Ayn Rand lives on.

People really do think like this: Time For the 99% To Give Back To the 1%. Someone sent me to that site, In response to a Facebook share of this Krugman post. At first I really thought it might be trolling. But I checked out a couple more of his columns, and (natch) Googled him, and it turns out that Dr Binswanger is a committed Randian philosopher.
Now, I don’t have a huge background in philosophy. Okay, I took a course (Philo 10, in winter term 1982) in Mathematical Logic that was later excluded from being eligible for the “History, Philosophy, and Religion” college distribution requirement, I guess for not being philosophical enough. But I do recall that one of the tenets there was that any system of logical deduction depends on both the correctness of the logic and the truth of the starting axioms on which the deductions are based.
Ayn Rand has been widely critiqued by philosophers, including here and here.
And I’m not going to try to get into that debate, except that I’ll simply assert, as a slur, that Objectivism is a religion and not a philosophy.

So let’s go to the axioms and logic as put in Binswanger’s column.

He is attacking “the popular idea that the successful are obliged to give back to the community”.
His arguments are (and these are direct quotes from the column):

  1. That oft-heard claim assumes that the wealth of high-earners is taken away from “the community.”
  2. And beneath that lies the perverted Marxist notion that wealth is accumulated by “exploiting” people, not by creating value–as if Henry Ford was not necessary for Fords to roll off the (non-existent) assembly lines and Steve Jobs was not necessary for iPhones and iPads to spring into existence.
  3. The community” never gave anyone anything. The “community,” the “society,” the “nation” is just a number of interacting individuals, not a mystical entity floating in a cloud above them. And when some individual person–a parent, a teacher [emphasis added], a customer–”gives” something to someone else, it is not an act of charity, but a trade for value received in return.

His “deductions” from these premises are, again as direct quotes:

  1. It turns out that the 99% get far more benefit from the 1% than vice-versa.
  2. For their enormous contributions to our standard of living, the high-earners should be thanked and publicly honored. We are in their debt.
  3. Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor.
  4. the moral praise showered on Mother Teresa [should go instead] to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind.

Axiom one: “the wealth of high earners is taken away from the community”? Well, in a trivial sense, this is tautological. If one person has wealth (defined as significantly above-average resources), others in the same area/tribe/whatever have below average resources. And aside from the slighting of the idea of “community”, I think the heart of the sentence is the idea that the wealth is “taken away”. Yes, it is taken away.

It is taken because barriers to entry do exist and allow monopolistic concentration of trade and consequent profit above what truly competitive markets would allow. It is taken away because the externalities of pollution diminish the value of everyone’s air and water but the profits from not controlling pollution flow to the polluters. It is taken away because the Rand disciples (in practice, if not in theory) have no problem with government spending if they perceive a benefit to themselves or their businesses. For example, it’s common practice to ask governments to build roads to serve a shopping mall, which might incidentally be used by people who have other reasons to travel in that area.
So yes, if your production nets you gains and there is a cost to someone with whom you are not directly transacting, you are taking from that person.

Axiom two. Wealth only comes from creating value. Sure, wealth comes from creating value. But it comes (a) disproportionate to value created (unless you take the tautological position that “value created” is only measured by wealth), and (b) from other factors such as rent-seeking.

Axiom three. There is no such thing as “society”, it can be reduced to an atomistic collection of selfish individuals. Wow. So there is no emergent property that comes when individuals in their own self-interest act together? That, in the interest of not being robbed and murdered, individuals promise not to rob or murder? And maybe even agree to pay a portion of their hard-earned profits to someone else to prevent them from being robbed and murdered?
The Objectivist would say that it is certainly OK to hire a bodyguard, but might decide to draw the line at forcing everyone to pay (taxes) to hire bodyguards (police). And it’s fine to hire tutors for your own kids, but there’s no net gain in educating everybody’s kids?

Well, I’m a teacher. And not only am I a teacher, I am a teacher in a system that is built on the idea that some abstract concept called “society”, or at least the State of Minnesota (and of course governments are another arbitrary and ultimately deficient construct), gets significant “value received” from a more educated populace. Because of this significant value received, the State allows students to take classes without paying the full costs, supporting part of that cost by the expropriation of wealth as taxes and subsequent appropriation of  State resources.

