Business & Economics — VOICES for REASON

Here are my recent comments on the Occupy Wall Street protests:

Some Americans have expressed sympathy with the Occupy Wall Street protesters because they oppose bank bailouts and the incestuous relationship between Washington and Wall Street.

“Americans are understandably upset by what they see as ‘crony capitalism,’” said the Ayn Rand Center’s Don Watkins. “But the real motive of the protesters is not to end ‘crony capitalism’–it’s to attack real capitalism and end whatever is left of it in America.

“For years, Washington has favored certain bankers by intervening in the market. But that has nothing to do with genuine capitalism. Capitalism means that the government does one thing–protects us from force and fraud–leaving us free to conduct our economic affairs as we see fit. A capitalist government doesn’t intervene to pick winners and losers, or to save companies from their mistakes.

“But the Wall Street protests aren’t calling for an end to government intervention in markets–they want to increase it. Most of them, for example, want to increase wealth redistribution in the name of fighting income inequality.

“Contrary to their rhetoric, they do not oppose the banks on the grounds that Wall Street is in bed with Washington. Notice, for instance, the plans to protest outside the home of investor John Paulson, who cannot be accused of getting government favors, and the lack of complaints about taxpayer money being poured into GM, Chrysler, and Solyndra. They chose to protest Wall Street because, whatever its flaws, it symbolizes genuine capitalism.

“What the protesters object to is not government stacking the deck to determine winners and losers. They just want the government to pick different winners and losers. They want to take the ‘capitalism’ out of ‘crony capitalism’–not the other way around.”

Photo: Paul Stein

Forbes.com has published the latest column by Yaron Brook and me, “What We Owe Steve Jobs.”

Watching the world mourn Steve Jobs, we are reminded of how massive crowds of Americans used to gather to celebrate the launch of a new bridge or a new railroad. There is a widespread recognition that Jobs was a creative genius who changed our world profoundly and for the better. Even President Obama, not usually given to praising businessmen, said that Jobs “transformed our lives, redefined entire industries, and achieved one of the rarest feats in human history: he changed the way each of us sees the world.”

All of this raises an important and to-date unasked question: what do we owe Jobs and productive geniuses like him?

You can read the entire column here.

Over the next week, ARI speakers will participate in “Capitalism Awareness Week.” Capitalism Awareness Week is being spearheaded by the student publication The Undercurrent, and will feature a series of events at college campuses addressing what capitalism really is and how our country would be far more prosperous and just if markets were free.

• Tonight Yaron Brook will debate Dane Smith, the president of Growth and Justice, on whether regulating capitalism is a moral necessity or moral treason.
• On Thursday, Sept. 29, Don Watkins will tackle America’s entitlement crisis and answer whether the entitlement state and its leading programs—Medicare, Medicaid, and Social Security—can and should survive.
• On Tuesday, Oct. 4, John Allison, an ARI board member and retired chairman and CEO of BB&T Corporation, will discuss the causes, consequences, and cures of the recent financial crisis.

The best part is: all of these events will be streamed live over the web. So be sure to check them out!

More information can be found at capitalismweek.org (which is also where the events can be streamed live).

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

Forbes.com has just published the latest column by Yaron Brook and me, “The Entitlement State is Morally Bankrupt.”

The basic principle behind the entitlement state is that a person’s need entitles him to other people’s wealth. It’s that you have a duty to spend some irreplaceable part of your life laboring, not for the sake of your own life and happiness, but for the sake of others. If you are productive and self-supporting, then according to the entitlement state, you are in hock to those who aren’t. In Marx’s memorable phrase: “From each according to his ability, to each according to his needs.”

As we’ve argued in past columns, no system that treats you as other people’s servant can be called moral. What made America the noblest nation in history was that it was the first country founded on the idea that each of us has a right to live and work for our own sake, that it’s our own job to try to make the most of our life, and that the government’s sole purpose is to protect our freedom to do so.

Some have raised objections to this line of argument, however. Here are three of the most popular objections.

You can read the whole column here.

We hear all the time about evil “speculators” driving up the price of oil and other forms of energy. But there is little explanation of what ”speculation” actually is. Yet understanding speculation is not only crucial to understanding these accusations and whether they hold water, but to understand the whole world of energy today. Therefore, the goal of this month’s Power Hour is to demystify speculation and debunk some popular myths about the practice.

