Sunday, March 29, 2009

AIG Bonuses and the Road to Fascism

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.--Ayn Rand

As an outraged public fumes over the bonuses paid to bailout giant AIG, the statist camel has charged, nose first, into the tent. With the wind of that outrage at his back, President Obama is not wasting any time attacking the very glue that binds capitalism together…the sanctity of contracts. Without freedom of contract protected by a government of objective law, we will enter into the never-never land of a serfdom ruled by the arbitrary power of unknown, unpredictable government officials.

The issue here is crystal clear. The AIG bonuses, however distasteful, were paid consequent to legally binding contracts signed long before the bailout money arrived…and the politicians knew it. On March 17, 2009 Politico's Jim Vandehei wrote:

Watching the coverage the past 24 hours, it would seem AIG just made public its plans to give top employees big bonuses. Wrong.

AIG disclosed its retention-bonus program more than a year ago…

The bonuses were essentially a nonissue when AIG got its initial bailout money…Joe Biden, then the vice presidential nominee, came out strongly against the bailout. Obama did not.

Timothy Geithner, then at the New York branch of the Federal Reserve, was a huge proponent and architect of the AIG bailout. So if Obama had strong private opposition to the idea it did not affect his pick for the person who would oversee all bailouts.

Capitalizing on the sudden wave of anger, and stoked by the press and posturing politicians of both parties, Obama is seizing this opportunity to seek dictatorial powers over executive contracts of all companies, whether or not they received any bailout money;

President Barack Obama said he will seek legal authority over the financial system that will give the federal government power to step into contract issues, such as the one that has allowed American International Group Inc. to pay out $165 million in retention bonuses to employees of the tottering insurance giant's financial products group.

The president said he spoke with House Financial Services Committee Chairman Barney Frank this morning about granting him "resolution authority" similar to the power the Federal Deposit Insurance Corp. has over the thrifts it regulates. That would allow his administration to potentially abrogate contracts that it can show does not serve the good of newly regulated entities like AIG.

Mr. Obama said he needs the regulatory power "to allow us proactively to get out in front, to separate bad assets from good in dealing with contracts that may be inappropriate."

The government’s proper function is to protect individual rights. The right of consenting adults to enter into voluntary contractual agreements based upon mutual advantage is fundamental to those rights to life, liberty, and property. Without the freedom to act upon one’s own judgement in associating with others, all other rights are negated.

In a brazen power grab reminiscent of his hero FDR, Obama seeks arbitrary veto control over the “contract issues” in the entire financial system. The government will acquire the power to abrogate contracts based upon what it determines does “not serve the good of newly regulated entities”, “to separate bad assets from good”, or are “inappropriate”. What standard will be used to determine “the good”, asset quality, or “appropriateness”? There is only one proper, objective way for those determinations to be made…by the sum of the independent judgements of free individuals…i.e., the market. Yet that enormous power will be arrogated to a central planning bureaucratic elite, or to the president himself!

There is no doubt that that power is destined to sweep through the entire economy. Indeed, a flock of 70-year-old chickens is coming home to roost here. As stated above, the precedent is the Federal Deposit Insurance Corporation, the agency that was designed to “protect” depositors in failing banks. Such government protections never come without a steep price, as we are plainly seeing here. The FDIC precedent paved the way for Obama’s power grab, which will pave the way for even greater power.

Blinded to the essential principles that underlie all political issues by the philosophy of pragmatism, we are lurching toward the total state on many fronts. A nation that functions on the expediency of the short-term “solution” at the expense of the study of cause and effect and long-term consequences has no way of knowing what will preserve freedom and what will erode it. Only political philosophy can clear away the pragmatic fog and demonstrate the logical consequences of small but hideous precedents, by reference to basic universal principles. But “ideology” is disdained today, and we are paying a heavy price in loss of freedom.

The Undercurrent’s Rebecca Knapp writes:

[C]ontracts are the medium of production and trade. Contracts are the crucial moving part by which the economy functions. But contracts do not function unless they are inviolable. If they don’t operate in principle, then they don’t operate—and neither does the economy. The moment companies or the government arbitrarily choose which liabilities they will honor, contract “law” becomes a lie, and production and trade become a game played at the whim of government bureaucrats.

If AIG is a bellwether, then America is about to take another big step in down this road. The wind in Washington is blowing us toward the death of contract. From multi-million dollar mergers, to your supermarket purchase of a loaf of bread, to supplier contracts, employment contracts, loan agreements, home purchases, bank accounts, insurance—soon all of it will function, not by right, but by the permission of government.

This direct attack on contract rights is highly significant as a signal of things to come. Let Obama protest all he likes that he is pursuing “legal” means of snuffing the contracts. There can be no legal means of annihilating freedom of contract as such, the sine qua non of all other economic freedoms. This is the subordination of law to populist politics.

