etudiant, you said,

"When the Fed raises or lowers interest rates, do they "create wealth", by the resultant economic activity?"

What they do is violate rights when they do that. In Rands laissez faire capitalism, there would be no governmental control over interest rates in the first place, the government would also have no control over the money supply either. This means no inflation, manipulation of currency. Rand is also for the gold standard.

The conversation has drifted a bit from the point of the thread, which was to say that Ayn Rand's ideas actually do offer something of value in assessing how the private sector can help to address climate change. But that's okay, because we have moved on to the related important question of what Rand actually said and how she is interpreted, which can be two different things.

My impression is that so-called Objectivists (Exhibit A The Koch Bros) take Rand’s argument of support for private enterprise and then consider it a free pass regardless of facts. There is no doubt there is a political class war between representatives based on the rich and on the poor, and Rand has naturally been enlisted on the side of the rich. But we have to remember her focus on facts and evidence. When her work is used for propaganda, it can readily be distorted, especially where advocates have little interest in facts, as in the petrochemical industry attitude to global warming and CO2 emissions.

One thing at issue here is who owns the wealth from work. Atlas Shrugged is a polemic against the theft of value by people who don't deserve it from people who produce it. She argues against the Marxist labour theory of value – which holds that input of effort produces surplus – by saying that mind is the key to value. When need becomes the criterion for distribution, incentives are corrupted. This is a strong argument, but very complex.

My favourite example of the complexity of wealth creation and distribution is the Gospel of Matthew Chapter 25, where the capitalist parable of the talents (to those who have will be given) is juxtaposed with the communist Last Judgment (find Christ among the least). It seems to me that Jesus is saying that works of mercy can only be funded by economic growth through capitalist incentive.

In the case of CO2 emissions, there is a problem in restricting value to the product of ideas. When a business treats natural resources as a free gift, eg air and water, it is actually stealing something that belongs to everyone. In principle, the cost of production should include a contribution for the externalities that are destroyed. This is where government regulation and taxation to protect public property is essential. I am not sure if Rand even acknowledges there is such a thing as public property. Her focus is purely on private property rights, because she sees these rights trampled by neo-communist ideology.

The objectivists who use Rand to advocate privatisation of all wealth are misguided - common wealth has to be sustained as a public good. However, sustaining common wealth relies on private ideas. Rand was right about that.

To get back on topic, I will gather up some information about the application of Rands ideas to climate change, environmentalism. Give Objectivist perspective on it. Just allow me some time to gather it up. Whether or not one agrees, the important thing for me is to present that perspective in doing this. Get Rand right, get her ideas right, what she says right, is of primary importance in discussing her, in agreeing or disagreeing with her.

Much has been written applying Objectivism, Rands ideas to environmentalism, many op-eds here:

http://www.aynrand.org/site/PageServer? ... mal_rights
http://www.theobjectivestandard.com/exp ... or-die.asp

Welcome Mr. A! You appear to be a true believer/Objectivist if you will which should benefit the discussion as stated in your last sentence.

Mr. Tulip said My impression is that so-called Objectivists (Exhibit A The Koch Bros) take Rand’s argument of support for private enterprise and then consider it a free pass regardless of facts.

Yes, the starting point of Objectivism is literally "A equals A". That doesn't make a lot of common sense other than to broadcast the message that Objectivists stand on a certain principle and couldn't care less about the consequences because the starting principle is Infallible and therefore absolutely nothing can be compromised.

Mr. Tulip said When a business treats natural resources as a free gift, eg air and water, it is actually stealing something that belongs to everyone.

Yes, I'm sure our environment would be much healthier if we had recognized this 100 years earlier than 1960.

LanDroid, the starting point in Objectivism is not A is A, it is the axiomatic concepts of existence, consciousness, identity. They form axioms: Existence exists, consciousness is conscious, A is A.

Interbane wrote:

Mr A wrote:Why do you say that there MUST be. By what standard? Do you think such sacrificing is moral?

By the standard of fairness I say there must be policing of an economic standard. So, it's not a MUST unless you want the system to be fair.

Do you think such sacrificing is moral?

What are you labeling a sacrifice? Compulsory taxation with the intent of redistribution? You'll have to connect the dots between what you're saying and the definition of the word. It's not a sacrifice.

We are mixing the environmental questions with broader issues for Rand, but that is fine by me. The climate issues provide an interesting window into What Would Ayn Do?

The relation between morality and sacrifice is a core theme of Atlas Shrugged. Rand argues that conventional religion is based on the idea that giving is the key to goodness, but that this sacrificial approach has pernicious effects. If people become used to relying on charity, they lose initiative and skills, and become dependent on the giver.

