Thursday, April 30, 2009

The Continuing Assault on Prudent Banking

On October 6, 2008…as the full, calamitous scope of the housing bubble-induced financial crisis was just beginning to emerge…I exposed its fundamental source. Referring to the popular movie classic It’s a Wonderful Life, I wrote:

The message of the movie is to attack the prudent, profit-seeking banker. It [the movie’s theme] 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.

For decades, George Bailey has ruled the corridors of power in Washington. Primarily through the policies of the liberal democratic party of Franklin D. Roosevelt, a whole network of government policies and regulatory actions evolved for the express purpose of turning the entire U.S. banking system into a giant Bailey Building and Loan Association. Prudent, resistant lenders were increasingly cajoled, pressured, threatened, and placed at a competitive disadvantage as the charlatans and quick-buck artists (borrowers included) rose to dominance in the industry…unleashed by the pressure and with the blessing of the political altruists.

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.

C.S. Lewis once wrote:

“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. [T]hose who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

What dominates the conscience of our tormenters is altruism, the fundamental source of the financial crisis. While the remnants of our constitution get shredded in the rampaging lawlessness of what George F. Will calls our “capricious and increasingly anti-constitutional government", George Bailey goes on wreaking havoc.

But politicians of both parties steadfastly refuse to reevaluate and question the network of housing and credit policies and the underlying moral root that are a prime cause of the crisis. Instead, the primary culprits…the liberal democrats…race ahead with a breathtaking and far-reaching expansion of statist control of our economy. The GOP, daring not to challenge or openly embracing the altruistic motives of the perpetrators, stands by in ineffectual opposition or outright complicity. Meanwhile, as our freedom slips away, the fangs of altruism sink deeper. Consider these three pieces of evidence.

* Banks that emerged from the financial crisis in healthy shape are being dragged down by government’s attempts to “rescue” the financial system. Wells Fargo is being damaged by government’s “sacrifice the strong to the weak” altruistic policies. The company’s Chairman courageously spoke out against some of those policies:

Wells Fargo & Co. Chairman Richard Kovacevich criticized the U.S. for retroactively adding curbs to the Troubled Asset Relief Program [TARP], which he said forced the bank to cut its dividend, and called the administration’s plan for stress-testing banks “asinine.”

When the U.S. Treasury persuaded the nation’s nine biggest banks to accept capital investments in October, it signaled the whole industry was weak, Kovacevich, 65, said in a March 13 speech at Stanford University in California. Even though Wells Fargo didn’t want the money, it must comply with the same rules that the government placed on banks that did need it, he said.

“Is this America -- when you do what your government asks you to do and then retroactively you also have additional conditions?” Kovacevich said. “If we were not forced to take the TARP money, we would have been able to raise private capital at that time” and not needed to cut the dividend to preserve cash, he said. (Emphasis added.)

* In an essay published in the Objective Standard, Richard M. Salsman of the American Institute for Economic Research wrote:

[Former President] Bush pledged to “use the mighty muscle of the federal government” (his words) to meet his goal of extending home ownership to “underserved” minorities, by pressuring or subsidizing lenders to lower credit standards, on the premise that “corporate America has a responsibility to work to make America a compassionate place.”

[The] Federal Reserve Bank has for years distributed a booklet to mortgage lenders—Closing the Gap: A Guide to Equal Opportunity Lendingwhich includes sidebar reminders that fines and jail terms await those found to be deficient in fighting “discrimination” by lending to the less-than-creditworthy. The booklet, still distributed today, derides as “arbitrary and unreasonable” such traditional credit standards as a 20 percent down payment (or loan-to-value ratio of 80 percent), an above-par credit score, a history of paying one’s bills on time, and a steady job yielding an income sufficient to make monthly mortgage payments.
(Emphasis added.)

* Lest anyone needs more evidence of the altruistic insanity embedded in our policy-making apparatus, consider this astonishing letter delivered recently to a small Massachusetts bank:

A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success.

The secret behind East Bridgewater Savings Bank's accomplishments is the careful approach of 62-year-old chief executive Joseph Petrucelli.

"We’re paranoid about credit quality," he told the Boston Business Journal.

That paranoia has allowed East Bridgewater Savings Bank to stand out among a flurry a failing banks, with no delinquent loans or foreclosures on its books, the Journal reported. East Bridgewater Savings didn’t even need to set aside in money in 2008 for anticipated loan losses.

But rather than reward Petrucelli's tactics, the FDIC recently criticized his bank for not lending enough, slapping it with a "needs to improve" rating under the Community Reinvestment Act, the Journal reported.
(Emphasis added.)

Only the morality of altruism can justify a “needs to improve” demand for avoiding imprudent lending. East Bridgewater committed the unforgivable sin of “putting profits over people”, to use the cannibalistic language of the purveyors of the sacrifice of the strong to the weak:

"There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area," the FDIC wrote in the CRA evaluation.

The impediment that did “limit the bank’s ability to help meet the credit needs of its assessment area” was its own rational self-interest. But need, according to the altruist morality, trumps reason, logic, justice, sound lending practices, the pursuit of profits…i.e., virtue. Declared one of the patron saints of the altruistic state, billionaire George Soros: “the public interest would dictate that the banks should resume lending on attractive terms,” but “this lending would have to be enforced by government diktat, because the self-interest of the banks would lead them to focus on preserving and rebuilding their own equity.” Indeed it would. But bank solvency is irrelevant next to “the public interest”. (Emphasis added.)