There is only one just way by which contracts may be legitimately abrogated, altered, or re-written in a free society; other than by voluntary agreement among the parties...the bankruptcy courts. They were specifically designed to deal with the kinds of situations the country has been facing in recent months. The bankruptcy courts represent an objective venue for dealing with the conflicting claims arising from the collapse of a private company. Importantly, they are outside of the bounds of political interference. They are part and parcel to “a government of laws and not of men”. Yet that avenue has been all but abandoned during the current economic crisis in the bi-partisan rush to expand the arbitrary power of the political class.

We are rapidly moving toward an economy ruled not by merit but by an aristocracy of political pull. Added to the considerations by which companies contract for executive talent will be the unpredictable whims of unknown bureaucrats wielding arbitrary power. Consideration of the best interests of the company, its shareholders and its customers will now be replaced with the fear of what some government official will decry is “appropriate” to “the good” of the company. Rising in importance on the resumes of executive job candidates will be political connections, to the detriment of talent and experience. The corruption of the contractual process is a dangerous and unnecessary infringement to the rule of law. Rebecca Knapp concludes with this warning, with which I concur:

Open your eyes America: this is another slow, sad step to the gallows. But we are beginning to pick up the pace.

Thursday, March 26, 2009

For "Earth Hour", Celebrate Human Achievement

The environmentalists have concocted yet another tool for reminding us of the lamentable way in which we exploit the earth in order to live our lives of decadent luxury.

On March 28, 2009, at 8:30pm, we are to turn off our lights until 9:30pm to observe Earth Hour. Just as with Earth Day, we are to be reminded that the enjoyment of our industrial luxuries come at the “price” of disturbing untouched nature.

But Kieth Lockitch of the Ayn Rand Center for Individual Rights reminds us of the true meaning behind the seemingly innocent hour of darkness. It is a conditioning mechanism and a precursor to the wholesale assault on our standard of living, which is currently in the works in Washington, DC. and elsewhere.

Politicians and environmentalists, including those behind Earth Hour, are not calling on people just to change a few light bulbs, they are calling for a truly massive reduction in carbon emissions--as much as 80 percent below 1990 levels. Because our energy is overwhelmingly carbon-based (fossil fuels provide more than 80 percent of world energy), and because the claims of abundant “green energy” from breezes and sunbeams are a myth--this necessarily means a massive reduction in our energy use.

People don’t have a clear view of what this would mean in practice. It is hard for us to project the degree of sacrifice and harm that proposed climate policies would force upon us.

This blindness to the vital importance of energy is precisely what Earth Hour exploits.

Those who claim that we must cut off our carbon emissions to prevent an alleged global catastrophe need to learn the indisputable fact that cutting off our carbon emissions would be a global catastrophe. What we really need is greater awareness of just how indispensable carbon-based energy is to human life (including, of course, to our ability to cope with any changes in the climate).

It is true that the importance of Earth Hour is its symbolic meaning. But that meaning is the opposite of the one intended. The lights of our cities and monuments are a symbol of human achievement, of what mankind has accomplished in rising from the cave to the skyscraper. Earth Hour presents the disturbing spectacle of people celebrating those lights being extinguished. Its call for people to renounce energy and to rejoice at darkened skyscrapers makes its real meaning unmistakably clear: Earth Hour symbolizes the renunciation of industrial civilization.

Rather than Earth Hour, The Competitive Enterprise Institute’s Michelle Minton has a better idea:

This week Competitive Enterprise Institute announced the creation of Human Achievement Hour (HAH) to be celebrated at 8:30 p.m. on March 28, 2009 (the same time and date of Earth Hour).

If our Human Achievement Hour is at all a dig against Earth Hour, it is so only by the fact that we are pointing out what Earth Hour truly is about: It isn’t pro-Earth, it is anti-man and anti-innovation. So, on March 28, I plan to continue “voting” for humanity by enjoying the fruits of man’s mind.

That pretty much sums it up. Man’s very means of survival depends upon converting the raw materials provided by nature into the values needed for his survival and, yes, his flourishing. Earth Hour celebrates the subhuman existence implied by untouched nature. Human Achievement Hour celebrates the exaltation of man…nature’s noblest product.

At 8:30pm on March 28th, celebrate Human Achievement Hour—enjoy your energy use.

Monday, March 23, 2009

Autism Treatment and Government Insurance Mandates

In a March 1, 2009, essay published on the blog of the campus newspaper The Undercurrent, Rituparna Basu argues persuasively against a proposed Virginia law (House Bill 83) “that would require insurance companies to cover the medical costs of treating children with autism”. Rituparna writes:

This bill will make it illegal for insurance companies to offer coverage that does not include treatment for autism, even if they can offer a more affordable insurance package without such coverage. This means that everyone will be forced to buy coverage for autism treatment, even if their children don’t need it or if they don’t have children at all. (In fact, spiraling insurance costs are in part due to more and more benefits being mandated by law.)

Parents of autistic children in support of this bill argue that “they should be able to give their children any treatment they feel works and not be socked with astronomical medical bills.” Whatever their intent, in practice this means others are socked with these bills.

