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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. The point is, ladies

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Speaker 1: and gentlemen, that greed, for lack of a better word,

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Speaker 1: is good. Greed is right, Greed works, Greed clarifies, cuts through,

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Speaker 1: and captures the ess of the evolutionary spirit. Greed in

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Speaker 1: all of its forms, greed for life, for money, for love,

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Speaker 1: knowledge as marked the upward search of mankind, and greed.

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Speaker 2: For the love of money is of all evil. Reed

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Speaker 2: was long seen as a vice, as selfish, as a

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Speaker 2: waste of our time. It undercuts both our happiness and

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Speaker 2: our life satisfaction. Yet today the pursuit of money seems

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Speaker 2: to be everywhere. It's a driving factor in all of

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Speaker 2: our lives. How did the love of money go from

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Speaker 2: a vice to a virtue? I'm Barry Ridoltson on today's

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Speaker 2: edition of At the Money. We're going to discuss how

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Speaker 2: greed became good. To help us unpack all of this

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Speaker 2: and what it means for you, let's bring in Paul

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Speaker 2: Vinya of The Wall Street Journal. He's published numerous books

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Speaker 2: on money and cryptocurrencies. His latest book is The Almightier

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Speaker 2: How Money Became God, Greed became virtue, and debt became

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Speaker 2: a sin. It's out by the time you're hearing this. So, Paul,

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Speaker 2: when did greed become good? And how did this happen?

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Speaker 3: So I think people think that greed became good, that

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Speaker 3: idea sort of came about in the eighties, and you

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Speaker 3: have the Wall Street clip Gordon Gecko. You know, greed,

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Speaker 3: for lack of a better word, is good. And the

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Speaker 3: eighties were the greed decade. And a lot of people

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Speaker 3: will say, you know, you have the election of Reagan,

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Speaker 3: the Conservatives. It all changed in the eighties, and we've

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Speaker 3: been living in that world. And I grew up in

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Speaker 3: the eighties. You did, too, Barrio. I was a teenager

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Speaker 3: in the eighties, and I had absorbed a lot of

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Speaker 3: those those beliefs and those ideas also. But what I've

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Speaker 3: discovered is that you actually can trace that idea further back,

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Speaker 3: much further back. I'm not talking about the robber barons

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Speaker 3: and the Gilded Age in the eighteen nineties, where you

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Speaker 3: can find it. I'm not talking about the you know,

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Speaker 3: the Mississippi Bubble in the seventeen hundreds where you can

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Speaker 3: find it. You can trace that idea back specifically almost

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Speaker 3: to the year at least of the decade to the

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Speaker 3: fourteen twenties, and there was a Florentine writer named Poggio Bracciolini,

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Speaker 3: and he wrote a dialogue. And the dialogue contains, among

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Speaker 3: the many, many things in the dialogue, it contains this sentence.

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Speaker 3: I'll just say the sentence. He says, avarice sometimes is beneficial.

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Speaker 3: It is almost word for word what Gecko says in

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Speaker 3: Wall Street. Gecko says, greed, for lack of a better word,

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Speaker 3: is good. Avarice sometimes is beneficial. That idea was incubated

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Speaker 3: in Florence in the fourteen twenties. Florence was a mercantile city.

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Speaker 3: It was a republic, and there were a lot of

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Speaker 3: merchants there. It was basically driven by commerce, and those

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Speaker 3: merchants had this belief. They couldn't talk about it, they

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Speaker 3: couldn't express it, they couldn't really show it because the

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Speaker 3: church's stance was usury is evil, it should be outlawed.

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Speaker 3: Greed is the root of all evil. You know. It

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Speaker 3: was very, very dangerous to come out and say greed

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Speaker 3: is good.

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Speaker 2: So let me ask you about some other historical figures

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Speaker 2: who might have become forgotten, who philosophized on this topic

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Speaker 2: the economic thinkers who rebranded greed from a deadly sin

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Speaker 2: to a driver of social benefit. You mentioned Bracciolini, who

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Speaker 2: else were key thinkers in this space?