In a scene lifted straight out of the pages of Atlas Shrugged, the Soros principle is being carried out to the letter by the current administration and congress. In hearings held in February 2009, Rep. Barney Frank (D-MA), chairman of the House Financial Services Committee and one of the biggest enablers of the GSEs in recent decades, warned top bank executives against putting “their own economic self-interest ahead of a necessary government program,” and “urged” them to become more “willing to make some sacrifices,” by acceding to still further controls.

And according to Reuters:

U.S. Treasury Secretary Timothy Geithner said Wednesday he would consider forcing out chief executives of banks that receive government bailouts if they were not managing their businesses properly.

In an interview with CBS, Geithner said economic recovery depends on a financial system that effectively provides credit, and the government would hold companies receiving public aid accountable.

When asked whether he left open the option to pressure a bank CEO to resign, Geithner responded, "Of course. Of course."

When you consider Geithner’s threat within the context of the TARP funds being forced on healthy financial institutions that didn’t need nor ask for any “bailout”, America’s direction becomes clearer.

The market discipline that ultimately determines if a business is being run “properly” is profits, which are determined by how efficiently a business is run coupled with the satisfaction of its customers. No more. How well a bank meets the credit needs of something called the “economy”, as determined by government officials, will now be the determining factor.

Altruism means sacrifice, and nothing else. Where there is sacrifice, there must be something to sacrifice…success, prudence, ability, rationality, justice, freedom…at the alter of the God of Need.

“There are people who aren’t broke,” said [Orren] Boyle slowly, “you boys have no excuse for permitting all that need and misery to spread through the country—so long as there are people who aren’t broke.” (Atlas Shrugged, page 535).

Such is the perverse, suicidal mindset that drives our leadership. At a time when financial institutions desperately need to be liberated to pursue their self-interest and their profits, policy makers ratchet up the pressure on them to self-sacrificially expand their lending based upon need, while simultaneously shackling them with more controls, intimidation, and threats.

The race is on to devour the successful and the prudent, in a desperate attempt to prop up an economy increasingly strangled by a new central planning aristocracy. Capitalism and free markets are blamed at a time that they are most desperately needed. Calls for “shared sacrifice” grow ever louder as a cure for a sagging economy, with few willing or able to see the profound contradiction in that logic. “Greed”, the anti-concept designed to obliterate the virtuous, life-giving selfish pursuit of personal gain, is condemned as the cause of our troubles. Czars are being placed in power in Washington to control vast segments of the American economy, essentially placing a moratorium on private independent judgement.

We are witnessing today the naked essence of altruism played out on a national scale. The phony cloak of compassion has melted away, exposing its true cannibalistic nature. In the midst of a ferocious financial catastrophe brought on by need-based lending imposed by “the mighty muscle of the federal government”, all we get are attacks on the remaining solvent banks. It’s obvious we are witnessing the dead end of the creed of sacrifice.

Sunday, April 26, 2009

E. J. Dionne Correctly Equates Obamacare With Servitude

I love E.J. Dionne Jr., for he is quite open about the ultimate goals and methods of the enemies of the American Revolution…totalitarian socialism. He doesn’t explicitly advocate that, of course. But he does explain and uphold the process by which we will end up there. As he points out, the Edward M. Kennedy Serve America Act was made possible by the gradual “creative compromise” of the fundamental principles of a free society to the opposite…the idea of the citizens of a country as subjects with a duty to serve the state. It is logically consistent for Mr. Dionne to tie that concept into the fight for government-run medicine. In a Washington Post piece entitled Not Yesterday's Health Fight, Mr. Dionne writes:

Over time, certain ideas become irresistible. They start out as problematic. Later, no one can remember why.

Consider Tuesday's bipartisan ceremony at which President Obama signed the Edward M. Kennedy Serve America Act. Thirteen years ago, Republicans in Congress tried to kill Bill Clinton's AmeriCorps program. This year, Republicans and Democrats joined together to pass the largest expansion of service opportunities in decades. Tomorrow isn't always defined by yesterday.

Bear that in mind as you hear reports about this or that snag, controversy or disagreement over the effort to pass comprehensive health-care reform.

“Yesterday”, a country was founded on the principle that each individual has an unalienable right to his own life, with the freedom to pursue his own happiness through his own effort and only in voluntary cooperation and association with others.

Today, we are told to “Serve America”, a concept consistent with a Soviet Russia or a Nazi Germany or with any of the dictators currently enjoying the moral sanction of our president.

“Yesterday”, a country was founded on the principle that a government is the servant of its people whose proper function is to protect their unalienable rights to life, liberty, and property.

Today we are told that government’s role is of an armed extortionist whose power of legalized force is to be used to command insurance industry obedience to its dictates, or it will put them out of business. He writes:

The "public plan" idea is a good one, and the issue is important: If the government makes it possible for everyone to buy health coverage, one option among many should be a government-run health insurance plan akin to Medicare.

If the private insurers are right that the government would actually provide health coverage more cheaply than the private companies, why shouldn't that option be available?