If it is unfair for parents of autistic children to have to pay their children’s medical bills, how much more unfair is it for other parents to have to pay the same bills?

Insurance mandates like the Virginia proposal are in fact not insurance at all, but wealth redistribution schemes masquerading as insurance. They are one of the many government intrusions into the medical field that is crippling American healthcare. But if insurance companies are not forced to cover autism treatment, commenter asks:

What would you have families do when unable to afford treatment for an autistic child? You suggest voluntary charity, but there is no evidence that charity would be forthcoming in an amount sufficient to meet the needs of the families…

Rituparna responds that:

If voluntary charity is not enough to sustain these individuals, that would be a tragic situation. It’s always tragic when good, honest people suffer due to circumstances beyond their control.

Such circumstances, however, no matter how dire they may be, do not justify forcing others to sacrifice their own lives. As Americans, we have no claim to the lives or property of others. We do not have the right to expect others to give up that which they use to sustain their lives in order to sustain our own.

The underlying premise behind your concern is that everyone has a right to values such as health care, even at the expense of others. No such right, however, exists. Rights are freedoms to act in your own interest without interference from others, not entitlements to values that others have produced.

The issue is clear-cut. The guiding moral principle of individual rights as well as the government’s proper role as protector of those rights unequivocally call for the defeat of that legislation in Virginia.

But also exposed here is the inherent injustice and contradictions of our current health care system, which I brought out in this comment on the site:

Rituparna is right here. The same arguments used against autism insurance mandates points to a genuine injustice suffered by parents of autistic children, though. While they struggle to pay the cost of their own children’s treatment, they themselves are victims of a myriad of other government mandates, programs, and policies.

For example, they are forced to pay the cost of similar insurance mandates such as New Jersey’s soon to be (or already) enacted Senate bill S1940, which requires insurance companies to cover mental healthcare expenses relating to eating disorders. In addition, that same unfortunate couple that is unable to afford treatment for their own autistic child is paying, through their taxes, the healthcare expenditures of: the elderly (Medicare), the poor (Medicaid), other peoples’ children (SCHIP), other uninsured people (”charitable” government aid to hospitals to cover “free” emergency room care, including for illegal aliens, imposed under the federal law EMTALA), etc., etc., etc. In addition, there are medical research grants to universities and colleges. And don’t forget foreign aid healthcare spending, including President Bush’s $50 billion Aids relief package to Africa. Undoubtedly, there is more. asks; “What would you have families do when unable to afford treatment for an autistic child?”. Rather than perpetuate the injustice with more of the same, it’s time to begin to dismantle the network of government intrusions into the medical field. All of these government-imposed wealth redistribution schemes should be phased out and abolished in favor of a free market.

That long-term solution to fixing our government-crippled healthcare system with its soaring costs is admittedly of little help to the autism parents struggling to pay bills today. So here’s a short-term, simple interim step to advocate for those “unable to afford treatment for an autistic child”…tax credits. America currently spends about $8000 per capita on healthcare annually, almost 90% of which represent people spending other peoples’ money. That money comes out of someone’s pocket. The amount of money that most of us pay toward other people’s healthcare undoubtedly runs to many thousands of dollars annually. Simply allow the costs of uninsured ailments like autism to be offset by direct tax credits up to the amount the parents pay toward the litany of forced payments cited above. This would allow them to spend their own money on their own children as they see fit.

It’s simple, just, and violates no one’s rights. Just as these parents have no right to force others to pay for their medical expenses, so the myriad of recipients of government largess have no right to their healthcare dollars.

My comments were well received by Elisheva Levin, a parent of an autistic child, who is in just the financial situation fretted about:

Thanks for the enlightening post.

I am the parent of a child with an autism spectrum disorder and we have incurred a great deal of personal expense to cover treatment that our insurance does not cover. Although there is a special developmental disability waiver (which comes from federal money) that might cover some of this treatment in my state, it is unlikely that my son would qualify for it as he is very high functioning, and even if he did, he would go without treatment for the seven to ten years it takes to come to the top of the waiting list. And if he did finally qualify and come to the top of the list, the treatment provided would likely not be what we believed would be best for him. When you take government funding, you lose the freedom to decide.

MIke Zemack is right: the best solution is to let all of the people of the United States keep as much of their money as possible, and let them then decide how to spend it for the benefit of their own family in their own situation. If I could have the money back from the 90 cents of each of my health-care dollar expenses that go towards government programs that do not help my child, it would cover most of those expenses incurred that my insurance does not pay.
And I would be the final arbiter of what to spend those dollars on for my son’s benefit.

Finally, even as they are taxxed* to death, Americans are amazingly generous people–this is part of the self-sufficiency that were the social norm for America’s frontier communities–and there is quite a lot of private charity available for parents who could use a leg-up.

*if any word should be a four letter word, taxx should be!

The proliferation of insurance benefit mandates (over 2000 nationwide) is one of the key reasons for the soaring cost of health insurance. Once we started down this road, the inevitable result had to be rising demands from special interests demanding that “their” ailment be forced down other peoples’ throats. The end result is a steady de facto socialization of medicine masquerading as “insurance”, with a pseudo-private, government protected big insurance company cartel providing the conduit for state power.