As well, excessive taxation destroys people’s work ethic, especially where progressive tax scales lead to a high effective marginal tax rate, because a shrinking proportion of any extra income is retained. Libertarians such as Rand argue that allowing individuals to decide how to spend their money is better than the tax and spend state model, except for clearly defined public goods. This all raises the problem of how we define public goods, and how we assess the counterfactual. The USA has much lower taxes than the social democratic countries of Europe, and libertarians argue this low tax approach is key to freedom, and to incentive for economic growth.

Religion has always been focussed on sacrifice, with the idea that giving up something important to us enables atonement. So Jesus is presented as the ‘once for all’ sacrificial offering, making peace by the blood of his cross. Christianity encourages self-abnegation, with the idea that salvation involves losing your own life. This argument has emotional appeal, based on the intuitive premise of ‘no pain no gain’, but it is far from clear if it makes rational sense.

On climate change, the sacrificial argument is that we should use less energy as a matter of moral principle, that people should sacrifice their affluent lifestyles for the good of the planet. This environmentalist view leads to opposition to economic growth, and to the somewhat contradictory green ideology that we should both live more simply and reduce world poverty, as though economics is a zero sum game.

A result of this moral view is that climate management methods such as geoengineering, which hold out the possibility of stabilizing the climate in a way that is not based on incentives for lower energy use, are condemned as incompatible with the principle of moral sacrifice. Rand's argument, especially in the speech by John Galt which presents the core philosophical argument of Atlas Shrugged, is that material creativity is the basis of human advancement, so moral sacrifice stands condemned as incoherent and wrong, as based on emotion rather than reason.

Rand’s views on sacrifice make sense, because constraining the most productive individuals conflicts with the principle of leadership, that pioneers and innovators should be celebrated as people who make life better for everyone. Hank Reardon, the steel magnate hero of Atlas Shrugged, is her prime example, a man who creates abundance for all by focussing purely on his own self interest.

Rand's capitalist philosophy accords with the observation by Adam Smith in The Wealth of Nations that businesses do not provide goods and services for charity, but for their personal advancement, and yet the invisible hand of the free market is the most efficient, effective and ethical source of wealth for all, with leading entrepreneurs providing a rising tide that lifts all boats. A dynamic capitalist economy requires a government that minimises its role, allowing free enterprise to provide jobs, goods, services, customers and models. Every dollar of our own that we sacrifice in tax reduces the dynamism of the economy, except when it is spent well by government on services that are needed to enable the market to operate better. Sacrifice is sand in the gears of freedom.

Again on climate, my own view is that capitalist incentives for profit have to be enlisted to provide scalable sustainable solutions to global warming. New technology has to be commercially competitive against fossil fuels in order to mobilise global change. The best candidate, in my view, is large scale ocean based algae biofuel. Combining the energy of the sun, wave, wind, tide and current through industrial algae production holds open the prospect of global economic transformation to a new economy that will combine ecological sustainability with abundant wealth.

Do you think it is right for someone to take what another has earned, and give some of it to someone that has not earned it?

No. Do you think your question embodies my position? Do you think financial CEO's "earned" the king's ransom they received after their role in the meltdown of 2008? How about the ones who received such bonuses after firing many employees for the sake of 'keeping the company afloat'? No, MrA, they did not earn that money. If you think they did, please explain what you mean by "earn".

The role of Wall Street in enabling the global financial crisis shows the dilemmas in objectivism, which can’t be simply reduced to a class war argument that Rand is a shill for the rich. Hayek’s The Constitution of Liberty makes the case very clearly that a libertarian state would be based purely on rule of law, with strong contestable processes for regulation based on precedent and predictability. This is what the US is missing in allowing business to corrupt government.

You can’t blame Rand for the misuse of her ideas. The Geckos of Wall Street are more like James Taggart, the weak corrupt fool who relies on buying politicians for his prosperity, than Hank Reardon, the moral businessman who seeks to profit from his own productivity.

The benefit of giving to someone who hasn't earned it is that they will SPEND it. If you want to stimulate the economy, don't give tax breaks to the rich. Give it to the bottom feeders who will spend every penny of it. If you give it to the top, history has indicated that the economy will suffer. This makes sense, as the extra money will be banked, rather than spent.

That is a very confused economic analysis. Giving money to someone who hasn’t earned it makes them dependent on the giver, destroys their incentive and initiative to work, degrades their skills and employability, and in the worst case produces economic stagnation and intergenerational poverty. Welfare is poison.

