Friday, October 31, 2008

The Real Election Choice-“McBama vs. America”

Recently, Rush Limbaugh announced on his radio show his conservative strategy for this election. “First,” he said, “we save America from Obama, by getting McCain elected. Then we save America from McCain by defeating his policies.”

Sadly, this is what all of the past year and a half boils down to. The question is, though, should the order of that strategy be reversed? In other words, would it be easier to defeat Obama’s destructive policy initiatives, rather than McCain’s? I believe that clearly the answer is the former. Here’s why.

Both Obama and McCain share the same fundamental philosophical premises…that the individual is second to some “higher” cause or power. For McCain it is the “nation”, for Obama, the “collective.” Neither is a champion of individual rights. The difference is that Obama is an unabashed socialist. He is a clear target. McCain, on the other hand, is a murky target. That is because as the Republican, rightly or wrongly, he carries the banner of free market capitalism.

The danger is that a President McCain will discredit, demoralize, and split the pro-free market forces between those who feel obligated to support the GOP guy they voted for, despite bad policies, and those who oppose him on principle. The result would be a repeat…on an even larger scale, I believe…of the Bush debacle. President Bush is already being lined up by the Left as the next Herbert Hoover…a statist, interventionist, big-government president who nonetheless has been held up as an example of failed laissez-faire policies. This is a blatant lie, of course (more on the Hoover-Bush connection in a future post). Bush presided over the largest expansion of the welfare state since LBJ (Medicare drug benefit), a huge expansion in federal control over education (NCLB), a significant rollback of first amendment rights (McCain-Feingold, Faith-Based Initiatives), a large expansion of the EPA’s dictatorial powers (polar bear ruling), the largest expansion of business regulation in decades (Sarbanes-Oxley), an unimaginable explosion in federal spending, and now, of course, the runaway fascist bailout policies. He has brought the 20 year Reagan respite to a close, and presided over an explosive resumption of the century-old trend toward totalitarian socialism…while, like Hoover, being denounced as an example of failed free market governance!

Bush has done more damage to the cause of freedom in America than the Left could have ever gotten away with. And McCain will be Bush on steroids. He will “reach across the aisle”, engage in bipartisan compromise, and advance the Left’s agenda…while simultaneously undercutting free market capitalism.

With Obama in the White House and a Democratic congress, the Left’s agenda will take explicit center stage. This will open the door to a full exposure of the true authoritarian nature of their designs on America. Rather than sneaking their freedom-eroding agenda into law piecemeal under stealth cover of a Republican administration, the Dems will have nowhere to hide. The disparate elements of what today passes for the “Right” will present a solid wall of opposition. The key question is, will an effective, principled pro-capitalist, pro-individual rights opposition arise within the GOP? Or will the Left be able to move its destructive programs through an intellectual vacuum?

The best that can be hoped for…from the perspective of those who champion American ideals…is to stall the statist advance long enough to enable the emergence of that GOP movement. But that new GOP leadership, to be an effective antidote to the resurgent collectivist Left, must embrace two key provisions. First, it must put forward a positive alternative based on a principled, moral defense of free markets, capitalism, individual rights, and a government charged with the task of protecting, rather than violating, those rights. Merely being against the Left is a prescription for continued irrelevance. Second, it must break completely with the Christian Right, whose assault on the doctrine of church-state separation through the legal imposition of its religious agenda is as much a threat to constitutional liberty in America as is the Left’s socialist one. (I am talking here not of private Christianity, an unalienable first amendment right, but of political Christianity.) A GOP break with the Christian Right is vital to a pro-individual rights platform, because it would reaffirm the commitment to religious liberty in America.

I believe the best hope for the kind of Republican resurgence laid out above is with the kind of contrast of visions that can only be presented during an Obama administration. (Do not take this as any kind of endorsement of Obama. I have no intention of voting for him.) There is, of course, the danger of an Obama landslide, the coattails of which could sweep Democrats into a commanding majority in congress. This scarey scenario would leave even a united GOP minority too small and weak to block the Dems’ legislative initiatives. That aside, my stance has long been, and continues to be, to abstain from voting for president. I will, however, vote straight Republican in the congressional races. While the crop of candidates open to my choosing is abominable, my goal would be to keep the Democratic gains in congress as small as possible. When you’re playing electoral defense, it’s best to keep the congress as divided as possible.

An Obama victory could conceivably not be the kind of legislative bonanza the Left hopes it will be. This, admittedly, is a rather thin reed to hang one’s hat on. But hanging over the party will be the specter of 1966. Following the Johnson and Democratic congressional landslide of 1964, the flood of welfare-state legislation that followed precipitated a popular backlash. The apparent electoral mandate Johnson thought he had collapsed, amid a Republican mid-term onslaught in 1966. That election halted President Lyndon Johnson’s Great Society legislative momentum entirely, and began a trend that would culminate in the rise of Ronald Reagan and the 1980-2000 economic revival and stall-out of the statist trend.

Of course, a lot of damage was done in the 1965-66 liberal interlude, which saw the start toward socialized medicine (Medicare-Medicaid) and the colossal “War on Poverty” failure. The GOP resurgence ultimately collapsed on a failure to build on the inconsistent, incomplete…yet positive…pro-growth, pro-producer “Reagan Revolution”. Indeed, the GOP instead morphed into “big government conservatism”. Just one example; One of Republican VP nominee Sarah Palin’s self-described gubernatorial “achievements” was to “take on the big oil companies”. How did she do it? She looted them in as brazen a fashion as any Democratic socialist. She imposed a huge new tax on oil production in her state, to “fund” a $1200 per person “rebate” to the citizens of Alaska! (Contrast that with Obama’s puny $500 looters “rebate”) John McCain, for his part, promises to “take on the big drug companies”. We can only guess what that assault on private, productive American citizens might mean. “Windfall” profits taxes, anyone? Wealth redistribution? Socialism? As John Lewis so aptly put it, “Republicans have learned to love the welfare state”.

One important issue that has been flying under the radar screen until recently is the issue of judicial appointments. An article in the Wall Street Journal lays out the strategy of an Obama administration. In essence, Obama would appoint judges who adhere to a legal theory that would substitute “social justice” for actual justice, turning the constitution from a document that protects individual rights while limiting government power into a vehicle for government-imposed wealth redistribution…i.e., universal enslavement. While the danger in the Obama strategy of advancing a socialist agenda through the courts cannot be overstated, the fact is that this is a continuation and logical consequence of the ongoing statist trend of the last 100 years or so. That trend is rooted in our culture’s embedded altruist-collectivist-pragmatist ideas, which can only be countered by a resurgence of the individualist-capitalist-reason axis…the Enlightenment remnants of which are slowing fading.

Statism has been advancing in a myriad of ways, and in direct contradiction to the constitution, without Marxist judges who have “the heart, the empathy, to recognize what it's like to be a young teenage mom. The empathy to understand what it's like to be poor, or African-American, or gay, or disabled, or old.” What are Social Security, Medicare, welfare, the federal highway bill, farm bill, foreign aid, public education...but wealth redistribution? That trend will continue with or without them, under either McCain or Obama, until the dominant philosophical and moral doctrines are expunged from the culture.

This year’s election will be the first of my ten presidential ballots in which I abstain from pulling the presidential lever. The battle for America’s future is no longer defined by a tug-of-war between the two major parties, if it ever was. The road ahead is clear…and it takes us straight onto the battleground of fundamental ideas. It is a battlefield marked by two indistinguishable, and bankrupt, statist political parties on one side, and a virtual intellectual vacuum on the other. That vacuum must be filled by the kind of principled, pro-reason, pro-capitalist movement that Goldwater and Reagan gave us a tantalizing glimpse of, but that never took root during the GOP resurgence of the past few decades.

The consequence of that failure is summed up nicely in this October 25, 2008 NJ Star-Ledger letter-to-the-editor, written by W.P. Haller of Martinsville, New Jersey;

I cannot imagine that three contributors to the Oct. 22 Reader Forum have been paying attention to what has been happening in this country the last few months. From "protect(ing) this country from taking the path toward total socialism" and "arguments that slide us ever so subtly into socialism" to "on the road to a completely socialist society," they would have us believe that electing Barack Obama is a direct line to socialism in America. Well, guess what, folks, we're well on our way there already -- with a Republican president leading us there like a parade marshal. Right now, the U.S. government (read: taxpayers) is a stakeholder in banks, insurance companies and who knows what else (automakers and airlines?) before this whole financial mess is cleaned up. Get used to it because that scary future is here.

Wednesday, October 29, 2008

On Ayn Rand's Dishonest Critics-2

Former Fed Chairman Alan Greenspan’s congressional testimony last week continues to produce fodder for attacks on Ayn Rand and Objectivism. The attacks are designed to discredit her philosophy and ideas through guilt-by-association. Greenspan is well known as having been close to Ms. Rand during the 1960s and 1970s, although I don’t know of any evidence that he ever considered himself an Objectivist. If he ever did, he abandoned those beliefs long ago.

Nonetheless, an objective assessment of Greenspan’s actions as Fed chairman and how they relate to Ayn Rand is not a concern of the critics. The goal is to discredit Objectivism and bury it once and for all. But any short-term damage notwithstanding, this effort will be futile longer term. Rational ideas don’t die. Like an underground river that breaks through to the surface in unpredictable places, Objectivist ideas will continue to penetrate the culture and build on its already significant strength.

Bill Moyers, on his recent PBS program Bill Moyers’ Journal, follows the script to the letter. In his opening comments prior to the start of his interview with left-leaning economist James K. Galbraith, Moyers launches into a distorted attack on Ayn Rand, focussed on her ethics of what he calls “radical self-interest”. It is this that is the primary subject of my rebuttal, which I posted on his comments page.

