Matthew Yglesias, noted moral simpleton, is correct

I find myself in basic agreement with this childlike post by Matthew Yglesias. He argues – observes, I would say – that executives at financial institutions are “people primarily motivated in life by greed,” that they are “multi-millionaires who want to earn millions more.” We can know this in many ways, one of which is that “a good person, who’s primary passion was the life of a bank executive, would be donating the bulk of his massive compensation package to charity.” Yglesias is not saying policy should be driven by this observation, or even that this critique only applies to people in the financial sector, or that greedy people don’t produce some social goods.

Will Wilkinson makes extremely bad arguments against Yglesias. I’ll go through the worst ones.

First, he says that Yglesias’s arguments are “especially bad” because Yglesias is a “utilitarian,” and not, presumably, a virtue theorist. I would point out: Utilitarian arguments against greed motivations are legion. But even if they weren’t, Yglesias being inconsistent in his convictions doesn’t mean his arguments are bad, or “especially” bad. In fact, his pro-virtue argument could just as well mean his arguments for utilitarian arguments are “especially bad,” according to Wilkinson’s ad hominem.

Of more substantive relevance: Wilkinson reminds us that “finance is only one of many ways to make money.” To drive the non-sequitur home, he then goes on to ask questions the obvious answers to which are implicit in Yglesias’s post:

How about small entrepreneurs animated by the prospect of hitting it big? Are movie stars, who do not donate the bulk of their massive compensation to charity, off the hook because they are also motivated by fame and self-love?

The easy and correct answer: No, they are not off the hook. Plus, Yglesias is making a systematic critique, not a critique of cherry-picked hypothesized individuals, like Greedy Actor, or Greedy Gym Teacher.

Wilkinson goes on to admonish that “we should reconsider how much those who have become wealthy in these fields have actually enhanced general welfare.” This misses the point, which is personal virtue. In fact, Yglesias indicates that he agrees. Plus, outside of abstract considerations of ideal markets, it’s not at all clear that increases in “general welfare” – and only the ones caused primarily by the financial industry! – outweigh the negative externalities, such as (so the anti-finance arguments go) the environmental harm, income inequality and the stagnation of wages, the decreased bargaining power of labor, the increased reliance of the economy on gambling, and so on.

For the last major point I don’t like, Wilkinson says:

We need to make sure the desire for wealth takes the right shape, and that the institutions within which people pursue wealth tend to actually work to convert “low” aspirations into real social benefits. But we’ve been given no special reason to second-guess the general utility of the desire to become wealthy.

Why should we have to “shape” the desire for wealth in the first place? Oh, I know – because the quest for wealth unscrupulously tends to ignore virtue. Wilkinson is correct that we’ve been given no reason (by Yglesias) to second-guess the general utility of the desire to become wealthy. That’s because, as he himself seemed to notice earlier, Yglesias agrees with this idea.

In any case, given enough restructuring of incentives, Yglesias’s criticism will happily no longer systematically apply to financial industry executives, just like his critique would not (generally) apply to teachers, construction workers, and so on as those incentive systems are currently structured.

A final thought on why I like Yglesias’s argument. He points out that probably most bank executives aren’t where they are because being a bank executive is intrinsically interesting. In other words, they probably wouldn’t be doing it if the salary was comparable to that of car mechanics. It’s much easier to imagine someone going into education, where the primary reason is that teaching is intrinsically valuable and interesting. In fact, this is why, if you’re an education major (or a philosophy major, I’ve discovered), your aunts and uncles will condescendingly question you at parties and such, precisely because there’s “no money” in these areas. They ask asinine questions like, “What do you plan to do with that?” Many financially-oriented people have probably never experienced this obnoxious phenomenon. There of course is money in these areas, and many things to do – which is why teachers and philosophers try to get jobs in their field rather than do pro bono work with other jobs on the side. So why do aunts and uncles make fun of them? We can answer this question by pointing out that they don’t make fun of us when we get business degrees. Everyone knows why you’d want to be a bank executive: that’s where the money is. It’s not an impenetrable mystery why people pursuing finance are not accused of being “idealistic.”