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Ayn Rand And Henry Hazlitt Made The Same Point In Different Ways

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While everyone reads a different book, and surely reads the same book differently at different times in life, Ayn Rand’s Atlas Shrugged is timeless.  It may be one of the few novels that always reads in the moment, that always seems to be describing the exact time in which the reader is living.

In my case a friend gave me a copy in 1994 or ’95.  It resonated.  Around this time Al Gore had referred to cable mogul John Malone as ‘Darth Vader,’ and I always imagined the Hank Rearden character as Malone. And then Michael Milken had recently spent time in prison for alleged rules violations never before prosecuted.  Milken’s true “offense” seemed to be that he found capital for businesses and business concepts that traditional finance had ignored, all the while cleaning the clocks of traditional finance.  Years later The New Yorker reported that while in prison Milken received countless copies of Rand’s novel.  It was very fitting.

All of this is worth mentioning simply because to me Rand’s philosophy has always been intensely logical.  As someone who strongly believes it’s the “vital few” who carry the world on their backs, I’ve always loved the philosophy’s muscular elevation of achievement.  Of greater importance, I like its essential elevation of selfishness as a virtue.

That’s why Peter Schwartz’s new book In Defense of Selfishness is such an important read for people of any philosophy.  Those who read it will quickly understand that Schwartz is merely defending personal happiness.  As he explains it, “the term ‘selfishness’ means only a concern with one’s own interests.  To be selfish is simply to care about one’s own life.”

My read of his very clear explanation is that it pairs well with arguably the most powerful passage written in any economics book ever written.  It comes from Henry Hazlitt’s Economics In One Lesson, and if politicians understood it, today’s abundance that is merely the product of what Schwartz refers to as a “mixed economy” would appear rather microscopic.  Specifically Hazlitt observed:

 “What is harmful or disastrous to an individual must be equally harmful or disastrous to the collection of individuals that make up a nation.”

My analysis of Schwartz is that he’s doing the important work of reminding readers of this basic point.  The world is not a living breathing blob; rather it’s a collection of individuals.  Here he quotes Rand who, like Hazlitt and a few other great thinkers, always elevated the interests of the individual.  Rand proclaimed that “The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities.” Absolutely.

If we then break down the thinking of Hazlitt, Rand and Schwartz we can easily see the path to staggering prosperity and individual happiness.  We can simply because we know that an individual is not made better off if 50 percent of his annual income is being taxed away so that politicians can waste it.  We know that an individual is not made better off if increasing amounts of his time are taken up complying with rules and regulations, as opposed to producing.  We know that an individual earning dollars is not made more prosperous if the U.S. Treasury makes it policy to devalue those dollars, and we know that an individual is not better off if barriers to trade deprive him of the right to have the most talented people on earth vying to transact with him, often at prices that expand the purchasing power of his own production.

What about inequality? Schwartz’s assertion that “To be selfish is simply to care about one’s own life” works beautifully with Hazlitt’s assertion yet again.  To see why, readers need only ask themselves a basic question: are they better off when they get to pursue the path in life that most animates their individual talents? Much the same, would they be worse off if forced by others empowered by government to pursue a path in life that least animates their individual talents?

Both questions require no answer.  A life defined by the non-pursuit of one’s interests would be marked by unrelenting drudgery, whereas the freedom to care about one’s interests would be a life defined by the pursuit of happiness.

What about the others? Is there an obligation? Those who seek to besmirch the philosophy promoted by Schwartz blindly argue that it’s anti charity.  It’s not.  What the philosophy doesn’t like is coerced charity.  There’s a big difference.  Schwartz has trouble with this notion that benevolence is increasingly rendered the equivalent of altruism.  More on altruism in a bit, but Schwartz isn’t so much against those with resources giving a starving man food as much as he understandably has trouble with the notion of an individual “having a duty to do so.”

What makes the Randian philosophy so appealing is the powerful, confident nature of it.  I say it’s confident because it’s rooted in clear-headed reason.  Schwartz doesn’t begrudge Bill Gates doing as he wishes with his wealth, but he does struggle with Gates’s implicit assertion that “the benefits achieved by Microsoft” are “regarded as the tainted detritus of self-interest.”  Schwartz correctly believes that what Gates achieved as a businessman was far more valuable than his charitable endeavors will be.  Taking this further, and paraphrasing Schwartz’s colleague Harry Binswanger (easily one of my favorite writers), “would we prefer that Gates, Steve Jobs and Jeff Bezos had chosen the dole?” The source of benevolence is always and everywhere production, and this is too often forgotten.

