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Markets Are Breaking Down India’s Caste System, Turning Untouchables into Millionaires – Article by Malavika Nair and G. P. Manish

Markets Are Breaking Down India’s Caste System, Turning Untouchables into Millionaires – Article by Malavika Nair and G. P. Manish

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The New Renaissance HatMalavika Nair and G. P. Manish
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This year marks the 25th anniversary of liberal reforms in India that led to the dismantling of many socialist economic policies and the end of the draconian License Raj. Liberalization has changed life for many in India over the past couple of decades, although much more remains to be done. Just the middle class alone has exploded from 30 million people in 1991 to 300 million in 2014.

So this is a good occasion to tell the story of perhaps the most unexpected beneficiaries of these reforms: the rising Dalit millionaires. In recent years, many thousands of so-called “untouchables,” or Dalits, members of the lowest group in the Indian caste order, have risen out of poverty to become wealthy business owners, some even millionaires.

By taking advantage of the greater economic opportunity brought about by market reforms, these Dalit entrepreneurs provide us with an important example of the power of markets, not just to bring about economic emancipation, but to fight deeply entrenched social discrimination.

The Plight of the Dalits

The Indian caste system is an ancient and complex social order that divides society into groups based on a somewhat rough division of labor. The Dalits belong to the lowest group, below the four-tiered hierarchy of priests, warriors, merchants and artisans. Traditionally, Dalits were relegated to a life of doing “dirty” jobs such as cleaning floors and toilets or handling garbage: hence gaining the name “untouchable” as others would refuse to come into contact with them.

Since one’s caste was determined by birth, and it was impossible to switch castes throughout one’s life, being born an untouchable meant a lifetime of being trapped in a low income “dirty” job with very low social status. Marriages would only take place among caste members, and hence one’s children would be faced with the same hurdles brought by the untouchable identity, leading to systematic discrimination locked into place for generations.

It isn’t surprising that the Dalits consistently rank near the bottom of poverty statistics in an already poverty-ridden country. The term “poorest of the poor” would be an apt description of their socio-economic status in general. For decades, this made them the targets of several affirmative-action programs as well as many a politician looking to champion a cause.

While affirmative action has helped some get ahead, it has by no means been a panacea. For as long as all industry was state-controlled and subject to extensive licensing, the state effectively made all production decisions and awarded licenses to a few chosen oligarchs. This meant that opportunities for entrepreneurship and business were slim to none, and affirmative-action programs only served to redistribute pieces of a fixed pie from one to another.

Slumdog Millionaires

But there is a new heartwarming trend of entrepreneurship and self-help among Dalits since the liberal reforms in India, especially in urban areas. A visit to the Dalit Chamber of Commerce website (see also the Facebook page) reveals slogans such as “Fight Caste with Capital” and “Be Job givers, not Job seekers” as well as a spokesperson who favorably cites the invisible hand, a la Adam Smith! This voluntary Chamber of Commerce, set up in 2003 to bring Dalit entrepreneurs together, currently has 5,000 members whose enterprises jointly boast over half a billion dollars in sales revenue. The actual number of entrepreneurs in the population is much higher.

To what do they owe their success? Fascinating new qualitative research that tracks the life stories of several of these Dalit entrepreneurs reveals a common thread. The opening up of production processes to market forces created new opportunities like never before. Starting small and scraping together resources and capital, many of these Dalits now run business empires that actually provide employment to upper caste members.

There is Thomas Barnabas who was born into a family of bonded laborers, all eight of whom lived in a one-room house. Thomas recalls being thrown out of an upper caste friend’s home as a child after eating and drinking there because he was “untouchable.” They then proceeded to purify and wash the floor where he sat and threw away the dishes from which he ate.

Thomas now owns an industrial waste recycling and disposal business that has an annual sales revenue of $2.3 million and employs 200 people (including many upper caste members) outside the city of Chennai. He strove to fulfill an unmet demand for the processing of industrial waste generated by large corporations like Samsung, Dell, and Mercedes that set up manufacturing facilities in India after liberalization.

Or there is M.M. Rao, who was just one of two children to get an education in a family of bonded laborers with eight children. His family was so poor that they could not afford to buy shoes. His mother and sister were forced to walk barefoot to work in a nearby town.

Rao now owns a group of companies that specialize in construction, especially in the telecom sector, with a sales revenue of $7.4 million in 2010 alone. He was able to use his education as a civil engineer to start a small sub-contracting business laying telephone cables for large companies after the liberalization of the telecom sector. Owing to the quality of his work as well as his business acumen, he was able to grow that small sub-contracting business into what it is today.

Sushil Patil grew up in a 200-square-foot house in a slum, and his father was a laborer in a factory where he was discriminated against for his low caste status. Sushil was able to complete his engineering degree only because his father had to request the college dean to waive the fees that they could not afford to pay. He recalls, “I can never forget my father bowing before the dean, that hit me hard.” He now owns a construction and engineering company with revenues of $45 million a year. His main business is to handle the construction of power plants for major power companies. He has friends who still live in the slum that he grew up in and hopes to construct a charitable hospital that will offer medical services free of charge to the poor.

Markets Break Down Barriers

These stories constitute but a tiny sliver of many thousands, if not more. They lead us to an interesting question: how is it exactly that markets fight social discrimination? Markets work in very different ways than the obvious and visible hand of state-driven policies. While the state seeks to outlaw and abolish caste identity by making discrimination illegal, markets work in quiet and invisible ways by making caste identity irrelevant.

Competition brings about the existence of meaningful and relevant alternatives that raise the opportunity cost of discrimination for everyone participating in the market. It is in an entrepreneur’s economic interest to hire and contract with those who have the highest marginal productivity regardless of their caste identity. For if he does not, his competitor might potentially steal away profits that he could have earned. The more open and competitive a market, the more true this holds.

Once liberal reforms were put in place, they created choice and opportunity for many like never before. Market forces unwittingly brought about economic and thus social progress for society’s poorest and most discriminated against.

But can we go as far as saying the caste system has withered away? Not at all. It is unfortunately alive and well, especially in the rural areas where 68% of the population still lives, despite its being legally “outlawed” for decades.

Can we say that discrimination melts away in a market setting? Not necessarily. Anyone is free to discriminate on the basis of caste identity, even in a market. However, the greater the economic opportunity out there, the greater the chance that the cost of discrimination will be borne by the discriminator himself, not the one being discriminated against.

This is not true under socialism. When the state has a monopoly over all production and its chosen oligarchs (employers) sell to a captive market, discriminating against a certain group of people does not have negative economic consequences for the employer, but only for the ones being discriminated against. Naysayers claim that this rise among Dalits is marginal and not representative of Dalits as a proportion to the total population of the country. Some are getting ahead, but most are still left behind.

While this may be true in terms of numbers, the fact that this has happened at all is nothing short of marvelous. It’s not a coincidence that there were no Dalit millionaires emerging under socialism. It is a direct consequence of the underlying institutional setting. The Dalits exemplify the theory of the so-called poverty trap: being locked into a low-income equilibrium for generations. And yet, given a little opportunity and choice, we see many leaving a life of poverty and social discrimination behind to become well-respected business leaders and philanthropists.