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Speaker 3: So it's interesting because the one dialogue that really states

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Speaker 3: at the best is the one from Bracchiolini. So I

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Speaker 3: spent a lot of time talking about that. But what's

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Speaker 3: interesting is that he ran in this circle of influential

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Speaker 3: thinkers and doers that included a banker that most people

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Speaker 3: probably know the name of at least named Cosmo de Medici,

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Speaker 3: and a man who would become pope, who would become Pope,

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Speaker 3: Nicholas the fifth. He was a bishop and he was

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Speaker 3: a Cosmo was actually he was a supporter of this bishop.

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Speaker 3: Nicholas the fifth becomes Pope, Cosmo becomes the most important

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Speaker 3: banker in Europe, and actually one of the most important

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Speaker 3: politicians in Europe, and they take this idea and they

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Speaker 3: run with it. Cosmo employs this in his bank. In

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Speaker 3: his personal life, he makes a lot of money, he

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Speaker 3: spends a lot of money. He shows people that you

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Speaker 3: can be greedy, you can pursue wealth for yourself, you

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Speaker 3: can become very, very rich, and you can then become influential.

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Speaker 3: He supports architects, he supports artists, he supports all kinds

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Speaker 3: of public works projects. That becomes a very you're talking

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Speaker 3: about culture, that becomes a very influential cultural example to

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Speaker 3: people in Europe.

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Speaker 2: So following the Medici family in Florence, which at the

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Speaker 2: time was probably the wealthiest city state in Europe, we

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Speaker 2: eventually go forward to John Calvin and Protestantism, and Calvin

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Speaker 2: holds that wealth is a sign of divine favor. This

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Speaker 2: is the exact opposite of greed is a sin. This

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Speaker 2: is not wealth proves that the Gods are smiling on you.

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Speaker 3: Yeah, and I'll go through a couple hundred years of

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Speaker 3: history very quickly here. So, uh, these Florentines start saying

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Speaker 3: greed is good, and they show it as an example,

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Speaker 3: and it kind of takes off. It takes off in

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Speaker 3: the Catholic Church, which starts employing it. The Catholic Church

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Speaker 3: starts raising a ton of money and spending money at

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Speaker 3: the same time. They really buy this. This I call

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Speaker 3: it in the book the Ethos of Beneficial Greed. They

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Speaker 3: start buying into it, and of course it all becomes excess. Right.

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Speaker 3: A Medici, a Medici becomes pope, Pope Leo the tenth,

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Speaker 3: and he is just he's horribly uh, he's terribly corrupt.

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Speaker 3: He's a really bad pope, and he spends a lot

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Speaker 3: of money, and he is actually the bags of the

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Speaker 3: antagonist of Martin Luther. Like the whole Protestant Reformation is

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Speaker 3: a rebellion against the excesses of Leo the Tenth and

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Speaker 3: the Catholic Church. But what's interesting is that once the

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Speaker 3: Protestant Reformation takes off the idea that what they really

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Speaker 3: are against is the excesses, they're not actually against the

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Speaker 3: idea of money. And John Calvin comes along, and John

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Speaker 3: Calvin is very very clear, and what he says is

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Speaker 3: God controls everything. Every down to the last hair on

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Speaker 3: your head is determined by God. And I don't have

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Speaker 3: a lot of hairs on my head left, you know.

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Speaker 3: So there's that God controls everything. God everything that happens

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Speaker 3: happens because God wants it to happen. If you have money,

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Speaker 3: it is because God wanted you to have money. So

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Speaker 3: whatever job you have, you should do it to the

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Speaker 3: best of your ability, and you should go out there

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Speaker 3: and make as much money as you want, because that

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Speaker 3: is what God wants for you. He doesn't want you

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Speaker 3: to spend it the way the Catholics do. And I'm Catholic,

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Speaker 3: so if anyone's upset about, you know, Catholic bashing, I'm

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Speaker 3: just being historical here. He doesn't want you to spend

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Speaker 3: it the way those you know, profligate Catholics do. But

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Speaker 3: God wants you to have it and then want you

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Speaker 3: to put it to good uses, you know, help the

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Speaker 3: poor health, indigen you know, do good things with it.