Abolishing all benefit mandates is one of the key reforms needed to restore contractual freedom to the health insurance market. Derived from the fundamental rights of the individual, the right to freedom of contract between voluntarily consenting adults is both the moral and the practical thing to do.

Wednesday, March 18, 2009

Corzine's Sacrificial Budget

As Washington pursues its self-destructive drive toward socialism, New Jersey is not to be outdone. On March 10, 2009, Governor Jon Corzine unveiled a state budget that all but assures a continuing decline in the state’s economic fortunes.

His budget would “protect [the] needy…the elderly and the lowest-income earners.”

“[T]he budget emphasizes only education, senior services and programs such as charity care hospital funding that are relied upon by the ‘most vulnerable.’ ” Public education spending is among the highest in the nation here in NJ, yet Corzine calls for an actual increase in state funding.

Municipal aid, too, will be pretty much maintained. It will be “distributed ‘in a manner that's consistent with need’ based on a formula ‘that is reflective of the property tax burdens and the wealth’ of towns…”

By now the picture pretty much becomes clear. Corzine said that “the decisions I have made in laying out this budget reflect a clear ranking of my priorities and core values…”

It’s clear that his priorities are to place need ahead of the producers who will foot the bill for his “shared sacrifice” budget. The “core values” of the Governor are obviously rooted in altruism. Altruism holds self-sacrifice as a moral ideal. Who will do the sacrificing and who will be the profiteers on that sacrifice? For there to be sacrifice, there must be something to sacrifice. Therefor, altruism’s target is anyone who has achieved a level of prosperity, to the extent that he has achieved it. The beneficiaries would necessarily be anyone who, for whatever reason, have achieved less…the “needy”, the “lowest-income earners”, the “vulnerable”, the least “wealthy” towns.

Let’s be clear here. “Need” has and never will produce so much as a single morsel of food. Production of the values human’s need depends on a process of productive work guided by reason. Yet, under the moral inversion that is altruism, the God of Need will be the drain down which the efforts of the productive will be poured. On the national scale, it is called “raising taxes on the top 5%”. On the NJ State level, it is called “raising taxes on the rich and on employers”.

If you think you’re safely below the “top 5%” or the “rich”, think again. The dirty little secret is that there will always be a “top 5%” or economic class called the “rich”. Once the current crop of rich five per-centers is drained, the tax target shifts down the income scale to the next level, then to the next, and so on. It is the well-worn path to national economic suicide. That process is just getting re-charged on the national level, but here in New Jersey it is well under way.

In recent years, taxes on the wealthy have been raised substantially to a top rate of 9%. Yet, Corzine seeks to raise it further. The tax “would affect about five percent of New Jersey's population… those with incomes over $250,000…” Sound familiar?

But the cow may have already been milked dry, as leading members of his own Democrat party apparently fear:

"The president already announced he's going to go after that group. It's a double hit," Senate Majority Leader Stephen Sweeney said.

He pointed out that New Jersey also raised the income tax on those making $500,000 or more in 2004, under Gov. James E. McGreevey's so-called millionaire's tax.

"We've hit that income bracket pretty hard. I'm not one of them, but we've hit them pretty hard," said Sweeney (D-Gloucester).

Sen. Raymond Lesniak (D-Union) said he's not against raising the cigarette tax but views an income tax hike on the wealthy as "a huge mistake." As New Jersey tries to attract businesses, particularly those fleeing Manhattan during the recession, "it would be very counterproductive" to add to the tax burden of top executives, he said.

"I will aggressively oppose it," Lesniak said.

So where else to look for sacrifices? Why, down the income scale, of course. Corzine’s "targeting of the middle class” took “many by surprise”. It shouldn’t have.

“As he promised to protect children, the elderly and the working poor, the governor asked others to sacrifice, proposing tax increases on businesses and the wealthy...

That could translate into a double whammy for non-senior homeowners earning between $75,000 and $150,000. Not only would they lose their rebate, they would miss out on hundreds of dollars in savings from the tax deduction.”

New Jersey’s property tax rebate scheme is widely seen as a scam, with money being drained out of the income tax pocket and returned as property tax “relief”. Now the “relief” part goes up in smoke. On top of that, the tax deduction is lost. Who will this hit affect? The new “higher income households”:

"As family members lose jobs or see their hourly wages fall, the number of taxpayers making less than $75,000 grows," Corzine said. "For these citizens, rebates count."

And here we get to the hideous essence of “shared sacrifice”. Blinded by altruism, the Governor cannot see the connection between the penalizing of achievement and the growing ranks of the “needy”. We see this phenomenon being played out dramatically with regard to the financial crisis. For the sake of the growing “number of taxpayers making less than $75,000”, those just above that threshold will be sacrificed…just as Gov. James E. McGreevey's 2004 so-called millionaire's tax raised taxes on incomes of $500,000+ to fund middle class tax relief…relief that is now gone.