Most encouraging is the recognition among them that it is the invisible hand of the market that has been instrumental for social and economic progress in their community. It is a step in the right direction for the future of classical liberalism and its role in alleviating poverty at a time when many who are more fortunate seem to be forgetting or ignoring its importance.

References

  1. The unexpected rise of Dalit millionaires: Swaminathan Aiyar
  2. Capitalism is changing caste much faster than any human being: Shekhar Gupta
  3. Defying the odds: The Rise of Dalit Entrepreneurs: Devesh Kapur, D Shyam Babu, Chandra Bhan Prasad
  4. Capitalism’s Assault on the Indian caste system: Swaminathan Aiyar, Cato policy paper
  5. 5. Dalit Chamber of Commerce website: www.dicci.org.

Malavika Nair is an Assistant Professor of Economics in the Johnson Center for Political Economy at Troy University. She is also an associated scholar of the Ludwig von Mises Institute.

G.P. Manish is an Assistant Professor of Economics in the Sorrell College of Business and a member of the Manuel H. Johnson Center of Political Economy at Troy University.

This article was published by The Foundation for Economic Education and may be freely distributed, subject to a Creative Commons Attribution 4.0 International License, which requires that credit be given to the authors.

America’s Aristocracy of Privilege and Power – Article by Daniel J. Bier

America’s Aristocracy of Privilege and Power – Article by Daniel J. Bier

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The New Renaissance Hat
Daniel J. Bier
March 26, 2015
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Bush, Kennedy, Romney, Clinton, and, yes, even Paul — is it just a coincidence that the same names keep appearing on the ballots each election cycle? Are these families just innately talented legislators, naturally “born to rule”?

No, says economist Seth Stephens-Davidowitz. America’s lame political dynasties are the result of a political system rife with nepotism.

There is a very real chance that the presidential election in 2016 will pit Jeb Bush against Hillary Clinton.… Whether or not you like one of the candidates, it just doesn’t feel right, in part because a second Bush-Clinton election makes a mockery of our self-identification as a democratic meritocracy.…

In our era a son of a president was roughly 1.4 million times more likely to become president than his supposed peers.… The presidency is obviously a small sample. But the same calculations can be done for other political positions. Take governors.

Because it is difficult to be sure that you have counted all the sons of governors, let’s assume that governors reproduce at average rates. This would mean there were about 250 baby boomer males born to governors. Five of them became governors themselves, about one in 50. This is 6,000 times the rate of the average American. The same methodology suggests that sons of senators had an 8,500 times higher chance of becoming a senator than an average American male boomer.

But there’s nepotism everywhere, and most parents want their children to follow in their footsteps. Is politics remarkable?

Is this electoral edge unusual? Successful parents, whatever their occupation, pass on their genes and plenty of other stuff to their kids. Do different fields have similar familial patterns?

In just about every field I looked at, having a successful parent makes you way more likely to be a big success, but the advantage is much smaller than it is at the top of politics….

Think about the N.B.A. further. The skills necessary to be a basketball player, especially height, are highly hereditary. But the N.B.A. is a meritocracy, with your performance easy to evaluate. If you do not play well, you will be cut, even if the team is the New York Knicks and your name is Patrick Ewing Jr. Father-son correlation in the N.B.A. is only one-eleventh as high as it is in the Senate.

Presidents, superstar athletes, Nobel Prize-winning scientists, and other leaders in their field are outliers in the distribution. “Regression to the mean” is a statistical principle that describes the tendency of variables to return to the average over time. In the case of hereditary athletic talents, we should expect that Michael Jordan’s sons will be pretty average basketball players and will probably not end up dominating the NBA.

But in politics, we don’t see this: “The Bush family’s dominance would be the basketball equivalent of Michael Jordan being the father of LeBron James and Kevin Durant — and of Michael Jordan’s father being Walt Frazier.”

In other words, the odds that the best person to run your government (assuming such a thing exists) just so happened to live in the same house as the previous senator, governor, or president are stupendously bad.

He notes that politics isn’t the only sphere where irrational favoritism for close relations shows up in the data: CEOs tend to give birth to CEOs at an improbable rate, too, and we know that heredity isn’t a foolproof guide to succession in business, either. Economists have shown that family businesses that favor succession to blood relatives tend to perform worse after the transition.

The difference is that in business, the cost of the decision falls on those who make it. In politics, we all pay.

Stephens-Davidowitz concludes, “The data shows conclusively that we have a nepotism problem. So now the question is: Why does the modern United States tolerate this level of privilege for political name brands?”

Indeed. How could this be? It can’t be nepotism in the same way that family businesses tap relations to run the company — it’s the voters who decide who wins the next election. So how could equalitarian democracy, the great leveller, the system that tells elementary students “you too could grow up to be senator or president,” recreate dynastic political succession?

Well, the answer is that the promise is partially true: technically, any citizen can become a senator — Sen. Elizabeth Warren, he points out, is the daughter of a janitor — but you’re just 8,500 times more likely to get there if your mom or dad was too. And, in part, it could be that intelligence (or low cunning) is heritable and makes politicians’ kids better at the game. But that doesn’t explain the continued popularity of a figure like Robert F. Kennedy Jr., the dull luminary of the anti-vaccine and “jail climate deniers” movements, who has clearly regressed to mean with a vengeance.

A better answer is that America’s dynasties reveal something fundamental about politics: we do not have a meritocracy because democracy is not a good way to select rulers (even if it is, as is so often said, the least worst way). Surveys show conclusively that the electorate is wildly ill-informed about both the candidates and the issues, as well as aggressively irrational about a host of important economic, political, scientific, legal, and simply factual issues. Controlled studies show that voters select candidates for patently absurd reasons, like their height, weight, attractiveness, and timbre of voice. And, in answer to Stephens-Davidowitz’ last question, more than anything else, name recognition matters.

What makes politics so futile is not that the national electorate improbably keeps landing on the same few families, decade after decade. Rather, it’s that the voters keep supporting the same dumb policies.

We don’t need a rule to prevent political power from passed down through families. The rules that govern what people can do with elected office matter far more than who sits there. We need, as comedian Penn Jillette once said, to give politicians so little power that it doesn’t matter who they are — rather than so much power that it doesn’t matter who they are.

Daniel Bier is the executive editor of The Skeptical Libertarian. He writes on issues relating to science, skepticism, and economic freedom, focusing on the role of evolution in social and economic development.

This article was originally published by The Foundation for Economic Education.

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Video by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Video by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
September 16, 2014
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Mr. Stolyarov reviews the final installment in the “Atlas Shrugged” film trilogy.

