents of change. As it is, all they are is a waste of tent fabric.

  14. Zachary Sochacki • In a lot of ways, they kind of parallel our current government. LOL!

  15. Terry Currey, MBA, PMP • OMG…now you've done it…the pin is definitely out of the grenade. Talk about a crisis of leadership in this country: both in business and in government, we are in an absolute vacuum. The politicians are not leading. Again, they have no plan, unless you want to count their efforts to get re-elected by bashing the opposition, as a plan. Worse, the only thing the business guys are watching is next quarter's 10-Q and how their personal compensation plans will be affected. No one is looking to the future…to long-term goals and developing plans to achieve them…to nurturing and exploiting America's comparative advantages in agriculture and technology. It's all reactionary knee-jerks and foot-shots about POWER…how to get it, how to keep it, but nothing about how to USE it for the benefit of all Americans. What's worse, the dumb bastards don't even realize that they are hopelessly and entirely WRONG! Your comment cuts both ways: our so-called leadership is, really, no more competent nor any better organized than the tent dwellers.

  16. Zachary Sochacki • And the fish stinks from the head.

    I'd love to see Ron Paul win the Republican nomination. He's running under the aegis of the Republican party. But he's a Libertarian through and through, meaning that he's the "Ant--Federalist" of the group.

    Unfortunately, getting elected these days is all about the money and pandering to party extremists in the beginning of the campaign...and then feinting to the middle toward the election to get the unwashed masses to vote in your favor.

    Ron Paul tells it like he sees it is.

  17. Stephen Padilla • Since the OWS movement was orchestrated by a Canadian consortium of international anti-capitalists, it was doomed to failure. It is not an organic movement. It is not a grassroots movement. It is a modestly clever choreography by a group of ultra-left activists.

  18. Zachary Sochacki • A New York Judge just ruled in favor of NYC this evening saying that the city had every right to clean up the park area as it had become a health and public safety issue.

    He is allowing the protesters to remain in the park, but they will not be allowed to erect structures such as tents or to "camp" in the park. They can occupy the park and express their concerns in an orderly and lawful manner.

    @ Stephen

    I'd never heard of the OWS protests being organized by a Canadian consortium, etc. I'd like to read your source for that info. Please provide.



  19. Stephen Padilla • Zach,

    That's actually quite old news. Let me see what I can Google for you.


  20. Stephen Padilla •

    There are a few of the many, many sources available at the click of a button, thanks to the magic of something called the internet and a search engine known as Yahoo!

  21. Stephen Padilla • P.S. I don't know why it bunched all of those together. I tried editing it to put each link on a separate line, but the magic of LinkedIn is reinterpreting my will for me.

  22. Mary Rehberg • And the system that doesn't run on greed is ......what? And that system is run by which selfless angels?

  23. John Slegers • @ Mary Rehberg :

    " And the system that doesn't run on greed is ......what? "

    Communitarianism is a common alternative to greed as a primary drive in society. As said before, the following are possible alternatives to capitalism that are compatible with communitarianism :



    " And that system is run by which selfless angels? "

    It would be run by technocrats smart enough to put the interests of the many before the interests of the few... or at the local level you could have a pure democracy.

  24. Mary Rehberg • These are vague philosophies that cover....well, everything! Your links say Corporatism includes capitalism, liberalism, monarchies, fascism, etc.. Communitarianism includes everything from communism to compassionate conservatism. So your alternative is pretty much everything? A little vague for my tastes.

    Do you think communism doesn't run on greed? Putin is all about the folks and China fusses over human rights, correct?. We don't see anything greedy in socialist Greece while the people riot, do we? Crony capitalism is a taxpayer funded disaster unfolding before our eyes. Any system that gives something to somebody first takes it away from somebody else. Self-interest and greed are human conditions. And they ALL run on greed, just a question of who's greed trumps.

  25. John Slegers • @ Mary Rehberg :

    " So your alternative is pretty much everything? A little vague for my tastes. "

    I'll simplify things for you...

    Corporatism is an economic principle based on concepts like the guild system. People are divided into corporate groups, each usually representing a particular profession of sector. Each corporate group tries to both fulfill the needs of its members and protect the interests of other parties by maintaining fair pricing and quality standards for its members.

