government intervention — VOICES for REASON

If intellectual obscenities could be ranked, it would be hard to outdo Elizabeth Warren’s recent tirade against America’s wealth creators:

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

There is a lot one could say about this quote–notice, for instance, that it totally ignores the benefits made possible by the factory–but I’ll confine myself to this: underlying Warren’s rant is a disastrous view of the proper relationship between the individual and society.

On Warren’s view, society is some collective entity with its own interests and prerogatives, and if you want to be a part of society, you have to surrender some of your interests and prerogatives–above all, some of your freedom. Warren calls it a “social contract.” I call it a “social shakedown.”

The Founding Fathers, in a view they inherited from Locke and which was elaborated by Ayn Rand, had a radically different view of the relationship between the individual and society. They held that society is not some collective entity. It is only a collection of individuals–each with his own aims and interests. The basic problem of politics, they held, was how sovereign individuals could gain the benefits of living in society without surrendering their ability to pursue their own interests.

The solution was to base society on the principle of individual rights: each individual has an inalienable right to life, liberty, property, and the pursuit of happiness. You were free to live your life for your own sake and according to your own independent judgment. The government’s job was simple: to make sure no one interfered in that pursuit by violating your rights. Not to build roads or schools or to confiscate what you earn when you build a factory. To protect your freedom.

The result was the first voluntary society in history–a society where people dealt with one another only by mutual consent to mutual advantage. In such a society, if no voluntary cooperation is possible, individuals are free to go their own way.

In a voluntary society there is no such thing as some undefined, unlimited debt to “society.” Those who educate workers, pave roads, or put out fires are fully remunerated for their work by their customers. They have no further claim on anyone’s wealth–to say nothing of the bizarre idea that their services give Elizabeth Warren or Barack Obama a claim on anyone’s wealth. As for the government itself, that’s more complicated. A limited government is indispensible for individuals to flourish and we certainly have a moral obligation to pay for it. But in today’s context, when most of what government does is violate rights, interfere with wealth creators, and tax away their profits, it takes no small amount of chutzpah to talk about the debt they owe to government.

Individuals do create wealth, and morally they have a right to the wealth they create. But to appreciate that, you have to reject Warren’s collectivist social shakedown in favor of the individualist tradition of the Founding Fathers.

In BusinessWeek’s “Debate Room” this week, I take the “pro” position on the topic: “Dear Government, U.S. Business Doesn’t Need You.” Here’s part of what I said:

Jobs are created by private businesses when they expand production, launch new products, and develop new markets. Government’s proper task is to protect the rights of these job creators (and the people who fill the jobs). That means enforcing laws against embezzlement, fraud, breach of contract, and all the other crimes and civil wrongs that violate the right to free, voluntary trade.

After that, government’s No. 1 priority is to butt out. Our lawmakers need to be pondering how to roll back the programs that stifle job creation. From Federal Reserve-driven currency manipulation that fogs up the economic prediction windshield to costly and demoralizing regulations such as Sarbanes-Oxley that treat businesspeople as guilty until certified innocent and on to runaway “stimulus” spending that sucks capital out of the private sector, government “help” actually kills business initiative.

My opponent advocates economic protectionism, even higher spending on education, and other forms of what I call “welfare for business.” Who’s the winner of this debate? You be the judge—and be sure to post your comments on the BusinessWeek.com website.

Image: WikiMedia Commons

The April issue of the Ayn Rand Institute’s monthly newsletter Impact features an interview with Debi Ghate, co-editor of the new collection Why Businessmen Need Philosophy.

Impact: Hello, Ms. Ghate. Thank you for meeting with Impact to talk about the new edition of Why Businessmen Need Philosophy. To begin, why did you decide to revise and expand this book?

Debi Ghate: Thanks for speaking with me! The idea to update Why Businessmen Need Philosophy arose when my co-editor, Richard Ralston, learned that the first edition had sold out. He was interested in printing it again with a few updates. When I learned of this, it seemed like a tremendous opportunity for us to create a new volume that might be of more interest to the academic and business community. It brought to mind all the positive conversations we’ve had about Atlas Shrugged with businessmen, college students and educators interested in free market ideas. We personally meet or otherwise hear of many fans of the novel who say the book was influential on them–and many of them are (or will someday be) in business-related fields.