Although Mr. Stolyarov favorably reviewed the first two installments, in his view the third film fails to do full justice to the culmination of Ayn Rand’s magnum opus, where one would expect to witness the coalescence into an integrated worldview of all of the philosophical and plot pieces that Rand meticulously introduced during the first two parts. Atlas Shrugged: Part III is not without its merits, and it is inspiring in certain respects – especially in its conveyance of Rand’s passionate defense of the creator-individualist. However, the film is also not a great one, and the creators could have made Rand’s source material shine consistently instead of glowing dimly while occasionally emitting a bright flicker.

References

– “The Accomplishments of ‘Atlas Shrugged: Part I’” – Article by G. Stolyarov II
– “Rejecting the Purveyors of Pull: The Lessons of ‘Atlas Shrugged: Part II‘” – Article by G. Stolyarov II
– “The Strengths and Weaknesses of ‘Atlas Shrugged: Part III’” – Article by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Article by G. Stolyarov II

The Strengths and Weaknesses of “Atlas Shrugged: Part III” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
September 13, 2014
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In my reviews of Part I and Part II of the Atlas Shrugged film trilogy, I expressed largely favorable reactions to those films’ message and execution. Naturally, I was eager to see Part III and the completion of the long-awaited Atlas Shrugged trilogy. After I watched it, though, my response to this conclusion is more muted. The film fails to do full justice to the culmination of Ayn Rand’s magnum opus, where one would expect to witness the coalescence into an integrated worldview of all of the philosophical and plot pieces that Rand meticulously introduced during the first two parts. Atlas Shrugged: Part III is not without its merits, and it is inspiring in certain respects – especially in its conveyance of Rand’s passionate defense of the creator-individualist. However, the film is also not a great one, and the creators could have made Rand’s source material shine consistently instead of glowing dimly while occasionally emitting a bright flicker.

Strength 1: There is now a complete film series spanning the entire story arc of Atlas Shrugged. What Ayn Rand herself and many successive filmmakers could not achieve, producers Harmon Kaslow and John Aglialoro have been able to bring into existence. For decades, admirers of Ayn Rand’s work have lamented that no Atlas Shrugged movie had been made. The fact that this particular lament is obsolete constitutes major progress for Objectivism (where the rate of progress is admittedly extremely slow).

Weakness 1: Part III is, in my view, the most poorly executed of the three Atlas Shrugged movies, even though it had the potential to be the best. The extreme brevity of Part III – a mere 90 minutes, compared to 102 minutes for Part I and 112 minutes for Part II – orphaned many of the events of the film from their contexts, as compared to the meticulous rationale for each of Ayn Rand’s decisions in the novel. John Galt’s speech – which received some 70 pages in the novel – had been cut to bare bones and lacks the deep, rigorous, philosophical exposition that Ayn Rand saw as the substance and culmination of the novel.

Strength 2: As was the case with the previous installments, the film’s creators conveyed a plausible sense that the events of Atlas Shrugged could happen in our own world, or at least in a world that greatly resembles ours, as opposed to the world of 1957. In this sense, the film’s creators succeeded in conveying the universality of Atlas Shrugged’s moral message.

Weakness 2: Changes in directors and the entire cast for every single one of the Atlas Shrugged films greatly detract from the continuity of the story, especially for viewers who may watch the films back to back, once all of them are available on DVDs or other media.

Strength 3: The reactions to Galt’s Speech by Ron Paul, Sean Hannity, and Glenn Beck added authenticity and relevance to the film and reinforced the message that the conflict between value-creators and “looters” (cronyists or purveyors of political pull) is very much present in our era. In addition, whether one agrees or disagrees with these notable figures, it was amusing to see them in a dramatization of Ayn Rand’s literary world.

Weakness 3: The film fails to do justice to many important plot elements in Part Three of the book. Hank Rearden – my favorite character from the book and the most compelling character in Part II – barely makes an appearance. Cheryl Taggart’s suicide is only expressed in retrospectives of her realizations that drove her to this desperate act – while she is not actually shown taking any steps toward it. The fate of Eddie Willers at the end of the film is almost completely unaddressed, with a mere intimation that the protagonists have another man in mind for whom they plan to stop – but no validation that this would indeed be Eddie Willers. The treatment of Eddie Willers in the novel is ambiguous; Ayn Rand leaves him beside a broken-down Taggart Transcontinental train engine, abandoned by the railroad workers. He might be rescued, or he might perish – but he has not yet been invited into Galt’s Gulch. The film creators neither pose the ambiguity nor attempt to resolve it. For me, the fate of Eddie Willers – a sincere, moral, hard-working man who respects the achievements of heroic individualists but is not (according to Rand) one of them – is a key concern in Atlas Shrugged. I think Rand treated him with undeserving harshness, considering that people like Eddie Willers, especially if there are millions of them, can be tremendous contributors to human flourishing. The film creators missed an opportunity to vindicate Eddie and give him some more serious hope of finding a place in the new world created by the inhabitants of Galt’s Gulch. In Galt’s Gulch, the film shows Dagny explaining her plan to have a short railroad built to service Francisco d’Anconia’s new copper mine. But who would actually physically build the railroad and do the job well, if not people like Eddie Willers?

Strength 4: The film’s narrator does a decent job at bridging the events of the previous two installments and the plot of Part III. The events in the film begin with Dagny Taggart crash-landing in Galt’s Gulch, and even those who did not read the book or watch the preceding two films would be able to follow how and why she got there. The film is also excellent in displaying the corruption, incompetence, spitefulness, and callous scheming of the crony corporatist establishment that Rand despised – and that we should despise today. The smoky back-room scene where the economic planners toast to the destruction of Minnesota is one of the film’s high marks – a memorable illustration of what the mentality of “sacrificing the parts” for the whole actually looks like.

Weakness 4: While moderately effective at conveying narratives of events and generally decent in its treatment of ethics and politics, the film does not do justice to the ideas on metaphysics and epistemology also featured prominently in Atlas Shrugged. Furthermore, the previous two films were generally superior in regard to showing, in addition to telling, the fruits of the creative efforts of rational individualists, as well as the consequences for a society that shackles these creators. In the Part III film, many of the scenes utilized to illustrate these effects seemed more peripheral than central to the book’s message. Much of the footage hinted at the national and world events that take place in the book, but did not explicitly show them.

Amid these strengths and weaknesses remains an opportunity to continue the discussion about the undoubtedly crucial implications of Ayn Rand’s message to today’s political and societal climate – where there looms the question of how much longer the creator-individualists who power the motor of the world can keep moving forward in spite of the increasingly gargantuan obstacles placed in their way by legacy institutions. Any work that can pose these questions for consideration by wider numbers of people is welcome in an environment where far too many are distracted by the “bread and circuses” of mindless entertainment. Atlas Shrugged: Part III is a film with intellectual substance and relevance and so is worthy of a relatively short time commitment from anyone interested in Ayn Rand, Objectivism, philosophy, and current events. However, those who watch the film should also be sure to read the novel, if they have not already done so, in order to experience much greater depth of both plot and philosophical ideas.