    Distributism is an economy principle somewhere intermediate between communism and capitalism. Under such a system, most people would be able to earn a living without having to rely on the use of the property of others to do so. Examples of people earning a living in this way would be farmers who own their own land and related machinery, plumbers who own their own tools, software developers who own their own computer, etc. The "cooperative" approach advances beyond this perspective to recognise that such property and equipment may be "co-owned" by local communities larger than a family, e.g., partners in a business. Distributism is also associated with the concept of a guild system.

    Anarcho-syndicalism is a left wing alternative to both corporatism and distributism but differs mostly in its radical anti-authoritarianism. Whereas both corporatism and distributism are compatible with forms of dictatorship (eg. fascism or monarchism), anarcho-syndicalism is essentially anti-authoritarian.

    Communitarianism is a concept closely related to each of the three hereabove, but a lot more abstract. All communitarianism really implies is a strong focus on the needs of the community rather than the needs of the individual or the nation as a whole.


    " Do you think communism doesn't run on greed? "

    I never said it didn't. I'm not a communist and don't support communism. Please stop confusing anti-capitalism with communism.


    " Self-interest and greed are human conditions. And they ALL run on greed, just a question of who's greed trumps. "

    Wrong. Take the Inca's for example. The Incas did not even use money. Instead they developed upon the system of barter whereby all citizens were required to labour for a set number of days per year known as mita. Gold ('Sweat of the Sun') and silver ('Tears of the Moon') were used only for aesthetical purposes to adorn temples and create artwork.

  26. John Kelley • The OWS crowd is all about big government and crony capitalism. They just want to be assured there is such a thing as a free lunch. While they stumbled on the problem of "too big to fail," which means too connected to fail, they advocate for more of what caused it. Since they were too transparent to share with the actual needy, they lost any credibility they might have had with the gullible. I guess it is too much to hope they will just go back to other Soros-funded or union-paid jobs or just sit on their trust funds and keep smoking pot. For others, they will want to continue as they want to have a continuous supply of new iphones, ipads, and victims to sexually assault with impunity.

  27. Susan Hurt • I'm trying to figure out what planet you might be from since your commentary shows a complete disconnect with what is actually going on. I can only assume that you watch Fox News rather than other outlets that interview people who are not on the fringe or the homeless that were hanging out by the protesters to get a free meal or that you just really don't care to learn any more than what supports such a biased vew. Your comments are insulting and ill-informed to say the least. I guess it is too much to hope that you might consider there are many valid points they make and that the people protesting are a far more diverse, intelligent, and hard-working demographic than those who feel threatened would care to admit. As far as iphones, ipads, etc. - does it occur to you that people may have purchased things prior to losing jobs, received as gifts, etc. Or they may have bought them themselves since being able to connect with the internet or being accessible for contact by any potential employers is CRITICAL to even trying to find a job when applicants number in the hundreds. Having been laid off in March, I am one of those people who have a home and a car and whoa, even a TV! I've slowly been selling things I worked years to own so I can eat and pay for out-of-pocket medical expenses since I have no health insurance - it's not affordable. Don't worry, I'll be more identifiable as a poverty-stricken, homeless person living out of a shopping cart at some point and then you can completely ignore anything I might have to say, too - and call me a pot-smoking hippie too lazy to find a job.
    When you have thousands of people gathered in one place, the odds are that there is going to be some activity that is NOT condoned by the general 'population' of the protest but even in the safest neighborhoods, there are criminals. Why would this be any different?

  28. Jeffery Pyle • John, I can't figure out what the OWS crowd wants, exactly. I see a mixture of anarchists, Marxists and other socialists plus a few anti-Semites -- all with different agendas. It does appear that the majority do want more of what caused the problem in the first place and most of their anger seems to be that they personally didn't get a bailout.

  29. Fred Bosick • If the OWS crowd is too greedy, what do you call the bank and finance executives who got even bigger bonuses *after* the bailout? Whether too big or too connected to fail, they screwed up and should lose everything. After all, plenty of regular people are and only some of them were house flippers.

  30. Jeffery Pyle • Anybody who wants somebody else to pay their bills is greedy.

    Now, as far as the financial sector bonuses go, those were entirely in accordance to the contracts. Maybe the bailout should have stipulated otherwise, but that was not done. The contracts should have been followed, just as the banks should have been allowed to fail.