King Barack the Mild

Holman W. Jenkins, Jr. penned an interesting opinion piece in the Wall Street Journal last week, in which he characterized President Obama as “King Barack the Mild.”

Ninety-nine times out of a hundred, name-calling falls in the category of mere ad hominem, and is thus actually counterproductive to an argument.  However, occasionally a clever appellation can make a point more vividly and concisely than could an entire essay.  I am sympathetic to Mr. Jenkins’ comparison; he strikes an apt parallel between Mr. Obama’s administration and the heavy-handed, arbitrary, and often contradictory decrees that one would expect from an omnipotent monarch.  

So, if the royal shoe fits...

image credit to The Wall Street Journal, Ismael Roldan

The straightforward enumeration of “King Barack’s” policies related to Chrysler and General Motors serves to demonstrate the dictatorial nature of the administration.  In particular, Mr. Jenkins shows the illogic of juggling the various contradictory political considerations - as “[k]ingly prerogative... conflicts with kingly prerogative” - none of which takes any real account of market requirements or individual freedom.[Note 1.]

Consider the pressures imposed by the Obama administration upon creditors.  As “King Barack the Mild... tries to dictate terms of what amounts to an out-of-court bankruptcy for Chrysler and GM,” Jenkins writes:

He wants Chrysler’s secured lenders to give up their right to nearly full recovery in a bankruptcy in return for 15 cents on the dollar.  They’d be crazy to do so, of course, except that these banks also happen to be beholden to the administration for TARP money.[Note 2.]

This is exactly the kind of government force that I’ve warned about in previous posts.  The government seizes the earnings of private citizens, distributes it to corporations, then uses that “gift” as a lever to exact obedience, compelling the companies to make concessions or decisions that they would not have otherwise made.  

As for GM’s creditors, the Treasury Department’s advisor Steven Rattner “has delivered word that the king’s pleasure is that these unsecured creditors give up 100% of their claims in return for GM stock.”  The article points out the absurdity of this charade.  Why would GM’s creditors accept as payment, instead of the dollars that they are owed, the stock of a company that “the king’s own policies mean they’d be loony to buy?”  Why indeed, except that implicit or explicit compulsion is behind it.

Naturally, political agendas trump the logic of running a company.  Jenkins notes that it is “the king’s pleasure” that GM discontinue its GMC-brand SUV’s and pickups despite the fact that they earn the company’s highest profit margins - a suicidal position that can be comprehended only in the shadow of the president's environmentalist policy.  And with that same illogic, Mr. Obama has refrained from advising GM to discard the “profitless black hole” that is the Chevy Volt because such programs are the darlings of the environmentalists.

Concludes Jenkins:

There’s a reason royal discretion has long been outmoded as a way to run an economy: Things just work better if a realm’s subjects are left to resolve their own disputes and interests through the impersonal mechanism of the markets and the law.

This point is well taken, though of course there is an even deeper reason than markets simply “working better” under capitalism.  At the heart of the matter is the moral foundation of capitalism.  In her essay “What Is Capitalism?” Ayn Rand wrote: 

The “practical” justification of capitalism does not lie in the collectivist claim that it effects  “the best allocation of national resources...”

The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve “the common good.”  It is true that capitalism does - if that catch-phrase has any meaning - but this is merely a secondary consequence.  The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is: justice.[Note 3.]

NOTES

1.  To write “market requirements or individual freedom” is a redundancy.  What the market requires is the liberty of individuals.

2.  Holman W. Jenkins, Jr., “GM Is Becoming a Royal Debacle,” The Wall Street Journal, 22 Apr 2009, p.A13.  All other quotes of Mr. Jenkins are from this article as well.

3.  Ayn Rand, “What Is Capitalism?” from Capitalism: The Unknown Ideal, Penguin Books, New York, NY, p. 20.  Article reprinted from The Objectivist Newsletter, November and December, 1965. 

Inroads

In today’s note on his private list, Harry Binswanger called attention to something that I found has become a habit of mine recently: jumping to the editorial section of the Wall Street Journal (WSJ) to see which letters-to-the-editor have been written by Objectivists.  

Yet another one was published yesterday, a letter by James G. Lennox, Professor of History and Philosophy of Science at the University of Pittsburg, defending Charles Darwin’s achievements.  Letters critical of Barack Obama’s health plan, by Richard Ralston of Americans for Free Choice in Medicine (AFCM), and Dr. Paul Hsieh of Freedom and Individual Rights in Medicine (FIRM), were published on the same day last week.  On the very next day, Dr. Ralph Whaley’s letter pointing out an individual’s ownership of his own organs was printed.  David Rafner had a letter published the week before last, concisely defending principles against pragmatism.  Dr. Hsieh had another letter printed in the WSJ last month.  There are others, too, that I can’t quite put my finger on.  (I am pretty sure Alex Epstein of ARI had a letter printed not too long ago, and my own letter was published earlier this year.)