Particular, Principled, Context-Specific Justice (2010) – Article by G. Stolyarov II

Particular, Principled, Context-Specific Justice (2010) – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
Originally Published April 11, 2010
as Part of Issue CCXLIV of The Rational Argumentator
Republished July 18, 2014
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Note from the Author: This essay was originally published as part of Issue CCXLIV of The Rational Argumentator on April 11, 2010, using the Yahoo! Voices publishing platform. Because of the imminent closure of Yahoo! Voices, the essay is now being made directly available on The Rational Argumentator. The arguments in it continue to be relevant to discussions regarding justice, natural law, and a merit-based society, and therefore it is fitting for this publication to provide these arguments a fresh presence.
~ G. Stolyarov II, July 18, 2014
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Here, I will briefly outline the fundamental features of a new approach to justice that departs radically from the egalitarian view typical of our era. A departure from egalitarianism may appear to some to be reactionary – with the alternative being a reversion to the older, class-based systems of justice, where different individuals were afforded different treatments on the basis of membership in rather arbitrarily defined groups. However, the approach of particular, principled, context-specific justice is in fact highly progressive in that it rejects the collectivism and suffering of innocents inherent in both class-based and egalitarian systems of justice. If we use an analogy to medical evolution, class-based justice could be compared to the pre-scientific treatments of bleeding and leeches; egalitarian justice could be compared to a mass-marketed pill that helps some people, but not in all ways, and also causes substantial adverse side effects in others; particular and context-specific justice is like an army of tiny nano-machines, repairing specific instances of bodily damage cell by cell without damaging healthy tissues. What nano-medicine promises to accomplish for the principle of health, particular and context-specific justice can accomplish in advancing the principle of merit.

The best way of encapsulating particular, principled, context-specific justice is to say that justice should not be blind. Indeed, justice should see as much as possible about the situation which is being judged and use all relevant information to arrive at a remedy specifically tailored to that situation. Any simplification of this principle – including the invocation of group- or class-based stereotypes, inflexible norms, and binding precedents – leads a departure from the just outcome.

It is a necessary component of justice that no innocent person should be harmed by its application – and that no guilty person should be harmed by it beyond the extent specifically warranted by his guilt. To hold otherwise is to embrace not justice, but pseudo-pragmatic trade-offs, where the suffering of some innocents is weighed against the perceived greater or lesser suffering of other innocents. To enforce such trade-offs is not within the legitimate power of any human being, nor is it necessitated by the natures of things or genuine practicality.

Unfortunately, “justice” as conceived by many of our contemporaries – egalitarian justice, or, phrased less generously, one-size-fits-all justice – necessitates the making of trade-offs that harm innocent people in virtually every case. Egalitarian justice is based on the premise that all persons must be treated in the same manner, irrespective of their individual qualities, context, and the consequences of a particular treatment. The uniform treatment is intended to produce the “greatest good for the greatest number” – but it often results in the lowering of the manner in which people are actually treated to a mediocre level, or even to the level of the lowest common denominator. Egalitarian justice typically imposes mandates or prohibitions deemed to improve the position of the “average person” or the majority of people; in reality, such impositions hamstring the above-average individuals while providing only slight, if any, benefits for the others. Indeed, many egalitarians, after the failure of their attempts to elevate the majority through one-size-fits-all measures, resort to insisting that everyone must “share the burden” equally – i.e., suffer by the same amount in situations where, before, no suffering was necessary.

Egalitarian justice is misguided, because it is premised on the idea that justice applies fundamentally to collectives of people, as opposed to individuals – who are the basic units where human perception, thinking, creation, and decision-making are concerned. Egalitarian justice seeks – at least in its best-intentioned variant – to bring about societal improvement by imposing the same rules and treatments upon all of society.

By contrast, reason and morality – natural law – require that every individual be treated in accordance with the merits or demerits of that individual’s own actions. Individuals who act rationally and morally, to the genuine benefit of themselves and others, should be rewarded, and individuals who act detrimentally – by harming others or themselves – should suffer the naturally ensuing adverse consequences of their actions. Individuals who harm only themselves are already punished sufficiently by the harm they inflict; there is no need for an external entity to disproportionately magnify that harm. However, individuals whose actions also adversely affect innocent others will not always be thwarted in time to prevent the harm. Hence arises the need for societal institutions, external to a particular situation where harm to others can be caused, to prevent or remedy such harm. This is the function of justice.

Thus, to have true justice in a particular case, it is clear that the harm to innocent persons in that case must be prevented or remedied – and, just as importantly, no harm must be caused by the process of justice itself. This is impossible to accomplish without a finely targeted approach: one that attempts to fathom the particular situation in all its relevant details, to establish the harm being committed or threatened, and to develop a way of neutralizing that harm which will punish only the guilty, and only in proportion to their guilt. A simplistic rule, conceived to apply to a myriad of diverse cases, apart from the context of these particular cases, is not adequate to this task.

It may seem at first glance that the attainment of particular justice precludes the application of any principles whatsoever. After all, are principles not themselves general rules that are developed apart from any given particular case? Yet it is not possible to reach a non-arbitrary decision on any matter without having some standards on which to base that decision. And there are indeed standards which are universally applicable to all human beings – derivable from the desirability of human life and flourishing, and from the mechanisms by which such values can be preserved and expanded. Among these standards are the natural rights of all humans: the right to act in the furtherance of one’s life, the right to acquire and keep property by naturally legitimate means, the right to interact with consenting others, and the right to be free from aggression, expropriation, and unwarranted punishment.

Indeed, the very definition of what constitutes an unjust harm is dependent on the principles of natural law. For instance, it is not an unjust harm if a person becomes displaced from a particular field of work because technological advances by others rendered that field of work obsolete. Because the technological advances and their creators did not rob, injure, kill, threaten, or defraud anyone, they are in complete accord with justice. The people displaced from their jobs may be worse off temporarily, but they always have an opportunity to retrain themselves in a society that respects their rights. Moreover, because they did not have the right to hold a particular job in the first place – as such a job was the result of an agreement that requires the continuing consent of two parties – they lost nothing to which they were entitled. On the other hand, it may be salutary from the standpoint of voluntary, private morality for the employers of such displaced individuals to offer to support their re-training or to aid them in finding alternate jobs.

But the universal standards of natural law are not the standards used by egalitarian justice; rather, egalitarianism tends to develop highly concrete criteria that are applied irrespective of whether they satisfy the abstract universal principles of justice. According to the most widespread embodiments of this philosophy, everyone must be subjected to the same minutiae, in an attempt to approximate just outcomes on a society-wide level. By contrast, in true justice, universal principles are not tied to any specific set of objects, procedures, or prescriptions for concrete behaviors. Rather, each principle can only be properly applied by considering the context in which it is relevant. To say, for instance, that honesty is a universal principle does not translate into concrete mandates or prohibitions for every situation; while it may not be justified to lie in most situations, in some – including situations where an aggressor demands the truth so as to inflict harm on its basis – lying may be morally necessary. It is an unfortunate characteristic of the egalitarian thinking of our era that abstract principles often become reified into a laundry list of byzantine particulars, whose “uniform” imposition then becomes seen as synonymous with justice – to the detriment of the very principles of justice that were supposed to be advanced in the first place.