In the wake of the financial crisis, a rush is on to convict capitalism. As I have been writing and will continue to write, it is logically impossible to blame free market capitalism for the implosion of a rigidly controlled and regulated industry. But what I find interesting here is the fact that of all of the pro-free market thinkers, it is Ayn Rand that gets the brunt of the assault. I have long believed that vocal attacks on Ayn Rand’s ideas will escalate in parallel with the ascendance of her influence in the culture. Her sudden prominence as a target of the Left wing attack machine is a good indication that her ideas have now reached the point where they are perceived as a long-term threat to their statist designs on America.

To be sure, there has been some positive (toward Rand), or at least balanced, commentary. But the mere fact of her appearance as a prime whipping dog of the anti-capitalist assault is proof of the growing strength of her ideas in the culture, in my view. Mr. Moyers seems to agree, referring to Rand as “the author of two of the most influential books of my generation THE FOUNTAINHEAD and ATLAS SHRUGGED, both timeless best-sellers.”

Here are the relevant remarks of Mr. Moyers, followed by my response:

Watching Alan Greenspan testify before Congress this week, I tried, I tried very hard not to keep thinking of Ayn Rand. I failed.

The philosopher and novelist Ayn Rand was Alan Greenspan's ideological guru, his intellectual mentor. She was also one of the most amazing fantasists of the last century, the author of two of the most influential books of my generation THE FOUNTAINHEAD and ATLAS SHRUGGED, both timeless best-sellers.

Rand was a hedonist, an exponent of radical self-interest, who so believed in unfettered, unbridled capitalism that she advocated the abolition of all state regulations except those dealing with crime. In the gospel according to Rand, the business community was constantly beleaguered by evil forces practicing, are you ready for this? Altruism! Yes, the unselfish regard for the welfare of others was a menace to greed, and Rand would have none of it.

Alan Greenspan met her as a much younger man in New York and, like so many blossoming capitalists, was smitten. He has since downplayed her influence on him, but as Chairman of the Fed for nearly 19 years he seemed quite Rand-like as he watched Wall Street run wild. Yesterday, like an old warrior still in a fog after his armies have been routed from the field of battle, he expressed shock at how his ideology has failed him. He didn't see it coming, he told the House Oversight Committee. The extent of the meltdown is, "Much broader than anything that I could have imagined," a "Once-in-a-century credit tsunami." The wondrous glories of a free market with no need of pesky oversight had somehow gone wrong. Now you tell us.

There is no question that Greenspan was influenced by Rand. But he is not in any way representative of her or of her philosophy of Objectivism, as anyone who has fully studied her work knows. If he ever was an advocate of laissez-faire capitalism, he certainly hasn’t been one in a very long time. If he were, he never would have taken the job of Fed Chairman, which is essentially a monetary dictator. A “free market” regulator is a logical impossibility. Taking that job completely disqualifies him from any valid connection with Rand’s ideas.

In short, Ayn Rand is being made a victim of guilt-by-association. Why her? Greenspan was undoubtedly influenced by many thinkers. There is only one reason to single out Rand…the power of her ideas and her philosophy of Objectivism. Objectivism offers the only comprehensive, moral defense of free market capitalism and of America’s founding principles of the unalienable rights to life, liberty, property, and each individual’s pursuit of his own welfare and happiness. In other words, Objectivism is the foremost threat to statists of every variety. Therefor, Objectivism must be discredited at all costs…at the cost of honesty, objectivity, fairness, or rational analysis.

Greenspan is being set up as the perfect straw man.

Importantly, though, it is telling that Mr. Moyers starts out by attacking Rand’s Objectivist ethics, and for good reason. The Leftist Mr. Moyers seems to be in agreement with Ms. Rand on at least one key point…ideas move human history, and morality is the most powerful force in the field of ideas. Her discovery of rational self-interest as the proper code of ethics for people to live by is indeed radical and is, in fact, the moral foundation of free market capitalism.

But Mr. Moyers deliberately fails to define her concept of self-interest, leaving his audience to accept a false premise. What he doesn’t tell you is that Rand utterly rejected the conventional definition of selfishness… that of a person who achieves his aims by taking advantage of others through dishonesty or trampling their rights, etc. Rand considered such people evil. Many of the villains in her novels, some of whom are businessmen, are people of such character. A good key to Rand’s concept of selfishness is provided in this brief definition from the book “Ayn Rand Answers”:

What do you mean by “selfishness”?

I mean the pursuit of one’s rational self-interest. I mean that the central purpose of one’s life is to achieve one’s own happiness, not to sacrifice oneself to others or others to oneself. “Selfishness” means to live by the judgement of one’s own mind and to live by one’s own productive effort, without forcing anything on others.

A similar distortion is in Mr. Moyers’ equating altruism with “regard for the welfare of others” and attributing that package-deal to her. In her refutation of altruism, Rand took pains to show that the two concepts are in fact mutually exclusive. She said (from The Ayn Rand Lexicon);

The basic principle of altruism is that man has no right to exist for his own sake, that service to others is the only justification of his existence, and that self-sacrifice is his highest moral duty, virtue and value.

Do not confuse altruism with kindness, good will or respect for the rights of others. These are not primaries, but consequences, which, in fact, altruism makes impossible.

Exposing the true nature of altruism, she went on to say;

Why is it immoral to produce a value and keep it, but moral to give it away? And if it is not moral for you to keep a value, why is it moral for others to accept it? If you are selfless and virtuous when you give it, are they not selfish and vicious when they take it? Does virtue consist of serving vice? Is the moral purpose of those who are good, self-immolation for the sake of those who are evil?

Rand rejected altruism precisely because it leads to predatory behavior, rather than benevolence and mutual respect. Altruism means self-sacrifice, which sets up a moral inversion…the unearned as a virtue, and the earned as a vice. Since, according to altruism, the moral consists not of achieving but of sacrificing personal values…then it necessarily follows that it is moral to be the recipient of the sacrifices of others, since one did not earn it. To keep what one has earned is selfish and thus immoral, according to altruism. The logical consequence of altruism is seen all around us…in the form of the growing entitlement mentality engulfing this country. Anyone with a “regard for the welfare of others” would never demand that they sacrifice their values, and no one possessing integrity would sacrifice their own. ("Sacrifice” is defined by Rand as “the surrender of a greater value for the sake of a lesser one or of a nonvalue.” This does not preclude charity or extending a helping hand to others, if the recipient is worthy according to one’s own hierarchy of values, one can afford it, and it is done out of a sense of good will, rather than as a moral command to “put others above self”.)

Worse yet, altruism is the moral base and justification of socialism and all forms of tyranny. It is the tool of the power-luster. And this gets to the heart of the matter. It is no accident that Barack Obama’s campaign rests on the morality of altruism (“We are all our brothers’…and our sisters’…keeper”). The battle between socialism and capitalism, or collectivism and individualism, is primarily a moral one. Is the individual subordinate to “society”? Or does he have a right to exist for his own sake? If self-sacrifice for the sake of others (altruism) is the standard of morality, then socialism is the moral social system. If the achievement of values for one’s own well-being (rational self-interest) is the standard, then capitalism is the moral social system. Anti-capitalists know this. Capitalism’s defenders…from Smith to Von Mises to Friedman…have not yet figured this out…with the exception of Ayn Rand. This may explain Mr. Moyers’ attacking her ethics. In any event, a country of rational people who selfishly demand their right to their own lives and freedom is what socialists (or their watered-down cousins, the welfare statists) fear most. This is the real motive behind the outbreak of anti-Rand, anti-Objectivist attacks, in my view.

Ethics is a complex subject, and requires much more discussion than is presented here. But, let me just say this. The radicalness, and great virtue, of Rand’s ethics is that it discards both altruism (self-sacrifice for the sake of others), and the conventional concept of selfishness (sacrificing of others for one’s own sake). Rand’s rational self-interest is a non-predatory, non-exploitative, rights-respecting moral code that discards the primitive dogma of human sacrifice altogether and, thus, clears the way for a benevolent human interaction based upon mutual respect. Her twin discoveries of rational self-interest…a new concept of egoism which is derived from man’s nature and the factual requirements of his survival…and of the true, evil nature of altruism stands as one of the greatest of philosophic achievements.

Mr. Moyers can be forgiven, perhaps, for getting it wrong on the Objectivist ethics. The view of selfishness as always evil and altruism as the good has deep roots, and Rand’s challenge to that dogma takes tremendous cognitive effort and reflection. But the tip-off that proves Mr. Moyers’ dishonesty is his discription of Rand as an advocate of hedonism. It doesn’t take much research to discover that she explicitly rejected hedonism as inimical to a person’s rational self-interest, which can only be determined by a process of reason within a long-term context.

A long line of economic thinkers has proven the practical ability of free market capitalism to enable tremendous increases in man’s material well-being. Yet capitalism continues to wither under the big-government assault. Ayn Rand found the key to this disparity…capitalism’s need for a moral sanction. Anyone interested in rolling back the growth of the predatory welfare state in America must be ready to make not just the practical case for capitalism, but the moral case as well. In this regard, I recommend discarding the misrepresentations of Rand’s ethics, as well as preconceived notions of selfishness and altruism. Make your own objective assessment by reading the Ayn Rand novels mentioned by Mr. Moyers, The Fountainhead and Atlas Shrugged, followed by these three non-fiction books:

The Virtue of Selfishness, by Ayn Rand

Ayn Rand’s Normative Ethics…the Virtuous Egoist, by Tara Smith

Loving Life…the Morality of Self-Interest and the Facts That Support It, by Craig Bittle

Monday, October 27, 2008

Approaching the Abyss

“A piece of paper will not feed you, when there is no bread to eat…money can function only so long as it represents actual goods…” –Ayn Rand, Egalitarianism and Inflation, 1974.


