This argument from Matt Yglesias seems very poor, especially since Matt is a pretty basic utilitarian (unless he has changed his mind since we last talked about ethical theory) who therefore has no business handwringing about motives. Rehearsing an argument he’d been having on an email list, Matt writes:

I was saying that whatever one thought should be done with large financial institutions as a policy matter, surely we could agree that the executives at these institutions are primarily bad people.

It turns out we couldn’t agree on that. But my argument is pretty simple. These are people primarily motivated in life by greed. Not just by a desire to make some scratch, mind you. These aren’t immigrants who walked through the desert from Mexico in order to earn more money by washing dishes in a San Diego hotel. They’re not 24 year-olds looking for a hefty salary in order to pay off student loans. They’re multi-millionaires who want to earn millions more. It’s possible, of course, that Vikram Pandit really does find being a bank executive to be intrinsically interesting. But 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. But that’s not what Pandit’s doing. Rather he, like virtually all executives at major firms, is living a life that’s primarily oriented around an ethic of greed.

Now there’s a decent argument out there, familiar from Adam Smith and the whole tradition of economics, that a world full of greedy people isn’t necessarily quite the disaster that pre-modern ethical thinkers would have thought. This is all well and good. True even. But it’s a sign, I think, of a kind of sickness running through American society that we’ve lost the willingness to just say clearly that ceteris paribus greedy behavior is not virtuous behavior. In the spirit of decency, of course, we recognize that none of us are without sin.

I assume the motivations of the executives of financial firms are many and varied. Some executives are surely complete bastards and some of them are surely upstanding women and men of virtue. Matt’s willingness to commit himself the the idea that these are bad people simply because of their occupation seems unhinged. I understand finance is unpopular now, but finance is only one of many ways to make money. If people motivated primarily by greed are bad people, and Matt cannot imagine another primary motive for financial executives, can he imagine other motives for any executive? 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? 

Anyway, if Matt thinks the Adam Smith argument — that people moved by impulses other than benevolence or charity may nevertheless serve the general good — is “true even,” then what’s the problem? Especially given Matt’s utilitarian sympathies? Whether a person is “bad,” in the utilitarian framework, has little to do with motivation, and everything to do with results. As Tyler Cowen kept urging on Peter Singer, the consistent utilitarian should simply admit that an entrepreneur who creates a great deal of utility on the way to making and keeping huge sums of money is a much better person (a better utility engine) than someone who creates a much smaller amount of utility by giving away all but 10 percent of a relatively small income earned in a job that produces a relatively small amount of utility. One can be a folk moralist or a utilitarian moralist, but not both. If the pursuit of wealth produces more utility than charity — which it often will given the right institutions — then we might wish to reconsider what we are going to count as virtues and vices. Again, maybe Matt has given up on his utilitarianism, in which case he stands some chance of making sense relative to his own ethical assumptions. But I suspect he’s catering to certain popular folk assumptions about the vice of greed to impugn the character of an entire class of people for reasons that are obscure to me. Maybe he can clarify what he’s doing here. 

Now, I am willing to say that, ceteris paribus, a certain kind of grasping, unprincipled pecuniary self-interest is a destructive quality. If that’s greed, then I’m against it. But I’m not willing to say the same thing about the pursuit of wealth generally.

I think we have recently punctured some dangerous misconception about the real value of certain kinds of “financial innovation,” and so we should reconsider how much those who have become wealthy in these fields have actually enhanced general welfare. I think a lot of execs basically failed to do their primary job: to manage their firms’ assets responsibly on behalf of the owners of those assets: the shareholders and creditors. This makes them justifiable targets of outrage. We’ve learned a lot of lessons. I think we’ve been given reason to think much harder about the principal-agent problem — the mismatch of incentives between owners and managers — at the heart of corporate organization. I think we’ve learned just how “socially responsible” maximizing long-term value really is, and how anything that distracts from focus on long-term value creation (whether it be myopic bonus systems or irrelevant-to-the-business “corporate social responsibility” initiatives) is a potentially hazardous nuisance. The Smithian congruence between self-interest and the general welfare is not a natural fact of the world, but is mediated by social norms and the structure of institutions. 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. It is a crucial and necessary resource. And it remains a much more likely engine of utility than the desire for political power — a truly dangerous motive Matt tends to ignore.

None of this is to say that I think Vikram Pandit is a prince. For all I know he’s a complete cad. And none of this is to say the man’s a great force for the enhancement of human well-being. As far as I know, he’s done more harm than good. But I don’t know enough about him to say for sure, and I suspect Matt’s in the same position. Anyway, I don’t think we’re likely to do much good if we reduce our view of the world to a children’s cast of villians and heroes, and I’m relieved to hear that Matt’s email list interlocutors won’t agree to his cartoon assumptions.

[Update: See Conor Clarke, who replied in a very similar spirit, but much more concisely.]