The policies being pursued in Washington are being compounded by similar ones in New Jersey, and they will be very damaging to our economic well-being, long term. Governor Corzine, just like President Obama, has cloaked his plans in a moral blanket…the morality of altruism. My “core values”, as Corzine put it. Here, as on the national level, the lesson is clear. To challenge the direction of state policy, it is the moral foundation that must be challenged. As long as it is deemed moral to sacrifice for the sake of others “less fortunate”, there is no way to effectively counter such schemes as the New Jersey budget. At a time when a drastic easing of the burden on production and trade is desperately needed, that burden will be increased. But it is seen as the moral thing to do.

But altruistic self-sacrifice is not moral. The moral is to achieve and keep values…in other words, to be selfish. If the rational, selfish pursuit of one’s own self-interest was widely accepted as a moral virtue…and the sacrifice of one’s hard-earned values was seen as the vice that it is…New Jersey and America would be embarked on a very different course. The ranks of people making more than $75,000 (or $500,000) would be swelling rather than shrinking.

As for people truly in need, their best interests would be served not by a shrinking, but by a growing, productive class. History has borne this out. America is the richest country the world has ever seen…and the most generous…even under today’s onerous tax burden. Generosity and compassion are corollaries of prosperity. But that generosity depends on the security of knowing that another’s need is no threat to one’s own wealth and earnings. Respect for the right of each individual to his own life and pursuit of happiness is a prerequisite for a prosperous and benevolent society.

Nothing short of a moral revolution enshrining rational self-interest as the highest virtue is needed to make that possible.

Thursday, March 12, 2009

Is Atlas Shrugging?

[WARNING; Anyone who has not read but may be interested in reading Ayn Rand’s novel Atlas Shrugged should take note that the links provided below contain plot spoilers.]

It is not uncommon for investors, entrepreneurs, businessmen, and other producers to respond to economic dis-incentives imposed by their government by altering or reducing their behaviors so as to minimize the damage to themselves and their goals. Shifting wealth from productive ventures to tax shelters, delaying or reducing income and work, or simply avoiding business expansions or start-ups are common in periods of excessive taxation or overbearing government regulation.

These types of actions are usually taken for practical economic reasons based upon the expected return on work, time, and investment. When government policy reduces the return on productive work, there is less of it.

But is there is a new force…a moral-philosophical element…emerging in American culture that is giving added impetus to the age-old response of producers to rising statism? I hinted at the tantalizing prospect of “a new cultural force emerging behind this capital strike.”

In a recent appearance on Fox News’s Neil Cavuto show, Michelle Malkin described a phenomenon that surfaced just before the election. Producers, she said, are going on strike in large ways and small. Her mailbox, she says, is inundated with letters from people telling her they are doing just that. She linked this phenomenon directly to Atlas Shrugged. The New York Times reports that “Michelle Malkin is the Norma Rae” of this “movement”, dubbed “Going Galt”. Who is Going Galt? Lisa Schiffren tells us who they are:

The doctors, lawyers, engineers, executives, serious small-business owners, top salespeople, and other professionals and entrepreneurs who make this country run work considerably harder than pretty much anyone else (including most of the chattering class, and all politicians). They are not robber barons, or trust-fund babies, or plutocrats, or even celebrities. They are mostly the meritocrats who worked hard in high school and got into the better colleges and grad schools, where they studied while others partied. They pushed through grueling hours and unpleasant "up or out" policies in their twenties and thirties at top law firms, banks, hospitals, and businesses to earn salaries in the solid six figures (or low seven) today — in their peak earning years. Their work ethic is prodigious, and, as Tigerhawk points out, in their spare time they sit on the boards of most of the complex charities and arts institutions that provide aid and pay for culture in America. No group of people contribute more to their community. And now the president, who followed a path sort of like that, and who claims that his wife's former six-figure income was a result of precisely such qualifications and efforts, is demonizing them. More problematically, he is penalizing their success and giving them very clear incentives to ratchet back on productivity.

Among other attributes, Atlas Shrugged provides a moral sanction for the success of productive individuals at all levels of competence and intelligence. It is not a glorification of money-chasing at any cost, as the dishonest and misinformed would have us believe. Rather, it is the glorification of productive achievement…the real source of the value of money…and all of the personal virtues that that implies. Atlas dramatizes the value to society of the top tier of producers, and demonstrates that the virtues of the most productive wealth creators are practical for all. Those virtues include rationality, independent thinking, honesty, and integrity, to name a few of the cardinal virtues of Rand’s philosophy.

Are more and more of America’s top tier getting the message that they have a moral right to their earnings, and that the political class has no right to redistribute it to pay for anyone’s bailout or needs? Is the fledgling “strike” alluded to by Investor's business Daily and Malkin being driven not just by economic calculations but by moral rage? If so, all bets are off on normal economic analysis of the future direction of the economy. Is this what the stock market is picking up on?