From A Professor and a Banker Bury Old Dogma on Markets


" 'There are no atheists in foxholes and no ideologues in financial crises,' [Fed chairman] Mr. Bernanke told colleagues last week, according to one meeting participant."


Cable News program, as reported on Rush Limbaugh show, approximately 9/22/08;

CNBCs Larry Kudlow; Tries to explain government's role in imposing low mortgage lending standards on banks via Community Reinvestment Act.

Liberal apologists; (Interupting Kudlow, with anger) “So now you're going to blame poor people!?!”


Via private e-mail, I came across this incident involving a college student;

“My professor is an economist, and although the class supposedly focuses on development, recently we have been discussing the current economic situation. When he asked us if we had any questions for him, I asked him what role he thought the CRA had in creating this situation, since I've heard the act being tossed around as one cause of many. His response was essentially 'none', and later he sent me a private email. This is his email…

From my professor:
I really had a hard time understanding why you would think that the CRA was a factor in the current financial crisis.
Until I saw this was a creation of Fox news and National Review
I realize now this is part of a disinformation campaign and not so subtle racist strategy.' "


Exchange between Fox New's Neil Cavuto and Jack Welsh, former General Electric CEO;

Cavuto; Explains connection between government bailouts of large financial institutions and how one may lead to another. Reports Fed statistics that commercial lending for last four weeks had risen steadily from about $6.1 T to $7.1 T. Expresses concern about overreaction and tries to touch on the causes.

Welsh; “Now is not the time for ideology, but for action.”


From How to Recapitalize the Financial System, by Greg Mankiw

"Essentially, it was a result of poor judgment among various private decisionmakers, encouraged by equally poor judgment of various public policymakers, many of whom were more interested in promoting homeownership among questionable borrowers than in the preserving the safety and soundness of the financial system. But this is not the time for recriminations. We have to face up to the problem sitting in our laps.) "[Emphasis added.]

These five separate episodes have something crucial in common. Kudlow and Megan were confronted with opponents who attempted to frame the subprime crisis in emotional terms. Welsh, Bernanke and Mankiw were calling for a concrete-bound focus on the immediate moment, in defiance of cause and effect, history, or potential future consequences of the policies they were advocating. President Bush set the tone of the flailing moves to come as he announced his bailout plan in September when he said that this is not the time for finger-pointing…there would be time for that later.

The common denominator here is the abandonment of ideas, logic, principles, historical perspective, and the kind of ideological analysis that enables one to predict the likely outcome of legislative proposals. In other words, the current debacle is marked by a triumph of pragmatism over reason. Don’t think…act! Such is the nature of the way in which our political “leadership” is going about “solving” the crisis.

Without a perspective that goes beyond “the problem sitting in our laps,” how are we to judge the longer term efficacy of anything we do, or if we will be doing more harm than good? Without “recriminations,” how are we to figure out how this crisis came about? If this is not the time for “recriminations”…a time when our government is taking draconian steps that will have profound implications for our economic and political freedoms…then when is?

The current crisis has deep roots. Understanding of money and credit is crucial here. As Rand puts it, wealth “represents goods which have been produced, but not consumed.” Money is not wealth, but only a representation of actual wealth. Money is also a means of exchange…a facilitation of the trading of real wealth (i.e., of unconsumed goods) between productive people. Money has value only to the extent that it is backed up by unconsumed goods.

Credit is made possible only by grace of productive people, on any level of income, who consume less than they produce (people who save some of the money that they earn). Credit requires peoples’ savings, in other words. Credit is not created by a government printing press. When government creates money beyond what the productive members of society require, it is in effect creating counterfeit money…money not backed by actual wealth (unconsumed goods)…but which is then used to purchase that actual wealth. It is a hidden tax on savings…i.e., it is theft.

What is being rushed into today…in an effort to “recapitalize banks”…is a wholesale raid on the remaining national savings in order to replace wealth already destroyed by the housing bubble. That wealth…the previously unconsumed goods…is gone, and nothing can bring it back. It can only be replaced with future savings, created by the aforementioned “productive people”, which takes time. In the meantime, the irresponsible borrowers and lenders…and the investors who purchased their mortgages…must face the consequences of their judgements. Given the magnitude of this government-facilitated “meltdown,” a serious recession may be likely. But it is a necessary adjustment, painful as it may be for many. When the government steps in with its printing press (i.e., counterfeit) money to “bail out” the irresponsible, it is forcibly and immorally diverting actual savings from eventually going to more credit-worthy borrowers. It is throwing good money after bad.

As the blind rush…i.e., to focus only on the immediate moment…continues to devour our savings, the mantra continues. Don’t attempt to learn from the past! Don’t worry about future consequences! This is no time for ideology! But how else would one learn about the silent victims of the government’s attempts to re-inflate the housing bubble? What about those prudent folks who were priced out of the market during the boom, but chose to postpone or abandon their dreams of homeownership rather than take on mortgages they couldn’t pay back? Just as prices are being brought down to their price range by the correction, the politicians step in to “rescue” the irresponsible borrowers, thus denying them the just rewards for their prudence…a chance to buy a home they can afford at a realistic price. And then there are the healthy banks that resisted the sub-prime mania that will be denied the chance to make profitable loans to those new buyers. And all of these prudent folks, including the large majority of people who continue to pay their mortgages on time, are being made to pay for this political panic attack.

And make no mistake, the mad money scramble is a real panic by politicians trying to ward off the inevitable consequences of decades of their own evasions. The closest any of them have come to an acknowledgement of their own culpability comes in the form of these amazing words by Rep. Barney Frank:

"But we have made a mistake in this society. The assumption that everybody can be a homeowner is wrong. We pushed and encouraged people into home ownership - people who, in some cases, weren't ready for it. You can't act on wishes that are unrealistic without having negative consequences." (CNN, 8/25/08)

Exactly! What is startling about this admission is that it comes from a very liberal Democratic House leader. He doesn’t specifically declare that the government’s policies caused this whole mess, but then who does he mean by we? The fact is that it was his party’s icon…FDR…who declared in his “second bill of rights” that every American has a right to a home. It was his party’s 1960 platform that reiterated that right. (For a discussion on the actual meaning of rights, see "Man's Rights".) It was his party, under President Carter, that created the Community Reinvestment Act designed to pressure banks into making loans that they otherwise would not have made. It was his party that, under President Clinton, turned that act from a relatively innocuous nuisance into a sub-prime bank shakedown scheme. And it was his party (and later the second Bush administration) that expanded Fannie and Freddie into pac-man gobblers of those loans for resale as mortgage-backed derivatives to investors. “We have made a mistake,” indeed!

But we are not to seek “recriminations.” We shouldn’t reference theories of money and credit, because we don’t need any “ideologues.” Don’t think…act! Emotion rules! Suspend the law of cause and effect. This is a financial crisis. We can’t be bothered by ideas. We must re-build confidence…by taking from the savers to give to the profligate.

Bailout after bailout after bailout were enacted to save us. And more is to come. And we continue to sink. And President Bush now pleads for patience because, he says, “it will take time to work.” Suddenly we have something we didn’t have before…time. But what we didn’t have time for before…or now…is thinking. With everyone from homebuyers to giant financial institutions knowing that the government will be there to bail them out of their risky mistakes, the seeds of an even bigger future meltdown are being sown in this crisis. With Barack “Herbert Hoover” Obama, our likely next president, planning tax increases, the unparalleled productive ability of Americans may finally be too overburdened to pull us through, this time. Someday, if current trends continue, the real wealth…our national savings…will finally be gone. Then we will be left with wheelbarrows full of worthless paper money. Just ask the Germans of 1923.

Some wise man once said, “when you’re in a hole, stop digging!” He must have been an ideologue.

Saturday, October 25, 2008

Guilt By Association

The recent congressional testimony of former Fed Chairman Alan Greenspan in which he “conceded his free-market ideology shunning regulation was flawed” has attracted widespread attention to Ayn Rand. Most of it, as far as I can see, has been negative. And the negativity has almost unanimously been based on misunderstanding and/or misrepresentation of Rand’s ideas. The views I will focus on are presented in two articles (Greenspan is taking some blame for crisis, and Greenspan’s Mea Culpa) and the comments allowed under one of them.

Greenspan was a friend and close associate of Ms. Rand’s during the 1960s and 1970s. During that time, he contributed articles to her monthly publications, some of which have been published in books on Objectivist thought. It is this association that has drawn attention to Ayn Rand, a self-described “radical for capitalism” and whose philosophy of Objectivism I fully subscribe to. But Greenspan has never, to my knowledge, ever considered himself an Objectivist. Based on some of his testimony, I doubt he ever fully understood it.

To be sure, I don’t think Rand ever came up explicitly at his hearing. But as perhaps the most famous of her close philosophical associates, his words represent for many to be proof of the invalidity of Ayn Rand, her ideas, and of laissez-faire capitalism. This is grossly unfair and intellectually dishonest. Greenspan is, in effect, being set up as a straw man with which to attack Rand and capitalism, without any effort on the part of the critics to understand or define Rand’s ideas or laissez-faire capitalism.

There is no question that Greenspan was influenced by Rand. But he is not in any way representative of her or of her philosophy of Objectivism, as anyone who has studied her work fully knows. If he ever was an advocate of laissez-faire capitalism, he certainly hasn’t been one in a very long time. If he were, he never would have taken the job of Fed Chairman, which is essentially a monetary dictator. Taking that job completely disqualifies him from any valid connection with Rand's ideas.

In short, Ayn Rand is a victim of guilt-by-association.

On Rand, there is a gross misunderstanding in calling her a “libertarian”. In fact, she totally repudiated the libertarian movement, believing their members to be amoral, anarchistic, anti-intellectual “hippies of the Right”.