While universal moral principles do not change, there are two important aspects of the world that do change continually: (1) our knowledge and understanding of these principles and (2) the specific concretes of our existence, to which those principles need to be applied. Moral philosophy is, and should be, an ever-evolving discipline, not because there are no truths to be found, but because no one can claim to have found all the truths or to have developed all of the facets of any true idea. At the same time, new discoveries, inventions, and societal changes raise new questions and dilemmas regarding how moral principles ought to be applied. The attempt of egalitarianism to set uniform concrete norms that apply to all people in all cases stands in defiance of the dynamic context in which we live and strive to fathom justice and reality. Egalitarianism, even based on the best effort to integrate the most advanced knowledge and the most rational thinking currently available, freezes justice in time and cuts off the prospects for a variety of innovative approaches that often occur simultaneously with one another within different subsets of any given society.

Because of the complexity of individual circumstances, every concrete norm, applied too broadly, will harm some innocent people. Particular, principled, context-specific justice would avoid this problem by being flexible with respect to concrete norms. For this, the discretion of the entity that dispenses justice is of foremost importance. Without discretion, no deviation from a concrete norm is possible – and, consequently, there is no way to avert innocent suffering. Discretion by a reasonable intelligent person, however, can avoid all of the obvious harms of a given norm – and the most competent and scrupulous dispensers of justice can even structure remedies so as to avoid subtle and indirect harms. Discretion should not be unlimited, and its exercise should be allowed in such a manner as would not extend the authority of the dispenser of justice beyond its intended sphere. Moreover, every care should be taken to prevent such discretion from resulting in draconian outcomes. But the limits imposed upon discretion should never prevent contextually warranted leniency or experimentation with remedies that are more palatable to all parties involved than those suggested by precedent or tradition.

To apply a general principle properly to a given situation, knowledge of the situation is crucial. The difference between true justice and egalitarian justice is akin to the difference between two applications of the principle of healthy eating: one approach makes choices regarding the nutritional value of every particular item of food one encounters, in the context in which one encounters it, while the other approach develops in advance a “diet” that consists of context-independent prohibitions on certain foods and requirements for certain other foods. Following a sub-optimal strategy for healthy eating may still make one healthier on net and, in that case, is not perilous. But this is because the individual is the basic moral unit; actions that benefit an individual on net while causing some discomfort, inconvenience, or inefficiency to that individual are therefore acceptable. But there can be no legitimate consideration of what benefits “society on net” which disregards harms to any individuals that occur in the process. Society is not a moral unit, and harms to its “components” cannot be brushed aside as necessary to advance an ostensibly greater goal.

Of course, for particular, principles-based justice to be applied to any systematic extent, both prevailing legal systems and moral understandings would need to change; the latter change would most likely need to precede the former, at least among the people who can affect the legal systems. Egalitarian justice attempts to treat particular situations independently of context or consequences; such treatment cannot be reconciled with the principles of justice. True justice encounters reality directly and infuses into it improvements – protections for the innocent, punishments for the guilty, and a closer approximation of a society where natural law is obeyed and the principle of merit is reflected.

Read other articles in The Rational Argumentator’s Issue CCXLIV.

The Breakthrough Prize in Life Sciences: Turning the Tide for Life Extension – Video by G. Stolyarov II

The Breakthrough Prize in Life Sciences: Turning the Tide for Life Extension – Video by G. Stolyarov II

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The tide of funding for life-extension research has turned. With the announcement of the Breakthrough Prize in Life Sciences – sponsored by such renowned entrepreneurs as Yuri Milner, Sergei Brin, and Mark Zuckerberg, as well as Zuckerberg’s wife Priscilla Chan and Anne Wojcicki of 23andMe – there is now a world-class mechanism for rewarding outstanding scientists whose work contributes to understanding and curing debilitating diseases and extending human life. Mr. Stolyarov explains the incentives that the Breakthrough Prize creates for cutting-edge life-extension research and a more meritocratic society.

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References
– “The Breakthrough Prize in Life Sciences: Turning the Tide for Life Extension” – Essay by G. Stolyarov II –
– Article on Transhumanity.net
– Breakthrough Prize in Life Sciences Website
– List of first 11 laureates of the Breakthrough Prize
– “Mark Zuckerberg, Sergey Brin, Yuri Milner Create $33 Million Breakthrough Prize For Medical Research” – Addy Dugdale – Fast Company – February 20, 2013
– “Breakthrough Prize announced by Silicon Valley entrepreneurs” – Rory Carroll – The Guardian
– “Bill Gates Wants to Be Immortal” – Adam Clark Estes – Motherboard

The Breakthrough Prize in Life Sciences: Turning the Tide for Life Extension – Article by G. Stolyarov II

The Breakthrough Prize in Life Sciences: Turning the Tide for Life Extension – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
February 23, 2013
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The tide of funding for life-extension research has turned. With the announcement of the Breakthrough Prize in Life Sciences – sponsored by such renowned entrepreneurs as Yuri Milner, Sergei Brin, and Mark Zuckerberg, as well as Zuckerberg’s wife Priscilla Chan and Anne Wojcicki of 23andMe – there is now a world-class mechanism for rewarding outstanding scientists whose work contributes to understanding and curing debilitating diseases and extending human life. (You can find out more about this prize from The Guardian and Fast Company.) The first eleven laureates of the prize have already been selected, and every subsequent year eleven more will receive $3 million each.

The incentives behind the Breakthrough Prize are exactly right. In short, they move our society ever closer to a meritocracy. By receiving a sizable fortune, each scientist – still at the top of his or her career – would no longer need to worry about finances. He or she would at last have a justly deserved reward for ingenious work that advances the struggle of human civilization against disease, decay, and death. To produce ground-breaking research in biology, medicine, and biotechnology requires a kind of passion that does not get extinguished just because one’s day-to-day material needs have been satisfied. By getting the material worries out of the way, that passion is allowed full and free rein. Innovation becomes the dominant motive force of further projects, and further research and breakthroughs can proceed without fear of running out of funding.

The people funding the prize are themselves excellent exemplars of meritocracy. They became wealthy by their own efforts – not through inheritance, political pull, or expropriation of others, but through providing services that millions of people voluntarily sought out and recognized as enhancing their lives. It is not surprising that these entrepreneurs of merit would seek to reward the merit in others – particularly merit that, through its further exercise, can eventually save the lives of us all, from the wealthiest to the poorest. The ideal of a societal meritocracy is one in which personal wealth is directly proportional to earned achievement. Meritocracy does not require central planning, because people of merit will naturally seek to exchange values and reward one another on a free market – provided that central planners do not distort the incentives toward doing so. The distribution of wealth will, over time, approach a purely meritocratic one solely as a result of such enlightened and free interactions. Of course, we are far from having a pure meritocracy today, for the incentives are significantly distorted by special political favors, barriers to entry, and the cultural corruption they engender. However, given the slightest opening, the meritocratic ideal will gradually penetrate into an ever-expanding array of endeavors. By the accident of history, computer and internet technologies have been some of the least centrally controlled in the 20th and early 21st centuries. The result was the emergence of a group of merit-based entrepreneurs who could use their wealth to fund productive benefactors of humankind in other fields.

