Don Watkins — VOICES for REASON

Forbes.com has just published the latest column by Yaron Brook and me, part 2 on the subject of ObamaCare and the debate over preexisting conditions. In this installment, we describe how a free market in health insurance might deal with preexisting conditions.

Imagine a world without health insurance. You’re a young entrepreneur and you notice that a perennial problem people face is how to protect themselves against the risk of incurring costly and unexpected medical expenses. For most, the apparent option–save enough money to cover any medical bill–is impractical: what if they get sick before they save enough? Or what if the cost of treatment exceeds a person’s capacity to save?

You realize that wherever there’s a problem, there’s an opportunity. You could convince some of the people in your town to purchase from you insurance that pays out in the event of accident or serious illness. But starting such a company would require a lot of work, a lot of financial capital, and complex actuarial and business skills that take a long time to acquire. You would need to set  rates to make sure more money is coming in than is going out; process claims to separate the legitimate from the illegitimate ones; and grow your client base. The challenges are enormous, but if you succeed, the value you provide clients would be huge and the profit potential should be as well.

After some careful deliberation, you decide to launch the business. You launch the first health insurance company. Your idea quickly catches on, and soon other health insurance companies spring up in your town and beyond.

You can read the whole column here.

Forbes.com has just published the latest column by Yaron Brook and me, on the subject of ObamaCare and the debate over preexisting conditions.

In his recent State of the Union, Obama named as the not-to-be-compromised central achievement of his health care bill that it put an end “to the days when insurance companies could deny someone coverage because of a preexisting condition.” ObamaCare does indeed make it illegal for insurance companies to refuse to cover people with preexisting medical conditions or to charge them higher prices.

Far from justifying an expansion of the state’s role in medicine, however, the issue of preexisting conditions illustrates how badly we need to disentangle government from American medicine.

You can read the whole column, the first in a series, here.

(Related discussion here.)

Forbes.com has just published the latest column by Yaron Brook and me, which looks at the role class warfare rhetoric is playing in the debate over taxing the rich.

The recent debate over the Bush tax cuts was filled with enough rich-bashing and envy-stoking to make Karl Marx blush, and while the left may have lost that battle, it just might be winning the war. A recent 60 Minutes/Vanity Fair poll finds that 61 percent of respondents advocate raising taxes on wealthy Americans as the “first step” in balancing the budget. (By contrast, only 7 percent advocate cutting the entitlement programs–Medicare and Social Security–that are chiefly responsible for the budget crisis.)

It doesn’t take an economist to see that our fiscal mess was not caused by rich people keeping “too much” of their wealth, but by the government spending too much of everyone’s wealth. So why have cries to soak the rich started to, well, sink in?

Americans, historically, have not been envious of wealth. The predominant attitude has been: let a person make as much money as he can, provided he earns it. The reason class warfare rhetoric has been effective of late is because the practitioners of class warfare have largely succeeded in painting the rich as unproductive parasites.

You can read the entire thing here.

Image: flickr

Forbes.com has just published the latest column by Yaron Brook and me, an analysis of Arthur Brooks’ recent book The Battle.

What’s the central message of The Battle? That the advocates of big government have offered a potent moral case that wealth redistribution promotes the happiness of society, and that the supporters of free markets need to articulate their own moral defense of capitalism in reply. Brooks’ argument, in short, is that wealth redistribution does not make people happy. The source of genuine happiness is earned success, i.e., “the creation of value” by the individual — and it is capitalism that fosters earned success. To defend capitalism in moral terms, he concludes, is to defend it as the system of the pursuit of happiness.

There are important elements of truth in this narrative, but there is also a gaping hole. What Brooks doesn’t acknowledge is that the pursuit of your own happiness is at odds with the near-universal view that we have a moral obligation to sacrifice ourselves to the needs of others — and that the basic reason we live in an ever-expanding welfare state is because, when faced with a choice between the individual’s pursuit of happiness and his duty to serve others’ needs, we almost always choose the latter.

You can read the entire piece here.

Following the news that Facebook founder and Time Person of the Year Mark Zuckerberg had signed the Gates/Buffett Giving Pledge, ARC put out a press release arguing that signing the Pledge was not a morally praiseworthy act–that businessmen like Zuckerberg deserve moral credit for creating wealth, not for giving it away.

Nick Baumann of Mother Jones recently linked to it, suggesting, tongue firmly in cheek, that it might be “the best PR ever,” and his comments are getting a fair amount of play around the web. Given all the attention, I would like to recommend that interested readers take a look at the full argument Yaron Brook and I laid out in our original piece on the Pledge.

By the way, I will be discussing the Giving Pledge with Baumann tonight on Thom Hartmann’s TV show The Big Picture.
[Cross-posted from forbes.com]

In our latest Forbes.com piece, ARC’s Yaron Brook and I examine the ObamaCare individual mandate:

A federal district judge has struck down ObamaCare’s individual mandate as unconstitutional in a case expected to go to the Supreme Court. Judge Hudson is to be commended on his decision, for not only is the mandate unconstitutional, it is also immoral.

You can read the whole thing here.

By the way, Forbes.com has a new format for our column. To follow our latest, just bookmark http://blogs.forbes.com/objectivist/.