Rand never advocated selfishness as an unqualified virtue. In fact, she condemned the type of behavior that fit the conventional definition of selfishness…that of a person who achieves his aims by taking advantage of others through dishonesty or trampling their rights, etc. Ethics is a complex subject, but a good key to Rand’s concept of selfishness is provided in this brief definition from the book Ayn Rand Answers, page 109:

What do you mean by “selfishness”?

I mean the pursuit of one’s rational self-interest. I mean that the central purpose of one’s life is to achieve one’s own happiness, not to sacrifice oneself to others or others to oneself. “Selfishness” means to live by the judgement of one’s own mind and to live by one’s own productive effort, without forcing anything on others.

She was a champion of every individual’s right to the pursuit of his own rational self-interest, free from the coercive, predatory interference of others…whether private or governmental. The key to her ethics of egoism is the concept rational, which includes consideration of long term consequences in determining what is actually in one’s self-interest. Not enough Ayn Rand is the problem.

Rand never advocated the view of capitalism as a system of “survival of the fittest” (or Social Darwinism). She explicitly renounced that concept as completely invalid as a definition of capitalism. The wealth required by man to live and thrive does not exist in nature, to be fought over like animals in a forest. Instead, it must be produced by a process of individual productive work guided by his reason. Capitalism provides the social framework of freedom from the initiation of physical force that makes the production of an ever-expanding array of products, services, and jobs possible, courtesy of the most productive members of society…entrepreneurs, businessmen, and inventors. Equating the human predation implicit in the concept of “the survival of the fittest” to a system and philosophy of individual rights is a logical impossibility.

Rand’s broadly philosophical conception of laissez-faire capitalism is of a system that embraces much more than free markets. It is of a social system based on the recognition of individual rights and of a government limited to the vital task of protecting those rights through rigidly objective laws. The protection of those rights, which are rights to freedom of action (to free speech, trade, religious practice, etc.) and the property one earns, takes the form of defense against domestic criminals and foreign aggressors…as well as the mediation of disputes through the civil courts. In other words, America’s primary founding principles. Laissez-faire capitalism is, in fact, the only social system fully consistent with individual rights. The “self-regulating” nature of free market capitalism, which rewards rational behavior and penalizes the irrational in the long term, can only function when it actually exists.

Greenspan is looking for a scapegoat in placing the blame for his blunders and the current financial crisis on his allegedly “laissez-faire” beliefs. In fact, laissez-faire capitalism disappeared from American finance decades ago, and is nowhere to be seen today. Laissez-faire means the separation of state and economics, just as with state and church, and for the same reasons. Under laissez-faire, there would be no central bank or government money monopoly, no ban on gold or gold-backed currency, no ban on private bank-issued currency, no government-imposed restrictions relating to reserve requirements, capital ratios, mergers, bank branching, etc., and no government setting of interest rates. There would be no government-insured mortgages, no Fannie and Freddie, no CRA, and we wouldn’t have the extensive political interference in the housing and mortgage markets designed to “encourage” homeownership based on FDR’s fraudulent declaration of the “right” to own a home. There would only be free individuals thinking and acting on their own judgement, and a government protecting their right to do so…including the vigorous enforcement of laws against fraud and deception.

Laissez-faire in American finance? Where does anyone see it? In fact, American banking is so heavily regulated and controlled today as to make it a quasi-branch of the government. One need not excuse the irrational behavior of many lenders, borrowers, and investors to understand that the current crisis must clearly be laid at the hands of government, any minimal pseudo-deregulation or free market remnants notwithstanding. To blame laissez-faire capitalism for today’s debacle is to attack a non-existent target in order to switch the blame away from the real cause. With all of the angry calls for more government regulation, no one is asking the question…Who will “regulate”, or protect us from, the regulators? We are witnessing the culmination of decades of interventionist policy failures, and the anti-laissez-faire drumbeat is only a cover for a renewed lurch toward fascism that should make any American who values his freedom shudder.

Monday, October 20, 2008

My Latest On-Line Activism

Following are my responses to the comments of others at NJVoices, the on-line forum of the New Jersey Star Ledger. The specific comments I responded to are presented prior to my full response. To read the full article by Paul Mulshine and the correspondents, click here.

The subjects are the meaning of a free market, the root causes of the financial crisis, and the philosophical underpinnings of America's Founding.

Let us all hoist a beer in honor of Ron Paul, the only true adherent of the free market who ran for president this year and an opponent of rent-seeking behavior.

No wonder McCain hated him so much.-Paul Mulshine

... there is no such thing as a "free market".-hglindquist

Mr. Mulshine's understanding of McCain as an enemy of free markets is right on. He is dangerous because he is a statist running under the free market banner...just as President Bush waved the free market banner while destroying it the last 8 years. I had decided that rather than vote for one of the two statist candidates, that I would abstain from voting for president this year...for the first time in my 4 decades as a registered voter. But maybe I'll write in Ron Paul, who Mr. Mulshine describes as "the only true adherent of the free market".

A free market is a crucial ingredient of capitalism, and of freedom. It is based on the recognition of individual rights, in which each individual is free to think and act on his own judgement, to associate and trade with others voluntarily to mutual advantage, in pursuit of his own goals, welfare, and happiness. Rights are a guide to freedom of action, not to the productive efforts of others (ex.-a home, food, health care, a job, etc.). Philosopher Ayn Rand described individual rights as "the means of subordinating society to moral law."

The concept of individual rights...including the all-important property rights, without which no other rights are possible...contains the answer to the problem of so-called "externalities". If the actions of one violates the rights of another...causes physical harm to another's person or property as objectively determined in a court of law...then the government may properly step in to require restitution to the injured party. Such would be the case of an individual or group of individuals (i.e., a corporation) polluting the property of another. In the case of second-hand smoke, as long as a non-smoker is free to leave an area occupied by smokers, his rights are not violated. It is solely the right of the property owner...ex., a decide whether his establishment will allow smoking, and whether to segregate smokers from non-smokers.

The free market is not incompatible with government action to protect individual rights. Indeed, the protection of individual rights is the only proper function of government, and is vital to the functioning of a free market. The "free" in free market means to live one's life free from coercive interference (physical harm) by others, including by government officials and politicians, as well as criminals and the economic activities of others. The protection of rights, in a free society, is accomplished through objective laws against explicit types of behavior, or through the civil courts where grievances and disputes are resolved in an objective forum...and not through the arbitrary, dictatorial powers of government regulators.

Free market capitalism, properly understood, is the only practical and moral social system because it is the only system based on individual rights and a government limited to the job of protecting those rights. People can deal with each other in one of only two voluntary persuasion and logic, or by physical force. Under capitalism, rent-seeking pressure groups would not and can not exist because the government's power of economic interference on behalf of one private entity at the expense of others would not exist. The individual is protected against the predation of those seeking to trample his rights in the name of that mystic god of every power-luster...the "collective", or "common good".

It's either a free market, tyranny, or what we have today..a mixture of freedom and tyranny, in which tyranny steadily gains and freedom slowly recedes.

I choose free market capitalism.

Free markets are responsible for the financial melt down on wall street.-boobosie

Where do you see a free market in finances? You're committing the fallacy of equating the failures of private individuals and firms with a free market.

Who controls the money supply, the raw material of banking? The Fed

Who ended the gold standard? FDR, on the domestic front, by confiscating private gold currency and replacing it with fiat (i.e., counterfeit) paper. And Nixon, who closed the international gold window.

Who controls short-term interest rates? The Fed. (The Fed's inflationary policies and sudden tightening, based on control of money and interest rates, were largely responsible for the rampant 1920s stock market speculation and crash, as well as the recent housing boom and bust.)

The current crisis is rooted in the government's massive intervention in the housing and mortgage markets, beginning with FDR's "second bill of rights", which declared every family's "right" to own a home (which was reaffirmed in JFK's 1960 party platform.) Subsequent government policies were implemented to ensure that alleged "right." The home mortgage deduction; mortgage "insurers" (at taxpayer expense) FHA and FHLBB; the government-created quasi-private Fannie and Freddie that artificially created the mortgage resale "market."

Then when it was found that many low-income folks couldn't qualify for home loans, Carter created the CRA, to "encourage" lenders to extend loans to those folks. The government's extensive regulatory control over the banks was the club with which it enforced its "encouragement." Then when that wasn't enough, Clinton imposed "flexible" lending standards through the CRA, which led to no-doc and no-down-payment, or sub-prime, loans. But when banks that dove into these loans found that by restricting these gov.-mandated standards to just low-income folks they could run afoul of anti-discrimination laws, they had to extend these standards to all customers who wanted them. (Do not take this as a condemnation of low-income folks in general. It should be stressed that many low-income folks did purchase homes the old fashioned saving for a down payment and then securing conventional loans. Many low-income, sub-prime borrowers continue to make their payments on time. And many of the defaulters are high earners.)

When it was found that Fannie and Freddie, the government-created giants with the implicit (now explicit) backing of Uncle Sam, wouldn't buy those sub-primes, Clinton, and later Bush, (and with the complicity of Congress) intervened to force them to. The flood gates were open for a virtual government-created conveyor belt of bad lending. CEOs like Mozilo of Countrywide latched on to the game with a vengeance.

It was Fannie and Freddie who pioneered the practice of bundling good and sub-prime loans together into Mortgage-Backed Securities (later emulated by many Wall Street firms) for sale to the public. The implicit taxpayer-guarantee created a false sense of safety for these securities. The "bubble mentality" of ever-rising home prices, fueled by the Fed's inflationary policies, took over from there.

