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Tuesday, May 24, 2011

The "No Free Lunch" of Ayn Rand

This was posted in response to an Atlas Shrugged book review on Amazon.

I had characterized Rand's philosophy as essentially, "genius is really great, we should structure our society to make everything easy and cheap for them, and everybody else stays out of their way so they can do great things." One of the faithful just said that my interpretation was "idiotic." So I asked essentially if that was the best he could do and not be more specific. He then called my original comment a "tortured misinterpretation," and that I should address a specific Rand quote to provide some evidence.

I immediately went to the Galt speech, but before I was able to choose which juicy item I was going to post, someone else responded with a doozy which hit the nail right on the head:

"The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the `competition' between the strong and the weak of the intellect. Such is the pattern of `exploitation' for which you have damned the strong.

We required that you leave us free to function - free to think and to work as we choose - free to take our own risks and to bear our own losses - free to earn our own profits and to make our own fortunes - free to gamble on your rationality, to submit our products to your judgment for the purpose of a voluntary trade, to rely on the objective value of our work and on your mind's ability to see it - free to count on your intelligence and honesty, and to deal with nothing but your mind. Such was the price we asked, which you chose to reject as too high. You decided to call it unfair that we, who had dragged you out of your hovels and provided you with modern apartments, with radios, movies and cars, should own our palaces and yachts - you decided that you had a right to your wages, but we had no right to our profits, that you did not want us to deal with your mind, but to deal, instead, with your gun. Our answer to that, was: `May you be damned!' Our answer came true. You are."
"Neither [Rearden] nor the rest of us will return until the road is clear to rebuild this country-until the wreckage of the morality of sacrifice has been wiped out of OUR way [emphasis added]. A country's political system is based on its code of morality. We will rebuild America's system on the moral premise which had been its foundation, but which you treated as a guilty underground, in your frantic evasion of the conflict between that premise and your mystic morality: the premise that man is an end in himself, not the means to the ends of others, that man's life, his freedom, his happiness are his by inalienable right." -- Atlas Shrugged

The Rand disciple then asked what I objected to, to which I responded:

What I object to primarily is the implication that these wannabe-gods are operating in a total vacuum. Apparently, no credit at all is afforded the peons ("starving in their hopeless ineptitude") whose actual toil is in fact instrumental in implementing the deity's grand visions. And no responsibility is acknowledged whatsoever to insure that the little guys (or their customers, for that matter) aren't simply taken complete advantage of by these superior beings. And of course, we see repeatedly in reality, that the "superior intellects" are often not above taking full advantage of the inferiors over which they lord their paychecks. To then take full credit for providing apartments, movies and cars while they enjoy mansions and yachts makes me think of the religious con men that drive Rolls Royces paid for by the hard-earned contributions of their congregations.

As if those paragons of industry don't need the rest of us to keep the engines of their successes operating. It's laughable, really that they could go off and do better by themselves-- or would be laughable, if so many out there haven't bought into that particular fantasy.

Frankly, I think the opposite story of Atlas Shrugged would be far more interesting. Let all the "lower class" worker peons leave and leave it all to the ubermensch, and see just how far they get without the armies of paid grunts to pull it all together.

But we all live in society together, with each others consent. Louis XVI forgot that, to his regret. I’d say it’s best to think more like a team player, than to try to figure out how much you can get out of the system for nothing. The tax-evader rich guy at the top is in reality, the equivalent of the welfare mom, just at the other end of the spectrum where the numbers are larger. The only difference is, the guy at the top can get the government to make his tax evasions legal, while the rest of us cannot, and have to make up the difference.

As an example of some of the things overlooked here-- pensions were paid workers in order to attract them to jobs, because the competition in the free labor market required it. Employers could have instead paid higher wages, but providing a pension is a worthy idea-- and in fact, might be more cost effective for the employer—who invests less money than they might otherwise have to pay out in higher wages, given the fact that the pensions won’t be drawn upon right away and the investments will grow over time. Pensions weren’t created to “redistribute wealth,” they were a more cost effective way to competitively provide more benefits in lieu of higher wages. Pensions can be seen as delayed wages, agreed upon as a condition of the employment contract. To renege on it later is bald-faced theft. Did the genius manager at the top screw up in setting up a viable investment plan for the pensions? Maybe so, but that doesn’t make the little guy at the bottom who needs that pension check the one that should suffer for it. And maybe reality means they all have to compromise, but after it’s all over if the little guy is homeless and the guy at the top is still living in a mansion and enjoying his yacht, I’d say the compromise was inequitable.

Social Security and Medicare have similar characteristics, and the government has a vested interest in encouraging people to prepare for their old age so that they don’t end up either street-urchins, dying in the street, or as an extra load on the healthcare system, not being able to pay their way. But people don’t always estimate well in that regard, and when the economy takes an unexpected downturn can find themselves unprepared. Who let who down in that case? You have a vested interest in a society full of people that are healthy and not homeless, even if you don’t recognize that fact. Providing a safety net is in fact an employment benefit, and is one of the benefits of working in the US. Pulling the plug on it is every bit as much a theft as the pension case.

Taxes pay for common services that we all need, no matter how much money you make or how stellar your performance, if you use roads, you need to help pay for them, and everyone uses roads in one way or another, if you eat food chances are it got shipped to your local market over roads. And those common services are getting more expensive for a variety of reasons, some of which are related to major gaffes made by those at the top while they were accumulating all that wealth and creating all those jobs. One of those common services is fighting wars—is not the protection of your mansion and yacht by crack military troops worth more than it is to the guy who has a tiny little shack in the bad part of town?

And there exists a segment of society that needs help, that simply can’t do it on their own. Sure there are some lazy slobs that would take advantage of a system to help them, but perhaps that brilliant intellect can figure out a way to handle those without impacting those who are really in need. Rather than penalize everyone for a few miscreants, why not design a system better able to detect or withstand them?

When people are young they may incur large tuition debts with the idea that they will eventually make enough money so that it makes financial sense. Well, it doesn’t always. I have a friend who’s a specialist MD. She has many of the same debt problems the rest of us may have had at one time or another, though her numbers are proportionally bigger. She makes more money, but got herself into bigger debt. Rent on doctors office space is very high, equipment is expensive, insurance, yada yada… Ok, so it may be poor planning, but that’s not particularly uncommon, no matter how much you make. But when the numbers are bigger it makes sense that the sacrifices must be as well. If the little guy at the bottom is asked to sacrifice a big chunk of his paycheck because the economy is bad or our debt is out of hand, why shouldn’t the wealthy guys at the top be expected to sacrifice a more proportional amount as well? It’s said that the 14+ trillion dollar debt amounts to about 40K or so per person. So we could all pay off the debt by tossing in our 40K. But should the little guy who’s making less than that be expected to pay the same as the guy with the mansion and yacht? I don’t think so

When the economy gets in trouble, you rich guys may just have to move into a smaller mansion and downsize your yacht. It’s part of being a team player in a society that you otherwise would seem to feel no compunction to pillage to your hearts content, as if you have no responsibility to the rest of society at all.

Again, it’s not about redistributing wealth, it’s about PAYING YOUR FAIR SHARE, which is a larger amount if you have reaped larger benefits from taking advantage of what the system and society has to offer. You are not operating in a vacuum, where only you are responsible for all of your success. The system is not just YOU, and the idea that if you all went away it would come crashing down is, in a word, “idiotic.” Your part of a team that includes all of us, whether you like it or not.