Download greed video worksheet

Worksheet on the Video – Greed, hosted by John Stossel
Name: ___________________
Read the overview, watch the video in class, submit worksheet at the beginning of class following
completion of the video
.
Video: “Greed” by John Stossel
Overview:
“It is not from the benevolence of the butcher,the brewer, or the baker, that we expect our dinner,
but from their regard to their own interest. We address ourselves, not to their humanity
but to their self-love, and never talk to them of our necessities but to their advantages.”
Adam Smith, “Wealth of Nations”
Economics is the science of purposeful human actions and their unintended or overlooked consequences.
Economic theory examines the choices people make and the way these decisions affect others. You are an active
part of the U.S economy. Every decision, even to buy an orange instead of an apple, reverberates throughout the
economy by impacting on prices, output, wages, investments and profits. Since all actions have consequences, it is
important to trace the logical sequence of events arising from people’s choices. Applying economic theory to a wide
variety of everyday situations enables us to view the world in an unexpected and exciting way.
A person's values or needs guide the choices she makes. Everyone has a different set of values that they want
satisfied. As Adam Smith observed, humans are motivated by self-interest, which is another way of saying, people
are generally greedy, they like to possess things. The butcher, brewer and the baker do not labor and sweat
everyday because they want to help strangers. As John Stossel demonstrates in Video 2, ranchers raise cattle to
meet their own self needs. By providing dinners for strangers, they gain the means to acquire a house, a car, and
an education for their children. In this sense, everyone is greedy. Entrepreneurs rarely refuse extra profits, and
employees rarely turn down pay raises. Consumers never feel prices are too low. Sellers never complain that their
prices are too high. Even philanthropists "greedily" strive to help others. Defined this way, greed is everywhere you
look, even in our genes.
Greed occurs because individuals have unlimited desires. Everyone can dream of a better state of affairs for herself
or others. When we succeed in improving our lives, the second we think we’re happy, we want more. Once
accustomed to the current state of affairs we begin to think of ways it could be better. Call it the treadmill of
happiness principle in economics. For example, if you get a job that pays double your previous wage, you’ll likely
feel very rich. But that good feeling will eventually fade, and you’ll once again feel the need for more. Unfortunately,
scarcity prevents us from simultaneously satisfying all human desires. Mother Nature rarely provides goods and
services in such abundance that all human needs are fulfilled. Nature is the ultimate Scrooge! We arrive in this
world naked, hungry, ignorant and challenged to survive.
We combat Mother Nature’s stinginess by producing goods and services where none exist to satisfy our evergrowing array of needs. However, when more people desire something, the less available it becomes. This conflict
between unlimited needs and limited resources forces each individual to purposefully choose among alternatives.
Fulfilling some needs causes others to go unsatisfied. The value a person places on the foregone alternative is
called the good’s opportunity cost. You cannot go to the movies and attend a party at the same time. Your
opportunity cost for attending the party is not going to the movies. Even a free lunch isn’t free since the time spent
eating could be used doing something else, and the resources used could be applied to alternate uses.
Competition and the Market Process
Competition arises from scarcity and greed (needs). Competition has some role to play in most human relations:
entrepreneurs vie for profits, sports teams compete for victory and scientists contest for scholarly acclaim, such as
the Nobel Prize. Obviously, the winners benefit from competition, but the losers often gain as well. People trying to
start businesses often fail. Frequently, that failure helps them learn lessons that lead to them becoming the next Bill
Gates. And, whether the entrepreneur wins or loses, the consumer almost always wins. A competitor trying to give
consumers a better product than Microsoft may fail and go out of business, but in the meantime they’ve forced
Microsoft to keep prices down and quality up. Fans win from watching athletes collide in the Super Bowl. Sick
people win when scientists compete to discover cures for life-threatening diseases. Computer users win when small
companies based in Taiwan (Lenovo, formerly IBM PC) compete with Michael Dell’s company. Competition and
greed create vast unseen beneficial side-effects. When competitors pursue personal gain, they indirectly enhance
the quality of life for all.
