By taking an economical perspective of greed and incentive, one can see how each play a vital role in the free market society.
And until just a few months ago we thought it was working.
Now, as each day seems to bring a new business scandal, we can see the theory's fatal flaw: a system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success.
Positive incentives, forever, reward someone financially for making certain choices or behaving in a certain way (Economic Incentives in Our Community).
Greed and incentives have some similarities, such as, both are only concerned about with self-interest. 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.
But a few years of illusory achievement can leave an executive immensely wealthy.
Ken Lay, Gary Winnick, Chuck Watson, Dennis Kozlowski -- all will be consoled in their early retirement by nine-figure nest eggs.
The raiders claimed -- usually correctly -- that they could increase profits, and hence stock prices, by inducing companies to get leaner and meaner.
By replacing much of a company's stock with debt, they forced management to shape up or go bankrupt.
In order to help make clear the difference of greed and incentives, this paper will discuss a quote from Adam Smith’s book, Wealth of Nations, along with discussing innovation, the difference of acting in one’s self interest and being greedy, and fairness or greed in free market systems.
Greed and incentives are two terms that each play a role in the other.