It is, of course, impossible to gauge the full scope of the impact that the ideas in Atlas are having on the current turbulent times. No movement can succeed without a firm philosophical base, and I don’t want to overstate the case. How well the deep philosophical principles enunciated by Rand in her novel are actually understood is the $64,000 question. But we are in uncharted territory here, and Atlas has the potential to short-circuit the strong statist trend of today before it can reach its inevitable logical climax depicted in Atlas Shrugged.

One thing is for sure. The penetration in the culture of the anti-statist, anti-collectivist, pro-capitalist, pro-individualist principles dramatized in the novel is accelerating. An Ayn Rand Institute press release announced that sales of Ayn Rand’s Atlas Shrugged are surging. According to the Institute:

Washington, D.C., February 23, 2009--Sales of Ayn Rand’s “Atlas Shrugged” have almost tripled over the first seven weeks of this year compared with sales for the same period in 2008. This continues a strong trend after bookstore sales reached an all-time annual high in 2008 of about 200,000 copies sold.

Americans are flocking to buy and read ‘Atlas Shrugged’ because there are uncanny similarities between the plot-line of the book and the events of our day…Ayn Rand understood and identified the deeper causes of the crisis we’re facing, and she offered, in ‘Atlas Shrugged,’ a principled and practical solution consistent with American values.

In January, Amazon reports that the sales rank of Atlas actually exceeded Barack Obama’s “The Audacity of Hope” on at least one day. In what may be a symbolic harbinger, this occurred in the very month of the inauguration of our “historic” president. Sales are likely being propelled not only by grassroots word of mouth (the traditional driving force) but by a growing chorus of prominent voices pointing to the profound relevance of this 52 year old masterpiece. Glenn Beck, Tom Smith, Frank Beckmann, Tammy Bruce, and Rush Limbaugh (story #3) have all pointed out on their shows the strong parallels between the plot in the novel and today’s events. Bank giant BB@T’s Chairman John Allison called the Atlas Shrugged villains “straight out of today’s New York Times”.

Steven Moore, senior economics writer for The Wall Street Journal editorial page, wrote in an article in that newspaper entitled ‘Atlas Shrugged’: From Fiction to Fact in 52 Years;

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.

This sales surge is particularly impressive given the deeply philosophical nature of this nearly 1200 page book. From Washington, D.C., to Abu Dhabi (UAE), Ayn Rand is emerging as a significant factor in the pro-free market forces’ struggle to push back against the rising tide of statism sweeping the world.

Barack Obama tells us that he wants to champion the “bottom 95%” by targeting the most productive 5%. But without the jobs we fill, the tools we work with, the job skills we are taught, and the products and services we buy with our earnings, there would be no 95% to champion. Those things do not just drop in out of thin air. Someone creates them. Without those who step up to convert innovative ideas and theoretical science into the values that enrich our lives, the 95%…including the highly productive middle class from which the creators emerge…would collapse.

The unfolding national drama is about much more than a few percentage points added to the income tax or some specific regulatory policy. What we are witnessing is a wholesale rejection of the American principles of individual self-determination and limited government in favor of an explicit turn towards the collectivist ideologies that have always led to economic despair and political tyranny. At the same time, we are seeing growing awareness of the philosopher who holds the antidote to those forces. It is to soon to tell how this emerging battle will play out.

The phenomenon of the creators pulling back by conscious, philosophical choice…“going Galt”…adds a new dimension to the latest statist upsurge in America. How decisive this will be is, of course, unknown at this point. But if it continues to gather momentum, it has the potential to focus America’s attention on its premier philosophical defender…Ayn Rand. That attention could not come too soon. The political/cultural debate polarizing America today must switch from concrete issues to the basic moral—philosophical arena of ideas that underlie it, if capitalism is to be saved.

After the Japanese attack on Pearl Harbor, Japan’s reluctant Admiral Isoroku Yamamoto famously fretted "I fear all we have done is to awaken a sleeping giant." Perhaps the Obama Socialist attack against America and its ideals has also awakened a slumbering giant—Atlas.

Sunday, March 8, 2009

What the Market is Really Saying

As the Obama Bear rages on, it is obvious that the vast majority of pundits, journalists, and other assorted “experts” are utterly clueless about what is going on. With every new daily drop in the stock market, we hear the same stale old voices rising to tell us why. It was a renewed request for bailout funds for some company in trouble, or the latest government economic report, or it’s those nasty short-sellers. But, I suspect that there is something else going on here…something much deeper and possibly profound.

A hint of what I am talking about was provided by Investors Business Daily. In a March 2, 2009 editorial entitled Capital On Strike, IBD observed the following:

Investors have walked away from investing, while businesses shut down factories and offices and slash jobs.

This is both highly significant and dangerous. Capital, bluntly put, has gone on strike. Those who own wealth are pushing it to the sidelines, as a young and inexperienced president tries to jam through the most sweeping economic changes in over 70 years.

The prospect of these changes becoming law has already radically altered our nation's economy. Entrepreneurs and CEOs who once created new products, new services, jobs and trillions in wealth for America's workers and retirees now find themselves vilified and punished for their success.