The government's Federal Deposit "Insurance" and the "Too Big To Fail" bailout well as the Fed's lender of last resort status...has led to an atmosphere of reward without risk, or profit without loss. In a free market, the threat of having to face up to one's own failings is a built-in protector against the kind of system-wide catastrophe we are now seeing. The free market rewards long-term prudence and penalizes irrational, short-term lenders, investors, and borrowers (I don't let the irresponsible borrowers, which included outright speculators, off the hook. Without them, there would not have been a crisis.) When profits are privatized (as they should be), but losses are socialized (as they should not be), what kind of behavior does one expect to take hold?

The fact is that the heavily controlled and regulated financial industry was responding to the policies of its own government. The sound and prudent institutions that resisted the sub-prime mania were, for a time, placed at a competitive disadvantage, leading to a loss of business. (They are now in a very good position, once the economy turns around.) According to an article by Bloomberg's Michael Lewis (NY Post, 9/17/08), "if any of these men had behaved well and resisted the pressures and temptations of the moment, his firm would have, for several years, dramatically underperformed the competition. He probably would have lost his job." He was speaking of the Bear Stearns, Merrill Lynch, and Lehman Brothers CEOs. What created a situation where prudence is penalized and imprudence is rewarded? The quick-buck charlatans who gained a position to bring down decades-old financial powerhouses were unleashed by market distortions created by government intervention.

I could go on and add to this already too-long post. The private lenders, borrowers, and investors that participated in this fiasco are part villain, part victim. But they are only the face of this crisis. Without government's massive interventions, the imprudent would have been weeded out by bankruptcy, foreclosure, and investment losses long before they could infect the whole system. One does not have to excuse the failures of private participants in order to understand that the government-created culture of homeownership entitlement and the policies they spawned are the real culprit here. It's a simple matter of cause and effect.

In a Money magazine interview (with Janice Revell, Sept. issue, I believe), Rep. Barney Frank made this startling statement: "But we have made a mistake in this society. The assumption that everybody can be a homeowner is wrong. We pushed and encouraged people into home ownership - people who, in some cases, weren't ready for it. You can't act on wishes that are unrealistic without having negative consequences."

That is about as close to an admission of the real cause as you will find in Washington. The free market is getting tried and convicted, where no free market exists. And along with it, our freedom.

I apologize for this long-winded post. But it was necessary. I could not let boobosie's unsubstantiated statement go unchallenged.

And "the collective or common good" is not some "mystic, undefinable god of every power-seeker" -- in my opinion. We can simply start by identifying those "things" the individual has a right to expect from his/her community, and in turn recognizes that his/her community has a right to expect participation from him/her. Or to put it another way, what do we expect to share in common as Americans?-hglindquist

I hope you're enjoying you're trip to New England. My wife and I plan on some day making a trip up there.

I'll address one more point...the key hopefully clarify my philosophical position.

I reject the collectivist premise in the entire statement. I consider the notion of "The collective or common good" to be invalid for two reasons. First; human beings...every one of us...are autonomous individuals each possessing his own independent mind, or rational faculty, which is the means by which he guides his life. This is a metaphysical fact of nature. The fundamental choice that each of us faces think or not. That is exclusively a choice of the individual, and only the individual. No one can do another's thinking, nor force another to think.

Second; the collectivist, or tribal, premise is un-American. A recognition of the validity of the first reason formed the basis for the Founders' creation of a nation that, for the first time in history, was based on the premise that the individual, not the group, is the supreme value upon which a society would be organized. And they recognized that certain fundamental requirements are required for such a society...the individual's unalienable rights to life, liberty, property, and the pursuit of one's own welfare and happiness...protected by a government which, for the first time, was explicitly deemed to be the peoples' servant rather than ruler.

Thus, there is no such thing as the "collective", or "common" good that is separate from the good of the individual...every independent individual. And since every individual possesses the same unalienable rights, equally, and at all times, and protected equally and at all times by the government, any private or public (i.e., governmental) action that violates the rights of even a single individual is not and can not be in the "common" good.

There is no such entity as a "community". The community is a number of individuals, as described above. The "community" has no right to expect anything out of any individual, and the individual has no right to expect anything out of the "community" one. That one "thing" that each of us owes the other individuals that make up a "community" is to respect, and to reframe from violating, their aforementioned individual rights...i.e., to avoid compelling another person to act against his own judgement and will. In a free society based on individual rights, anyone who initiates physical force against another is a criminal, and is subject to prosecution by the government. This same principle applies to government. The government is the protector of the individual's unalienable rights. Therefor, no one in the "community" may use the legalized force of government to violate the rights of other members of that community, no matter how big his majority or how small the minority. The same principles apply to a group of ten, a thousand, a million or 320 million. This is what is meant by the principle that "Individual rights are the means of subordinating society to moral law."

The use of the term "the common or collective good" implies that the group or society or the community is the supreme value and can do whatever it wants to its individual members. It is always the justification for any rights-violating governmental action...and of all tyrannies. There is no "collective" good in a free society. There is only the necessity to ensure, via limited government, that each member is free to pursue his own good...which means to be free from human predators.

What do we... share in common as Americans? We share the right to think for ourselves, to act on our own judgement in the pursuit of our own individual well-being, to engage in voluntary and uncoerced association with one another, to engage in voluntary trade to mutual advantage, to engage in voluntary and uncoerced charity, and the obligation to respect the rights of all of our fellow community members. We share, in other words, the principles of free market capitalism. Or at least, as Americans, we should.

Wednesday, October 15, 2008

Opportunity Lost

“Government cripples you, then hands you a crutch and says, ‘See, if it wasn’t for us, you couldn’t walk.’ ” — Harry Browne

In the recent vice-presidential debate, the Republican Sarah Palin was asked by moderator Gwen Ifill who she thought was at fault for the sub-prime meltdown;

“Was it the greedy lenders? Was it the risky homebuyers who shouldn’t have been buying a home in the first place? And what should you be doing about it?”

In answer to this loaded question, Palin looked straight into the camera, and said;

“Darn right it was the predatory lenders, who tried to talk Americans into thinking it was smart to buy a $300,000 house if we could only afford a $100,000 house. There was deception there, and there was greed, and there is corruption on Wall Street. And we need to stop that.

Again, John McCain and I, that commitment we have made, and we’re going to follow through on that, getting rid of that corruption.”

The questioner doesn’t even bring up the roll that government policies may have played in this crisis. That is to be expected, given that Ifill is a committed backer of Obama. She does make reference to the irresponsible borrowers, without which there couldn’t have been any “greedy lenders.” But Palin’s answer is outrageous, coming from a Republican. Indeed, Palin was an aggressive “pit bull” in attempting to out-do her rival in smearing private citizens with such un-defined and libelous accusations as “greed” and “corruption”.

The sub-prime lending crisis is a golden opportunity for advocates of free market capitalism to go to the mat with the statists of the left. Biden and the Democrats are openly declaring that freedom has failed, and that government control (i.e., dictatorship) is the only solution. But this is a classic example of a government-created crisis being blamed on the free market, and then declaring that more of the same poison…government power and control…is the solution. The evidence that this crisis was caused and exacerbated by government is overwhelming.

The common denominator to this whole mess is the government and its policies. This is not to excuse the charlatans and their customers operating in the lending industry. But they are a symptom. Consider just a few of the government’s interventions:

Fannie Mae and Freddie Mac; Federal deposit “insurance”; subsidies and tax preferences; the Community Reinvestment Act that imposes “flexible”, i.e., imprudent, even non-existent underwriting standards on mortgage lenders; taxpayer-backed mortgage guarantees through such agencies as FHA and FHLLB; the “too big to fail” policy, which has led to one bailout after another and that, along with FDIC, has resulted in an atmosphere of reward-without-risk; the government-imposed “mark-to-market” accounting rule, which led many solvent financial institutions to “collapse.” Add to this the massive inflationary money creation by the Federal Reserve, coupled with its below-market short-term interest rate policy (as low as 1%) in the years following 9/11, and you have the effect of pouring gasoline on a raging fire.

The list of government interventions in the American financial industry goes on and on. There is so much ammunition upon which to build a case that this is a failure caused by government intervention, rather than capitalism, that one hardly knows where to begin. Yet, with a statist at the head of the GOP ticket, capitalism is being tried and convicted in this election cycle without even the semblance of a hearing. Just as with political prisoners under dictatorships, capitalism’s lead defense attorneys…McCain and Palin…are tripping over themselves to outdo the Obama-led executioners in burying it.

To be sure, there are some Republicans coming down on the right side of the issue. Senator Jim Bunning said that the bailout plan “smacks of socialism.” And SenatorJim DeMint said that “This plan does nothing to address the misguided government policies that created this mess and it could make matters much worse by socializing an entire sector of the U.S. economy.” And Representative Ron Paul addresses the bankrupt monetary policies dating back decades in this recent clip.

But these protests are drowned out by the almost universal call for more government control. We are witnessing a powerful demonstration of why I consider McCain so dangerous. By failing to vigorously defend capitalism, he is doing more damage than outright Marxists could ever do. The same goes for President Bush, who said just prior to one of his recent public announcements urging patience for his massive statist intervention, “As is well known, I’m a free market guy, but…” If the alleged proponents of free markets are advocating socialism, is it any wonder that Obama is gaining in the polls? If socialism is the answer to the “crisis of capitalism,” then why not go with the real deal rather than a phony?

The Republican Party is dead. The failure to rise to the occasion and launch a dramatic call for a rollback of government as the only real solution to the crisis is the GOP’s final epitaph. The disastrous failure since the “Gingrich revolution” of 1994 to build on the “Reagan Revolution” and advance a principled free market agenda…and instead to preside over an explosive growth of government and its consequences, all under the banner of free markets…has cleared the way for the sacking of America by the barbarian hordes of the Left. The last thing we need now is another phony “free market guy” to further discredit capitalism.