But a “competition” between a “public” (i.e., government-run) plan and a private one misses a crucial distinction. Government has a legal monopoly on the use of physical force. No private citizen, no matter how rich, can forcibly compel another…otherwise, that person is a criminal. A private company must depend only on voluntary agreement with its customers, who are free to refuse to buy its product. A “public” company (or GSE—government-sponsored enterprise), on the other hand, is backed by the legal force of government, which can subsidize it through taxes, while setting legal restrictions on its private “competitors” through its tax and regulate authority…etc. To pretend that there is no difference between a government-run “insurer” and a private one is to say there is no difference between an armed mugger and his victims. Since the “public” plan is specifically designed to offer “affordable” coverage, it will necessarily require the force of government in some capacity to keep rates below market. (For a comprehensive discussion on the dangers of equivocating between economic and political power, I urge you to read Harry Binswanger’s essay, The Dollar and the Gun.)

Mr. Dionne believes this is fair, and brushes off private insurers’ who “think the public plan would undercut them in the marketplace.” But despite assurances to the contrary, that is exactly what happened with Medicare, which killed off the over-65 private health insurance market in short order (except for some fringe services not covered by the government-run plan). As openly acknowledged by Obamacare booster the New Jersey Star-Ledger, the purpose of any “public” (i.e., government) plan is to destroy private insurance.

The concept of people as sacrificial servants is fundamental to the drive to finalize government’s takeover of medicine. It is the implicit principle that has allowed the government to cripple the healthcare industry under a steadily growing mountain of controls, regulations, tax code distortions, insurance mandates, social welfare schemes masquerading as insurance, and attacks on the sanctity of contracts. The result is the current state of American healthcare… soaring costs and administrative expenses, an unsustainable and unjust burden on employers, $trillions in unfunded government healthcare liabilities, etc.

Human beings are not valueless specks in a collective whole, to be sacrificed at the whim of any state, king, warlord, chief, priest, ayatollah, or modern politician…as was the case throughout history prior to the United States of America. Each person is a morally independent being possessing unalienable rights. Those rights are guarantees to the freedom to take the actions necessary for the furtherance of his life, not an automatic claim on the earnings, products and services, or property produced by others. There is no right to healthcare or to any particular type of insurance product.

Today, America spends on healthcare nearly $8000 per capita per year ($32,000 per family of four)…nearly 90% of that amount represents people spending other people’s money! There is an alternative. Rather than his money being spent by government or employers, everyone should be free to use his own money for direct purchase of healthcare through some vehicle such as an HSA (Health Savings Account). A free market, which is the only economic system based upon individual rights, should be established as an alternative to the current semi-socialized system.

Under American principles, no one…neither private criminals nor government acting as criminal…has the right to force any individual to pay the healthcare expenses of another. Such programs as Medicare, Medicaid, and SCHIP should all be phased out and abolished, leaving individuals free to decide how they will provide for their own old age; when, who and how they will help others; and to raise and provide for their own children’s healthcare.

The third-party-payer system should be abolished, as should all insurance mandates (community rating, guaranteed issue, and benefits, which are really redistribution schemes masquerading as insurance). In addition, all state trade barriers should be abolished, creating a national market for health insurance.

The choice we face is not between the current system and a government-run healthcare dictatorship (by whatever name one wants to ascribe to it). The choice is between socialized medicine and a free market. Rather than establish a coercive state monopoly, we should leave healthcare providers and insurers free to compete for the consumer’s business. The unalienable rights of consumers, providers, patients, and insurers to contract freely with each other to mutual advantage should be the foundation of any reform plan. The government’s role should be limited to protecting those rights, such as through laws against fraud and breech of contract.

The individual freedom and personal responsibility inherent in a free market is the best and only moral path to widely accessible, affordable healthcare.

The history of American healthcare over the past 60+ years is a microcosm of the world depicted in Ayn Rand’s Atlas Shrugged…the saga of a society and an economy collapsing under the weight of ever-growing government controls and ever-shrinking individual freedom.

Mr. Dionne concludes with the following:

The biggest difference between now and the last time around [1994s Hillarycare] is the emphasis on creative compromise in place of creative obstruction. Public-plan advocates should stay at the table to keep things moving.

They should also remember the lessons of Tuesday's Serve America event, which, by the way, received scant media attention. That was sad, except for the fact that the media's indifference was a sign of how a once controversial idea has now won such wide acceptance. That acceptance, in turn, allowed for the big improvements in the program that Obama signed into law.

No, it is the lessons of Atlas Shrugged that should be remembered…and heeded.

Friday, April 17, 2009

On Doctors Who Support Government-Run Healthcare

In a biting editorial, the Wall street Journal documents the critical state of Republican Mitt Romney’s universal healthcare plan he imposed on Massachusetts. The journal stated;

In Massachusetts's latest crisis, Governor Deval Patrick and his Democratic colleagues are starting to move down the path that government health plans always follow when spending collides with reality -- i.e., price controls. As costs continue to rise, the inevitable results are coverage restrictions and waiting periods. It was only a matter of time.

They're trying to manage the huge costs of the subsidized middle-class insurance program that is gradually swallowing the state budget.

Like gamblers doubling down on their losses, Democrats have already hiked the fines for people who don't obtain insurance under the "individual mandate," already increased business penalties, taxed insurers and hospitals, raised premiums, and pumped up the state tobacco levy.

