Laissez Faire Links: Rational Production, Debt Hysteria, Economic Ignorance, and Obamacare

Where does wealth come from?  The answer is simpler than you ever thought.  Washington’s antics over the current debt crisis and people’s ignorance of Obamacare’s deceptive design.

  • Over at Objectivism for Intellectuals, the idea that wealth comes from action based on rational thought is not a new revelation, but simply a rebuttal to those who still maintain otherwise.  Wealth, according to the classical tradition in political and economic theory (i.e. Locke and Smith), is a product of one’s labor.  See my discussion here for elaboration on this point.  Wealth cannot be anything but a “product” of action, not wish or whim.
  • Dan Mitchell from the Cato Institute points out the current debt hysteria in Washington as nothing more than political posturing.  The issue of raising the debt ceiling, lest the government default on its obligations, overlooks many aspects of U.S. fiscal responsibilities that point to a much less severe predicament.  His comments on the Treasury Report are particularly insightful:

“The Obama Administration is deliberately trying to blur the difference between defaulting on the debt, which would have real consequences, and “defaulting on obligations,” which is a catch-all phrase that includes mundane and uneventful matters such as postponing a Medicare payment to a hospital or delaying a grant disbursement to a state government.”

“The White House wants people to believe genuine default is likely even though tax receipts this fiscal year are expected to be more than $3 trillion and interest on the debt is projected to be only $237 billion. In other words, the Treasury will collect more than 12 times as much revenue as needed to pay interest on the debt….I want to reiterate that a default only would happen if the White House wanted it to happen.”

  • The Objective Standard has an interesting, albeit bit depressing, piece on how many of the Americans who voted for Obama visualize how government, economics, and insurance markets actually function.  I highly recommend taking a minute or two to read this!
  • On a related note, Laissez Faire Today provides a piece with particular insight into why health insurance markets are so difficult to understand and so expensive.  For example, what makes them different from life insurance markets?

“When premiums reflect expected costs, people are essentially paying their own way. When that happens, it really doesn’t matter very much who chooses to buy insurance and who chooses to self-insure and bear the risk themselves….Why are things so different in the market for health insurance? Because in this market, premiums are regulated, and that regulation is completely dominated by the idea that it’s unfair to charge real premiums. In fact, the most common belief is that everybody should pay the same premium for health insurance, even if everyone’s expected health cost is different.”

See the whole article here.

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Rand’s Philosophy Needed to Guide Budget Reform…and Much More

Quote from novelist Ayn Rand.

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Amidst all the turmoil over the budget and how to make prudent cuts that will avoid further hindering a jobless recovery, Yaron Brook and Don Watkins of the Ayn Rand Institute’s (ARI) Objectivist Academic Center (OAC) peel back the top layer of the onion to suggest that perhaps what is lacking from the budget debate is a sound political philosophy from which to base one’s decisions.  The issues of whether to cut defense or entitlements, to increase taxes, or to raise the debt-ceiling alone does not entail one with a political philosophy.  That is to say, simply agreeing that one should cut entitlement spending to help balance the budget does not imbue one with a philosophy all his own or of that of a particular party.  I think implied in Brook and Watkins’ article is that we must work from a philosophy rather than to a particular set of prescribed beliefs that are usually determined by a narrow set of party tenets or guidelines.  And particular to Rand’s ideas is that her philosophy is based from the single axiom of man’s natural right to exist and to provide for that existence free from any external or undue burdens.

In morality, [Ayn Rand] argued, a man who truly lives and works for his own sake neither sacrifices himself to others nor others to himself–he produces the values his life requires. In politics, a limited government that protects an individual’s right to the product of his own effort does not sacrifice “the needy”–it refrains from sacrificing anyone by protecting the freedom of everyone. Cut Social Security? To do so is, in reality, to stop depriving men of the wealth they’ve produced.

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Our current economic troubles have given a renewed vitality to Rand’s ideas.  Almost daily now, one can easily find an article either promoting or repudiating her philosophy.  Yet as with most controversial or vivacious ideologies, Rand has been falsely grouped with an already well-established (and faltering) Republican platform, as well their new affiliated Tea Party.  In fact, Rand herself warned of this very fallacy herself, that of association.

Since early childhood, [men’s] emotions have been conditioned by the tribal premise that one must “belong,” one must be “in,” one must swim with the “mainstream,” one must follow the lead of “those who know.”…

There is a crucial difference between an association and a tribe.  Just as a proper society is ruled by laws, not by men, so a proper association is united by ideas, not by men, and its members are loyal to the ideas, not the groups….All proper associations are formed or joined by individual choice and on conscious, intellectual grounds (philosophical, political, professional, etc.)

“The Missing Link,” in Philosophy: Who Needs It

Moreover, as I read articles around the web discussing her vision, I am disappointed at how ideologically and emotionally misguided some people’s comments are.  For example, this author from Outside the Beltway blatantly dismissed Rand’s ideas while imbuing her with “the intellectual pretensions of Hegel.”  If individuals express their beliefs pronounced from judgments they themselves make, they would not be so quick to group Rand with characters of the likes of Hegel, as Rand dismissed him outright as an intellectual fraud (see Philosophy: Who Needs It).

So the point of my musing is that if there is one thing one need take from Rand, it is that her philosophy, unlike many others, necessitates that one think for oneself.  It says that since man must provide for his own existence, he must be afforded the right to use his mind as he sees fit.  This tenet of Rand’s is the very essence of freedom.  Without our minds and the conscious act of judgment, we cannot hope to achieve a true state of liberation from those of others.

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