Saving is better for the economy than spending, because saving provides resources for investment, with funds retained and grown. The best strategy for economic growth, for a bigger pie that everyone can be part of, is to encourage investment rather than consumption. Stimulating the economy through a sugar hit is based on Keynes’ argument, which Rand implicitly mocks several times as corrupt and stupid, that big government can produce wealth and that we should not worry about long run consequences of current policies.

At one point, one of the corrupt Washington neo-comm fools uses Keynes line 'in the long run we are all dead.' Continued Keynesian short-termism is popular because it serves political electoral interests, at the cost of the millstone of debt that sucks life out of the economy.

Demand precedes supply. Supply has value according to demand. When you redistribute downwards, you feed directly into increasing demand. History has shown that the economy does better. This raises all boats. Tax breaks to the rich do not stimulate the economy.

You are misusing Jack Kennedy’s celebrated observation that economic growth is good for everyone. That is the meaning of his statement that a rising tide lifts all boats. Prosperity provides jobs, and that is good for the poor. Living by stimulating demand amounts to ‘eat drink and be merry for tomorrow we die’. It is an ideology of consumption without production. Profit drives poverty reduction.

Fortunately, most people in poverty are seeking to rise above it, rather than content on bottom-feeding, so the counterargument of too large a moral hazard doesn't work.

The only way to escape poverty is through jobs provided by profitable employers. If you kill the goose that lays the golden egg – business – you condemn the poor to a trap with no opportunity for escape. Overall efficiency through economies of scale maximises growth, producing wealth that trickles down to all.

By what right does anyone have to do such a thing?

There's another side to redistribution. Much of what the wealthiest people make, they did not "earn" as we understand the word. They are not producing anything of value, but instead are using loopholes and gimmicks. What this amounts to is that people's efforts in some cases aren't towards the production of goods or services, but are instead attempts to redirect existing wealth in their direction. This is known as rent-seeking.

Rent-seeking is defined in Atlas Shrugged as ‘the power of pull’. It is about using politics to distort markets to enable those with connections to overpower others. Rand argues for a merit based approach, which she defines as justice. In this approach, government limits its role to providing fair and transparent rules for all, and allows the free market to compete on the basis of ability.

Regardless of who is to blame for the rent-seeking opportunities, it answers your question. When people acquire wealth through ways that do not benefit society or the free market, it is fair to redistribute that wealth.

Again, it is wrong to simply treat Rand as some sort of icon for Wall Street. She opposes rent-seeking. That is one of the main themes of Atlas Shrugged. But where I think there is a weakness in her argument is in the problem of externalities, that she imagines America as some sort of endless frontier, unconstrained by material limits, with unowned assets just there for the taking.

That mentality of the inexhaustible frontier has proved very destructive, but what is needed now is a synthesis between freedom and responsibility, a recognition that costs have to be properly built into the price paid by the user, and can’t be simply palmed off on to the broader public. This especially applies to climate, where business-as-usual is based on pretending we can ignore the shit in our own nest. CO2 emissions are like fat in the arteries of the planet, a slow unseen build up from an affluent lifestyle that is eventually deadly.

In many cases, it's the government that is responsible for such rent-seeking opportunities. This has been increasingly the case since the 1970s, when started the rightward policy drift that are the cause of recent economic volatility. This drift is self-reinforcing, as lobbying produces wealth based off rent-seeking, more lobbying is then funded. Lobbying works, it's very effective. Our government is a misshapen hydra because of it, allowing the richest of us to pay less in effective taxes than many of the middle class, and giving out subsidies to industries that certainly don't need them.

Government is always responsible for rent-seeking opportunities. The gross corruption of money in US politics has totally distorted the policy process, making politicians blind to the need to create a level playing field and govern for the long term and the public good.

The complete absence of climate change from the Presidential election campaign in 2012 is testament to this ‘snouts at the trough’ attitude in Washington. Only when Gaia intruded into the campaign in the form of Hurricane Sandy did any sense of the bigger realities behind the constructed fantasy start to make a presence known.

What I like about Ayn Rand is her unrelenting focus on integrity, her view that the individual must stand for what they know is true. Incidentally, this makes me think of Paul Ryan’s attempt to combine respect for Rand with his Roman Catholicism, which somehow reminds me of Chinese Premier Jiang Zemin, who said his favourite two authors were Mao Tse Tung and Milton Friedman. Despite the utter contradiction, Jiang’s point was that he wanted to use Friedman’s analysis of reality while respecting the political base provided by the dominant ideology of Chairman Mao. Ryan is similar, in combining a contradiction, using Rand for ideas and the Pope for power.