The Journal points to the deception socialists use to “sell” Americans on universal healthcare. A dictatorship is a dictatorship, regardless of whether one chooses to call it that. And slavery is slavery. And lying is lying. The Journal doesn’t use those terms, but;

The real lesson of Massachusetts is that reform proponents won't tell Americans the truth about what "universal" coverage really means: Runaway costs followed by price controls and bureaucratic rationing.

In the Opinion Journal Forum, Steve Brougham, MD, left two lengthy commentaries. He begins with these statements;

"Interesting article, medical insurance reform is key to fixing the system. Personally, I support the US developing a “universal” single payer system a la Canada and the UK."

One of the distressing facts about the political direction of American medicine is the large number of doctors who support some variant of government control. I’m not talking just about professional organizations like the American Medical Association, which have long been dominated by Left-leaning leaderships. I’m talking about rank-and-file doctors.

As a lay person, I have wondered about doctors who support some form of socialized medicine, such as the single payer system advocated by Dr. Steve Brougham. What would make a doctor want to sacrifice control of his career, his judgement, and his profession to the dictates of government bureaucrats wielding arbitrary powers? I suppose doctors that do have varied reasons…some innocent, some not. Here are a few of my suppositions.

Perhaps some doctors do not understand the free market alternative to our current system, and see total government control as an undesirable but necessary evil.

Perhaps some may want to take the intellectually lazy career path and avoid the rigors of the free market. They would rather come to work every day, picking canned, off-the-bureaucratic-shelf solutions to their patients’ healthcare problems in exchange for some guaranteed unit price from a central governmental authority. (This is what philosopher Leonard Peikoff identified as the “new bureaucratic doctors” practicing “assembly-line medicine”. See his essay “Medicine, The Death of a Profession” in The Voice of Reason, page 299).

Some may not like having to deal with patients who want to exercise their right to act upon their own judgement by demanding, say, a PSA test. They would rather deny him that right by imposing the “rational” dictates of some unknown central planner. This was something that concerned Dr. Brougham, who simply advocated establishment of a system of “evidence based medicine” as a means of “cost containment”. He is talking, of course, about “price controls and bureaucratic rationing”.

Much of the medical profession, I suppose, sees a government-run health care dictatorship as inevitable, and believes that the “practical” course is to make a deal with the devil at the expense of their professional integrity.

Some may be motivated by a desire to help those who cannot afford adequate healthcare, but would rather avoid the responsibility of deciding when, how, and in what capacity to extend charitable care to their indigent patients…by forcing others to foot the bill for their compassion through taxes.

There are also undoubtedly many doctors who are egalitarian ideologues who don’t like the fact that some people can afford to pay their own way and some cannot, and thus seek to impose “social justice” at the expense of actual justice.

Whatever their reasons, doctors who support state-run medicine should all recognize that by failing to defend their own freedom of judgement, careers, professional integrity, and rights, they are also selling out the rest of America…especially America’s best blood. Those of us who do not want to trade our independence and freedom for a free appendectomy or cholesterol pill will also be victims.

I can sympathize with Dr. Brougham with regard to such issues as tort reform. But with due respect, his call for government control is both immoral and un-American. Like it or not, doctors and other healthcare providers are on the front lines in the battle between freedom and authoritarianism in medicine. Those who side with the statists in calling for socialized medicine are not just forfeiting their own rights, but the rights of all of us as well, including those of their patients.

Sunday, April 12, 2009

How to End the "Hostage" Crisis

The lead editorial (Health care system holds us hostage) in the New Jersey Star Ledger’s April 9, 2009 addition recounts the heart-rending dilemma of Kia Moore. The Ledger writes:

The Camden mom, who has waited months to get her 20-month-old son Xavier a kidney transplant because of a squabble over insurance, said she felt as if "we're held hostage by the insurance companies, and the lawmakers are allowing that to happen."

The Ledger doesn’t explicitly say, but implies that the “squabble” is related to loss of a job. But that is really irrelevant to the fundamental debate.

“Stories such as these,” the editorial says, “are expected to soon take center stage as Congress debates President Obama's promise to reform the health care system.” People with real problems that tug at the heartstrings are always a convenient prop for statists seeking expanded government controls. The solution, according to the Star-Ledger, is to nationalize our health care industry.

I posted a strong editorial rebuttal on the Star-Ledger’s website.

Having crippled American healthcare with a steadily increasing, decades-long, stream of statist regulations, controls, and social "insurance" schemes, our government will now ride to the rescue of its own victims with a total government takeover. But no reform proposal is valid without a thorough examination of the destructive role that prior government interventions played in bringing about the problems plaguing today's healthcare system. Substituting government bureaucrats for insurance company bureaucrats will only turn us from semi-free "hostages" into actual hostages.

The solution to the problems begins with ending government interference in the insurance industry and restricting government to its proper role of enforcing laws against fraud and breech of contract, and mediating contractual disputes through the civil courts. The third-party-payer system, all insurance mandates, and all legal barriers to interstate competition among insurers should be abolished. The insurance industry of today is in essence a heavily regulated, government protected cartel, and is not indicative of what we would have in a free market. Perversely, insurance companies today work not for the consumer, but for the employer-- despite the fact that the consumer's (as the employee) own earnings pay for the policy. In a free market, insurers would compete directly for the consumer's business, and policies would be tailored to the interests of both insurer and insured, by voluntary agreement to mutual advantage. Just as with auto and homeowners insurance, job loss or change would not mean an automatic termination of anyone's health insurance coverage.

