An Excerpt from Greed Gone Good


Great financial innovations arise from moments in time when the world is ripe with opportunity. Around the dawn of the 21st century, one such moment arrived with the impact revolution, a drive to realign investments with social and environmental goals alongside financial goals. The coronavirus pandemic and ensuing economic devastation has highlighted the urgency of a sustainable investing approach in order to build back better.

This movement owes its popularity to the failure of other approaches to development, such as foreign aid. Bottom-line capitalism has brought massive inequity, evident in the class-based and racial overtones of the Hurricane Katrina debacle and the unpleasant reality of global markets exposed in the financial crisis of 2007-10. And then came coronavirus, which exposed the horrid underbelly of globalization and greed, by hitting poor, underserved, vulnerable, often minority populations with disproportionate ferocity.

There has to be a better way – and there is. The profit incentive is a powerful one, so why not embrace this in our quest for economic and social progress? The concept of ESG-based investing (investing in line with environmental, social, and governance goals) is both an affirmation and a reformation of capitalism.

This book is a roadmap to how we can lure huge gobs of private capital into enterprises that promise both financial and social returns.

There is a tide in the affairs of men,
Which, taken at the flood, leads on to fortune.”
(Shakespeare, Julius Caesar)

As Shakespeare’s Brutus noted, there are moments in time when the world is ripe with opportunity. In the world of finance, great innovations have always arisen from such moments. Financial guidelines and structures were born in the wake of the Great Depression of 1929, paving the way for massive growth and prosperity over the next century. The home mortgage enabled millions of people to become homeowners; the development of syndicated loans and project finance enabled huge development projects from gold mines to the Eiffel Tower.

Sometime around the dawn of the 21st century, another such moment arrived in the financial world as the notion of ESG investing (aka triple bottom line investing, sustainable investing, impact investing, or blended value investing[1]) took hold.  As the gatekeepers to finance, lenders and investors are responsible for allocating scarce capital to the most promising sectors. Traditionally, MBA programs taught that these “promising sectors” were those most likely to maximize shareholder value. Other stakeholders, including government and society, were considered for their nuisance value rather than for their intrinsic worth.

In the past two decades, however, the notion of ESG investing has gained credence, even among the most cynical of managers. Moreover, it is widely recognized that lenders, investors and business leaders, as the ultimate financial decision-makers, have special responsibilities in this regard. Blended value – which encompasses the social, environmental, governance, and financial performance of a business – will only become more important in a globalized economy marked by scarce and shrinking resources. The COVID-19 pandemic and ensuing economic devastation has highlighted the urgency of ESG investing as a way to build back better.

Among changemakers and investors alike, these ideas are being put into action.  In 2020, the Global Impact Investing Network (GIIN) estimated the current ESG-based equity investing market size at $715 billion.[2] Around one-quarter of total assets under management (AUM) are invested for social as well as financial value; and the COVID pandemic has spurred the Social Bonds market to explosive growth in 2020.

Foreign Aid: There Has To Be A Better Way

The impact movement owes its birth in part to the failure of other approaches. Over the past many decades, foreign aid has been the globally-accepted cornerstone policy aimed at poverty alleviation, promotion of Western-style democracy, and disaster relief. Well-intentioned as it may be, the most startling aspect of decades and billions of dollars of development aid is the disappointing results.

In Mexico, for example, the US government has contributed more than $300 million to support criminal justice reform – urgently needed in a country devastated by criminality and corruption. But what has this money bought? According to the Washington Post in 2017, mostly chaos. Reporters found that “the most profound overhaul” of Mexico’s legal structure in one hundred years, aimed at “restoring order to a country torn apart by drug violence,” is instead plagued by unforeseen consequences.

“Bickering and confusion reign at each link in the legal chain. Police complain of hours lost on laborious forms; prosecutors blame judges for setting criminals free; judges accuse poorly trained police of botching crime scenes. Powerful drug cartels, meanwhile, are exploiting the weaknesses in the new system and strong-arming authorities with death threats and bribes.” [3]

The bottom line? A record high of nearly 35,000 people were murdered in Mexico in 2019.

