Reasonable defense of free markets in the era of bailouts
I work for an organization, the Ayn Rand Institute, which advocates laissez-faire capitalism and opposes government redistribution of wealth on moral grounds. We also recently took out a loan from the Paycheck Protection Program (PPP) – on the moral principle.
Does it sound strange? Many do, so it’s no wonder that recently the news of our loan has gone viral.1 Twitter crowds claimed that our acceptance of government loans made us hypocritical. The news has been used as a practical tool to intimidate supporters of an unpopular political position.
But there is no talk here. Months before getting the loan, we openly announcement and Explain our intention to take it if we could get it. At the time, we even tried to publish our explanation in a newspaper, but no one thought it was news. We did all of this because we had nothing to hide and actually wanted the world to understand our reasons.
ARI advocates the free market because we defend the moral right of the individual to seek his own happiness – his right to reject the life of a martyr.
Hypocrisy is not living according to the principle that one advocates. But we took the money, shamelessly, precisely because of the same principle that leads us to oppose the welfare state in the first place.
Some may find this confusing, assuming our principle is to “never touch government benefits”.2 But that was never our point of view. This is a great opportunity to explain the real principle.
The principle against victimization by the welfare state
Ayn Rand, whose philosophy we defend, argued that the only function of proper government is to protect individual rights. This principle stems from the fact that one must be free from physical strength to pursue one’s own happiness. Basically, she thought her own happiness is her own highest moral goal. A government that does not touch the economy and protects property rights and the free market system respects the right of individuals to seek happiness. But a government that manipulates the economy and redistributes wealth uses force against individuals and violates their rights.
Basically, the ARI advocates the free market because we defend the moral right of the individual to seek his own happiness – his right to reject the life of a martyr. It is a controversial principle, but it is the one that we have made it our mission to defend.
Ayn Rand has strongly asserted that morality is not a series of thunderclaps: it is rather a set of rational scientific principles to achieve happiness.
It takes careful thought to apply this principle to a world in which government constantly interferes with the economy. Today’s government taxes and regulates and even shuts down entire sectors of an economy during a health crisis. ARI opposes these policies on principle because they destroy individual freedom and livelihoods. We also offer alternatives it could help us move to a system of freedom.
But to “fix” the economic problems it created during the recent crisis, the government has instead chosen to resort to massive deficit spending like the PPP, financed by future taxes and by even more printed money, threatening to retard future economic growth and to dilute the value of everyone’s savings.3 ARI opposite all of these programs at the start of the crisis because they would victimize everyone, including us.
Once free market advocates themselves fall victim to the very policies they oppose, it is especially important to remember the principle that led them to oppose those policies in the first place.
This is why, in September 1964, Ayn Rand herself advised a supporter of the free market that she should resort to public aid if she needed it, because of the taxes she had already paid and because that if it was opposed on principle to the welfare state, it “should not be its first victim and should not suffer [her] his own hard-earned money is spent supporting bums around the world.4 In other trial, she argued that those working to end the government aid system have a moral right to perceive such aid as a form of compensation for what has already been unfairly taken from them.
Principles are not commandments without context
Having identified the right principle, it is also important to avoid a wrong way of thinking about moral principles that encourages even those who work from the right principles to inadvertently become martyrs.
A rule that slavishly forbids concrete action without considering the effects on a valued goal only encourages foolish martyrdom.
Most people think that moral principles are commandments, like pure lightning that must be accepted without explanation. Thou shalt not kill, or lie, or covet thy neighbour’s ox, because the Lord God or society proclaims it. But without explanation, the meaning of these rules floats away from the real facts. If killing or lying is wrong, what about killing or lying in defense against a murderer? What if this neighbor stole my beef – shouldn’t I want it?
Ayn Rand has emphatically asserted that morality is not a series of thunderclaps: instead, it’s a set of rational scientist principles to achieve happiness. If this is true, they must be intelligently applied with this in mind. For example: murder is wrong because we observe the values that peaceful and productive human beings can add to our lives. But if a murderer tries to kill these peaceful productive beings, it’s wrong not lie or even kill the murderer if that could protect the values that the murder destroys. If there is anything wrong with “coveting”, it is because there is something unhealthy about desiring values that you did not produce and earn – but that beef your neighbor stole is something you won!