But the government's role is not to be examined. Instead, the problems it caused serve as a convenient rationalization for a massive power grab. The Editorial Board's utter disdain for individual rights and the rule of law is brazenly on display with this astonishing statement:

"Would nationalized health care destroy private insurance plans? If those plans deny people care because of cost and coverage restrictions, that's no great loss to the American people."

The employment of the power of the state to destroy a private industry is the hallmark of a dictatorship. Of course, the destruction of private health insurance has always been the aim of American welfare statists. "Insurance" schemes like Medicare, Medicaid, and SCHIP are designed to do just that, and are succeeding. The proposed Health Care Exchange will complete the job. The Star Ledger believes that living up to contractual agreements (cost and coverage restrictions) is no longer important. But the sanctity of contracts and the protection of private enterprise, which includes the customers who voluntarily patronize those businesses, are hallmarks of a society governed by the rule of objective law.

Of course, a denial of coverage based upon the terms of a prior contractual agreement (the health insurance policy) freely entered into by all of the parties is not a denial of care. The policyholder is free to pay out of pocket for treatment not included in the policy. Kia Moore’s plight is apparently related not to lack of coverage provisions in her policy, but to loss of the insurance due to job loss, something that would not have happened if not for our government-imposed third-party-payer system. In either case, a self-directed Health Savings Account would have greatly alleviated or eliminated the effects of policy limitations.

But voluntary contractual agreements that define the policy limits and enforced under the rule of law is to be replaced by government bureaucrats wielding the arbitrary power "to tackle costs and compare medical care based on how efficiently and effectively patients are treated". The immense loss of the individual's right to make his own healthcare decisions implied in that statement is breathtaking. But, according to the board, that loss of freedom is "no great loss to the American people."

Well, speak for yourselves, comrades!

Of course, the purveyors of central planning are desperate to prevent Americans from discovering the actual nature of a free market, or that a free market is the only economic system compatible with individual rights. The administration's ideological mouthpieces are dutifully attempting to shut down dialogue through such intimidation/insult-based rhetoric like referring to opponents as "fearmongers...bleating about the evils of 'socialized medicine' in Britain and Canada".

The stars are indeed aligned for real reform. Unfortunately, no real reform is indicated here...just more consolidation of control by the state. Real reform involves a recognition of the fact that today's problems in medicine represent a failure, not of freedom, but of statist government intervention. The only true reform would be to scrap those interventions and institute a free market, which means the protection of the rights of healthcare providers, consumers, patients, and insurers to contract voluntarily with each other to mutual advantage. Let providers and insurers compete directly for the business of the consumers of healthcare making self-interested decisions based upon their own needs, choices, and budgets...and the natural incentives of the free market will lead to falling costs and rising quality.

The problems in American healthcare have grown in lock step with the growth of government intervention. America currently spends some $7500 per capita per year ($30,000 per family of four and rising) on healthcare. Almost that entire amount represents third-party-payers spending other people's money. That money comes from all of us in a myriad of ways. We are "hostages" to insurance companies and HMOs because that is how the government set the racket up. Leave that money in the hands of the people that earned it through some vehicle like HSAs, and we will end the "hostage" situation.

The choice we face is not between a government-run healthcare dictatorship and the status quo, as the Editorial Board would have us believe. The choice we face is between being held hostage to government central planners, or taking control of our own healthcare in a truly free market.

Tuesday, April 7, 2009

"Think" Debate on Rand's Ethics of Self-Interest-2

The “Think!” debate on Ayn Rand’s Objectivist ethics, which I wrote about in February, took place as scheduled on March 2, 2009. As I stated then, and reiterate here, Professor Michael Huemer is a rarity—his critique of Rand’s ethical theory is based on a genuinely honest attempt to understand Objectivism. A link to the audio of the debate can be found at Noodlefood, the blog of one of the debate’s co-sponsors, Diana Hseih.

While I have not yet had a chance to listen to the debate, I wanted to post some thoughts based upon a lively discussion at Noodlefood. One can pretty much get the gist of the core argument through the blog post and the comments thread, although I obviously must reserve final analysis until I listen to the whole thing, whenever that may be. Ayn Rand’s view of ethics is complex, presenting a new concept of egoism. My analysis addresses one key aspect based on what is apparently Huemer’s primary objection to Rand’s ethical theory. Hopefully, the points I mean to convey are clear.

My following analysis is based solely upon the secondary sources provided at Noodlefood. All of the following quotes can also be found there. Also, all of my references to egoism specifically mean Rand’s version—rational egoism.

The basic argument Professor Huemer advances against Rand is this:

He knows that Ayn Rand and Objectivists don't think rights-violation is consistent with Objectivism. He made it very clear that he knew this, and so he was not misrepresenting what we think. His point was that we are wrong to think of this as a logical implication of egoism: if self-interest is our standard, then he doesn't see how, logically speaking, our self-interest alone could rule out exploiting/killing other people. That's not a misrepresentation, but a disagreement about whether our view has a particular logical implication.

