FTX’s greed, corruption isn't capitalism's fault

Recently, FTX, a digital coin trading firm founded by Sam Bankman-Fried, declared bankruptcy and shocked some people in the world of investing. The company collapsed from a valuation of $32 billion to nearly zero. George Selgin, professor emeritus of economics at the University of Georgia, has written a good analysis of the fiasco.

To boil down the complexities, FTX used the funds of depositors to make loans to its subsidiary, a venture capital firm called Alameda. Alameda made poor investments and lost so much money that it couldn’t repay FTX, and both tanked. Few depositors will get their money back. Clearly, Bankman-Fried became greedy and cost those who trusted him billions of dollars.

Socialists’ Attack On “Greed” Is Really Concealed Envy

Source: AP Photo/Carolyn Kaster

Gordon Gekko in the motion picture Wall Street regurgitated what socialists have been saying for a century: capitalism is based on greed. Here is part of his monologue:

The point is, ladies and gentleman, that greed -- for lack of a better word -- is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.

Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind. And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

As I wrote recently, the definitions of greed are confusing. Even the poorest in Western countries are guilty of egregious greed if we adhere to dictionary definitions. The writers who put those words in Gekko’s mouth appear to agree. But if greed is to remain an evil, should we call the self interest that Adam Smith identified as the motive of business people? Is loving one’s family and wanting them to live more comfortably greed? Is trying to produce a better mouse trap greed? Is striving to have enough to give to charities or churches greed?

Socialists see only two evils in the world today: white people and greed. If they could get rid of both, the U.S. would finally be exceptional and a city set on a hill that conservatives claim it is. But what happened to envy? According to Helmut Schoeck in Envy: A Theory of Social Behavior, envy was considered the most terrifying of the seven deadly sins through history. He uses Chaucer’s “The Parson’s Tale” in the Canterbury Tales as an example: (finish at Townhall Finance)