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Speaker 3: But if you have it, God wants you to have it.

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Speaker 3: That idea becomes at that point becomes deeply, deeply embedded

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Speaker 3: in our culture.

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Speaker 2: Let's let's fast forward to people like Richard Baxter and

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Speaker 2: even Ain Rands. How does the thought that greed is

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Speaker 2: good progress over the next few hundred years?

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Speaker 3: So over the next few hundred years, and again I'm

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Speaker 3: gonna do this very fast. If people want the whole thing,

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Speaker 3: they can they can buy the book, thank you very

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Speaker 3: much in advance. Yes, I'm greedy too, I want to

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Speaker 3: sell my book. So Calvin is influential. Another Protestant theologian

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Speaker 3: named Richard Baxter takes it a step further and he

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Speaker 3: starts explaining how businesses operate, and how you know, the

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Speaker 3: pursuit of wealth is employed as a tool of God's

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Speaker 3: will and he and then who takes that even a

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Speaker 3: step further is Adam Smith. Who's Smith's whole idea really

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Speaker 3: is that the economic system we have, which had existed

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Speaker 3: for a few hundred years by the time Smith came around,

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Speaker 3: the economic system we have is a moral system. This

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Speaker 3: is how it works. This is what's good about it.

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Speaker 3: By all these people out there doing these jobs that

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Speaker 3: they're supposed to be doing, the division of labor, this

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Speaker 3: is all moving us towards a better relationship with God.

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Speaker 3: That idea is, at the very least it's moralistic in

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Speaker 3: Smith's worldview. If not outright religious, he kind of secularizes

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Speaker 3: it a lot.

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Speaker 2: So let's address that exactly, because I have to ask

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Speaker 2: the question, what's the relationship between the rise of capitalism

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Speaker 2: and the read definition of greed or at least motivated

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Speaker 2: self interest as a virtue.

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Speaker 3: Well, I actually think, and I state this quite clearly

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Speaker 3: in the book, I think this change in attitude toward

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Speaker 3: greed is actually what creates capitalism. There's a line in

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Speaker 3: the book I say capitalism didn't create greed greed created capitalism.

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Speaker 3: What you see in Farnance and the fourteen hundreds. Now

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Speaker 3: I'm going backwards a little bit, but to the start

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Speaker 3: of it. That is the first time you see people

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Speaker 3: employing capital consciously as a tool for themselves and for society.

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Speaker 3: It used to be just about the nobility and the

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Speaker 3: kings and the rich, you know, accruing wealth, and it

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Speaker 3: was all for them. Now you see this idea that wait,

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Speaker 3: wait a second, we can actually anybody, commoners or nobility

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Speaker 3: can pursue wealth, and that can be a tool to

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Speaker 3: help us in our own lives and to help society.

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Speaker 3: That is the cornerstone of capitalism. Greed is good barry.

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Speaker 3: That explains capitalism as it actually operates. That is not

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Speaker 3: how the textbooks tell you it operates. Actually went through

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Speaker 3: the textbooks and I looked and like, the word greed

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Speaker 3: doesn't appear in them at all.

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Speaker 2: Well, it's motivated self interest, and it's homo economists and

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Speaker 2: all that stuff.

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Speaker 3: But it's always kind of like schluffed off to the side, right, I.

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Speaker 2: Mean, you're making it a central focus.

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Speaker 3: So it is about efficiency, it's about you know system, No,

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Speaker 3: it's about greed. It's actually about people using greed, and

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Speaker 3: you can see it winding its way through our culture.

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Speaker 3: Adam Smith secularizes the idea and people seize upon it.

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Speaker 3: And then you have this this new nation that had

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Speaker 3: just formed in the Americas, and they rejected the king,

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Speaker 3: they rejected the church. They needed something to ground their

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Speaker 3: new country on. And what they came up with. And

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Speaker 3: James Madison, one of the founders, makes this most clear

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Speaker 3: property rights, money, wealth, that is what the nation is

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Speaker 3: actually founded on. This idea, that that point becomes so

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Speaker 3: deeply embedded in the culture of America that that is

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Speaker 3: what are that that is that is the cornerstone of

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Speaker 3: our history.