You may have heard of the trend of businessmen “Going Galt,” i.e., self-confidently declaring that until the government loosens the burdens of backbreaking taxes and onerous regulations, they will scale back their productive efforts rather than work as virtual serfs. (The phrase “Going Galt” is a reference to Rand’s novel Atlas Shrugged.) Other businessmen, however, have decided to “Go Guilt,” i.e., to sign Bill Gates and Warren Buffett’s “Giving Pledge,” vowing to give away most of the wealth they have earned. The recent news that Facebook’s Mark Zuckerberg has signed the Pledge is making headlines.

To be fair to Zuckerberg, there can be many reasons why he and his fellow “Givers” have signed the Pledge. But as Yaron Brook and I argued in a recent Forbes.com column, the Pledge’s aim is to prey on the (undeserved) guilt many successful businessmen feel.

It is no accident that the Giving Pledge is not a call for charity but a public pledge to give. As Matthew Bishop and Michael Green observe, “Richesse oblige is part of American culture. The peer pressure to give is great (for donors large and small) . . . The Giving Pledge has upped that peer pressure . . .” The Pledge treats your wealth, not as a justly earned reward, but as a gift from society–one that came with plenty of strings attached. The message is: Fulfill the obligation that came with your riches, give your wealth away–or hide your face in shame.

But your wealth was not an undeserved gift. Every dollar in your bank account came from some individual who voluntarily gave it to you–who gave it to you in exchange for a product he judged to be more valuable than his dollar. You have no moral obligation to “give back,” because you didn’t take anything in the first place.

What I didn’t mention in the column was that one of the central issues Ayn Rand addresses in her novel Atlas Shrugged is why so many businessmen feel unearned guilt for their success. That, not coincidentally, is a point I discuss in a post I wrote last year–criticizing the phrase “Going Galt.”

Image: flickr

In a delightfully written column for the Wall Street Journal, Holman Jenkins observes that baseball great Derek Jeter’s salary showdown has provoked none of the public outcry we inevitably hear when a CEO makes a lot of money. My favorite part:

Absent from the Jeter controversy has been envy or raillery about the horrors of income inequality. Absent has been the lethargic assumption that national income is a fixed sum, so more for Mr. Jeter means less for schoolteachers. Absent has been the psychological malady that, in a world not short of injustices, causes sociology professors to lie awake obsessing over the difference between their incomes and those of other people.

Said one fan on a New York paper’s website: “As far as the money is concerned, I really don’t care what they pay him. It’s not my money.” If it were catching, this healthy-minded attitude toward the paychecks of our fellow man would make the world a better, happier place.

There’s a lot to say about why the relatively high pay of superstar CEOs is reviled while the relatively high pay of superstar sports figures and celebrities is tolerated and even cheered.

One reason for this double standard is simply that few people have a clear idea of what it is a CEO does. We all can see what makes Jeter great (well, those of us who aren’t Red Sox fans), but just what does Larry Ellison do–and why can’t Oracle’s stockholders find someone to do it more cheaply?

I’ve often thought that a reality TV show based around a successful CEO who is not Donald Trump would go a long way toward remedying this problem. But, alas, it would not go all the way, for reasons I explain in my article (co-authored by Yaron Brook) “The Corrupt Critics of CEO Pay.”

image: flickr/keithallison

In honor of Veterans Day, we encourage you to read ARC’s Alex Epstein’s op-ed, “What We Owe Our Soldiers.”

Every Veterans Day we pay tribute to our fellow Americans who have served in the military. With speeches and ceremonies, we recognize their courage and valor. But justice demands that we also recognize that we should have far more living veterans than we do. All too many of our soldiers have died unnecessarily–because they were sent to fight for a purpose other than America’s freedom.

You can read the entire piece here.

Carlos Slim, the world’s richest man, has made headlines by questioning the effectiveness of charity and refusing to sign the Gates-Buffett Giving Pledge. “The only way to fight poverty is with employment,” Slim is quoted as saying. “Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything.”

I would say that the only way to fight poverty is with capitalism–there are plenty of poor, employed people in the world–and one way to fight for capitalism is through philanthropic giving. (The Ayn Rand Center for Individual Rights, for instance, is a 501(c)(3) non-profit organization.) In any case, it is heartening to hear a successful businessman challenge the idea that the only way the lot of the poor can be improved is through charity.

But what’s most interesting to me is this response from Wall Street Journal senior writer Robert Frank: “In these populist times, some might argue that Mr. Slim is being a selfish billionaire who’s simply justifying his own wealth accumulation.” But, wonders Frank, “Would Bill Gates and Warren Buffett be doing more for society by putting their time and money into new businesses rather than funding philanthropy?”

What I take issue with is the idea that accumulating wealth that one has earned via productive activity requires some non-selfish justification. The selfish justification of production is that manna doesn’t fall down from Heaven: if you want to live and enjoy life you have to work to create wealth. To say that this requires some further justification is to say that your life requires justification–that you don’t have a right to exist for your own sake, but need to buy your right to exist by proving that you are serving others.

As ARC’s Yaron Brook and I argue in a recent Forbes.com column, businessmen aren’t servants of society. Whether they should give to charity or fund new businesses is a decision they should make by thinking about what will promote their own well-being and happiness. A successful and happy life requires no “higher” justification.

Image: flickr