If teachers only counted “value received” in monetary terms, it would be considerably more difficult to hire teachers. I don’t know if any teacher has ever said, “I’m just in this for the money, nothing else is important to me.” So there is a counter example.

So, first of all, the axioms are suspect. Now let’s look at the conclusions he draws:
Conclusion one. “The 99% get far more benefit from the 1% than vice-versa”. This directly contradicts his axiom of equality of trade. If 99 people purchase something for $1 from one person, and every trade is “a trade for value in return”, then by his own definition that cannot be true. So, within the zero-sum framework implied, the conclusion can’t be right. If we then abandon the zero-sum idea, the question becomes one of who (if anyone) benefits unequally. Do the 99% get more total value from the labors of the 1%, or vice versa?
Since he uses Steve Jobs as an example, let’s consider the iPad on which I’m composing this blog post. I paid for this iPad and got what I considered fair value. Did the late Mr. Jobs get all of that vast sum? Of course not. It went to a huge number of workers, from the Apple Store employees who sold it, to the trucker who delivered it there, to the software coders and hardware engineers who designed it and to the Chinese factory workers who put it together. And also to the people who built the machinery that made the components they assembled. And to the company that made the little lanyards that the Apple Store employees wear for their badges. And a little bit to the credit card company for facilitating the transaction. So of the hundreds of dollars I shelled out, only a tiny bit actually went to the 1% (probably someone at Apple, someone at Foxconn or whatever the assembly plant was, the UPS exec, assuming it was a UPS truck that brought the shipment to the Apple Store. In short, you can’t equate the money out of my pocket with any one individual’s gain.
In that sense, it is only reasonable that my gain in the transaction is not equated to any one person’s gain. That’s what money is for. No one individual would have wanted to trade chemistry lessons for an iPad (but let me know if you do).

An additional problem with this axiom comes in the area of fraud. If one party to a transaction is creating “value” through deception, and the other party is unaware of that, then the exchange can’t be called equal or fair. The Randian would probably rebut this with “caveat emptor” and leave it at that.

Conclusion two: the 1% deserve, not just our money but our thanks. Well, given the complete lack of emotion and any concept of gratitude or any moral sense aside from profit and self-interest in Objectivism, this needs little rebuttal. And of course given the failure of Conclusion 1, there is no sense in which my pleasure at owning a nice iPad should be expressed as gratitude toward a single individual. Actually, gratitude and similar social emotions come from our existence as “naked apes” . We use gratitude as -well, as a “gratuity”. It’s a way we express that we are satisfied (and then some) with a transaction. If I get a haircut, and leave a good tip, the scale of that gratuity is an expression of my “above and beyond” appreciation. If I was extra-grateful to Steve Jobs (or Tim Cook, his successor), I could have tipped. When was the last time you tipped a 1%er? I guess that means you don’t feel “gratitude”.

Conclusion three. His “modest proposal” that incomes above $1,000,000.00 be exempt from income tax? Well, I don’t really see the logic that leads to that suggestion. An absolutist might argue against all taxes. Forbes magazine, who publishes this column, advocates a flat (percentage) tax. You could argue for a per-capita tax. None of those are addressed here, nor the exemption of anyone making over $1,000,000.00. So I assume that the exemption must be as an expression of the gratitude from conclusion #2.

Finally, conclusion four. The CEO of Goldman Sachs deserves more gratitude than Mother Teresa. If gratitude is defined as the difference between value created and cash received, then you could say that Mother Teresa created significant value for those she helped but little for others. The Goldman Sachs CEO, who is ultimately responsible for the actions of his company, should have any gratitude for his accumulation of billions tempered by the fact that it was actions such as GS’s dealing in worthless mortgage-backed securities (see comment on fraud, above) that led to a speculative bubble and a huge crash, followed by an economic depression that was the worst in 80 years. So, yeah, thanks for that, Mr. Blankfein.

Finally, one note of irony. Here’s a screencap of one of the splash-screens you get on the way in to the Forbes magazine sites.


PS- very long post, been working on it for 2 days, makes up for no Saturday post.


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