ABC News reported this week that many upper-income taxpayers already are planning to cut back on work and investments to stay under $250,000 in income — the point where Obama's punitive taxes kick in. No one wins from this, yet Obama seems oblivious.

Forget what the so-called experts are telling us. I believe the stock market is adjusting to the reality that an American president and one of the two major political parties have declared war on productive achievement. I had thought up until recently that the country might muddle through for awhile, with a recovery that struggles against the headwinds of expanding government. That may still happen, but that scenario is looking more and more likely to be too optimistic. The beginnings of accelerating economic and societal decline that is inevitable under current trends may not be 10 or 20 years down the road, but upon us now.

Back in October 2008, I wrote a post (The Obama Bear?) raising the specter of a possible Obama effect on the stock market. I wrote:

If this were Hillary Clinton we were talking about, I would draw some consolation from Fisher’s observations [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.]. But Barack Obama is a Left-wing ideologue who is committed, on principle, to his altruist-collectivist-Marxist dogma. He…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.

The very point in late September, 2008, at which candidate Obama pulled ahead of McCain in the polls following the eruption of the financial crisis into public view marked the beginning of the collapse in the stock market. Though the market had been in a bearish mode for nearly a year, the relentless collapse of the last five and a half months has confirmed beyond any doubt what I had suspected last October…this is an Obama bear market. The failures of financial firms and the incompetence of a clueless Bush Administration were merely supporting actors. The stock market is motivated by future expectations, and those expectations were validated by future events. Since the inauguration, the downward spiral has only accelerated as the democrats have unleashed a relentless barrage of statist rage against America’s businesses, its most productive and responsible citizens, and the remnants of capitalism.

IBD is wrong on one key point…Obama is not oblivious, and the market seems to grasp it. While he talks about laying the foundation for future economic growth, that is just window dressing meant to keep as many Americans as possible off guard. The Obama-led democrat socialist express is intent on turning America into a fiefdom ruled by the God of Need that I warned about a month ago, thus guaranteeing their hold on power. That is the tipping point reached by every democracy in history unconstrained by individual rights protections, where the parasites reach the 51% level of the electorate and can loot the productive 49% minority by simply electing politicians to do the dirty work. This is the path begun under Franklin D. Roosevelt and now reaching its climax. This is the path to poverty, dictatorship, and economic ruin, as every collectivist hellhole in history has proven. The latest example, as if we needed another, is Hugo Chavez’s Venezuela. The American reports that ten years after his ascension to power, Venezuela is on the verge of just such a collapse.

But reality is impervious to any socialist’s claims that this time, his gang will make it work. The great avenger’s arrival is seemingly being signaled by the stock market. In the above-referenced post, I stated that “despite occasional rallies, we may be in for a long, painful slog like the 1966 to 1982 dead-market doldrums…or perhaps far worse.” That was 4000 points ago. Events are racing ahead at a dizzying speed, and we appear to be on the path to something far worse.

For decades, the steady growth of taxes and government controls over the economy have added a heavier and heavier burden onto the shoulders of American producers. But they have always managed to lead the economy upward anyway. But the tremendous and unmatched productive ability of the American people may have reached a breaking point where they are unable…or unwilling…to step up to the plate, this time.

To be sure, the suffocating ooze of government economic interference always did act as a discouragement to productive achievement, leaving untold $trillions in wealth-producing ideas and investments stillborn. But today’s pullback by the country’s entrepreneurs, businessmen, and investors may be more than just discouragement. There may be a new cultural force emerging behind this capital strike.

Tuesday, March 3, 2009

Playing the "Morality Card"

“You know, I don’t know when, when they decided to make a virtue out of selfishness.”

After the campaign speech in which Barack Obama took this slap at Republicans who criticized his economic and tax proposals, Dr. Yaron Brook of ARI commented:

The Republicans were unable to respond. The very word “selfishness” seemed to paralyze the GOP candidates and their surrogates-there was no principled defense of an individual’s right to his life, liberty, property, and pursuit of happiness.

As I have emphasized repeatedly, the battle for capitalism and freedom is primarily a moral, not a political, battle. There is simply no way that one can uphold capitalism without upholding its basic premise, individual rights…or man’s right to exist for his own sake. Since the concept of individual rights is a moral one, one must defend capitalism on the proper grounds. Without defending the morality of capitalism and exposing the immorality of collectivism in all of its forms, the future of America will feature the continued slide toward totalitarian socialism.

Dr. Brook raised an interesting possibility. While it is unclear as to whether Obama was taking an indirect slap at Ayn Rand (I believe that he was), Brook said that by shifting the debate to the moral sphere, he was playing to Objectivism’s strength. This, he said, presents an extraordinary opportunity for Objectivists.

Being the only movement dedicated to a moral defense of capitalism, Objectivists can leverage their small numbers into a major cultural influence in the years ahead. There are signs that this is beginning to happen. Here is some anecdotal evidence that some on the Right are beginning to understand the fundamental nature of the battle.