Regulation is also so terrible in some areas that I think we ought to start over from scratch. The differential selection of eliminating or altering regulation through lobbying leaves us with a regulation system that does more harm in some cases than good. It's a neutered system, staffed in many cases by people loyal to those they regulate. Some people see a single link in the chain of cause and effect, not understanding the concept of a chain. The problems of bad, under-enforced, or corrupted regulation are in turn caused by something else, which should be obvious. Yet some nutjobs claim we should throw out the baby with the bath water, rather than focusing our mental efforts on solving the CAUSE of the problem, rather than one of the myriad symptoms.

And Atlas Shrugged is all about the causes of the corruption of lobbying.

In this way, right wing politicians have increasingly become like drug salesmen. They sell you a drug that only cures the symptom, so that they can continue to sell the drug. If the cure the disease that causes the symptom, they lose profit. A symptom of policy drift and lobbying is ineffective and corrupt regulation. Blaming the symptom rather than the disease means you're an ideal customer for their wares.

Thanks Interbane, I always enjoy reading your comments, which provide very robust food for thought and debate. What this all illustrates is that a simplistic mapping of Rand’s ideas on to the political realities of the left-right spectrum fails to engage with the nuance of her analysis.

But of course that doesn't stop her followers from trying: http://www.aynrand.org/site/PageServer? ... nmentalism

Mr A wrote:etudiant, you said,

"When the Fed raises or lowers interest rates, do they "create wealth", by the resultant economic activity?"

What they do is violate rights when they do that. In Rands laissez faire capitalism, there would be no governmental control over interest rates in the first place, the government would also have no control over the money supply either. This means no inflation, manipulation of currency. Rand is also for the gold standard.

Fundamentally Mr A, the rights and freedoms one has are almost always a trade off between individual and community. Your compulsion to stop at a red light may curtail your individual rights, but that law vastly benefits society. Allowing anyone and everyone to own a gun may increase individual rights, but it also then becomes problematic for the larger society. Some may benefit from no government control over the economy, but the weight of history indicates a different story, IMO.

Control of interest rates is a major tool societies have to even out the boom and bust of capitalism that has caused so much havoc in the past. Abandoning that tool would push us back into the nineteenth century. The "producers" you seem to admire were only too happy to have government set low interest rates, and redistribute tax income in their direction after the financial meltdown of '08.

If government had no control over the money supply, then who would you propose did? Goldman Sachs? Just typing that made the short hairs on the back of my neck stand up. The Miami People's Trust and Pizza Delivery Co Inc? There would be myriad players, all jockying for their own personal advantage. Some would lack complete information about the national and international economy, some would have it, but not care particularly. Long term strategy would be sacrificed for short term gain, and the strong would ride roughshod over the weak. Does this sound familiar?

Relating the value of money to gold would simply detach it from real world conditions. Money is ultimately just a measure of societies assets, activities, and goals for the future. It has no inherent value, and so its value is a political question, not something based on some particular resource, or fundamental economic law. The gold standard has been tried, and in fact the world's economy suffered inflation, deflation, financial panics, bank runs, and the largest depression ever in the '30s during that time. The gold standard is a panacea only to novelists like Ayn Rand, and country club philosophers like Ron Paul.

That is a very confused economic analysis. Giving money to someone who hasn’t earned it makes them dependent on the giver, destroys their incentive and initiative to work, degrades their skills and employability, and in the worst case produces economic stagnation and intergenerational poverty. Welfare is poison.

My analysis wasn't confused though Robert. There is a moral hazard to redistribution that takes the form of an entitlement philosophy. However, you need to live in poverty before you make an assessment of it. Handouts may definitely destroy the incentives of some people, but they are not the majority, which I mentioned in my disclaimer. The benefits outweigh the moral hazards. The benefit isn't merely supplying the demand side of the economy, but is also helpful in maintaining an inequality equilibrium.

I've known many people in poverty. Friends and family. The entitlement philosophy does NOT apply to all people. The majority wish to rise above poverty. For the leech-like minority, they are the bath water. It is understood as a negative consequence of redistribution. But redistribution is a requirement for a healthy society. The pros of increased sustainability outweigh the cons of moral hazard.

As well, excessive taxation destroys people’s work ethic, especially where progressive tax scales lead to a high effective marginal tax rate, because a shrinking proportion of any extra income is retained.

Show me examples of work ethics that were destroyed when America's top tax rate was 91% for many decades. History has shown that you are wrong Robert. What matters isn't the percentage of income. What matters is percentage of income relative to everyone else. If every one of your peers pays the same rate, there is a sense of fairness that allows for strong work ethics. History has shown that this is the case.