Values and Voluntary Exchange
What happens when someone else has what you desire? How do you get it? Only three ways exist for getting what
you want in life: (1) gifts, (2) trade or voluntary exchange and (3) coercive transfers. In the economy, scarce
resources are transferred using one of these three methods. Some gifts come from nature, like wild berries waiting
to be picked, but even these require the time and effort of gathering. Most gifts come as presents from people who
expect nothing in return, such as your family or friends. Seldom do strangers pass out gifts. Since strangers own
most goods we desire, waiting for gifts or begging for a new Corvette usually doesn’t succeed. In human societies,
voluntary trade and coercion are the most common ways things are acquired. In a free market economy, most
needs are met through voluntary exchange. Individuals trade something they value less for something that they
value more. At the time of exchange, each trader believes she will be better off after the exchange. Additionally,
trade promotes cooperation, understanding and trust. Exchange requires knowing the other person’s needs or
wants, and knowing that promises will be kept concerning the quality and quantity of the traded goods.
A common fallacy implies that trade is zero-sum, where one person’s gain is another’s loss. Frequently, journalists
and politicians incorrectly use the phrase “trade wars.” This phrase confuses peaceful and mutually beneficial trade
with the violence of war in which a victor plunders the loser. Trade and war are completely opposite principles of
social relations. The coercion by force in war guarantees a win/lose, zerosum, or even negative-sum result,
whereas voluntary trade generates a win/win, positive-sum outcome. Trade only occurs when both parties feel they
will be better off. If a person expected to lose from trade, why would they voluntarily trade?
The zero-sum fallacy implies a fixed economic pie with the winners getting bigger slices than the losers. As David
Kelley explains to John Stossel, human productivity creates new wealth. The Earth is a self-contained economic
system. Where did the world’s wealth come from? Cave dwellers didn’t find clothes, cars and VCRs just lying
around in Nature. How was this wealth created? The chart below explains the answer. In this world, individuals
work every day to create the wealth consumed or traded away. The economic pie grows because of greed and
trade. In 1817, Adam Smith’s student David Ricardo discovered the economic reason for specialization and
exchange. Ricardo determined that we trade because of “comparative advantage.” One of economics’ most
important concepts, comparative advantage, explains why specialization arises even when the other person enjoys
an absolute advantage in producing all goods. In essence, comparative advantage means we do what we do best
and trade for the rest!
Worksheet Questions to answer. Use a separate sheet
1. While many would use the word, “greed,” what term might a capitalist use instead?
2. Greed is usually associated with negative outcomes and as being “bad.” In the video, several positive examples of greed
were given. One such example was that “greed” was largely responsible for the creation of better products due to “greedy”
people in their attempts to get rich, using their know-how and innovation to provide goods and services that others would buy.
Please cite three additional examples from the video that demonstrate greed not being viewed as a negative.
3. A “zero-sum” game by definition means that the amount of wealth in the world is fixed and that for every dollar one person
gains, some other person must lose a dollar. Greed is often associated with “zero-sum” games but in a capitalist system this
analogy doesn’t apply.
1. What is a “zero sum game”?
2. Why is our market system NOT a zero sum game?
4. Another example of the benefits of “greed” can be seen when comparing “for profit” versus “not-for-profit” industries.
According to economist Walter Williams, what does he conclude about customer satisfaction when comparing profit versus
not-for-profit enterprises? Be sure to cite specific examples from the video that he used to make his point.
5. n a free market, the general rule of thumb is that you get more for yourself by serving others. In such a system, how
important are variables such as human love and kindness in the process? Briefly explain.
6. Many would refer to capitalism as the great equalizer, stating people at the bottom need capitalism in order to succeed.
Explain why this is so as opposed to other forms of economic systems?
7. Ted Turner challenged the wealthy living today to give some of their money to charity as he had done. T.J. Rogers, founder
of Cyprus Semi-Conductors, took issue with Ted Turned, claiming that wasn’t what was best for helping people. Briefly,
explain the logic behind Roger’s argument.
8. While T.J. Rogers makes a logical point in arguing against simply giving money away to the poor, what is the major flaw in
his “economic” reasoning? (Hint: It has something to do with human capital.)
9. Why do people “trade”?
10. In conclusion, support your position regarding greed: “ Is Greed Good?”