Saturday, December 20, 2008

Morality versus the Arbitrary, and the Individual vs. the State

This is an exchange with a friend concerning the source of morality that came out of a discussion of the financial crisis and Alan Greenspan's horrible dishonesty in testimony before Congress, where he stated, in effect, that Ayn Rand's advocation of laissez faire capitalism was the cause of the financial collapse, rather than Greenspan's own betrayal of her philosophy over decades. My friend had read some limited writings of Rand decades ago, and I was rebutting his objections.


I meant to reply sooner, but I've been very busy.

Greenspan's remarks to Congress simply demonstrated his ignorance of Ayn Rand's philosophy and the "virtue of selfishness" (which Obama, of all people, was mocking the other day). Rand's point isn't that selfishness automatically brings about "best outcomes", even for oneself. As she discussed many times, the primary issue is moral, not practical -- we have a right to pursue and preserve our own values based on our own judgment. That's selfishness, in her view. Put another way, that's simply freedom. Put another way, it's simply the most fundamental human requirement for survival and happiness.

I copy below something from to illustrate my point. As she says,

"Just as the notion that “Anything I do is right because I chose to do it,” is not a moral principle, but a negation of morality—so the notion that “Anything society does is right because society chose to do it,” is not a moral principle, but a negation of moral principles... "
Greenspan, however, appears to have wrongly believed that self-interest is primarily a "practical" necessity of market operation rather than a moral one. "Self-interest" doesn't automatically guarantee the market will do what's best for itself, which is nonsense, of course -- particularly in what Rand calls our "mixed economy", a mixture of freedom and controls. The very nature of government intereference in markets (apart from legitimate functions of prosecuting actual crime and fraud) is that it corrupts everything and everyone, including the people Greenspan was apparently counting on to keep things going.

However, to address your point, it is certainly true that even honest people vary in their ability to reason and act correctly, but my answer is two-fold -- first, that in a truly free market, cataclysmic events like the collapse we've witnessed simply couldn't happen, and I'm not taking Greenspan's point of view here. Greenspan somehow seemed to believe, naively, I think, that a mixture of freedom and controls can work via the miracle of "self-interest". I don't, nor would Rand have claimed it, either. It can't. One (controls) poisons the other (freedom, of which free markets are simply an expression).

If you simply consider the scope of the federal involvement in the crisis, I think that bears me out. The Community Reinvestment Act grew and morphed over the years, particularly under Clinton, to openly encouraging "shakedown" operations of the type Obama was part of with Acorn -- threatening banks with demonstrations or worse if they didn't lend to inner city people.

The scale of fraud at Fannie Mae was much worse than Enron under Franklin Raines and his cronies, as they openly encouraged the issuance of sub-prime loans to even honest borrowers who could never make rapid increases in payments. The Federal Reserve, too -- printing money en masse. And the fact that the mere presence of the Federal government in the home-mortgage business created a widespread psychology among everyone in the private sector that even if loans or related businesses went bad (banks and insurers), they would be bailed out -- so people took risks they never would have taken in the absence of government involvement and just closed their eyes to the consequences.

I don't want to make a litany here -- it just goes on and on, and I only scratched the surface (I think as you know), but it illustrates how it corrupts everyone, and why you can't rely on their "self-interest" in that kind of political environment -- because people start factoring the government actions into all their thinking. Their "self-interest" of the moment no longer aligns with their real self-interest in the long-haul.

My second answer is that, people must be allowed to make their own mistakes, and other people have to be more cautious (caveat emptor) about the possibility [of fraud]. What's the alternative? There's no way any bureaucrat or political appointee is going to be wise enough, omniscient enough, or even care enough to enact and administer laws to the self-interest of 300 million people. All he has at his disposal is good intentions (maybe), the point of a gun (if you don't obey) or political pull (lobbyists and cronies).