Yet very few consider themselves to be seriously interested in philosophical ideas, which of course, the novel is full of. The new edition of Why Businessmen Need Philosophy serves as a bridge between the novel and its underlying ideas with an emphasis on how they apply to the realm of business. Hence the subtitle for our new book–The Capitalist’s Guide to the Ideas Behind Ayn Rand’s “Atlas Shrugged.”

When Richard compiled the first edition in 1999, Objectivist scholarship in this area (and in many other areas) was more limited. Since then, there has been an explosion of excellent articles on themes of interest to the audiences I’ve described. In addition, the new volume provided us with an opportunity to highlight Ayn Rand’s writings on business in a way that had not been done before.

The result is that we now have a much expanded, improved and timely book than was originally planned.

Read the rest of the interview here.  The issue also includes an excerpt from ARC senior fellow Onkar Ghate’s essay ”Atlas Shrugged: America’s Second Declaration of Independence.”

For another excerpt from the book and the full table of contents, check out the website for Why Businessmen Need Philosophy.

The revised and updated edition of Why Businessmen Need Philosophy hits stores this Tuesday, April 5!  This edition contains new essays by ARC writers Onkar Ghate, Alex Epstein, Yaron Brook, and Keith Lockitch.  Check out the website for the book, where you can peruse the table of contents, watch an interview with co-editor Debi Ghate, read an excerpt from the book, and keep up with other updates.

Don’t forget to place your order for Why Businessmen Need Philosophy today!

And if you want to be entered into a drawing to win a free copy of the book, take our survey.

The revised and updated edition of Why Businessmen Needs Philosophy will be released April 5, 2011. This collection explores why businessmen are vilified in the culture today and how they should defend themselves against the plethora of attacks made against them. The book contains several new essays written by ARC intellectuals, including Yaron Brook, Alex Epstein, and Keith Lockitch.

Check out this excerpt of an interview with co-editor Debi Ghate.

You can peruse the table of contents here, and pre-order a copy of Why Businessmen Need Philosophy today!

WNYC has posted round two in the online debate between Yaron Brook of ARC and Miles Rapoport of Demos, on the proper role of government. That online exchange is a prelude to a live debate Thursday night on the same topic at NYU’s Skirball Center, kicking off the First Principles Debate Series.

For those who cannot make it to the Skirball Center, note that there will be a live video stream from the event.

ARC president Dr. Yaron Brook will be engaging in a lively debate on March 10 at the NYU Skirball Center in NYC.  He will debate Miles Rapoport, of the think tank Demos, on the question: “What is the Proper Role of Government?”  This debate is the first of a three-part series called “First Principles,” in which fundamental issues in politics will be discussed.

The debate will be moderated by Brian Lehrer of The Brian Lehrer Show from WNYC, a chapter of NPR.  To build up to the event, WNYC is publishing blog posts that illustrate the starkly different views of the two debaters on what the government should and should not do.

In the first blog post, for example, Mr. Rapoport contends that government should provide the “basic opportunities . . . every person [should] have access to in order to live a dignified life,” such as health care, education, and financial security in old age.  In contrast, Dr. Brook argues that a proper government would recognize “that each individual’s life morally belongs to him, and its sustenance and happiness are his [own] responsibility,” not the government’s.  In Dr. Brook’s view, government should be limited to “protect[ing] the rights of each individual against coercive interference with others.”

Check out their remarks in full here.

And stay tuned for more blog exchanges on this issue from Dr. Brook and Mr. Rapoport!

Also be sure to RSVP to the event if you are in NYC on March 10.  If you won’t be in town, watch the event live on ARC’s Facebook page!  (You won’t need an account)

In the five years since Katrina devastated New Orleans, $15 billion has been spent on rebuilding infrastructure (enough to protect against a Category 3 hurricane). But, according to a recent Wall Street Journal article, “many engineers and local politicians argue it may not be good enough.”

