An economic fable

Jan 5, 2006 22:31 GMT  ·  By

Once upon a time there were two rich guys. One of them was good, compassionate and altruistic, while the other one was evil, merciless and egotistic. Each day they passed by a beggar. The good guy always pitied the poor fellow and speared a dime or two. The other one was always disgusted by the beggar and labeled him a worthless and lazy bum. However, one day a brilliant idea crossed the evil rich guy's mind. He realized that he could exploit the beggar: How about hiring him in his shoe factory? He is doing so bad that he would probably accept any payment. Of course, he will have to pay him the minimum wage, if that barrier wasn't put in place by a concerned government, he would have hired him long time ago; nevertheless, the business is good right now and he can afford it, the rich guy isn't that greedy. And after all, he can think about the profits he will earn on the beggar's back. Surprisingly or not, the beggar accepted the deal. The rich guy congratulated the man for not being a lazy bum and even shook hands with him. Apparently, unaware of his class interest, the beggar was kind of grateful!

A new dilemma now presents itself: Who is really the good guy?

Of course, we can look at people's motivations and thus conclude that the factory owner is an egotistic bastard, while the other rich guy (who, by the way, is a famous writer) is a humane, compassionate person. But in the end, what really matters are the concrete results of one's actions and not his/her motivations. Well, the writer's generosity obviously helps the beggar. But this is only a short run help. The charity also has the gift of maintaining the status quo; it offers the beggar no real opportunity to improve his condition. And this gesture of charity doesn't help anybody else except the beggar. On the other hand, the factory owner's greed also helps the beggar. And it does this in more than one way. It offers him a certain amount of money, it offers him a chance for a greater dignity, and, maybe most importantly, it offers him the chance of getting somewhere. Where exactly depends on what the ex-beggar wants. Finally, by working in the shoe factory he produces new things. The shoes he makes are bought by somebody, and thus somebody else is also made a little happier. While the writer's generosity only redistributes the existing wealth, the factory owner's greed leads to the creation of additional wealth (new goods are being produced on top of the existing ones). Altruism conserves the total wealth, egotism increases the total wealth. But does egotism also sharpen the inequalities, making the rich richer with a much higher rate than it enriches the poor?

Thus, is really altruism good, and egotism bad? Or could it be that altruism just helps preserving the current inequalities, while egotistic-driven actions are the sole true source of progress? Or maybe the picture is more complex and the 'good versus bad' story doesn't really hold?

Someone read this fable and asked me: What is the relevance of your story? I'm not a rich guy who could hire every beggar on the street. How could my greed be of any good? Well, what about saving money? When one puts money in a bank the money doesn't just rest there, the bank lends it to entrepreneurs. And what entrepreneurs do is investing the money and hiring people. Maybe the factory owner in the fable didn't have the money to hire the beggar either, maybe he just borrowed the money from a bank.

Image Credits: Paris protests 1968 poster