To give us clarity on speculation, I brought in an expert on financial markets and speculation, Dr. Eric Dennis. Dr. Dennis was actually trained as a theoretical physicist at CalTech, Princeton, and Santa Barbara—but now works as a high-level executive at a major financial institution, using his mathematical skills to build complex models of financial markets. I have been fortunate enough to know Dr. Dennis for several years now, and he is my go-to person whenever I have a question about speculation or financial markets, since he knows them inside out and can break down the issues in plain English.

Listen to the episode and learn:

• What exactly is speculation?
• Is it a problem that speculation is growing in oil markets—or a good thing?
• Does speculation really drive up prices?
• Do speculators have undue influence over prices?
• What is hedging, and how do speculators make it possible?

And much more!

(By the way, if you want an easy way to fit Power Hour into your schedule, download it to your MP3 player and listen to it during your commute.)

Listen to or Download this month’s show.

Subscribe to Power Hour on iTunes.

Subscribe to Power Hour for other podcast programs.

In the latest issue of The Energy Advocate, editor and physicist Howard Hayden gives a thorough explanation of how different forms of light bulbs work, and why incandescent light bulbs are the most pleasing to most eyes. Here’s an excerpt:

Filaments in [incandescent] electric lamps are not as hot as the surface of the sun, yet the light they emit is very similar. Each one emits light in the entire wavelength range visible to the human eye . . . .

Incandescent lamps are notoriously inefficient, emitting less than 10% of the input power as visible light. The problem with more efficient sources like fluorescent lamps is that their light is not a continuous spectrum, but rather a handful of individual wavelengths. The effect is to distort colors of objects illuminated by the light.

Note that this “inefficiency” of incandescent light bulbs is the source of their scorn by the environmentalist left and their effective ban by the federal government. Energy Secretary Steven Chu reveals the mentality behind the ban when he says, smugly, of a law preventing individuals from buying the light bulbs they want: “We are taking away a choice that continues to let people waste their own money.”

What is Chu ignoring when he calls the choice to buy regular bulbs a “waste”?

Well, for one thing, he’s ignoring the fact that while incandescent light bulbs are not efficient in the sense of producing as much light per unit of energy as possible, they are incredibly efficient in the sense of producing the most desirable light for our money (including our energy). There is a rarely consulted passage of a rarely consulted document that champions “the pursuit of happiness.” When I choose to buy an incandescent light bulb, I do so because that gets me the best light for my money—with “best” emphatically including the quality of illumination I will enjoy as I read books, talk to friends, work in the evening, etc. To our government, such considerations are irrelevant; as long as I can fit neatly into government statistics that say I’m emitting less CO2 but I’m still alive and have access to illumination, why should it matter whether I enjoy my life more or less?

The ultimate standard of efficiency (be it energy efficiency, economic efficiency, or any other form) is the individual’s life and happiness. If anyone ever tells you that something you love is “inefficient,” and the cure is to shove something you hate down your throat, then “efficiency” has become a mere rationalization for tyranny.

Image: Wikimedia Commons

FoxNews.com has just released a new op-ed of mine on the nuclear safety issue. In the piece, entitled, “Nuclear Power Is Extremely Safe — That’s the Truth About What We Learned From Japan” I write that:

To think rationally about nuclear safety, you must identify the whole context. As the late, great energy thinker Petr Beckmann argued three decades ago in his contrarian classic “The Health Hazards of NOT Going Nuclear,” every means of generating power has dangers and risks, but nuclear power “is far safer than any other form of large-scale energy conversion yet invented.”

To read the whole article, click here.

You can buy “The Health Hazards of NOT Going Nuclear” here.

Finally, to listen to my discussion with Dr. Jay Lehr on nuclear safety on Power Hour, my monthly interview show on energy issues, click here.

Image: Wikimedia Commons

Alaska is the home of Prudhoe Bay, the largest oil field in American history. It is also the home of many other potentially momentous oil discoveries, which have for years been thwarted by the arbitrary, anti-development power environmental groups wield over the state. As Dave Harbour explains on MasterResource today, the situation has reached a critical juncture:

It is indisputable that for the last 2.5 years the Federal government has undertaken a campaign of economic genocide against Alaska.

The Trans Alaska Pipeline System (TAPS) is 2/3 empty and declining at a 6% annual rate while billions of barrels of oil lie untapped on federal lands…

The Obama Administration will have killed Alaska’s economy and thwarted America’s economic recovery if TAPS ceases operation for lack of readily available but off-limits federal oil.

As I have described in the Wall Street Journal, environmentalist opposition to Prudhoe Bay and the Alaskan pipeline helped contribute to America’s energy crisis of 1973. Make sure to reader Harbour’s whole post to understand what’s at stake today.

image: Wikimedia Commons