How about all of the development aid ladled out to post-Soviet Eastern European countries to grease the transition to democracy and capitalism?

After the fall of the Berlin Wall in 1989, the US Agency for International Development (USAID) poured over $20 billion into the region to support economic growth, democracy, and governance. Even more cash rained in from Western European powers and multilateral organizations like the World Bank and International Monetary Fund (IMF).

Again, what did this money buy? Economic growth in a few countries (think Poland and the Czech Republic) has been impressive. On the other hand, many countries continue to limp along as Soviet-style factories collapsed and foreign investors declined to rush in waving fistfuls of dollars. The ten poorest countries in Europe are all former Soviet republics or clients – Moldova, Ukraine, Kosovo, Albania, Bosnia and Herzegovina, Macedonia, Serbia, Belarus, Montenegro, and Bulgaria. In fact, per capita GDP in Moldova, the poorest, was a lowly $3300 in 2019 compared to Norway’s lofty $77,975. This means that Moldovans scrape by on an average of $9 per day, while Norwegians live the good life on $214 per day!

So where did all that aid money go? Some of it was frittered away on well-paid Western “experts” who jetted in to the donor countries for a week or two, racked up bills at the best hotels in town, and proposed the same policies for every country regardless of its particular circumstances. Anecdotes about these “experts” abound: One story is that experts arrived in Ukraine to present an employment policy that had simply whited-out “Armenia” and superimposed it with “Ukraine.”

And then, of course, there’s Afghanistan. An Oxfam study in 2008 panned the huge salaries of “most full time, expatriate consultants, working in private consulting companies, [who] cost 250,000-500,000 USD a year,” and estimated that 40% of aid since 2001 – around $6 billion – had bounced back to donor countries in the form of corporate profits and consultant salaries. [4] And poverty today is much more widespread than it was immediately after the fall of the Taliban.

Ouch. And we still haven’t mentioned Haiti, the poster child for expensive and fruitless, even harmful, foreign aid. Haiti’s horrifying magnitude 7.0 earthquake of January 12, 2010 left 220,000 people dead, 300,000 injured, and the poverty-stricken country a mass of rubble and devastation. Well-meaning aid donors rushed in with $13.5 billion in donations and pledges. But while the rubble is cleared and the injured (mostly) repaired, the country remains miserably corrupt, poverty-stricken, and – thanks to UN peacekeepers who spilled their waste into Haiti’s largest river – overwhelmed by an unprecedented outbreak of cholera.

One observer explains, “USAID has spent about $1.5 billion since the earthquake. Less than a penny of every dollar goes directly to a Haitian organization.” And he adds, “International companies had to fly in, rent hotels and cars, and spend USAID allowances for food and cost-of-living expenses.”  Danger pay and hardship pay can inflate these consultants’ salaries by “more than 50 percent.” [5]

I have, of course, cherry-picked the worst possible horror stories of international aid; there are also many good-news stories and many people lifted out of poverty thanks to foreign aid dollars. But aid donors tend not to play well together; this lack of coordination leads to duplication of efforts and spotty results. The high proportion of aid money that actually is absorbed by Western companies and “experts” is appalling; and an influx of foreigners waving checkbooks can also exacerbate local corruption while badly distorting the local economy.

A bald statement that aid hasn’t worked is too strong; foreign aid is well-intentioned, and some is even impactful. But it is fair to say that we certainly haven’t gotten much bang for our bucks (excepting, of course, the very well-paid international development companies and consultants). There has to be a better way.

And there is our opening.

The Better Way

“The businessman is only tolerable so long as his gains can be held to bear some relation to what, roughly and in some sense, his activities have contributed to society.”
(John Maynard Keynes, 1923)

One of the strongest arguments for an impact-based approach to business and society is that bottom-line capitalism has failed. At the first two decades of the 21st century came to a close, we are unnerved by the rise of authoritarian leaders around the world. Financial markets are shivering in fear of what these autocrats will do with all of their power. Climate change in the form of wildfires, massive floods, and man-eating storms is increasingly evident; and we have been treated to the spectacle of wealthy Asian tourists loading up on $10,000 handbags on the Champs Elysees amid thousands of have-nots rioting in the streets.