The rebirth of the GOP can only happen now at the grass roots. But that rebirth must be built on a proper foundation…a recognition of free market capitalism as the only moral social system. The housing crisis is rooted in the inverted altruist morality that claims that “The right of every family to a decent home” takes precedence over sound banking principles, the legitimate profits of lenders, justice, and individual rights…and that it is the government’s job to enforce that “right” at the point of a legislative gun and at the expense of any prudent bank or homeowner.

The only proper and effective way to fight back against the rising tide of statism is embodied in "ARC’s response to the financial crisis”. Introducing the reader to its web page, ARC states that its “experts clarify the fundamental issues involved in the current crisis—the controls that led to it, the ideas that led to the controls, the destructiveness of the government response so far. And they provide the antidote: an explanation of the true, benevolent nature of the morality of rational self-interest and the political-economic system of laissez-faire capitalism.”

The McCain-led GOP has blown a blockbuster opportunity to give America “a choice, not an echo” against the Democrats’…and President Bush’s…socialist agenda. The perverse effect of this is that Republicans are getting all of the blame for a fiasco that is the direct result of liberal Democrat policies and ideas dating back to FDR. And since Republicans carry the banner of Capitalism, it is Capitalism that gets the blame. America is thus destined to pay a heavy price regardless of who wins in November.

Monday, October 13, 2008

The Achievement of Christopher Columbus

Excerpts from an op-ed in the Bucks County Courier Times, October 11, 2007.

Columbus Day Celebrates Western Civilization

By Thomas Bowden

On October 12, 1492, Christopher Columbus discovered the New World.

We need not evade or excuse Columbus’s flaws--his religious zealotry, his enslavement and oppression of natives--to recognize that he made history by finding new territory for a civilization that would soon show mankind how to overcome the age-old scourges of slavery, war, and forced religious conversion.

On Columbus Day, we celebrate the civilization whose philosophers and mathematicians, men such as Aristotle, Archimedes, and Euclid, displaced otherworldly mysticism by discovering the laws of logic and mathematical relationships, demonstrating to mankind that reality is a single realm accessible to human understanding.

On Columbus Day, we celebrate the civilization whose scientists, men such as Galileo, Newton, Darwin, and Einstein, banished primitive superstitions by discovering natural laws through the scientific method, demonstrating to mankind that the universe is both knowable and predictable.

On Columbus Day, we celebrate the civilization whose political geniuses, men such as John Locke and the Founding Fathers, defined the principles by which bloody tribal warfare, religious strife, and, ultimately, slavery could be eradicated by constitutional republics devoted to protecting life, liberty, property, and the selfish pursuit of individual happiness.

On Columbus Day, we celebrate the civilization whose entrepreneurs, men such as Rockefeller, Ford, and Gates, transformed an inhospitable wilderness populated by frightened savages into a wealthy nation of self-confident producers served by highways, power plants, computers, and thousands of other life-enhancing products.

On Columbus Day, in sum, we celebrate Western civilization as history’s greatest cultural achievement. What better reason could there be for a holiday?

Excerpts from an op-ed in Pittsburgh Tribune-Review, October 10, 2008

Columbus was a hero

By Dimitri Vassilaros

Christopher Columbus could not have discovered a better spokesman than Thomas A. Bowden.

The accomplishments of Columbus should speak for themselves. But thanks to political correctness, the moronic multicultural mob keeps talking them down. Mr. Bowden has been speaking passionately and forcefully about Columbus for years.

Bowden is an analyst at the Ayn Rand Center for Individual Rights in Washington, D.C. Its mission is to advance individual rights as the moral basis for a free society.

"My ancestors were savages," says Bowden matter-of-factly. Everyone can say the same, depending on how far back one is willing to look at lineage. "It's nothing racial or ethnic; it's historical fact."

"Columbus critics have a disguised criticism of Western civilization because Europeans replaced Stone Age Indians. They believe that this continent would have been better off without Europeans, that industrial civilization is an evil that is to be lamented and regretted.

"That is the real criticism of Columbus. I reject it completely."

Indians typically were widely scattered Stone Age tribes, he says. "They had little agriculture and lived in poverty, fear, ignorance and superstition. They had no concept of government, ownership or private property rights.

"Slavery was perfectly common.

Well, didn't Indians at least live in harmony with nature?

"No," says Bowden. "Man should not live in harmony with nature in the sense of simply keeping it pristine. We live by impacting the environment. The environment has no intrinsic value. Our civilization is more in harmony with nature by making it serve our ends."

Well, what about all the land supposedly stolen from the Indians by European settlers?

Indians did not own the vast reaches of land that they traveled on, Bowden says. Ownership of land is deserved, he says. By that, he means a settler can acquire property rights by making the land more valuable by, say, digging it up for farming. Or to build his homestead or business.

Columbus essentially was an explorer and discoverer bringing Western civilization's cures, science and technology, he says. The philosophical legal process was another gift the Europeans gave to the Indians, he says. "Indians got all that for free."

Columbus' critics should fall down on their knees and thank the Founding Fathers for creating a nation based on the moral principle of the individual's right to life, liberty and, Bowden stresses, the selfish pursuit of happiness.

"It's the only nation that came about in such a way. Anyone who has humanity's interest at heart should love America," he says.

Happy Columbus Day

Saturday, October 11, 2008

The Obama Bear?

The crash in the stock market since the passage of the “bailout” by Congress is interesting on several fronts. Trying to pin down any particular cause as the culprit is always tricky. The cause could be that the market is seeing good money being thrown after bad. Or it could be the promised avalanche of new government regulation and control over the financial industry despite overwhelming evidence that government intervention caused and exacerbated the sub-prime crisis. Or it could be the blatantly fascist move by government to use printing press money to buy up real private assets like mortgages and commercial debt instruments, as well as equity stakes in private companies. Or the market could be seeing hyper-inflation ahead. That this may be a financial panic with little relation to the broad economy…similar to 1987…seems highly unlikely.

But there may be something else working here. It may be more than coincidence that the stock market’s slide parallels Barack Obama’s rise in the polls since the crisis exploded into the public eye.

Obama’s anti-American, anti-capitalist, anti-achievement, anti-individual rights agenda is clearly a major threat not only economically but to our freedom as well. At a time when capital accumulation (i.e., savings) is desperately needed to replenish the massive wealth destruction resulting from the housing bubble, he proposes to tax-soak the “rich”…the top 5%. At a time when emergency and large-scale deregulation of the economy is urgently needed, he falsely scapegoats the limited de-regulation that has taken place over the past few decades. At a time when the Federal government is devouring this nation’s stock seed of future industrial production (its investment capital) through massive deficit spending, he proposes trillions in new programs. At a time when American business needs talented leadership, Obama rails against CEO pay and threatens to place arbitrary limits upon what companies can pay their own executives.

He claims to be a champion of the middle class, yet condemns those who rise out of the middle class and into the “top 5%.” In other words, he condemns the most productive members of the most productive group for the sin of inventing the products, running the businesses, taking the calculated risks, creating the jobs…i.e., for succeeding. (I am not speaking here of the old, established rich, who are mostly in the socialist vanguard.) At the same time, he implores the young, the intellectual life-blood of America’s future, to forego their selfish pursuit of productive careers in favor of altruistic service to “the community” or the nation, and means to impose it through Washington’s growing control of local public schools. He proposes huge tax hikes camouflaged as “repeal” of the Bush tax cuts, including increases in the capital gains, dividend, and corporate tax rates. And then, he has the gall to speak of restoring something called “economic growth.”

Obama means to finish the task begun decades ago of turning the independent, upwardly mobile, productive middle class into a government-dependent welfare class.

But there is another side to this coin that the markets may be convulsing over. With a statist of their own at the top of the ticket, the GOP…at least its leaders…are not rising to defend free markets. Indeed, on many of these issues, the McCain-Palin ticket is actually trying to outdo Obama-Biden, as witness McCain’s sudden, panicky call for another $300 billion in “bailout” funds. The Obama rise is occurring in an intellectual vacuum. Capitalism is being bludgeoned, with only a few lonely voices rising to defend it (Only the Ayn Rand Institute is offering a fully consistent, principled, and moral defense of capitalism.)

Something historic is taking place here. The markets may very well be adjusting to the reality of another broad-based expansion in the size, scope, and intrusiveness of government…and the consequent shrinkage of economic freedom. If so, despite occasional rallies, we may be in for a long, painful slog like the 1966 to 1982 dead-market doldrums…or perhaps far worse.

But politics is strange, and a ray of hope pierces the gloomy prognosis of a potential Obama presidency. Ken Fisher, a money manager and Forbes columnist, has these interesting things to say:

I get the sense, talking to investors, that a lot of you are terrified of what an Obama presidency would do to your portfolio. You shouldn't be. Election outcomes don't affect markets the way you expect them to. We have a long history of elections and S&P 500 returns, and the pattern is pretty clear. First, years in which Democrats capture the White House are usually bullish years for the stock market… There is a reason for this pattern. The market expects the worst of a Democratic President and then discovers that he's not so bad for investors. It tends to rebound after the initial premonitions that a Democrat will win.

If we elect Obama and history's pattern prevails, expect…2009 to be above average [in stock market returns].

In inaugural years we discover that Democratic presidents are phonies and never meant most of what they said in their populist, anticapitalist campaigns. They could never get reelected if they really delivered on their campaign promises.

Maybe. If this were Hillary Clinton we were talking about, I would draw some consolation from Fisher’s observations. But Barack Obama is a Left-wing ideologue who is committed, on principle, to his altruist-collectivist-Marxist dogma. He believes that blacks got a raw deal after America's founding (which is true). But rather than embrace the philosophy of individualism (which is the only antidote to racism), he embraces the primitive idea of collective racial guilt and atonement. He also embraces the vicious altruist notion that the needy and the poor hold a first mortgage on the lives and wealth of the productive, because they are needy and poor. It is hard to overestimate the devastating consequences that an Obama-with-a-large-congressional-democratic-majority presidency can inflict on America…or the stock market…even in only one term.