Thinking about individuals elevating themselves more broadly, before Henry Ford pursued the Hazlitt/Rand/Schwartz path of self-advancement, cars were the preserve of the rich.  So were computers wildly expensive baubles of the seriously wealthy before innovators like Michael Dell made them cheap and ubiquitous.  While the cellphone of today has computer power that IBM couldn’t have possibly fathomed in the 1960s (when its first computer that filled a room retailed for over $1 million!), the initial handheld wireless that Motorola manufactured in 1983 set consumers back $3,995.  It’s the pursuit of one’s individual inequality that, while happily increasing the wealth gap, rapidly shrinks the lifestyle gap between the rich and poor.  All the lifestyles of the rich tell us is how we’ll all live in the future if we succeed in getting politicians out of the way.

Some will reply with variations of “you didn’t build that, that society is what makes wealth creation possible.” Schwartz has an artful answer. As he puts it so well, “There are certainly things one obtains by virtue of living in a society rather than on some uninhabited island.  But they are obtained by trade.”  Indeed.  Trade is the purpose of our production, but lost on those prone to defend sloth is that trade is always and everywhere a two way street.  It’s the producers who elevate society not for existing, but by virtue of fulfilling needs through production that others match with their own.

Where the book becomes most fun is when Schwartz addresses the impoverishing notion that there’s nobility in that which is “public,” and at the same that there’s something untoward about that which is “private.” Schwartz asks “why is a city-owned park a benefit to the public while a private shopping center is not?”  Implicit in the view that what is free carries with it nobility is that it fulfills a need that private markets would not.  For one, Schwartz notes that someone, somewhere is paying for that “need” in involuntary fashion, plus he adds that while Yellowstone Park “has three million visitors a year,” Disneyworld can claim 45 million.  The notion of the “public interest” is constantly mocked by market signals revealing that the public is most served by private, self-interested actors.

In the area of regulation, Schwartz similarly lights up the pages.  He writes that “Those who keep pushing the claim that man is inherently non-rational – while the regulators somehow aren’t – simply want a justification for ruling others.” Taking this further, it can’t be stressed enough that with regulators we’re talking about those who almost by their chosen vocation didn’t rate a job in the industry they presume to regulate.  Not only does regulation speak to those bereft of talent presuming to oversee those who have it in spades, but it also asks us to believe that those who couldn’t get jobs in the regulated field can somehow see into its future in a way that those inside the industry are unable to.  Regulation not only doesn’t work, it quite simply cannot work.

Schwartz goes on to point out that implicit in the supposed need for that which cannot work (regulation) is the view that “the person who benefits from some action is incapable of thinking objectively about it.” Wise minds can see right through this, as Schwartz clearly does.  It’s precisely the self-interested motive that causes the business owner to be a great regulator of himself simply because failure to please customers will lead to a lack of customers.  Somehow it’s gotten into our heads that once someone enters government that they acquire magical powers for having done so.  More realistically their arrival to the government payroll signals an inability to prosper in private markets.  Absent regulators that are worse than superfluous for distracting the truly productive on the way to neutered success is that “producers and consumers determine the nature of a business.” Yes they do.  Think “New Coke.”

If there was an area of disagreement, it concerned Schwartz’s assertion that adults are the victims of the schools they attended.  As he put it, once in adulthood “they apply the lessons they were taught in school.  They do not independently judge whether facts and logic support such assertions, they simply defer to the group consensus.” I’ve heard a variation of this argument in which it’s been said that kids are taught collectivism in the proverbial sandbox when they’re told to share their toys.  It doesn’t ring true.

It seems more true to say that students either arrive at school with collectivist instincts, tune the teachers out, or they take tests with an eye on telling the collectivist teacher what he wants to hear.  Evidence supporting my claim is the massive capitalistic advances that have revealed themselves in the U.S.  Figure some of the biggest ones have been conceived by the graduates or dropouts of the very schools (Stanford and Harvard most notably) most prone to teaching the collectivist way of life.  Education is vastly overrated not just when it comes to creating collectivists, but also when it comes to making us stupid.  Education is thankfully not much more than a potentially valuable social network.

As one would expect about what is an essential book that elevates the thinking of Ayn Rand, “altruism” is discussed throughout.  As Schwartz describes it, altruism is “that which requires someone else’s sacrifice to fulfill.” Schwartz, as one would expect, rejects this popularized view that the good results from the individual subsuming his own needs in order to fulfill those of others.  It’s a dangerous way of approaching life, and going back to the Hazlitt quote, it would be disastrous for the individuals who make up a nation.

Maybe the best answer is that altruism isn’t even a word.  Though some will sacrifice their own interests for others, it seems even then that they’re achieving some kind of selfish end in doing so.  While self-destructive at times, we generally pursue at least what we think will make us happy.  A read of Peter Schwartz’s excellent In Defense of Selfishness will make you happy for reminding you in insightful and entertaining fashion that your own happiness is of utmost importance.

John Tamny is Political Economy editor at Forbes, editor of RealClearMarkets, and author of Popular Economics: What the Rolling Stones, Downton Abbey and LeBron James Can Teach You about Economics (Regnery, 2015).