Likewise, any moral guidance regarding participation in welfare state programs must keep in mind the goal of achieving individual happiness. There is a principle that we must create value in the world if we are to prosper there. It means not using force to expropriate the values of others, which undermines our own self-esteem and destroys the ability of others to produce and trade with us. This certainly implies an opposition to government programs that engage in this expropriation. But if others expropriate the values of we, we have the right to repair our loss through legal process, especially if the expropriator is the government itself.
There is simply no rational basis for a “You shall not take government benefits” command that applies regardless of the context. It would mean never going to a public school, never taking a government contract, never driving on public roads. A rule like one that slavishly forbids concrete action without considering the effects on a valued goal only encourages foolish martyrdom.
A personal perspective on the matter
Some free market advocates who refuse to take the bailout money because they say it would violate their principles can work with baseless principles to begin with. But there are others who have interpreted rational principles as if they were commandments linked to the concrete. I once made the second mistake myself.
Don’t treat the principles as dogmatic commandments: apply them with a scientific eye to their original purpose.
It was 1994 and I was in first year at Georgetown University. I had once been a staunch egalitarian democrat, but when I read Fountain by Ayn Rand, I was won over by his individualistic philosophy.5 This created a dilemma. As I watched Republicans take over Congress under the “Contract with America” banner and launch a critique of welfare redistributionism, I found myself strangely sympathetic to some of their arguments. But there, I was paying for my studies with the help of the government.
I felt like a hypocrite. And as someone who was raised in Catholicism and viewed moral principles as commandments, I knew only one way to deal with a sense of moral guilt: Give something.
So I left Georgetown. I transferred to a less prestigious school whose lower tuition fees would not require money for work-study. It was a decision that changed my life, and not necessarily for the better. When I later read Ayn Rand’s book trial about how pro-capitalists should be prepared to accept scholarships as compensation, I also felt pretty stupid.
I’m glad I wanted to stick to what I thought were my moral standards. But I am now telling this story as a case study of how not to understand the principles. Don’t treat them like dogmatic commandments: apply them with a scientific eye to their original purpose. And especially if these are political principles that help us evaluate government policy, remember that their purpose is to help each of us seek our own happiness.
* * *
This same view of morality as a set of commandments is now being used to demand that my employer give up its means to stay afloat. I won’t be tempted by that anymore.
The outspoken critics of the ARI – especially the left-wing Twitter mobsters – have no problem encouraging free market types to interpret their own principles as commandments to martyr themselves. They should know that at least at the Ayn Rand Institute, we will not fall into the trap. Our principles are radical, but those who care to watch will see that we apply them consistently. The best advocates of the free market should consider following our lead.
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- See the comment thread in response to Pat Fitzgerald (@ PatFitzgerald23), “The Ayn Rand Institute received a PPP loan of between $ 350,000 and $ 1 million. “ Twitter.com, July 6, 2020, 2:08 p.m.
- By using “benefits” and “wellness” I am referring to the common names used for various government services, without meaning that these programs actually provide real benefits or well-being to anyone.
- On some of the ways the PPP will be funded by actions of the Federal Reserve versus direct taxes, see Steven Pearlstein, “What the $ 2 trillion coronavirus bailout is really going to cost,” Washington post, April 5, 2020, and Norbert Michel, “The Federal Reserve Should Not Help Congress Dodge Its Responsibilities: Part 2” Forbes, April 27, 2020.
- Ayn rand, Letter to Mrs. Milton W. Broberg, September 3, 1964. Ayn Rand Papers, 039_06A_002_001. Reprinted in Michael S. Berliner (ed.), Letters from Ayn Rand (New York: Dutton, 1995), 627.
- For all those who want to know more about the history, see my article “True philosophers do not only reflect the fashionable consensus”, New Ideal, July 2, 2018, and my maintenance with the American Philosophical Association by Sabrina D. MisirHiralall, APA Blog, March 1, 2019.