On the Larry King Live show, Ann Coulter told guest host Joy Behar what she thought of Obama’s “stimulus” package:

" it's not creeping socialism, it's galloping socialism and it's -- it's theft. It's immoral.

This -- it's shocking, the stimulus bill..."

In “the dueling press conferences of the two leading contenders for the Republican nomination for governor” in New Jersey, the Star-Ledger Editorial Board writes of one of the candidates:

Next up was Steve Lonegan, the former Bogota mayor and perennial opponent of state borrowing. In contrast to [Chris] Christie's calls for reform, Lonegan called for revolution. First to lose his head would be the taxman. Lonegan proposed ending what he termed the "immoral" [N.J.] progressive income tax with rates up to 8.97 percent and replacing it with a flat tax of 2.9 percent.

When asked by a reporter whether his plan would mean a tax increase for the working poor, Lonegan replied that that was the whole point. He wants everyone, rich and poor, to pay the cost of government. Asked if that means giving a break to the wealthy, Lonegan again said that was his point, and it would keep rich taxpayers from fleeing the state. "Eight-point-nine percent of nothing is nothing," he said.


Then there is the now famous “rant” of CNBC’s Rick Santelli against President Obama’s home mortgage bailout scheme, in which he declared that the government was promoting bad behavior and punishing responsible folks who will be left to pay the tab. While not explicitly using the term “immoral” to describe Obama’s plan, the moral overtones of Santelli’s passionate and animated commentary was indisputable. “I'm an Ayn Rander”, he told interviewer Jeff Poor.

In addition, Mitt Romney used the term “dangerous and immoral” on Fox News to describe Obama’s stimulus bill.

The stimulus bill, the graduated income tax, and the mortgage bailout are indeed immoral. They are altruism in political action…the sacrifice of the successful, the competent, the productive, the prudent, the self-reliant, the strong-to the failures, the incompetent, the imprudent, the irresponsible, the weak.

I obviously don’t know the full views these four hold on ethics, so I am not insinuating any implied connection or similarity to Objectivism. There are some obvious inconsistencies. Coulter carries water for the Christian Right, a leading exponent of the altruist ethics and, thus, is burdened by a fundamental contradiction in her ethical beliefs. Romney carries the baggage of his imploding Massachusetts mandatory health insurance scheme, which some Democrats are using as a model for their national ambitions. But they are right here, as is Santelli and Lonegan. Wittingly or not, they are all helping to elevate morality into the public debate.

If the “morality card” continues to emerge as a basic part of the Right's unifying opposition to the Left (which gets plenty of mileage out of the ethics of altruism) and becomes a significant element in the debate over Obama’s policies and, more broadly, on the government’s role in America’s life, it is bound to significantly raise Objectivism’s public profile. Ayn Rand shook the philosophical status quo to its foundations with her 1957 novel Atlas Shrugged, which provided the first comprehensive moral defense and justification of Capitalism. Objectivist intellectuals at the Ayn Rand Institute should see expanded opportunities to speak out, including Dr. Onkar Ghate who called Atlas Shrugged "America’s second Declaration of Independence".

That this is a positive development cannot be overstated. With America’s slide toward fascist socialism gaining impetus under the current leadership, this debate shift to the moral plane (if it catches on) could not have come too soon. Ultimately, the battle between individualism and collectivism…and, thus, America’s future…will be decided on the moral battleground. As Objective Standard editor Craig Biddle eloquently puts it:

As the politics of self-interest, capitalism cannot be defended with the ethics of self-sacrifice—nor can it be defended apart from a moral foundation (e.g., via libertarianism or mere economics). We who wish to advocate capitalism must advocate it explicitly on moral grounds. We must unabashedly explain to our allies and potential allies (i.e., people who are willing to think) that human life requires rationally self-interested action; that each individual has a moral right to act on his own judgment for his own sake, so long as he does not violate the same rights of others; that capitalism is moral because it enables everyone to act in a rationally self-interested manner; and that a mixed economy—in which no one’s rights are fully protected, and everyone’s rights are partially violated—is immoral because it precludes people from acting fully as human life requires.

We who wish to advocate capitalism must take the moral high ground—which is ours by logical right—and we must never cede an inch to those who claim that self-sacrifice is a virtue. It is not. Self-interest is a virtue. Indeed, acting in one’s rational self-interest while respecting the rights of others to do the same is the basic requirement of human life. And capitalism is the only social system that fully legalizes it. Grounds do not get more moral than that.

Do Coulter, Lonegan, Santelli, and Romney signal, at last, the vanguard of an emerging right wing moral counterforce to the altruist/collectivist/socialist forces that Ayn Rand half a century ago saw as the only effective means of reversing America’s inexorable drift toward statism? Obviously, a mere passing swipe at the Left’s policies is not enough. Playing the “morality card” must be supported explicitly and on principle in the same nature as Biddle’s statement above. Nevertheless, we are beginning to see some anecdotal evidence for hope, but we shall see.