But even with good intentions, there is no amount of regulations that will prevent people from making mistakes or committing fraud, and the more regulations there are, the more crippled businesses are by things such as Sarbanes-Oxley, and the more opportunities for fraud there are among the real crooks, and the more you will therefore see real crooks (like Paulson) elevated in the private sector to positions of influence over the economy -- their claim to fame is "working" the system, after all, and exploiting political pull, which is a power they can *only* draw on if there are government favors to be had, which can only be had if the government is involved in the economy.

The situation is either-or, as Rand says. You can have total control of everyone, or you can have freedom with the government out of the economy entirely. Anything in between will eventually lurch to towards statism, and that's the roost all these chickens are coming home on right now. The only role the government should play in the economy is to protect our rights by enforcing contracts and prosecuting crimes, but beyond that, the effect is entirely destructive.

------ Friend's Reply ----------

I thought Rand's statement on individual rights, societal rights, and moral negation was interesting but she doesn't answer the question of who has the right to decide what is moral. Her decision to proclaim the fundamental right as pertaining to the individual, the right to life and the fruit of one's labor, seems reasonable, but about as arbitrary a choice as those proclaiming societal & collectivists rights.

I don't think the US Constitution is quite as focused on the individual as she claims - whatever issues proved too thorny to deal with were relegated to States rights - the State being a societal entity, not an individual - so it tries to walk a line between individual and society. Our Declaration of Independence ascribes the rights it mentions as God-given. I think God is a pretty good basis on which to build upon, but then my god and someone else's god are likely to be quite different, so you can't prove anything by it. The best we can do in determining which system is right is to ask people which country and system of law they'd prefer to be governed by - then I think the US wins hands down.

--------My reply --------------

It isn't who gets to decide what is moral, but what. The view you describe ("The best we can do in determining which system is right is to ask people which country and system of law they'd prefer to be governed by") is essentially the view of Aristotle, whom Rand admired greatly (in a profound sense, actually), but disagreed with on a number of important points.
Rand's view is that morality has traditionally been defined by either subjective standards (eg, society), or intrinsic standards (eg, God). Her own view (and mine) is that there is a third alternative, reality (an objective standard, hence the name of the philosophy). That is, on the objective view, a moral code arises from the requirements of the life of Man. They are a necessity for his survival and happiness. In her words,
"Whether one believes that man is the product of a Creator or of nature, the issue of man's origin does not alter the fact that he is an entity of a specific kind -- a rational being -- that he cannot function successfully under coercion, and that rights are a necessary condition of his particular mode of survival."
By that standard he has to use his mind (reason) to apprehend reality, and all the rest follows from that, including individual rights to protect him from coercion, as she discusses in the second article I copied you ("Man's Rights").
"The principle of man's individual rights represented the extension of morality into the social system -- as a limitation on the power of the state, as man's protection against the brute force of the collective, as the subordination of might to right. The United States was the first moral society in history."
So, neither individual rights, nor a morality of rational self-interest on which they are based (in principle), are arbitrary, because the basis is a referent in reality -- the nature of Man, including not just his mind, but his capacity to value, and his need to survive, ultimately, by his own effort.
As a side note, Rand's concept of "rational self-interest" is definitely not of the "dog-eat-dog" variety, which she roundly criticized. A man who uses people and defrauds them is, in her view, the mostly profoundly selfless person (explicitly made clear in "The Fountainhead", in the character of Peter Keating), because he's sacrificing any hope he has for long-term happiness. This type of person tries to evade the fact that human happiness requires much more than material wealth.

Man's nature requires spiritual wealth (in her sense of the term) in the achievement of values by earning them, whether in a productive career, friends or family of high character, and the integrity to stay true to those values and defend them if necessary, even with one's own life, because betraying one's values would make life as a rational human being (what she terms "Man's Life") unbearable. Material wealth on this view, is the reward of integrity (to a rationally self-interested man, that is), and an effect of his virtue, but not the cause nor the primary goal of his existence.

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