I’ve thought long and hard about Rand’s ethical system, and it took a long time…many years, in fact…for the right mental connections to be made. But once they did, it seemed obvious why “exploiting/killing” others is not in one’s self-interest. Furthermore, it conversely becomes obvious why altruism is, in fact, the morality that must lead to predatory exploitation. While it is not my intention here to examine altruism, I will simply suggest for you to reverse the logic presented below to see why.

First, Heumer is wrong that self-interest is the standard for the Objectivist ethics. Man’s life and the factual requirements for his survival are. That is, man the individual, qua the individual. Egoism, in Rand’s conception, is a world view that applies to all individual human beings…past, present, and future. While egoism defines each individual’s own long-term happiness as his only proper moral purpose, it is not a self-centered egoism. It is not “my happiness is more important than yours”. Rather, it is “my happiness is of primary importance to me, just as yours is to you.” As Rand has said, egoism is not a license to do whatever one pleases, on the whim of any moment, regardless of the consequences to others (or to oneself, for that matter).

Once one accepts rational egoism as the proper set of principles (or values) to guide one’s life, it logically follows that this same concept must apply whenever one’s focus turns toward others. One necessarily projects one’s own code of values onto others, automatically. One might call this a reverse “golden rule”…Do not demand the sacrifice of the interests of others, as you would not have them demand the sacrifice of yours. Respect for the rights, values, and happiness of others is a natural consequence of one’s conscious, reasoned acceptance of egoism.

This leads to the question, why automatically? This is where Rand’s theory of the nature of the relationship between man’s conscious mind, his sub-conscious mind, and his emotions come in. Man’s sub-conscious mechanism is like a complex computer, which is programmed by his conscious mind. One’s explicit acceptance of a particular set of moral convictions becomes integrated into the sum of his knowledge, resulting in an automatic intellectual and emotional response with regard to relationships with others. The implicit (automatic) “feeling” an egoist operates on in his relationships with others is; since I have a moral right to protect and advance my self-interests, so to do others.

In this regard, it is important to keep in mind the role of the human conscience. One’s conscience is the powerful emotional faculty that stands as the guardian ready to block any actions that contradict one’s accepted moral values. Like all of one’s emotions, one’s conscience is well within the control of one’s rational, conscious faculty. If one adopts a proper code of moral values by reasoned analysis; one’s conscience will, thus, be programmed to give warning of any actual or impending conscious breech of one’s moral integrity. (It is important to note here that I am specifically referring to a moral code that is adopted with full understanding and by rational analysis. Moral values simply absorbed haphazardly will only lead to conflicting and inconsistent emotions and actions.)

A second error Dr. Huemer commits is to refer to extremely rare, dire circumstances in order to validate his claim that someday, somehow, an egoist must violate the rights of others to protect his own interests. Two examples cited are “killing an innocent person for a dollar” and “getting one’s pants wet in order to save a drowning child”. The professor can’t understand how self-interest wouldn’t ultimately lead to an egoist valuing a dollar over the life of a person, or a pair of pants over a child.

To begin with, Rand asserts that ethics cannot be discussed from the perspective of extremely rare events that few people will ever encounter. A moral code is a guide to normative living. What she called “lifeboat situations”…two people in a lifeboat that can only carry one--which person should be sacrificed?…are invalid as a criteria for determining proper ethics. The question of whether a person, in an emergency situation, should give up his own life for another or kill another to save his own tells you nothing about the proper moral principles that should guide normal human relationships. (See chapter 3, “The Ethics of Emergencies” in The Virtue of Selfishness, page 49.)

As to the two situations cited above, it must be remembered that Rand’s ethics rest on rationality. To determine what is actually in one’s self-interest…no easy task…one must first determine by conscious choice one’s own hierarchy of values. Then, he must act accordingly. Ethics presupposes values. Rational self-interest presupposes a consciously chosen hierarchy of personal values, with the most important values sitting at the top. What does one value more…a dollar or one’s life, a pair of pants or the life of one’s child? Those personal priorities must rationally lead to the same choices in relation to others, if one holds consistently to one’s principles. More-over, killing another for money is anti-egoistic in the extreme. It is the ultimate act of selflessness…i.e., dependence upon others. True egoism implies self-esteem and pride, both of which would necessarily have to be missing from the character of anyone who would sacrifice others to obtain his sustenance. An egoist is by proper definition a self-sustaining individual who lives by his own mind and his own effort. (For a good demonstration of how the exploitation of others results not from egoism but from selflessness, see the villains in The Fountainhead and Atlas Shrugged.)

In my discussion of the preamble statement of Professor Huemer, I wrote, “he…cannot conceive of moral selfishness, or of a virtuous egoist”. The corrupting nature of altruism runs deep. It is the primary roadblock to understanding Ayn Rand’s “new concept of egoism”. I know. I grappled with that corruption for years. Conventional ethical precepts hold sacrifice as the only moral absolute. This leads to a false choice…to sacrifice oneself to others (altruism), or to sacrifice others to oneself (the conventional definition of selfishness, which is really the flip side of the same altruistic coin). One must fully reject the ethics of sacrifice to clear one’s mind of the ethical fog engendered by today’s two-sided coin of altruism and conventionally defined selfishness. Rand rejects sacrifice as un-natural and inimical to man’s well-being and survival. The choice is neither to sacrifice oneself to others, nor to sacrifice others to oneself.

