It's Ayn, Not Anne
Tonight's commentary deviates from pension issues but can't be helped - too many headlines about new rules and regulations...
Whether you embrace her philosophy or disdain her work (and ignoring your feelings about her personal life), Ayn Rand remains a best-selling author, long after her death. A quick check of Amazon.com today reveals that Atlas Shrugged (Centennial Edition - Hardcover) ranks 133 with 974 of 1,660 book reviewers giving this 1200+ page novel a rating of 5 stars. The Fountainhead (Centennial Edition - Hardcover) ranks 6 in Literature & Fiction and 2,353 overall.
In "Why Do CEOs (Still) Love Ayn Rand?," BNET.com author Kim Girard writes that "Many executives are taking refuge in Rand's heroes today," believing that "she was right" in railing against "incompetent CEOs, federal bailouts, bloated government." Rand died in 1982 yet her prescient words describe much of what is happening now, twenty-seven years later.
With one power play after another to further socialize the U.S. economy, Ayn Rand must be rolling over in her grave. Certainly free market advocates (myself included) are taking it on the chin big time. I know, I know. There are those who think that deregulation was the culprit and further regulation is the answer. Alas, where does one begin?
- Banks around the world have long been heavily regulated so it is factually incorrect to say that the financial services industry was unregulated. Nothing could be further from the truth.
- If you accept the reality that banks have been heretofore heavily regulated, how do you explain mind-boggling losses, let alone support increased regulation as a panacea?
- What exactly is "smart" regulation and how does that differ from what I guess one would describe as "dumb" regulation?
- What problem has been fully solved by nationalizing private property? (I welcome readers' feedback here and invite you to drop me a line. Let me know if I can publish your comments or whether I should attribute them to an anonymous party.)
- In a truly free market (a theoretical construct at this point), who has the right and/or intellect to decide how much someone can earn or what constitutes an appropriate price at which two willing individuals trade? (Yes, I agree that there are many situations that preclude an unfettered exchange of information that would otherwise determine market equilibrium. For advocates of additional regulation, how do you net the costs of further impeding information and creating perverse incentives against projected benefits? How is an onslaught of bureaucracy meant to help Joe and Sally Consumer or BIll and Penny Investor?)
I could go on but I'll leave readers with my long-held view. Freedom is not free. When it comes to the proper governance of capital markets, self-interest should drive participants to carry out financial best practices, recognizing that the costs of implementation are far outweighed by the benefits of fair exchange. In a truly free economy, bad players would be recognized as such and lose business as clients, shareholders and vendors flee as fast as they can, seeking those who accept responsibility and strive to earn a risk-adjusted profit by providing a quality product or service. In contrast to pundits who avow the tragedy of the commons, capitalists counter that public ownership leaves no one properly motivated to take care of an asset and so it eventually deteriorates, being useful to no one.
About a month ago, I had a prickly discussion with my nephew. A prize-winning member of his high school debate team, he called me with questions. Apparently, his freshman economic professor had urged his class to enthusiastically support higher, "fairer" taxes on the "rich." No doubt Dr. "I'll Take Other People's Money Please" is thrilled with the just-published proposal to tax "wealthy" families in order to pay for government largesse. As I explained to my sister's son, why should initiative be punished? If someone works longer hours, takes calculated risks with his or her own money to start a busines, goes to school at night to improve skils, studies for a professional certification or otherwise retool for a new career, should this person be treated as a societal pariah? (By the way, as a former professor, I implore those in authority to engage young minds in a lively debate rather than push economic and philosophical dogma. Let them decide for themselves, regardless of the outcome.) Lest you say that the "rich" get unfair tax breaks, I concur but add that the current tax system is a gigantic mess (a view held by countless legislators who keep adding to the complex maze).
So there you have my soapbox speech for tonight. Some of my dearest friends couldn't disagree with me more. I count my blessings for the right to open discourse.