Another ubiquitously known member of the larger group of merit-based achievers is Bill Gates, who has recently expressed his personal desire not to die during a Reddit AMA.  This makes perfect sense: a man who has everything that wealth in today’s world can provide, and who leads a happy and fulfilling life besides, must still confront the fundamental injustice of his personal demise – an injustice that the wealthiest among us have not been able to rectify, yet. While Bill Gates is not sponsoring the Breakthrough Prize (at least not at present), his philanthropic efforts are already going a long way toward alleviating many life-shortening diseases in the less-developed parts of the world. We can all hope that, over time, he and others like him will devote increasing shares of their wealth toward overcoming the more formidable barriers of biological senescence.

For now, the Breakthrough Prize in Life Sciences is an excellent start. It will raise the profile of life-extension research and inspire others to pursue ambitious projects in hopes of earning the prize. Unlike the Nobel Prize, which scientists earn many decades after their most prominent achievements, this prize will come much sooner to those whose transformational work strikes blows against some our least tractable adversaries. With the accelerating pace of technological progress, it only makes sense not to wait over a generation before recognizing their accomplishments. Not only the recipients, but also their benefactors – Milner, Brin, Zuckerberg, Chan, and Wojcicki – are to be saluted for giving a critical and ongoing boost to life-extension efforts on many fronts.

Review of Gary Wolfram’s “A Capitalist Manifesto” – Article by G. Stolyarov II

Review of Gary Wolfram’s “A Capitalist Manifesto” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
January 5, 2013
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While Dr. Gary Wolfram’s A Capitalist Manifesto is more an introduction to economics and economic history than a manifesto, it communicates economic concepts in a clear and entertaining manner and does so from a market-friendly point of view. Wolfram’s strengths as an educator stand out in this book, which could serve as an excellent text for teaching basic microeconomics and political economy to all audiences. Wolfram is a professor of economics at Hillsdale College, whose course in public-choice economics I attended. The book’s narration greatly resembles my experience of Wolfram’s classroom teaching, which focuses on the essence of an idea and its real-world relevance and applications, often utilizing entertaining concrete examples.

The book begins with several chapters on introductory microeconomics – marginal analysis, supply, demand, market equilibrium, opportunity cost, and the effects of policies that artificially prevent markets from clearing. The middle of the book focuses on economic history and political economy – commenting on the development of Western markets from the autarkic, manorial system of the feudal Middle Ages, through the rise of commerce during the Early Modern period, the Industrial Revolution, the emergence of corporations, and the rise in the 20th century of economic regimentation by national governments. One of the strengths of this book is its treatment of the benefits of free trade, from its role in progress throughout history to the theoretical groundwork of Ricardian comparative advantage. Enlightening discussions of constitutionalism and the classical idea of negative liberty are also provided. Wolfram introduces the insights of Ludwig von Mises regarding the infeasibility of central planning in solving the problem of economic calculation, as well as Friedrich Hayek’s famous “knowledge problem” – the dispersion of information among all the individuals in an economy and the impossibility of a central planner assembling all the information needed to make appropriate decisions. Wolfram further articulates the key insights of Frederic Bastiat: the seen versus the unseen in economic policy, the perils of coercive redistribution of wealth, the immorality of using the law to commit acts which would have been unacceptable if done by private individuals acting alone, and the perverse incentives created by a system where the government is able to dispense special privileges to a select few.

The latter third of the book focuses on such areas as money, inflation, and macroeconomics – including an exposition of the Keynesian model and its assumptions. Wolfram is able to explain Keynesian economics in a more coherent and understandable manner than most Keynesians; he thoroughly understands the theories he critiques, and he presents them with fairness and objectivity. I do, however, wish that the book had delved more thoroughly into a critique of Keynesianism. The discussion therein of the Keynesian model’s questionable assumptions is a good start, and perhaps a gateway to more comprehensive critiques, such as those of Murray Rothbard and Robert Murphy. A layperson reading A Capitalist Manifesto would be able to come out with a fundamental understanding of Keynes’s central idea and its assumptions – but he would not, solely as a result of this book, necessarily be able to refute the arguments of Keynes’s contemporary followers, such as Joseph Stiglitz and Paul Krugman. Wolfram mentions critiques of Keynesianism by Milton Friedman and the monetarist school, the concept of rational expectations precipitating a move away from Keynesianism in the late 1970s, and the “supply-side” interpretations of the Keynesian model from the 1980s. However, those viewpoints are not discussed in the same level of detail as the basic Keynesian model.

More generally, my only significant critique of A Capitalist Manifesto is that it is too brief in certain respects. It offers promising introductions to a variety of economic ideas, but leaves some significant questions arising from those areas unanswered. Wolfram introduces the history and function of the corporation but does not discuss the principal-agent problem in large, publicly traded firms with highly dispersed ownership. To anticipate and answer (and perhaps partially acknowledge the validity of) criticisms of the contemporary corporate form of organization, commentary on how this problem might be overcome is essential. Wolfram explains the components and computation of Gross Domestic Product and the Consumer Price Index but devotes only a small discussion to critiques of these measures – critiques that are particularly relevant in an electronic age, when an increasing proportion of valuable content – from art to music to writing to games – is delivered online at no monetary cost to the final consumer. How can economic output and inflation be measured and meaningfully interpreted in an economy characterized partially by traditional money-for-goods/services transactions and partially by the “free” content model that is funded through external sources (e.g., donations or the creators’ independent income and wealth)? Moreover, does Wolfram’s statement that the absence of profit (sufficient to cover the opportunity cost) would result in the eventual decline of an enterprise need to be qualified to account for new models of delivering content? For instance, if an individual or firm uses one income stream to support a different activity that is not itself revenue- or profit-generating, there is a possibility for this arrangement to be sustainable in the long term if it is also justified by perceived non-monetary value.

Wolfram’s discussion of inflation is correct and forms a strong link between inflation and the quantity of money (government-issued fiat money these days) – but I would have wished to see a more thorough focus on Ludwig von Mises’s insight that new money does not enter the economy to equally raise everybody’s incomes simultaneously; rather, the distortion due to inflation comes precisely from the fact that some (the politically favored) receive the new money and can benefit from using it while prices have not yet fully adjusted. (This can be logically inferred from Wolfram’s discussion of some of the “tools” of the Federal Reserve, which directly affect the incomes of politically connected banks – but I wish the connection to Mises’s insight had been made more explicit.) Wolfram does mention that inflation can be a convenient tool for national governments to reduce their debt burdens, and he also discusses the inflationary role of fractional-reserve banking and “tools” available to central banks such as the Federal Reserve. However, Wolfram’s proposed solutions to the problems of inflation remain unclear from the text. Does he support Milton Friedman’s proposal for a fixed rate of growth in the fiat-money supply, or does he advocate a return to a classical gold standard – or perhaps to a system of market-originated competing currencies, as proposed by Hayek? It would also have been interesting to read Wolfram’s thoughts on the prospects and viability of peer-to-peer and digital currencies, such as Bitcoin, and whether these could mitigate some of the deleterious effects of central-bank-generated inflation.