It’s progress.

A Good Sign

I was thrilled to flip to the editorial page of the Wall Street Journal today and see that both Richard Ralston and Paul Hsieh had their letters-to-the-editor published.  Congratulations to both of them.

I was also encouraged by the tone of some of the adjacent commentary.  A couple of letters were clearly critical of government regulation and Fed meddling, and the main article on the next page was titled "Washington is Killing Silicon Valley."

The link to the editorials is here at the moment I am writing this, but since the contents change every day, I am reprinting Mr. Ralston's and Dr. Hsieh's letters in full below (Note 1):

You are probably correct that a major new national health-care program will be rushed through the next Congress without substantial debate through some mechanism such as budget reconciliation. That is because many of its elements would not survive close examination. The fatuous claim of Sen. Max Baucus that placing the nation's medical care under the rule of an "independent" council of presidentially appointed experts would not constitute government management of care is only the most conspicuous example. Others include the claim that computerizing those remaining medical records still on paper would reduce insurance costs by $2,500 a year per family.

But the main reason for the big rush is that nobody has a clue how the government will pay for it -- anymore than they know how the current unfunded liability of Medicare and Medicaid can be honored.

The last thing that proponents want is for anyone to ask where the money will come from, except perhaps questions about such details as the individual rights of patients and physicians to make their own medical decisions without the approval of presidentially appointed experts.

Richard E. Ralston 
Executive Director 
Americans for Free Choice in Medicine 
Newport Beach, Calif.

Businesses expecting to save money under President-elect Barack Obama's universal health-care plan are going to be in for a rude awakening. President-elect Obama's plan includes an employer mandate in which businesses must either pay their employee health insurance or else pay into a government fund to cover the uninsured.

A similar mandate has already been in place in Massachusetts for two years. As health costs there have skyrocketed, the state government has asked for more and more "contributions" from businesses. During this financial crisis, the last thing America needs is yet more economic burdens on the businessmen who create jobs and prosperity.

The fundamental problem with Mr. Obama's plan is the premise that health care is a "right" that must be guaranteed by the government. Health care is a need, not a right. Rights are freedoms of action, not automatic claims on goods and services that must be produced by another. Attempting to guarantee an alleged "right" to health care must necessarily violate actual individual rights and will destroy the American economy in the process.

Paul Hsieh, M.D. 
Sedalia, Colo.

NOTES

1. Letters to the Editor, Wall Street Journal, 22 Dec 2008, p. A18.

Nicholas Provenzo LTE

Nicholas Provenzo's letter to the editor was published in the Wall Street Journal today (21 May 2008):

The Journal applauded the FTC's effort to block
the proposed merger of Inova and PWHS on the grounds that Inova's use of zoning
law and other political efforts to restrict its competitors makes it a coercive
threat to competition and a legitimate target for antitrust enforcement. The
error in such a position is that there is no such thing as a legitimate target
for antitrust enforcement; these laws are no different from any other political
interference in the marketplace.

Nicholas Provenzo
Chairman, The Center for the Advancement of
Capitalism, Washington

WSJ LTE

To my surprise, the WSJ printed my letter to the editor, which was based on my post from earlier this week. It showed up in the Saturday/Sunday edition, May 17-18, both in print and online.

They did a little bit of editing, but they left my points more or less intact. Above all, they preserved the reference to Ayn Rand in the concluding paragraph.

Does Being Ethical Pay?

In The Journal Report section of Monday’s Wall Street Journal, the main headline asks the question, “Does Being Ethical Pay?”  This caught my attention because if treated properly, the correct message delivered by such a widely read publication could have a tremendous impact.  What the article is essentially asking is, “Is the moral also the practical?”  A rational ethics should answer with a resounding, “Yes!”

Unfortunately, the article is a dreadful disappointment.  It reduces a potentially eureka-laden topic into an uninspiring call to follow the dull duties of the anti-corporate political left.  At best, the article is a mess of floating abstractions and parroted premises.  At worst, the piece obliterates ethics outright by appropriating the term to refer to actions that are either not ethical or even unethical.

The key to the article’s problems may be found in the paragraph that describes the criteria used to determine if corporate behavior is ethical.  The investigators defined the conditions to be met:

For our purposes, “ethically produced” goods are those manufactured under three conditions.  First, the company is considered to have progressive stakeholder relations, such as a commitment to diversity in hiring and consumer safety.  Second, it must follow progressive environmental practices, such as using eco-friendly technology.  Finally, it must be seen to demonstrate respect for human rights – no child labor or forced labor in overseas factories, for instance.(1)

I would guess that the average businessman who reads this article is not particularly well armed with a rational view of ethics, but holds a haphazard collection of ideas that he has collected over his life from parents, Sunday school teachers, books, movies, college professors,... and perhaps Wall Street Journal writers.  Think about what such a businessman would conclude from this article.  In an effort to be considered ethical by his peers - after all, who wouldn’t want to be ethical? - he would accept the list uncritically as a program of action.  