And this was before coronavirus! The disease exposed the horrid underbelly of globalization and greed, by hitting poor, underserved, vulnerable, often minority populations with disproportionate ferocity. In the state of Louisiana, for example, where blacks are 32% of the population, they account for an unacceptable 70% of those dead from the disease (as of May 2020).

While the disparity is not quite as vast in other parts of the country, it is patently clear that COVID is taking a massive toll on minority populations in the US while passing fairly lightly over upper middle-class white populations. Blacks and Latinx tend to have a higher level of underlying, untreated medical conditions; live in closely-clustered neighborhoods and homes; have poorer access to health care; work in face-to-face “essential” jobs; and experience high rates of discrimination in the health care system.

And then a grim situation became dire when a white police officer in Minneapolis knelt on the neck of a crying and pleading black man, yet it took officials four days to charge the officer with the victim’s death. Black communities nationwide exploded in rage, and US cities were best by riots, looting, and street fighting between police officers and demonstrators, the likes of which had not been seen in more than a generation.

As columnist Thomas Friedman wrote, greed and globalization have broken the world. [6]

In fact, all of these developments highlight the lack of social progress and the failures of the old business model that were already evident even before coronavirus, especially in the class-based and racial overtones of the Hurricane Katrina debacle and the unpleasant reality of global markets exposed in the financial crisis of 2007-10. A crisis is a terrible thing to waste; and this century has already seen four crises – 9/11, Katrina, the financial meltdown, and coronavirus – with another likely to unfold in alarmingly short order.

Underpinning these crises has been an epidemic of blind faith. Blind faith in globalization led to a massive backlash – the election of Donald Trump, the British vote to exit the European Union (Brexit), and French rioting in the streets – as the losers from globalization demand attention for their plight. Blind faith in technology led to massive financial breakdowns from Enron to the financial crisis. And blind faith in free markets paved the way for banks that are too big to fail yet unable to police themselves; financial meltdown; and widespread poverty in the developing world.

Is capitalism the problem? Does a world that is dominated by capitalist markets (the only remaining socialist holdouts are Cuba and North Korea) inevitably engender poverty, inequality, and misery?

Well…not so fast. Let’s remember what Churchill is believed to have said about democracy: It’s the worst form of government, except for all the others. The same is true of capitalism: It’s the worst form of economic framework, except for all the others.

The dismal failure of socialism is evident in the collapse of the Soviet Union, China’s choice to largely abandon socialism for free markets, and the death struggles of Cuba and North Korea. There is really no rational argument for socialism as a road to prosperity – history categorically refutes that.

The concept of ESG-based investing is in fact both an affirmation and a reformation of capitalism. The profit incentive is a powerful one, so why not embrace this in our quest for social progress? Why not lure huge gobs of capital into enterprises that promise both financial and social returns? Why not incorporate business notions of efficiency and rigorous measurement of results into the realm of do-gooders?

This book, then, is a call to arms; an urgent plea that we all link arms and take a leap of faith together. Much more than that, it is a roadmap to how we can take this leap — and land on our feet. Harkening back to Churchill and Einstein, the impact revolution is a movement to do things differently. And echoing Keynes, it is an affirmation of the power and responsibility of business to do good and do well at the same time.

[1] ESG (environmental, social, governance) investing refers to investments that seek both positive financial returns and a positive long-term impact on society and the environment.

[2] Dean Hand, Hannah Dithrich, Sophia Sunderji, Noshin Nova. “2020 Annual Impact Investor Survey.” (June 11, 2020). Global Impact Investing Network.

[3] Partlow, J. (2017, December 29). How a US-backed effort to fix Mexico’s justice system led to turmoil. The Washington Post. Retrieved from:

[4] Bjelica, J. & Ruttig, T. (2018, May 17). The State of Aid and Poverty in 2018: A new look at aid effectiveness in Afghanistan. Afghanistan Analysts Network. Retrieved from:

[5] Knox, R. (2015, January 12). 5 Years After Haiti’s Earthquake, Where Did the $13.5 Billion Go? NPR. Retrieved from:

[6] Friedman, T. (2020, May 30). How We Broke the World. The New York Times. Retrieved from:

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