Thursday, May 14, 2020

The Silent Danger of Greed

I’m currently reading Hot, Flat, and Crowded 2.0 by Thomas Friedman. The book mainly discusses the ecological crisis we are facing, but the first three chapters also discusses the 2008 financial crisis. Ecological crisis and financial crisis may seem unrelated to each other, but Friedman argues that they actually have the same cause:

The way we were creating wealth had built up so many toxic assets in both the financial world and the natural world that by 2008/9 it shook the very foundation of our markets and ecosystems. That’s right, while they might not appear on the surface to have been related, the destabilization of both the Market and Mother Nature had the same root causes… The same recklessness undermined all of them.

Friedman explains the causes in more details, but they actually come down to just one thing: greed – the desire to get as much as possible for oneself without thinking about how things would be for other people or future generations.

Greed is the reason why people made irrationally risky investment in subprime mortgage assets. Greed is also the reason why people are depleting natural resources at an unprecedented rate. They want to increase their quality of life without thinking about whether or not they do it in a sustainable way.

The problem is people usually aren’t aware of the coming danger until everything is too late. Greed blinds them. Here’s what they might think:

1. Nothing could go wrong. We have done this for years and nothing negative happens. Besides, the probability that things could go wrong is small so there’s no reason to stop doing it.

2. Everyone is doing it. If I didn’t do it, I wouldn’t enjoy the rewards that everyone else is enjoying.

The scary thing here is this kind of thinking also caused the collapse of many civilizations throughout the history. The book Collapse by Jared Diamond has many such stories. Here’s one of them:

The overall picture for Easter is the most extreme example of forest destruction in the Pacific, and among the most extreme in the world: the whole forest gone, and all of its tree species extinct… The further consequences start with starvation, a population crash, and a descent into cannibalism.

But why did the deforestation happen? Here it is:

… competition between clans and chiefs driving the erection of bigger statues requiring more wood, rope, and food.

This, again, is greed at play. Greed made the people exhaust their resources despite the apparent danger. Didn’t they realize that exhausting their resources would cause their civilization to collapse? Greed had blinded them, obviously.

The same thing applies to individuals. A greedy person may become obsessed with money or prestige at the expense of his health or relationships. Greed blinds him to the coming danger until everything is too late.

This is an important reminder for all of us. Beware of greed. Here is a simple rule:
Where there is greed, there is a silent danger.
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