Twenty-three years ago, fictional Wall Street trader Gordon Gekko summed up a business era in three words: “Greed is good.” In this year’s Wall Street sequel, Gekko twists that observation into the question: “Is greed good?”
He’s not the only one asking. Since Adam Smith, it’s been an article of faith among economists that private self-interest creates public wealth. But for many, the Great Recession has shaken that faith. “This notion that everybody striving simply for their own good will produce a common good — it sure didn’t work in the market for residential mortgages and the mortgage-backed securities created from those mortgages,” says Greg Hallman, senior lecturer in finance at the McCombs School of Business. “It failed so spectacularly, it seems difficult to even defend it.”
In this four-part series, reporter Steve Brooks talks to McCombs faculty members about greed and its limits and how to revive the neglected field of business ethics. They offer fresh lessons on self-interest run amok, from overlooked writings of Adam Smith to overpaid CEOs, from misguided incentives in mortgages to unconscious biases in ethics.