Wolfram does discuss in some detail the sometimes non-meritocratic outcomes of markets – stating, for instance, that “boxers may make millions of dollars while poets make very little.” Indeed, it is possible to produce far more extreme comparisons of this sort – e.g., a popular “star” with no talent or sense earning millions of dollars for recording-studio-hackneyed “music” while genuinely talented classical musicians and composers might earn relatively little, or even have their own work remain a personal hobby pursued for enjoyment alone. To some critics of markets, this may well be the reason to oppose them and seek some manner of non-market compensation for people of merit. For a defender of the unhampered market economy, a crucial endeavor should be to demonstrate that truly free markets (unlike the heavily politicized markets of our time) can tend toward meritocracy in the long run, or at least offer people of merit a much greater range of possibilities for success than exists under any other system. Another possible avenue of exploration might be the manner in which a highly regimented political system (especially in the areas of education) might result in a “dumbed-down” culture which neglects and sometimes outright opposes intellectual and esthetic sophistication and the ethic of personal productivity which is indispensable to a culture that prizes merit. Furthermore, defenders of markets should continually seek out ways to make the existing society more meritocratic, even in the face of systemic distortions of outcomes. Technology and competition – both of which Wolfram correctly praises – should be utilized by liberty-friendly entrepreneurs to provide more opportunities for talented individuals to demonstrate their value and be rewarded thereby.

Wolfram’s engaging style and many valid and enlightening insights led me to desire more along the same lines from him. Perhaps A Capitalist Manifesto will inspire other readers to ask similar questions and seek more market-friendly answers. Wolfram provides a glossary of common economic terms and famous historical figures, as well as some helpful references to economic classics within the endnotes of each chapter.  A Capitalist Manifesto will have its most powerful impact if readers see it as the beginning of their intellectual journey and utilize the gateways it offers to other writings in economics and political economy.

Disclosure: I received a free copy of the book for the purposes of creating a review.

Rejecting the Purveyors of Pull: The Lessons of “Atlas Shrugged: Part II” – Article by G. Stolyarov II

Rejecting the Purveyors of Pull: The Lessons of “Atlas Shrugged: Part II” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
October 13, 2012
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Atlas Shrugged: Part II is a worthy successor to last year’s Part I, and I am hopeful for its commercial success so that John Aglialoro and Harmon Kaslow will be able to release a full trilogy and achieve the decades-long dream of bringing the entire story of Ayn Rand’s Atlas Shrugged to the movie screen. The film is enjoyable and well-paced, and it highlights important lessons for the discerning viewer. The film’s release in the month preceding the US Presidential elections, however, may give some the wrong impression: that either of the two major parties can offer anything close to a Randian alternative to the status quo. Those viewers who are also thinkers, however, will see that the film’s logical implication is that both of these false “alternatives” – Barack Obama and Mitt Romney – should be rejected decisively.

While the cast has been replaced entirely, I find the acting to have been an improvement over Part I, with the actors portraying their respective characters with more believability and emotional engagement. Samantha Mathis, in the role of Dagny Taggart, showed clearly the distress of a competent woman who is ultimately unable to keep the world from falling apart. Esai Morales aptly portrayed Francisco d’Anconia’s passion for ideas and his charisma. Jason Beghe also performed well as Hank Rearden – the embattled man of integrity struggling to hold on to his business and creations to the last.

The film emphasizes strongly the distinction between earned success – success through merit and creation – and “success” gained by means of pull. The scene in which two trains collide in the Taggart Tunnel is particularly illustrative in this respect. Kip Chalmers, the politician on his way to a pro-nationalization stump speech, attempts to get the train moving through angry phone calls to “the right people,” thinking that all will be well if he just pulls the proper strings. But the laws of reality – of physics, chemistry, and economics – are unyielding to the mere say-so of the powerful, and the mystique of pull collapses on top of the passengers.

As the world falls apart, the film depicts protesters demanding their “fair share,” holding up signs reminiscent of the “Occupy” movement of 2011 – “We are the 99.98%” is a clear allusion. Yet once the draconian Directive 10-289 is implemented, the protests turn in the other direction, away from the freedom-stifling, creativity-crushing regimentation. Perhaps the protesters are not the same people as those who called for their “fair share”  – but the film suggests that the people should be careful about the policies they ask for at the ballot box, lest they be sorely disappointed upon getting them. This caution should apply especially to those who think that Barack Obama’s administration parallels the falling-apart of the world in Atlas Shrugged – and that Mitt Romney’s election would somehow “save” America. Nothing could be further from the truth.

If there is any character in Atlas Shrugged who most resembles Mitt Romney, it is not John Galt. Rather, it is James Taggart – the businessman of pull – the sleek charlatan who will take any position, support any policy, speak any lines in order to advance his influence and power. Patrick Fabian conveyed the essence of James Taggart well – a man who succeeds based on image and not on substance, a man who has a certain polished charisma and an ability to pull the strings of politics – for a while. James Taggart is the essence of the corporatist businessman, a creature who thrives on special political privileges and barriers to entry placed in front of more capable competitors. He can buy elections and political offices – and he can, for a while, delude people by creating a magic pseudo-reality with his words. But words cannot suspend the laws of logic or economics. Ultimately the forces of intellectual and moral decay unleashed by corporatist maneuvering inexorably push the world into a condition that even the purveyors of pull would have preferred to avoid. As Ludwig von Mises pointed out, the consequences of economic interventionism are often undesirable even from the standpoint of those who advocated the interventions in the first place. James Taggart is ultimately pushed into accepting Directive 10-289, though his initial plans were much more modest – mostly, a desire to hang onto leadership in the railroad business despite his obvious lack of qualifications for the position. Mitt Romney, by advocating James Taggart’s exact sort of crony corporatism, may well usher in a similar overarching totalitarianism – not because he supports it now (in the sense that Mitt Romney can be said to support anything), but because totalitarianism will be the logical outcome of his policies.

