Month: May 2011

Age of Rand?

by Helping Families Flourish, posted in Flourishing Article

First published in Flourishing May 2011.

Ayn Rand, born Alisa Rosenbaum in St. Petersburg, Russia, on February 2nd, 1905, was one of the 20th century’s foremost voices for human freedom.  Some of you, no doubt, have read some of her work.  Recently, her most famous work, Atlas Shrugged, was adapted for the silver screen, and Atlas Shrugged, Part 1, was released to more than three hundred theaters in eighty U.S. cities on April 15.  Rand was not just one of the 20th century’s most famous and articulate champions of freedom, she was also the most misunderstood and most slandered.  Since I’m a great fan of her work, and having just seen the movie, I want to share with you a little of what I know about Ayn Rand.

After living through the Bolshevik Revolution, and the economic chaos and political repression that ensued, young Alisa fled the Soviet Union for the United Statesin 1926.  Already conversant in French and able to get around in English, she began her career in the movie industry working for such notables as Cecil B. De Mille.  She later became an accomplished playwright, most famously authoring The Night of January 16.  (My sweetie played Magda Svenson in the Beloit High School Junior Class Play, c. 1963.)

In 1936, Ayn Rand’s first novel, We the Living, which she said was the nearest to an autobiography as she would ever write, was published by McMillan.  It has since sold more than 3 million copies.  Remarkably, in 1942 it was adapted for the movies inItaly.  Though it was censored only a few weeks after its introduction, a digitized version is now available with English subtitles.  I own the 2-DVD set and it is a beautiful film, which one would expect, since it stars Alido Valli and Rossano Brazzi, two ofItaly’s movie legends.

Ayn Rand’s first financially liberating success came in 1943 with the publication of The Fountainheadby Bobbs-Merrill. The book has now sold 6.5 million copies.  Fourteen years later, Atlas Shrugged was published by Random House, championed by that firm’s Chief Executive, Bennett Cerf. Atlas Shrugged has sold over 7 million copies; more than 500,000 in the last year.

The success of her novels enabled Ayn Rand to devote the remainder of her life to building a system of thought – a philosophy – that she would call “Objectivism”.  She wrote and edited several periodicals containing philosophical essays, and cultural and political commentaries.  She played a critical role developing new advocates for laissez-faire capitalism, including, as you may have guessed, moi.  Her influence on American culture has, likewise, been profound. A 1991 survey by the Library of Congress and The Book-of-the Month Club placed Atlas Shrugged second only to the Bible in influence among American readers; admittedly and appropriately, a distant second.

Ayn Rand owed much of her success to the power and directness of her writing style. She was a master of reducing an idea to its clearest and most effective formulation.  For example, she wrote that, “If some men are entitled by right to the products of the work of others, it means that those others are deprived of rights and condemned to slave labor.”  Or, when challenging the view that human perception is unreliable, because it’s limited by the nature of our sensory organs, she would write satirically, “Man is blind, because he has eyes — deaf, because he has ears.” 

Ayn Rand called big business “America’s persecuted minority”, so she is often characterized as a naïve apologist for crony capitalism; but nothing could be further from the truth.  She vehemently condemned the “type of businessmen who sought special advantages by government action.”   

The most controversial aspect of Ayn Rand’s philosophy, ethical egoism (not to be confused with psychological egoism), is also one of the most misunderstood. The point of her egoism was not to advocate the pursuit of one’s own interests at the expense of other people.  Rather, she rejected the model of conflicting interests. She rejected not only the subordination of one’s own interests to those of others, but also the subordination of others’ interests to one’s own.  Though her ideas were original, in practice they were not a radical departure from what most of us regard as mere “common sense”.  In everyday parlance, she was an advocate of “win, win”.

Ayn Rand identified the roots of the 18th century Age of Enlightenment—the philosophical movement that led to America’s founding—in the rediscovery of Aristotle by St. Thomas Aquinas.  She always insisted that Aristotle was the greatest of all philosophers, and that St. Thomas Aquinas was the second greatest, her own atheism notwithstanding. For Ayn Rand, as for Thomas Jefferson and others among our founders, the Aristotelian recognition of the fact that rational human interests, however diverse, are naturally harmonious was (and is) the proper moral foundation of human relationships and a free society.  Preserve that thought.

Human progress is often driven by creative and controversial people working outside of the so-called establishment, and Ayn Rand was certainly that.  But, her philosophy is in many ways an extension, clarification, and moral defense of the principles that guided our founding fathers; and thanks to the popularity of her novels, her inspiring vision of the majesty of the human mind, and her defense of the ethical necessity of human liberty Ayn Rand has already affected and improved the lives of millions.  I think it’s very likely that in fifty years her ideas will be the foundation of America’s predominant secular philosophy.  Unfortunately, I won’t be there—well, I might not be there—to see how it all works out.  mh

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Of Pawns & Kings

by Helping Families Flourish, posted in Flourishing Article

First published in Flourishing May 2011.

Louis XIV was King of France for seventy-two years, and though he was not the worst of Kings, he did lead France to the brink of bankruptcy through his lavish and self-congratulatory spending. Mark Twain famously said that history doesn’t repeat itself, but it rhymes.  Indeed.