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Speaker 2: Let's dive deeper into that because the book delves into

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Speaker 2: the transformation of money from a religious and communal tool

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Speaker 2: to that exact secular object of faith. Are you saying

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Speaker 2: that in large part the creation and economic success of

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Speaker 2: the United States has been one of the key drivers

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Speaker 2: of the belief that motivated self interest.

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Speaker 3: To use a.

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Speaker 2: Less polarizing term than greed, right has is that what

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Speaker 2: led us to a couple of quotes from your book,

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Speaker 2: Banks are churches of money, and the other quote that

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Speaker 2: stood out, money isn't like religion. Money is a religion.

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Speaker 2: So has money secularized greed or has money just kind

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Speaker 2: of moved into religion's sphere and said, hey, we want

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Speaker 2: part of this faith based idea.

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Speaker 3: Also, I think it's done both. Really it has, and

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Speaker 3: this is really the argument of the book is that

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Speaker 3: it has replaced religion as the incentive system around which

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Speaker 3: a society revolves. In other words, I said, I said earlier,

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Speaker 3: you know, five thousand years ago, society revolved around the temple,

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Speaker 3: and it revolved the around the idea of pleasing the gods.

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Speaker 3: That belief system faded. You can't in the modern world

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Speaker 3: have a belief I know there are plenty of people

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Speaker 3: out there that believe in religion, and I'm not trying

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Speaker 3: to to, you know, attack their belief systems, but you

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Speaker 3: can't have a system. You can't have a modern society

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Speaker 3: built around that. At least the United States is a

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Speaker 3: modern society that is not built around that. That can't

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Speaker 3: be the foundation, and in fact is not the foundation.

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Speaker 3: And the history of Europe shows this. Over time, the

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Speaker 3: authority of kings, which came from the church was was

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Speaker 3: whittled away and whittled away, and through wars and civil

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Speaker 3: wars and you know it all faded religion was replaced

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Speaker 3: by this other belief system, and that other belief system

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Speaker 3: is centered around money and the pursuit of wealth.

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Speaker 2: Let's talk about today. Let's talk about that. We've been

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Speaker 2: talking about the pursuit of money and assets and power

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Speaker 2: and influence and all those things that go with it.

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Speaker 2: What we haven't been talking about is debt. So let's

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Speaker 2: talk a little bit about the ancient societal views of

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Speaker 2: debt and how that has transformed in the modern world

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Speaker 2: where debt is a useful tool, but it also comes

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Speaker 2: with some ethical and moral baggage. Tell us about how

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Speaker 2: debt has evolved over the past. I don't know, five

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Speaker 2: thousand years.

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Speaker 3: Sure, I mean part of so debt, money, credit, all

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Speaker 3: these things are just there tools. There are ways to

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Speaker 3: help distribute resources. And after money was invented, what you

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Speaker 3: see is people realize you can use that as collateral

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Speaker 3: for loans, for lack of a better word, they realize

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Speaker 3: you can use that if you have a certain amount

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Speaker 3: of money, which back then really wasn't You don't think

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Speaker 3: of it as paper money. It was really more possessions.

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Speaker 3: The money was just a notation on a you know,

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Speaker 3: clay tablet somewhere, but that you know, you could use

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Speaker 3: your wealth as a collateral for loans, you could borrow

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Speaker 3: against it. And then they realized something even more impressive

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Speaker 3: was that you could collect interest on that and that

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Speaker 3: if you had that loan going over time, the interest

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Speaker 3: would collect interest on the interest. You could collect interest

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Speaker 3: on the interest compounded interest, which is, you know, all

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Speaker 3: of modern finances based on that idea that was incredibly

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Speaker 3: attractive in the ancient world. And you then have loans

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Speaker 3: and you have networks of lenders, and because everyone understood

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Speaker 3: that the money was coming out of the temple, that

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Speaker 3: basically the money was something owed to the gods. Your

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Speaker 3: debts were to the gods. So there was a very

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Speaker 3: strong moral component to debt from the very beginning. You're

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Speaker 3: not paying your debt, you're basically thumbing your nose at

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Speaker 3: the gods, and the creditors could come in and basically

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Speaker 3: do whatever they want. They can take your land, they

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Speaker 3: can sell you into indentured servitude, they own you like.