Because, in some respects, Ayn Rand wrote during a gentler time with respect to civil liberties, and the film endeavors to consistently reflect Rand’s emphasis on economic regimentation, there is little focus on the kinds of draconian civil-liberties violations that Americans face today. The real-world version of Directive 10-289 is not a single innovation-stopping decree, but an agglomeration of routine humiliations and outright exercises of violence. The groping and virtual strip-searching by the Transportation Security Administration, the War on Drugs and its accompanying no-knock raids, the paranoid surveillance apparatus of large-scale wiretaps and data interception, and the looming threat of controls over the Internet and indefinite detention without charge – these perils are as damaging as an overarching economic central plan, and they are with us today. While not even the most socialistic or fascistic politicians today would issue a ban on all new technology or a comprehensive freeze of prices and wages, they certainly can and will try to humiliate and physically threaten millions of completely peaceful, innocent Americans who try to innovate and earn an honest living. Obama’s administration has engaged in this sort of mass demoralization ever since the foiled “underwear” bomb plot during Christmas 2009 – but Romney would do more of the same, and perhaps worse. Unlike Obama, who must contend with the pro-civil-liberties wing of his constituency, Romney’s attempts to violate personal freedoms will only be cheered on by the militaristic, jingoistic, security-obsessed faction that is increasingly coming to control the discourse of the Republican Party. There can be no hope for freedom, or for the dignity of an ordinary traveler, employee, or thinker, if Romney is elected.

I encourage the viewers of the film to seriously consider the question, “Who is John Galt?” He is not a Republican. If any man comes close, it is Gary Johnson, a principled libertarian who has shown in practice (not just in rhetoric) his ability and willingness to cut wasteful interventions, balance budgets, and protect civil liberties during two terms as Governor of New Mexico. He staunchly champions personal freedoms, tax reduction, foreign-policy non-interventionism, and a sound currency free of the Federal Reserve system. Gary Johnson was, in fact, a businessman of the Randian ethos – who started as a door-to-door handyman and grew from scratch an enterprise with revenues of $38 million.  And, on top of it all, he is a triathlete and ultramarathon runner who climbed Mount Everest in 2003 – clearly demonstrating a degree of ambition, drive, and pride in achievement worthy of a hero of Atlas Shrugged.

Ayn Rand never meant the strike in Atlas Shrugged to be an actual recommendation for how to address the world’s problems. Rather, the strike was an illustration of what would happen if the world was deprived of its best and brightest – the creators and innovators who, despite all obstacles, pursue the path of merit and achievement rather than pull and artificial privilege. Today, it is necessary for each of us to work to keep the motor of the world going by not allowing the purveyors of pull to gain any additional ground. Voting for Mitt Romney will do just the opposite – as Atlas Shrugged: Part II artfully suggests to the discerning viewer.

Thoughts on James Sterba’s “Liberty and Welfare” – Article by G. Stolyarov II

Thoughts on James Sterba’s “Liberty and Welfare” – Article by G. Stolyarov II

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The New Renaissance Hat
G. Stolyarov II
April 14, 2012
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In “Liberty and Welfare” (2007), James P. Sterba of the University of Notre Dame makes an argument that a libertarian society, grounded in the principle of classical enlightened egoism, would be consistent with a government-organized system of welfare, or redistribution of wealth from wealthier to poorer members of the society. There are some areas where I am in agreement with Sterba’s premises, and some areas of difference.

Sterba’s argument, essentially, is that enlightened self-interest renders it legitimate for a person to take the property of another in certain “conflict situations” – cases where doing so would save that person’s life (or not doing so would endanger that person’s life).  I acknowledge that there may be cases where it is legitimate to violate the property right of another in order to save one’s life – but only to the extent actually necessary to save one’s life and only if proper compensation is made afterward. For instance, suppose Person X is ejected from a burning airplane onto the vast estate of Person Y, a wealthy landowner with plenty of fruit orchards. Person Y is an absentee landowner, and is not able to give permission, and it would take Person X several days on foot to leave Person Y’s land. In my view, Person X can legitimately eat some of Person Y’s fruit so as to survive his journey. However, the proper course of action after Person X has returned to his normal life would be for him to contact Person Y and ask whether Person Y desires to be compensated for the fruit that was taken. There is, at that point, a likelihood that Person Y would be generous and overlook the incident, recognizing Person X’s need to survive. But, if this does not happen, Person X could offer Person Y a reasonable payment for the fruit. It is unlikely that Person Y would, for instance, turn down a payment that is several times the fruit’s market value.

As the loss of life is irreversible, while loss of many kinds of property can be undone through adequate compensation, in true emergency situations, it may be justified for someone else’s property to be put to use in truly saving an individual’s life. But this can only be carried out if confined to true emergencies, if done with minimal interference, and if adequate reparations are made afterward.

That being said, what I am referring to are true emergency situations – which are, by definition, acute events that subside after the cause of the emergency has passed. An ongoing situation where one person or a group of people appropriate the belongings of others without the consent of those others is not a justifiable position within a truly free society. Sterba’s paper borders on implying that there exists some group right for “the poor” to expropriate “the rich” without regard for the circumstances of specific individuals having either of these designations or for whether individuals called “the poor” could, in fact, manage to survive without such expropriation. If there is a way not to take another’s property without his consent and to still preserve human life, then that is the course of action that should be pursued.

Ultimately, Sterba’s argument leads to the support of some manner of redistributionist welfare system. Such a system may indeed be justified in an unfree or semi-free society, where artificial political privileges result in a non-meritocratic distribution of wealth – and where, for instance, inefficient and customer-unfriendly firms can achieve market dominance or incompetent individuals can come to control vast resources. The overall level of wealth in such societies is lower compared to a libertarian society, and there may be many “worthy poor” in such societies, who are poor for none of their fault and despite earnest efforts at improving their position. Indeed, the United States at present, with its massive levels of involuntary unemployment resulting from an economic bubble inflated by the Federal Reserve, could be considered to exist in such conditions. Thinkers such as Sheldon Richman have argued that, in such situations, welfare systems can be seen as secondary or “band-aid” interventions to mask or mitigate some of the harmful effects of the primary interventions (e.g., corporate subsidies, barriers to entry into markets, and laws that limit innovation and progress). While the secondary interventions bring their own unintended negative consequences, a national government that only practiced the primary interventions (which benefit and enrich a favored and politically connected elite) would be much worse in its effects. The only aspects of the secondary interventions that might be justified are those aspects that would undo some of the harms of the primary interventions and more closely approximate a meritocratic, individualistic, market-driven outcome.

I contrast “band-aid” welfare measures in a mixed economy – which could be justified – with redistribution of wealth by a government in an otherwise libertarian society – which would not be justified. Such redistribution of wealth would infringe on the justly earned property of numerous individuals, simply because they belong to some arbitrarily designated category (e.g., “the rich” – as defined by some artificial threshold). In a libertarian society, occasional emergencies might arise whereby one or a few people might legitimately avail themselves of the property of another, but only if they compensate the owner fairly afterward. But, by definition, such emergency treatment cannot apply across the board and as a systematic, ongoing matter. Furthermore, unlike the emergency treatment I described, a welfare system by definition redistributes wealth from some people to others, and does not compensate the people whose wealth has been redistributed. In a fully libertarian society, where all wealth is acquired based on the principles of merit and consent, such redistribution would be unjustified and harmful. It would, further, be unnecessary, as practically all people would be massively more prosperous than the majority of people are in today’s Western societies.