The concept of mutually beneficial, non-sacrificial relationships based upon self-interest is morally incomprehensible, if altruistic self-sacrifice is held up as the standard of the good. But that relationship is the logical end result of rational egoism. Rand called it “the trader principle”. The trader principle is an exchange between two parties in which each receives from the other a net gain in value, and it applies in both the material and the spiritual realms.

Quoting from Noodlefood,

[Professor Huemer] doesn't see how, logically speaking, our self-interest alone could rule out exploiting/killing other people.

And, it's a hard point to establish that egoism doesn't have this implication. Huemer's response (along with many other philosophers) to [Objectivists] would be: why should we care about whether we violate his rights? Why is it in our self-interest not to violate rights, or even to assist someone in an emergency? Huemer is correct that the answer to that question is not obvious. Indeed this was part of Onkar [Ghate's] point: because what's in our self-interest is not obvious, we need a science of ethics to help us discover it. (Emphasis added.)

To me it is now obvious why egoism and exploitation are mutually exclusive. It has been mentioned in the discussion that “reciprocity” (or what I called the “reverse golden rule”) is not enough to account “for how the interests of others fit into our self-interest [which] is probably the hardest problem for the Objectivist ethics”. The answer lies in what Dr. Ghate said about needing a comprehensive, scientific code of ethics. The problem is that being moral by conventional standards consists of putting other’s interests above one’s own. Performing a “good deed” means a donation of time or money, helping a stranger, being a “Good Samaritan”, etc. One wouldn’t cite personal, self-enhancing achievements as examples of good deeds, by today’s standards. Self-interest is considered either outside of the scope of morality, or outright immoral, thus leaving no moral guidance on how to live one’s own life. This, I believe, is the source of Dr. Huemer’s inability to grasp the Objectivist position that rights-violating actions clash with self-interest. He perhaps cannot fully grasp the possibility of a code of ethics derived not from some subjective source (society, personal whim, or God), but from an objective source--science.

Rand ended the separation of morality and science with her historic ethical discoveries. To accept and practice the Objectivist ethics means to accept the personal pursuit of happiness as the moral…which means, to accept that principle relative to all others as consistent with ones own basic code of values…which means, “the interests of others fit[s] into our self-interest” in the broadest sense. To see the morality in others is to see their personal value achievements, not their conventionally defined “good deeds” or sacrifices, and to never seek from others the unearned in matter or in spirit (This should not be construed as a rejection of voluntary charity, but that is another aspect of ethics).

Rand has given us something to guide us in the pursuit of our own self-interest. It is not a commandment to be accepted and followed on faith, but a scientifically validated code based on the objective facts of reality. And this is the crux of the matter. Rand’s ethical system must be studied and understood, not accepted at face value. Otherwise, one can easily come to the same confusion as Professor Huemer in not being able to separate self-interest from exploitation.

As a guide to action, egoism ties respect for the rights of others inextricably to our own self-interest. Our moral convictions define the very nature of our souls. To betray our moral convictions is then by definition a betrayal of our self-interest. Egoism makes the exploitation of others a violation of our self-interest, precisely because our moral convictions are our most selfish possession.

It is this that Huemer and other honest detractors fail to grasp. And yes, it is a major challenge to convey the concept of moral selfishness as an absolute. But that is exactly what is required to clear away today’s moral jungle wrought by altruism.

Thursday, April 2, 2009

God’s “Miraculous” Achievement--or Justice?…It’s Either-Or.

Recently a close acquaintance of mine was discussing the treatment she is receiving for a potentially devastating condition she suffers from called macular degeneration, which can lead to blindness. She described how immediately following commencement of the treatment, her eyesight improved measurably. She then proceeded to say how grateful she is to God for this "miraculous" treatment, describing how her minister told her that it is because God is watching over her. When I asked her "Don't you think you should be thankful to the scientists and researchers who actually created this new medicine?” she immediately said "Oh yes".

But it is the initial urge to give credit to "God", rather than to those who actually deserve the credit, that must be strongly challenged. With all due respect to this acquaintance, a good woman of 81, the mindset behind this line of thinking is one of gross injustice. It is not that those who subscribe to such religious dogma are necessarily unjust (my acquaintance was quick to acknowledge her true benefactors), but rather it is the mystical belief that God acts through individual human beings to create these products that is. The implication is that the scientists, researchers, investors, and companies who coordinate their activities are mere conduits for His good works and deserve no credit.

So, where did this "miraculous" treatment actually come from?

The treatment is called Lucentis, a revolutionary breakthrough that entered the marketplace in 2006. Developed through a joint effort between biotech company Genentech and pharmaceutical giant Novartis and marketed in the U.S. by Genentech, this incredible product stops the progress of the disease in 95 percent of the patients who receive it, while actually improving the eyesight in an astounding 70 percent of them.

A new drug typically takes at least 10 years and many hundreds of millions of dollars to bring to market. But it is the unrelenting drive and determination of actual people working under a social system of (relative) freedom…people of extraordinary ability, vision and courage…that make these medical breakthroughs possible. In other words, it is to the scientists, inventors, and researchers who work patiently and painstakingly for years to bring their theoretical ideas to practical reality that we should be thankful.