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Speaker 3: Not paying your debts was a really deep sin.

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Speaker 2: And yet we would have these demands on a regular

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Speaker 2: basis for a debt jubilee, erasing the ledger rebooting the

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Speaker 2: financial system. Whatever happened to the concept of I think

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Speaker 2: in some systems it was every fourteen years, eleven years,

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Speaker 2: some fifty years. Tell us about the history of the

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Speaker 2: debt jubilee and the connoisseur a debt jubilee in eight

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Speaker 2: o nine, didn't we.

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Speaker 3: In a way? In a way? So what happens is

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Speaker 3: these these creditors start amassing these giant loans. They are

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Speaker 3: becoming extremely wealthy. But you see this from society, city

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Speaker 3: state to city state that and look, this is something

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Speaker 3: that happens today. Right. People get they take on a loan,

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Speaker 3: they have to pay interest on it. The interest is

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Speaker 3: too high. It compounds. You know, you start off with

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Speaker 3: I borrowed a little bit of money. Fifteen years later,

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Speaker 3: twenty years later, you're still paying it off and you're

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Speaker 3: deeper deeper in debt. What the people realized in the

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Speaker 3: ancient world was that money that loans had a way

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Speaker 3: of growing beyond the ability of people to pay them,

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Speaker 3: no matter what they were trying to do. This whole

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Speaker 3: concept of compound interest just it becomes a problem, and

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Speaker 3: it becomes a societal problem. At some point, a king

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Speaker 3: who wants his subjects to work for him and be

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Speaker 3: in his army. But he doesn't have them because they've

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Speaker 3: all lost their farms, because they've all been sold into

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Speaker 3: slavery because of their debts. Terrible society. So the Kings

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Speaker 3: developed this relief valve, which is basically a debt jubilee.

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Speaker 3: Every once in a while in the Misaic Codes it

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Speaker 3: got codified and they put a timeframe on it. But

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Speaker 3: earlier than that, you would just have kings. Whenever they

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Speaker 3: felt things were kind of too bad, or they took

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Speaker 3: over a new city and they wanted to start over,

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Speaker 3: they would declare a debt jubilee. All the debts were

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Speaker 3: wiped out. If you lost your farm because of debts,

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Speaker 3: you got it back. If you were sold into slavery

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Speaker 3: because of debts, you were released from slavery and put

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Speaker 3: back on your farm. It was a way for the

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Speaker 3: society to start over, because what they realized was that

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Speaker 3: debt had this just inescapable habit of overwhelming the entire society.

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Speaker 2: So we've seen the rise of capitalism, and while globally

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Speaker 2: it's raised millions of people, arguably billions of people out

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Speaker 2: of poverty and raised standards of living worldwide, at the

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Speaker 2: same time, we've never seen greater wealth inequality, greater income inequality,

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Speaker 2: not just here in the United States but around the world.

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Speaker 2: How do we explain the virtues and vices of global capitalism?

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Speaker 2: Why how do we explain the virtues and vices of

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Speaker 2: global capitalism where on one hand it's raising all these

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Speaker 2: people out of poverty, yet on the other hand, it

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Speaker 2: seems to be creating this yawning chasm between It used

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Speaker 2: to be the haves and the have nots, Now it's

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Speaker 2: the haves and the haves a lot more.

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Speaker 3: Yeah, So I think two things, and I'll try to

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Speaker 3: get to them quickly. I think one, and it was

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Speaker 3: a really important thing that I state in the book.

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Speaker 3: I'm not writing this book as some kind of attack

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Speaker 3: on money and capitalism and greed. I'm trying to explain

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Speaker 3: a system, a system that we are all part of.