So get ready for a stomach-churning month ahead in the stock market. After the recent collapse, a violent, though short-lived, rally can be expected, if past bear market experience is any guide. We may even have a thousand point up day immediately ahead. This would be followed by another plunge.

The key to the election, though, will be as we near Election Day. In 2004, stocks were weak in the early fall, then quietly strengthened toward the end of October. The market didn’t much like Kerry (although he certainly was no Obama.). Bush won.

I may be all wet here. But for a clue to the possible electoral outcome, watch the last few trading days leading up to the election. If my gut feeling about the Obama effect being a contributing factor to the market plunge is correct, a sudden strengthening in stocks could signal a McCain upset. If the market senses an Obama win, it will likely be flat, since it’s already getting killed by that fear.

Monday, October 6, 2008

Potter's Revenge

Henry F. Potter is a rich banker. He demands collateral for the loans he extends. He is coldly rational in his lending standards, lacking even the hint of a “heart.” He expects to be repaid in a timely fashion. His concern is only to make money. He “puts profits over people.” Henry F. Potter is an evil man.

George Bailey is a big-hearted, smiling banker who “puts people before profits.” His main concern is to help you buy a house. He seeks only to help the “rabble” that Mr. Potter won’t lend a dime to. If you fall short in your mortgage payments, he tells you to “pay me when you can.” He is motivated primarily by the belief that every family deserves to be able to buy a home. He never thinks of himself. He is struggling financially. George Bailey is a good man.

Potter and Bailey, of course, are the protagonists in the classic 1946 James Stewart movie, It's a Wonderful Life. I thought of that movie, which I have enjoyed watching many times, as I observe the unfolding financial crises in America today. In essence, we are witnessing the culmination of the battle between Henry F. Potter and George Bailey.

Since before the middle of the last century, it has been official U.S. government policy to promote and encourage home ownership. This policy has led to massive government intervention into the mortgage and housing markets. The goal has been, and is, driven by the preposterous idea that it is every American’s “right” to own his own home. The result has been a myriad and growing array of subsidies, mandates, loan guarantees, tax preferences, etc., designed to make houses more “affordable.” John R. Lott, Jr. writes;

The federal government gives all sorts of subsidies to encourage home ownership. The mortgage deductibility in the income tax is a big subsidy, but that is not the only one. The Federal Housing Administration guarantees mortgages against default. Subsidies given to Fannie Mae and Freddie Mac allow them to charge less in repackaging private mortgages that are then sold to financial institutions.

There are also subsidies to certain types of mortgages. The Community Reinvestment Act bans so-called "red lining" -- requiring banks to offer mortgages in the entire geographic area in which they operate, not just to do business in suburbs. Loans in profitable areas were then used to subsidize loans in areas where banks were losing money.

In the 1990s, using its regulatory powers over the banking industry as a club, the government began imposing weak lending standards on banks via the Community Reinvestment Act. Intended to “encourage” home ownership among low income folks who couldn’t meet the traditional 20% down, 28%-of-income housing cost limit, these Clinton-era rule changes quickly became a tool of community activist groups. Howard Husock writes at Citi Journal in 2000;

The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.;

As a result, many high-risk borrowers received mortgages that they would not have received otherwise, including the now infamous no-down-payment, no documentation loans. This was destined, according to Husock, to destabilize neighborhoods and penalize responsible borrowers;

A no-down-payment policy reflects a belief that poor families should qualify for home ownership because they are poor, in contrast to the reality that some poor families are prepared to make the sacrifices necessary to own property, and some are not. Keeping their distance from those unable to save money is a crucial means by which upwardly mobile, self-sacrificing people establish and maintain the value of the homes they buy. If we empower those with bad habits, or those who have made bad decisions, to follow those with good habits to better neighborhoods—thanks to CRA's new emphasis on lending to low-income borrowers no matter where they buy their homes—those neighborhoods will not remain better for long.

The predicted consequences of this George Bailey-like policy are now coming true in many communities across America…the result of banks making loans that they would not have made in a free market, had they acted on their own judgements according to their own rational self-interest and long-term profitability.

The 800 pound gorillas, though, are the twin government-created and backed Fannie Mae and Freddie Mac. Their roles expanded by both the Clinton and Bush Administrations, their mortgage purchasing activities created a virtual conveyer belt for unsound mortgages. Outfits like Countrywide were able to latch onto the CRA-inspired “relaxed underwriting standards” and apply them to loans beyond the low-income market because they could simply sell many of the mortgages to Fannie and Freddie. Fannie and Freddie, in turn, packaged the mortgages…good and bad…for sale throughout the financial industry. The implicit government backing lent these securities an air of quality they did not deserve. Some firms, like Bear Stearns and Lehman Brothers, emulated the mortgage-backed securities strategy pioneered by the quasi-government behemoths. The disease began spreading through the system.

It must be remembered that the US financial system is a creature of the government, as I discussed in my post of 7/28/08. So it should be no surprise that many in the financial industry took the lead of government as a reason to throw caution to the wind, in pursuit of the short-term quick buck. A hint of what was going on under the surface comes from this piece by Michael Lewis of Bloomberg News. Thrown in almost as an aside, Lewis, speaking of “Stan O'Neal…the chief executive officer of Merrill Lynch, Dick Fuld…the CEO of Lehman Brothers, James Cayne…the CEO of Bear Stearns. [Who] each took home tens of millions of dollars in pay for making the decisions that destroyed his firm,” states;

But interestingly, if any of these men had behaved well and resisted the pressures and temptations of the moment, his firm would have, for several years, dramatically underperformed the competition. He probably would have lost his job.

Those firms had been around for decades and were clearly built by people who properly saw their own self-interest as consistent with a long-term perspective. For decades, borrowers had to meet strict criteria before being approved for a mortgage. What changed so dramatically that the normal workings of the marketplace became inverted to favor short-term financial strategies over long-term prudence? The only answer…the common denominator…is government intervention. That government intervention grew out of the conviction by politicians and much of the public that the selfish pursuit of profitable lending did not “serve” those who could not afford a home and, thus, lenders should be made to act in defiance of their long-term best interests.

To be sure, there are banks that did resist “the pressures and temptations of the moment” and adhered to sound lending standards despite being at a competitive disadvantage for a time. But the quick-buck artists who rose up through some of America’s great financial powerhouses to overwhelm those prudent folks who would resist those temptations are as much victims as they are villains. They were turned loose and given the blessing of their own government.

Hadn’t these men performed a public service by abandoning the cold and heartless policies of Henry F. Potter and allowed untold thousands of people to achieve “the American dream”? Is this not what their own government, which regulates them, called for? Is this not exactly what the Left-wing shakedown artists…AKA “community organizers”…demanded? Weren’t they following to the letter President Clinton’s 1994 clarion call that “more Americans should own their own homes”? Weren’t they, in fact, complying fully with the implicit premise as expounded in It’s a Wonderful Life…that the purpose of the banks are not their own profitable self-interest but to “serve” the public?

I realize that my tying the popular James Stewart movie to this mess is akin to attacking motherhood and apple pie. After all, isn’t Potter a mean and callous old man who treated people like dirt and who stole the money that Uncle Billy sought to deposit into his bank, while building a fortune for himself? And isn’t George Bailey the “selfless” hero who gave up his dreams of college and “building sky scrapers” to run the Building & Loan, so he can build for people “the prettiest little houses” while scraping by on 45 bucks a week? But all of that is window dressing. The message of the movie is to attack the prudent, profit-seeking banker. It is a symbol of the unjust tarring of what is, in essence, a highly virtuous lending doctrine…that neither need nor desire constitute valid criterion for extending credit. We see now the results of policies that are designed to invert that principle.

The graveyard in the sleaze-ridden town of “Pottersville” is portrayed as the symbol of the selfish, profit-driven banker, as if the financing of homes and thriving businesses for credit-worthy borrowers is not in the self-interest of that banker. But it must be said. The blame for the graveyard of failing financial firms and foreclosed homes spreading across America cannot be laid at the feet of the Potters of the world, but squarely at the hands of the George Baileys. The altruistic congressional champions of “affordable” housing who now rail against some undefined “greed” and “excesses” of Wall Street…those same politicians whose field of vision never extends beyond the next election…should not be shocked that so many in the financial industry have taken them at their word, and acted accordingly. It is the politicians, primarily liberal democrats, who unleashed George Bailey on a national scale.

It’s a Wonderful Life appeared in 1946. In 1960, point five of Democrat JFK’s “economic bill of rights” declared “The right of every family to a decent home.” The two are connected. The private banker who denies a mortgage to a prospective homebuyer who doesn’t meet his lending standards is, in effect, violating that person’s “right…to a decent home.” He is “greedily” pursuing his own profits at the expense of the “people.” The movie depicts the battle of this alleged choice between profits and people. But this is a false choice. The profit motive of the “hard-nosed” banker who acts on his own judgement and in his own self-interest by focusing on the long term is the best protection we have against the kind of calamity we have now. The sound lending principles that lead to profitable, solid financial institutions are in the self-interest of both banks and the “people.”

It is the government’s policies of the hitching of George Bailey banking to the fascist doctrine of the “right” to a home that is at the root of the sub-prime crisis. The only proper emergency solution is to end the reign of both.

Wednesday, October 1, 2008

The Virtue of Extremism

“Extremism in the defense of liberty is no vice! And…moderation in the pursuit of justice is no virtue.”—Barry Goldwater

In my post of 9/3/08, I responded to University of Arizona professor John E. Schwarz’s Washington Post essay in which he advanced the claim that governments as well as free markets create wealth. By examining the essences of this preposterous assertion, it becomes quite clear that governments, by their very nature, cannot create wealth of any kind. By identifying the source of wealth (individual human minds), the nature of government (coercion), and following the circuit of wealth from its productive source through the hands of state and back to the private sector, one can see that the apparent…but not actual…ability of government to produce wealth is an illusion.