To brush off their heroic efforts as God's doing is to make a mockery of volition, reason, intelligence, ability, history... and justice. One need only consider the contrast between the Dark Ages, when mysticism ruled amid the abandonment of reason and freedom, and the Enlightenment-spawned Industrial Revolution, the product of reason and freedom. For thousands of years there was no treatment for this disease. Are we now to believe that God, having sadistically allowed untold thousands of people to go blind throughout history, has suddenly and on some inexplicable whim brought to man Lucentis? Would a "good and merciful" God act in so callous a fashion in regard to so devastating a disease as macular degeneration? Are we also to believe that God is deliberately withholding vital treatments for the many diseases, for which there currently is no cure, causing untold suffering and premature death? Why would any religious believer want to ascribe to Him such a cruel nature, or to worship such a being?

The questions posed above are not supposed to be asked... or answered. The standard response of a religionist who takes these ideas seriously would be some such evasion as "God has a plan" or "It's part of God's design", which of course no mere mortal can ever understand.

But it is of the utmost importance, I believe, to understand the exact nature and consequences of such a belief. Rooted in mysticism and collectivism, the belief in some “higher power” that directs and/or is responsible for men’s good works is inimical to human freedom and progress. This doctrine holds that there are essentially no differences between people... that people succeed or fail because of forces beyond their control (determinism)... that such attributes as ability, intelligence, self-motivation and other such qualities are of no essential relevance to human achievement. We are all “God’s children” who should all share equally in “God’s bounty.” This mysticism takes many forms, both secular and religious. Former Democrat House Speaker Dick Gephardt once said, in defense of compulsory income redistribution, that "those who win life's lottery [the successful and productive] should be forced to turn over part of their winnings [earnings] to those who did not [the lazy, the incompetent, the unlucky, the failure]." A statement of this kind is in principle no different from the belief that God is responsible for the good works of people. Both deny credit to the people of achievement.

Of course, mysticism is not necessarily synonymous with a belief in God. America's Founding Fathers, for example, were predominantly deists who held a supreme belief in the power of reason and individual self-determination. Deism is the belief that a Supreme Being did indeed create the universe, but that he is a distant God that gave man the tools he needs to survive and thrive but doesn’t interfere in man’s or nature’s affairs. Deism does not ascribe to the belief in miracles, organized religion, or the divinity of Jesus, for example, and may be looked upon as a way station between theism and atheism. Deism reached its cultural peak, and religion its Enlightenment nadir, around the time of the American Revolution and helped pave the way for the birth of a country that unleashed the creative energy of man’s individual mind. The history of the next 200 years is indisputable proof of the source of human technological advancement…the human creator, not a supernatural force. What all mystics…secular or religious…have in common, though, is a belief that each person's lot in life is predetermined or controlled by God or society or the tribe or the race...i.e., a denial of individualism.

The re-emergence of the power and influence of religion in the culture over the past few decades, its increasing penetration into the political realm, and its growing alignment with the collectivist Left means that the religious tenet that God, not actual human beings, is ultimately responsible for the material benefits we enjoy must be taken very seriously. It will become a potent new lever for the rise of socialist tyranny, if current cultural trends continue. If productive output is determined not by individual human attributes but by some "higher" power, then ultimately it is up to whomever claims to speak for this power (i.e., the state, the King, the Clergy) to "equitably" distribute, by force, the nation's (the collective's) output. Hence, socialism...i.e., tyranny.

Man is a being of free will whose primary means of survival is his rational faculty...reason. He exists in a universe that is independent of his consciousness and which is governed by absolute natural laws. The material requirements for his survival do not occur freely in nature, but must be discovered, invented, and produced by him. Each individual is an autonomous being who must choose to focus on the world around him; who must choose to think for himself and acquire knowledge; who must choose to develop skills necessary to support himself. Men will succeed or fail at these tasks mainly due to their own individual qualities of character. While individuals differ in regards to natural attributes and potentialities, the fact is that charactoralogical attributes within the sphere of each person's choice are the primary driving force within each of us...attributes like self-motivation and perseverance, dedication to goals, hard work, integrity, honesty, self-esteem and rationality. Whether one believes man's "creator" is God or nature, the facts of man's nature and the requirements of his survival are indisputable.

The statement about God made by my acquaintance and quoted at the beginning of this essay may sound innocent enough, and coming from her I know it was. But ideas have consequences, and will eventually find their way into the realm of politics...i.e., into the realm of force. Politics is the handmaiden of cultural ideas. It is not God’s whims that determine the extent of human achievement and thus his progress and well being. The uncontestable fact is that man’s spiritual and material well-being is solely a consequence of individual reason and productive work…if, when, and to the extent that the social conditions conducive to his nature are established. Those conditions are individual liberty protected by government. To the extent that the belief in the individual as the source of human wealth and progress is accepted by a culture, the result will be a just and free society. To the extent that a culture accepts the idea that a “higher power”…be it God or society…rather than individual effort is the source of human wealth and progress, the result will be a growing sense of entitlement, predatory exploitation of the productive, collectivist tyranny, and poverty.