When the rich pay a lesser effective rate than some middle class, that destroys our social contract. The work ethic of the middle class is dependent on the fairness of the tax system. Fairness matters more to work ethic than the percentage paid. If we have historically found 91% to be a fair percentage, then why would it now be considered unfair? Where originates this zeitgeist? Who's motive are you defending here?

You can’t blame Rand for the misuse of her ideas. The Geckos of Wall Street are more like James Taggart, the weak corrupt fool who relies on buying politicians for his prosperity, than Hank Reardon, the moral businessman who seeks to profit from his own productivity.

Blaming Rand is justified. Her ideas cognitively capture people into unwittingly support one of the greatest dangers to our economy. An idealized human being in a fiction novel such as Hank Reardon should not be used to assess reality. We have reality itself that we can assess.

Saving is better for the economy than spending, because saving provides resources for investment, with funds retained and grown.

What would you invest in? If everyone saves, there would be no economy. No possible investment exists that would make a difference in an economy where people spend too little. Spending is required. The more that is spent in the economy, the stronger it is. The stronger the economy is, the more income each person makes, which in turn allows them to save. You're putting the cart before the horse. Both spending and saving are important, but everyone must spend a little in order for the economy to work. The more we collectively(and RESPONSIBLY) spend, the more we're all able to save.

Government is always responsible for rent-seeking opportunities. The gross corruption of money in US politics has totally distorted the policy process, making politicians blind to the need to create a level playing field and govern for the long term and the public good.

I agree. But a fiction novel should not be the sole basis of deciding how to solve our issues. Removing money from politics can be done without resorting to Randian philosophies that would increase inequality. For example, Joseph Stiglitz suggested that a certain small portion of advertising time be allocated for elections, free of cost. That single change(with the nuances not mentioned here) would greatly reduce private influence on politicians.

Lobbyists have relentlessly slaughtered our regulatory system with the intent of creating rent-seeking opportunities. The causal nexus here is the influence of private into public. Influence cannot be eliminated, but it can be minimized. Discarding our regulatory system is solving a symptom, not a cause. Regulation is necessary. The rent-seeking can be minimized without having to expose ourselves to the problems of a non-regulated economy. Informational asymmetries are unavoidable, as well as market failures, and some instances of rent-seeking that are not caused by government.

You are misusing Jack Kennedy’s celebrated observation that economic growth is good for everyone. That is the meaning of his statement that a rising tide lifts all boats. Prosperity provides jobs, and that is good for the poor. Living by stimulating demand amounts to ‘eat drink and be merry for tomorrow we die’. It is an ideology of consumption without production. Profit drives poverty reduction.

I'm not aware of Jack Kennedy's statement, or where you're going with it. Downward redistribution does not ignore production. When you feed demand, what you are feeding are intelligent people who will purchase novel products, choosing an expensive cellphone over a cheap one, thereby supporting innovation with their increased spending. Is your claim that everyone who gets social support would only spend it on food and alcohol?

For your last sentence, whose profit drives poverty reduction? The profit of those who are in poverty? How are they going to find jobs that pay enough, if they and their peers barely have enough money to live, let alone spent on a diversity of goods and services that supports the employers of said peers? If you want to create jobs, give these people in poverty a stimulus check of 1k each. Every penny of it will be spent. The economy will jump massively, and jobs will be created. Some higher paying jobs. Some of those in poverty will be able to get these new jobs and rise above it.



You can't have profit in a vacuum. Where do you propose it would come from? Trickle down economics does not work. It is proven ineffective and even harmful. Removing regulation would decrease rent-seeking and increase market-failures, and inequality/poverty would continue to increase as a result.

Money should not be tied to any resource.

Something to think about is that money does not really represent any physical asset. It is permission.

You hand somebody some money and it indicates that you have been granted permission by our culture to do such and such things and this is the voucher for it. I contribute to society on a daily basis through my job and in turn earn what amounts to permission credit to procure the goods and services i need to survive.

Robert Tulip wrote: Libertarians such as Rand

Rand is not a Libertarian or libertarian.

etudiant wrote: If government had no control over the money supply, then who would you propose did?

What traders use to buy goods with, pay employees with, and so forth, in laissez-faire capitalism (LFC), the government has no control over it, like with our money supply. The government in LFC is only there to protect man's rights. By doing so, people are free to use whatever they want, or free to accept whatever in payment for their goods.

Don Watkins, from the Ayn Rand Institute writes:

"Under laissez-faire capitalism, individuals are free to use whatever they want for money, assuming they can get other people to accept it. Historically, when people have been free to choose their medium of exchange, they have gravitated toward gold."
capitalism.aynrand.org/gold-restrains-g ... overnment/