Friday, June 7, 2019
Greed, Need and Money, Walter Williams Essay Example for Free
Greed, Need and Money, Walter Williams EssayIn the article entitled, Greed, Need and Money, Walter Williams presents his take on the economics and logic of keeping CEOs juicyly paid. He essentially argues that these huge golden parachutes and corporate salaries are justified by return that these companies get in return. Just because a CEO gets a high salary does not mean that he does not deserve it or do anything to help the conjunction recover that value. By comparing this to a simple issue and demand model, Walter Williams is able to show that the reason the salaries are so high is because the demand is high as well and supply is pretty scarce. One manner by which the mention of the word greed can be applied to the economic lessons that hold been discussed is to juxtapose this to the application of greed as an economic theory. Greed can be said to be the primal instinct for self-preservation of people. In an attempt to cheer ones self, man seeks only to pursue his individu al interests without care for the well-being of others. In relation to economics, this involvement of individual interests is greed or the pursuit of economic self-interests, otherwise known as individual wealth accumulation.Greed as a driving force is not an entirely new imagination as it was originally part of the Invisible consider theory introduced by Adam Smith. The elementary precept of the invisible hand is that in a trim market a person who chooses to be greedy and pursue his own interests in invariably also furthering the good of the entire community. A perfect congresswoman is in a situation where a person seeks to maximize his personal profits in total disregard of other factors.By applying the Invisible Hand theory of Adam Smith, it can be shown that when the total revenue of society is calculated this becomes identical to the summation of the individual revenues of every member of that society. In smart set to arrive at a better understanding of how greed, which is a key concept under the Invisible Hand Theory, both drives and regulates capitalist markets, it is essential to contrive a brief discussion of the basic supply and demand model. This is because production is driven by the willingness of the seller to supply and the basic goal of every seller is to increase profits (greed).This can be understood from two approaches, however, the first being profit maximization through an increase in the volume of units change (assuming ceteris paribus) and the second being profit maximization through a decrease in the cost of the factors of production which in turn increases the profit margins per unit sold. The basic supply-demand model becomes critical in this understanding because under the market model sales will only willingly occur at the equilibrium point. The worth level of a good essentially is determined by the point at which quantity supplied equals quantity demanded.The law of supply and demand predicts that the price level will mov e toward the point that equalizes quantities supplied and demanded. Greed is crucial in this sense because it is the basic assumption or behavior under this model. Without greed, there would be no drive for the individuals in society to pursue their own self-interests. The absence of this driving mechanism would mean that there will be no individual revenues and thereof leading to the failure of the community revenue to equalize with its summation.This basically means that societys scarce resources become more efficiently allocated through the restrictive nature of greed in capitalist markets. While the Invisible Hand theory has already been rejected as an acceptable economic model by the works of John Maynard Keynes and Milton Friedman, the more complex markets of straight off have shown that the pursuit of self-interests, while natural of human behavior, must be regulated by outer systems in order to ensure a more equitable and efficient allocation of resources.This means that greed is not necessarily good in todays current economic situation. As used in this discussion and in the article, this greed may not only be the effect of supply and demand but the pursuits of an individuals self-interests for the improvement of the economic system.