It is obvious that Mr. Schwarz is counting on the reader confining his mental observations to the specific concrete facts that he espouses without looking any deeper or “seeing the forest in addition to the trees.” Ignoring the forest, one will only see that government funds research, that that research sometimes yields commercially useful technologies, and that government then becomes a buyer of the products produced by private firms employing that technology. On the face of it, one who focuses only on those particular trees…i.e., confines his thinking to the isolated concretes without connecting them to the related facts a broader perspective would give him…will logically conclude that government can produce wealth. In other words, it is the anti-conceptual “thinker” (one who focuses only on concretes), rather than the abstract thinker (one who identifies the essential elements of an issue and integrates them with related facts, by reference to broader principles, which is true thinking in human terms) that he is counting on.

This is important because Mr. Schwarz is urging democrats to adopt the government-creates-wealth fallacy as a counter argument to what he calls the “mantra of the free market [that] has gained such a hold on Americans.” It is easy to see why. If governments can indeed produce wealth, and given that government represents, theoretically, all of the people equally, then all of the people have a right to share in the wealth that their government “creates”. Free market capitalism, it must be recognized, is only a handmaiden of government. After all, the highest paying jobs in the highest growth industries exist only by grace of the wealth-creating power of the state, according to Mr. Schwarz.

Once that inverted logic is accepted, there is no way to draw a line between where the power of state ends and the freedom of the individual begins. Any alleged market “failure” can serve as a justification for expanded government control over the economy. Mr. Schwarz has laid out a blueprint for the realization of the dream of the Left since FDR…the extermination of the remnants of free market capitalism in America.

Free market Capitalism is the social system based on individual rights, and a government limited to protecting those rights. Under Capitalism, every individual is free to work and produce to the best of his ability and ambition, and to trade his work product for the work product of others in voluntary, uncoerced agreement to mutual advantage. The only alternative to voluntary engagement between human beings is force. Under the explicit proposition laid out by Mr. Schwarz, force is a valid substitution for rational persuasion in economic matters. Anyone with an investment idea need not concern himself with convincing potential investors of the validity of his concept and seeking their voluntary funding. He need only cobble together a political constituency in order to lobby the Democrats for the necessary funds, who will then seize (i.e., loot) the capital via coercive taxation from people who would not voluntarily do so. There is no contest between private, disarmed private citizens operating in a free market, and legally armed (i.e., politically connected) groups operating through governmental force. Once a government reneges on its obligation to protect individual rights and instead turns predatory, it becomes the tool of an ever-growing army of economic groups seeking to advance its interests by force. And in the process, the private, free market elements wither under its onslaught. Freedom ends where predatory governmental force begins.

This is the process that has been going on in America since FDR’s New Dealers unleashed special interest politics. Mr. Schwarz has validated this process by declaring, in effect, that a free market is unnecessary for prosperity. His is a back-door call for central economic planning. Without refuting the basic point that governments can create wealth, there is no way to fight back if the Democrats pick up this mantra. And fighting back requires bucking a powerful headwind. That headwind is entrenched in American culture. It is the cover that has enabled the growth of an out-of-control governmental monstrosity that Americans never explicitly chose. That headwind, and cover, is the philosophy of Pragmatism.

Pragmatism holds that thinking is useless. Concepts such as the idea that governments can create wealth are treated by the pragmatist as perceptual primaries, like observing a rock lying on the ground. Understanding, in the human sense, is impractical. There are no fundamental truths, no moral absolutes, no unifying principles, no common denominators that one can rely on to integrate one’s knowledge, to project logical future consequences or draw lessons from the past. It is futile to identify the essence of any issue. One can never be sure, Pragmatism holds. What worked (or didn’t work) yesterday, may not work (or work wonderfully) today. What was true in the past is not necessarily true today. One must judge every issue, whether on the personal level or in the political realm, as an isolated “fact” cut off from all other isolated “facts.”

According to Webster’s Unabridged Dictionary, Pragmatism is “a [philosophic] system which tests the validity of all concepts by their practical results” (Simon and Schuster, second addition, c1979). Thus, Pragmatism freezes man’s awareness at the level of the immediate moment. The only way to understand the freedom-destroying nature of ideas like the one presented by John E. Schwarz is to first renounce the concrete-bound mental processes created by an adherence to the philosophy of Pragmatism. If one viewed Mr. Schwarz’s assertion through the lens of Pragmatism, one would see that it does indeed “work.” No need to be concerned with the objective facts, which demonstrate its falsehood. No need to be concerned with the nature of individual rights or of government…or of the fact that acceptance by the America people of his assertion would be a huge step toward totalitarianism. After all, just look at the immediate “practical results” as outlined by Mr. Schwarz.

It is no coincidence, in my view, that just two days following the publication of Mr. Schwarz’s piece comes one by Dick Meyer, in which Mr. Meyer elevates Pragmatism into the highest intellectual virtue of the American people. I do not mean this in the sense that there is a coordinated effort between the two men, but in the sense of like-minded souls with a common purpose.

In this piece, Mr. Meyer cashes in on the largely successful efforts of the Progressives in the American educational establishment of fostering an anti-conceptual mentality among the population. John Dewey, it must be remembered, is the father of progressive education. Dewey was a leading advocate of the philosophy of Pragmatism who likewise disdained abstract thought.

Mr. Meyer extols disintegrated “thinking” and condemns as evil…as “extremist”…any adherence to rational analysis based on a coherent set of fixed principles of morality, of logic, of objectivity. He writes:

Poll after poll, focus group after focus group show that the vast majority of Americans -- the Silent Majority, perhaps? -- are pragmatic, independent and un-partisan in their basic views. They are eclectic: "liberal" on some matters, "conservative" on others. They are not slaves to that hobgoblin of small minds, consistency.

Extremists, however rare, are becoming more common and, importantly, more rabid…[They} have grown more intolerant and prone to "personal demonization."

Mr. Meyer never defines the term “extremist”. He merely refers darkly to "extreme liberals" and "extreme conservatives". Nor does he tell you why either extreme is bad. Notice that he places “personal demonization” and intellectual “consistency” under the same heading “extremist.” The smear merchants of either political wing and the rational, consistent…i.e., principled… advocacy of one’s position are both “extreme” and therefore condemned. We must just go with “a much more pragmatic, moderate and independent crowd.” “Independence” here does not mean the refusal to subordinate one’s own judgement and mind to others. The sense that Mr. Meyer means is the willingness to betray any conviction, value, principle, and fact in pursuit of “eclectic” compromise. Compromise on what? The extremes on either side. What is a compromise between two evils? But that requires a principled analysis of the ideas of both “extremes”. And that is what Mr. Meyer does not want the “pragmatic, moderate, and independent” American to discover.

The purpose of the use of the term “extremist” in this context is a smear tactic aimed at any person who holds a firm set of convictions (of principles) and has the integrity and willingness to defend them by applying them consistently to every issue. Whether one’s ideas are ultimately right or wrong, one’s consistency in upholding his convictions is a sign of moral and intellectual strength, not weakness. The foisting of the conflict between "extreme liberals" and "extreme conservatives" is a straw man. By today’s accepted definitions, both, in fact, represent a threat to America. That particular straw man is a means of discrediting “extremism”…i.e., any coherent set of beliefs advocated consistently…as such, with no further discussion.

What Mr. Meyer is struggling to obscure is that the real battle today is between two extremes, not of evil against evil, but between good and evil…between capitalism and socialism…between individual freedom and the totalitarian state. Mr. Schwarz, Mr. Meyer, the Progressive educators and their ilk depend specifically on the American people never becoming “slaves to that hobgoblin of small minds, consistency.” That is because the consistent application of America’s founding principles of unalienable individual rights protected by government stops their statist designs dead in their tracks. Ask yourself who won and who lost when the Left demanded total socialized medicine and then settled for the “compromise” of socialized medicine only for the elderly (Medicare), then the poor (Medicaid), then the children (SCHIP), then the uninsured (EMTALA)… And each step on this path towards total socialized medicine, we are told that it “works” because the “practical results” show that the elderly, and the poor, and the children, and the uninsured are receiving healthcare. And each step along the way, “that hobgoblin of small minds, consistency,” is not there to tell us that our freedom is slipping away, thanks to “pragmatic, independent and un-partisan” non-extremism. In any compromise between good and evil, it is only evil that can profit. In that transfusion of blood which drains the good to feed the evil, the compromiser is the transmitting rubber tube . . .(Ayn Rand, ATLAS SHRUGGED, page 1054).

It is the philosophy of Pragmatism that helps explain why, despite its utter brutality and abject economic failure wherever and to the extent it is adopted, socialism keeps rearing its ugly head. Americans never overtly voted for welfare statism or socialism. Yet America is drifting inexorably toward totalitarian socialism...specifically, the fascist “brand”. It is being smuggled in bit by imperceptible bit…in healthcare, energy, finance, housing…virtually across the board. It is being put over on a people that has accepted the idea…the absolute…that compromise is always good, on any issue, because the extremes…standing on principle…is always evil. So America has been giving up one extreme…capitalistic freedom…in exchange for the other…totalitarian socialism…one pragmatic piece after one pragmatic piece.

If America is ever to reverse the trend toward its own demise, it must check its fundamental premises that have become accepted wisdom. One of those premises is the anti-intellectual philosophy of Pragmatism. It freezes the human mind into a range-of-the-immediate-moment functioning that obliterates hindsight, foresight, logic, and abstract understanding. It keeps one blind to the progression towards the day when "the gate slams shut.”