MORE ON THE ADMINISTRATION’S GORDON GEKKO GAMBIT:

It definitely reminds me of Gordon Gekko’s famous “greed is good” speech from Wall Street, where he said that “greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.” However, Summers is wrong to suggest that American investors and corporations have lost too much of their greed. To the contrary, the constant lobbying of every interest group under the sun for more and more government bailout money suggests that they are just as greedy as ever. Even firms that have already received a hefty dose of handouts are lobbying for more. The problem, of course, is that their greedy impulses are being channeled into the unproductive activity of lobbying Congress for subsidies rather than into the development of more and better products for consumers.

In and of itself, greed is neither bad nor good. The key question is whether it is channeled towards socially beneficial activity that increases wealth and promotes economic growth or whether it is directed towards lobbying the government to take away money from one set of interest groups and direct it to another. At this point, it is often easier for corporations to satisfy their greed by lobbying for government funds than by engaging in productive activity. As Gordon Gekko put it in his speech, “[t]he new law of evolution in corporate America seems to be survival of the unfittest.” Failing firms are using their very failures as justification for seeking bailouts.

It is also ironic that Summers cites an excess of “fear” as one of the main dangers facing the American economy. Ironic because the administration he serves has itself been stoking that fear in order to undercut opposition to its programs. As White House Chief of Staff Rahm Emanuel puts it, the crisis is “an opportunity to do things you could not do before . . . You never want a serious crisis to go to waste.” An obvious corollary to this notion is that the “opportunity” will be even bigger the more “serious” people believe the crisis to be.

Indeed.