Let me take each of the article’s criteria in turn to see how well the activities correspond to truly ethical behavior.

1.  “First, the company is considered to have progressive stakeholder relations, such as a commitment to diversity in hiring and consumer safety.” 

A “commitment to diversity in hiring” means that factors such as race, gender, and age ought to be considered as a qualification of employment.  That is, a company must adjust its workforce according to these factors.  

This is outrageous.  To say that the “diversity” of an unchosen human characteristic - diversity of race, for example - is of value to a company is to say that the quality of a workforce depends upon its racial makeup.  This is bald racism, and to smuggle this activity under the category of “ethical behavior” is obscene.  An employer who holds his own long-term self-interest as his ethical standard will judge potential employees on merit alone.  Skin color, heritage, gender, and age are utterly irrelevant.  

To desire the diversity of race, gender, age, etc. is irrational to the same degree - and for the same reason - as desiring the uniformity of these characteristics.  If a workforce happens to be “diverse” - composed of people from every corner of the globe - that’s great.  If a workforce happens to be composed entirely of near-sighted, elderly Jewish women with curly red hair, that’s great, too.  The only thing that matters is that the people are good at what they do.

The other item, a “commitment to consumer safety,” might indicate a proper ethics, but expressed this way it obscures the only valid reason: rational self-interest.  Again, it is in the long-range interest of any company to ensure the quality of its products, and consumer safety is certainly one of the important aspects of product quality.  This is never a problem in a free market because the law holds a company liable for any legitimate harm that it causes consumers, and companies that make unsafe products (or are even merely rumored to make unsafe products) will be driven out by competitors.

 

2.  “Second, it must follow progressive environmental practices, such as using eco-friendly technology.”

To “follow progressive environmental practices” does not mean to respect the property rights of one’s neighbors, which does in fact constitute ethical behavior.  It actually means to subjugate one’s own interests - and indeed, the interests of all human beings - to the alleged “interests” of the planet.

 

It is beyond the scope of this post to elaborate upon the deep irrationality of environmentalism.  I am simply pointing out that it is by no means moral to participate in the surrender of liberty, along with the prosperity, happiness, and achievement that it makes possible, in order to placate policy makers that use apocalyptic visions to advance their own agendas. 

3.  “Finally, it must be seen to demonstrate respect for human rights – no child labor or forced labor in overseas factories, for instance.”

If a “respect for human rights” means a respect for individual rights, then naturally this constitutes ethical behavior.  And “forced labor” is slavery, which is evil by any rational standard.  The problem is that I do not trust that the authors of the article are referring to individual rights, meaning: the right to one’s life, liberty, earned property, and pursuit of happiness.  

One clue to the authors’ meaning is the example of “no child labor.”  What is meant by this?  In some Third World countries, families send their children work to avoid starvation.  To use force to prohibit children from working in these circumstances would be extremely immoral.  The presence of these “sweat shops” is obviously a great benefit to the people, including the children, who work there; if there were a better deal somewhere else, they would leave.  (I am assuming here that they are not literally forced to work, for that would be immoral, as I’ve already stated.  And of course, by “force” I mean forced by people, not “forced by poverty” or “forced by conditions,” which is not force at all in the sense of rights violations.)  

It is tempting for us in western nations that are advanced and relatively free, to observe the squalid conditions and low-paying work in some overseas factories and conclude that this constitutes “exploitation,” since we cannot imagine ourselves actually choosing that kind of work.  But this is a misunderstanding of the context.  The progress of a civilization is made slowly, and Third World nations are in some respects literally centuries behind.  When corporations set up shop overseas, it is a supreme opportunity for the poorer nation to advance.  Everyone benefits. 

(As an interesting aside, a strict interpretation of “no forced labor” would mean that one should never do business with communist countries, since citizens of communist countries are, in every important respect, slaves.  However, I’m not sure that this strict interpretation should be applied in every case.  For instance, China is still technically a communist country, but I think a flourishing trade of non-military or non-“dual-use” goods with them is very beneficially and may by degrees cause the communist aspects to simply wither away.)

P.S.  I sent a greatly abbreviated version of this post as a letter-to-the-editor to the Wall Street Journal.

(1)  Wall Street Journal, Does Being Ethical Pay?, 12 May 2008, p. R-4.