We Americans are about to begin a national discussion of that vast, unfunded taxpayers’ liability known as Social Security.  (The discussion is bound to include all entitlements, but for the sake of simplicity, I’m focusing on Social Security.) For that discussion, we can thank President Obama’s National Commission on Fiscal Responsibility and Reform1.  Even the Social Security Administration confirms that sooner is better than later. (See inset p.2)

For the better part of seventy-five years, most people have believed that their Social Security contributions were being set aside for their retirement.  Not for one second did my father believe that his pension checks came from his children’s pockets. But in fact, they did.  The money he had deposited into Social Security had been spent for programs and projects designed to assure an abundance of goodies to a mixed assortment of voting blocks. That process continues unabated and enhanced today.  And, in that process and others of equal deception, we have become a collection of political pawns, bribed and manipulated with our own money.  

Unlike in my father’s time, virtually everyone knows today that there is no Social Security “lockbox”.  There is, instead, an unfunded liability awaiting the American taxpayer of this and succeeding generations in excess of $7.7 trillion2.  That’s just for Social Security, which is itself dwarfed by the unfunded liabilities of Medicare, etc.  I know what Dad would say about that: “Holy smoke!”  But, he was a better man than I am.

I don’t need to tell the readers of this newsletter that one of the most important motivations for private saving and investment is the need to provide for—you’ll forgive the anachronism—old age.  As in my father’s case, one “unintended consequence” of Social Security has been to create the illusion of saving and to reduce the apparent need for disciplined investment in IRA’s, 401(k)’s, and other retirement savings opportunities. Not surprisingly, the rate of saving in the United States has declined precipitously over the past seventy-five years.

The Social Security system has not only served to undercut the motivation to provide for old age and retirement by means of private saving and investment, there is a second “unintended consequence”.  It has also impaired the average American family’s ability to actually do so.  OASDI withholding (7.65% of wages and salaries) is nearly double what the average family spends on gasoline3; and I’m not counting employers’ contributions to Social Security.  Each of these two “unintended consequences” were entirely predictable—and were predicted by free-market economists4—but it gets worse.

Ask yourself this question:  “What if the money paid into Social Security had actually been invested in real, physical capital assets—American business enterprises, for example—instead of taxpayer-backed IOU’s?”  The answer is that in a relatively free economy, that investment really would have been the source of future financial security, just as private savings and investments are today.  Instead, three generations of King Louis wannabes have created a promise to levy unfathomable taxes on future generations, while they consumed the Social Security tax revenue that should have gone into saving and investment.  Now, the future has arrived; and it’s us.
At the most basic level, the coming debate about entitlement reform will serve to highlight a conflict of philosophies.  America was founded on the philosophy of Individualism; of the unalienable right of each individual to pursue his own happiness in his own way, asking only that he use neither force nor fraud in that pursuit.  Social Security—and Medicare, Medicaid, and Obamacare, as well—are premised upon the philosophy of Collectivism or Social Contract6; of subordination of the individual’s freedom to a presumed and so-called “greater good.” 

The scarcely concealed premise of collectivism, though, is that the average individual is too stupid or too lazy to plan and manage his own life; and therefore, he must rely on the government to rescue him.  In practice, we now know, when the power of government intervenes between the real providers—the people whose work, savings, and investments are ultimately to be taxed—and the receivers, “to rely” becomes “to demand”.  This is amply illustrated today by the European PIIGS (Portugal, Ireland, Italy, Greece, and Spain).  Are we next?

The first step in any recovery is to recognize the problem.  With the report and recommendations of President  Obama’s National Commission on Fiscal Responsibility and Reform, we can now see clearly that the consequences of lavish entitlement programs—not just in Europe, but here, too—are the eventual economic destruction of the nation through the undermining of real saving and the compounding of the national debt.  The bond rating agencies have issued their warnings, too.

There is also, I’m sorry to report, the potential for geriatric holocaust.  That will be the result when millions of elderly people—the Baby Boomers, most likely—without savings of their own, wake up to find that their children and grandchildren have grown tired of supporting them; or are simply unable to do so.

So yes, just as the doomsayers tell us, we do face a growing debt threat of runaway inflation and/or worldwide deflationary collapse. But, the doomsayers underestimate the American people.  We’re only beginning to see the nature of the game that’s been played by our King Louis wannabes, and we don’t like being pawns.  Moreover, we won’t submit to the indignity of stealing our grandchildren’s future.  We’re better than that!

The history of American free enterprise informs us that for every human need and desire, a free-market solution will sooner or later emerge, that is better and cheaper than anything that government can provide. And, with the report of the National Commission on Fiscal Responsibility and Reform to prompt and guide us, we’ll soon begin the tortuous process of dismantling and replacing Social Security, Medicaid, Medicare, Obamacare, and other bankrupting entitlements with free-market solutions.  In that process, which will take a generation or more to complete, we’ll reignite the entrepreneurial flame that defines America, and put every adult citizen back in charge of his or her own life.  ….Now, I can hear someone asking, “But, what if…?”

Call me an incurable optimist, or just call me stubborn—I see myself as a student of history: If the federal government defaults on its debt, or if the Federal Reserve creates a runaway inflation, or both;  history tells me that I will—more than ever—want to rely on myself, and on the earnings and resources of America’s great companies, to secure my livelihood and protect my family’s future.  mh

  1. http://www.fiscalcommission.gov/
  2. http://www.heritage.org/budgetchartbook/unfunded-liabilities-entitlements
  3. http://www.creditloan.com/infographics/how-the-average-consumer-spends-their-paycheck/
  4. Man vs. The Welfare State, Henry Hazlitt, Arlington House, 1969.
  5. Leviathan, Thomas Hobbes, 1651.