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Speaker 3: This book is not just to say Bernie made Off

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Speaker 3: was bad, was bad. Gordon Gecko's a villain. Those you know,

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Speaker 3: the robber Baron, Cornelius Vanderbilt, They're bad, They're terrible. Money

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Speaker 3: shouldn't exist. No, No, I'm not trying to do that.

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Speaker 3: You know, I'm selling the book. I'm not giving it away.

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Speaker 3: I could have given the book away. I'm not. I'm

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Speaker 3: selling it. I'm part of the system too. I'm just

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Speaker 3: trying to explain how the system works because part of

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Speaker 3: this is, and I said this money is actually a

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Speaker 3: very effective tool. It's a good thing. Society flourishes after

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Speaker 3: money is invented. Like you said, Barry, it has. Capitalism

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Speaker 3: has pulled a lot of people out of poverty, has

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Speaker 3: made a lot of people's lives better. It stimulates people

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Speaker 3: to go out there and do things, and create things

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Speaker 3: and build things. Those are all good things. I'm not

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Speaker 3: This book is not anti capitalist. It is. What it

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Speaker 3: does argue is that the problem is that we have

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Speaker 3: mythologized money and we have come to worship it as

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Speaker 3: a replacement for God, and that god worship of money

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Speaker 3: has created all the imbalances that we have in society

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Speaker 3: today and that you see in society today. And then

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Speaker 3: people on both sides of the system recognize. I mean,

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Speaker 3: you can hear that exact argument from people who are

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Speaker 3: on the right and from people who are on the left. Everybody,

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Speaker 3: i think recognizes that there is a problem today. Most people, though,

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Speaker 3: don't understand what the system is, so they don't understand

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Speaker 3: how to combat it correctly, and that's why you get

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Speaker 3: a lot of social programs that seem to go nowhere.

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Speaker 3: That's why you get this seeming inescapable growth of inequality,

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Speaker 3: because we don't understand the system. The other thing I'll

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Speaker 3: say is another part of the problem, I think is

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Speaker 3: that when capitalism was created, especially you know, certainly in

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Speaker 3: the fourteen hundredth and even in eighteenth century, the conditions

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Speaker 3: in which it was created were completely different from the

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Speaker 3: conditions in which we live in today. Resource scarcity was

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Speaker 3: a real issue back then. Certainly going back through time,

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Speaker 3: it was even worse. You know, most societies were one

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Speaker 3: great catastrophe away from being destroyed and wiped out forever.

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Speaker 3: They were going to disappear. In the last one hundred years, definitely,

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Speaker 3: in the last hundred years, technology has changed our means.

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Speaker 3: We can grow enough food, we could build enough housing,

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Speaker 3: we could provide enough education, healthcare, electricity. We have the

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Speaker 3: means and the capability of providing the basics that every

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Speaker 3: single person in the world needs to have just a

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Speaker 3: decent life. Our economics was not built with that in mind,

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Speaker 3: and I think our economics has not kept up with

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Speaker 3: changes and doesn't recognize that. And I think that is

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Speaker 3: another big problem. Our conditions have changed, but capitalism has

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Speaker 3: not changed enough to meet those conditions, and I think

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Speaker 3: that is causing a lot of the frictions that are

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Speaker 3: going on in the world today. And my hope also

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Speaker 3: in writing this book was to make that clear.

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Speaker 2: So to wrap up, how did greed become a virtue?

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Speaker 2: Well motivated self interest has allowed us to lift billions

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Speaker 2: of people out of poverty. Capitalism has shifted the dominant

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Speaker 2: thesis of just living in the world from one of

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Speaker 2: scarcity to one of abundance. And we've managed to take

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Speaker 2: what was once perceived as a vice and turn it

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Speaker 2: into a virtue by building an entire economic system around

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Speaker 2: rewarding success, rewarding the appropriate allocation of resources by companies,

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Speaker 2: by governments, and by people. I'm Barry Retolts. You're listening

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Speaker 2: to Bloomberg's At the Money