What would be good enough? “They say the city should be steeled for a 500-year or 1,000-year storm—roughly equivalent to a Category 5 hurricane.” Estimated cost: “at least $70 billion.”

New Orleans, most of which lies below sea level, gives new meaning to the term “money pit.” Yet the tax dollars keep flowing, partly because it’s taken for granted that no matter how risky it is to live next door to a wall of water, government must ensure everyone’s safety at public expense. “We should be looking at a much higher level of protection in New Orleans,” said one college professor. “If that thing breaks, you’ve got people who are trapped in there.”

The second sentence is true, but the first doesn’t follow logically from it. There are lots of places in America where the forces of nature threaten human safety. But it’s not government’s function to protect us from natural forces, only from human force—such as that wielded by foreign enemies or criminals. By spending billions on such measures as flood protection, government lures people into building (or rebuilding) in places where they wouldn’t otherwise dare to live.

In this way, as I’ve written elsewhere, government has a way of making natural disasters more disastrous. What is to be done?

[T]he solution is not more of the market distortions and perverse incentives that have lured so many people into harm’s way. The solution is to replace the prevailing entitlement mentality with a free market in disaster prevention, insurance, and recovery.

In a free market—without tax-paid levees, government disaster relief, or subsidized insurance—anyone who contemplates building or buying property in a high-hazard area will need to face hard facts about the local history of natural disasters, the efficacy and cost of preventive measures, and the availability of insurance.

For example, the high price—or total unavailability—of private insurance will resound like a clanging alarm bell, signaling the market’s objective view that a particular building plan is abnormally risky compared to less dangerous locales.

With their own lives and wealth at stake, people will have every incentive to evaluate risks objectively. And if hardy souls still choose to occupy and fortify New Orleans, or build on an earthquake fault, or live in a tornado alley, the risk and reward will be theirs alone. No longer will government make disasters more disastrous by pretending that citizens have a right to defy the forces of nature at others’ expense.

It’s time to start planning for the day when the money spigot that keeps New Orleans awash in federal dollars can be twisted shut.

Image: Wikimedia Commons

In their latest Forbes.com column, Don Watkins and Yaron Brook look at Washington’s longstanding policy of encouraging homeownership — and argue that it is un-American. They write:

For nearly a century it has been the policy of the U.S. government to increase American homeownership. Its efforts include (but aren’t limited to) bouts of easy money from the Fed, the mortgage-interest deduction, the exclusion of capital gains on primary residence sales, direct and indirect subsidies from the Department of Housing and Urban Development, and artificial liquidity pumped into the mortgage market via government sponsored entities Fannie and Freddie.

Policymakers assure us that the next generation of government housing programs will be “carefully designed” (bring on the next five-year plan, Comrade!). But the real question is why the government should be doing anything to promote homeownership.

Read the whole thing.

image: sxc.hu/alexkalina

Investor’s Business Daily has published an essay from ARI’s executive director Yaron Brook on  Atlas Shrugged. The piece begins:

In the years leading up to 2008—09′s financial meltdown, government control over mortgages, interest rates and America’s banking system was at an all-time high.

And yet when crisis struck, free enterprise took the blame.

The cure, therefore, was to give government even wider powers. Washington can now bail out any company, fire CEOs, override contracts and print billions of dollars to “stimulate” the economy — all in the name of the public interest. The result? Our deficits and debt continue to mount, and there’s a real possibility of a future like Greece’s.

This is the state of our world today. It’s remarkably similar to the state of the world in Ayn Rand’s “Atlas Shrugged,” a mystery story about a future America whose economy is disintegrating and whose government is accumulating power faster than anyone thought possible. This parallel is a big reason a record 500,000 people bought “Atlas Shrugged” last year.

So what can we learn from a book that foresaw in 1957 what few believed possible in 2007? We can learn a lesson the heroes of the novel learn: the cause of the government’s greater, destructive control of business. And we can learn how to oppose it.

Read the whole thing.