Principles in Practice: The Blog of the Objective Standard

Principles in Practice: September 2007

Friday, September 28, 2007

Good Press for Objectivism and Atlas Shrugged

Posted by Craig Biddle at 7:58 PM

There is a good article in Forbes today, titled “Atlas Shrugs Again,” by Marc Babej and Tim Pollack, focusing on the recent swell of interest in Ayn Rand’s ideas and on what it takes to “market something as amorphous as a [philosophical] movement.” After citing some of the recent items that have brought attention to Ayn Rand—from Alan Greenspan’s autobiography to New York Times and LA Times articles to TV mentions to the pending Atlas Shrugged movie—the writers ask Yaron Brook, executive director of the Ayn Rand Institute and a contributing editor to The Objective Standard, “Why the sudden interest in Any Rand?” Brook gives two reasons:

"First, she never really went away. Many who read the books when they were young, in the 1950s, '60s and '70s, are now confident enough to say that Ayn Rand is their favorite author, and they have the means to donate to the institute. That's enabled us to promote objectivism more aggressively."

Second, Brook cites what he calls a cultural vacuum: "Today's left doesn't have anything positive to offer to young people. When they were socialists, there was at least something they were fighting for, and they believed in a right and a wrong. Today's leftist agenda is negative and nihilistic—focused on stopping industrialization, capitalism and even Western civilization. But young people want positive values. That's why religion is so strong today, because many view it as the only thing that promises a brighter future."

According to Brook, this gap between liberalism and religious conservatism goes far to explain the surge in interest." Ayn Rand is the only voice that offers a secular absolutist morality with a positive vision and agenda, for individuals and for society as a whole," he says.

This is true, and while today’s relativists and religionists are increasingly sensing the threat that Ayn Rand’s observation-based ideas pose to their fantasy philosophies, many active-minded people are discovering the rational alternative to liberalism and conservatism.

Babej and Pollack offer some good advice for marketing Objectivism:

—Choose a fertile target. For objectivists [sic], this means conservatives who aren't comfortable with the religious right and feel alienated and orphaned. Objectivists can attract this audience with a moral argument for capitalism and individual rights by showing that free markets and individual choice aren't just smart and practical, but also moral.

—Activate your natural supporters. Objectivism is a natural fit for businessmen because it not only tolerates, but extols them. Fortune 500 CEOs can become to objectivism what movie stars are to Scientology and Kabalah [CB: with the added bonus that Objectivism is true rather than ridiculous]….

—Accentuate the positive. It's easy to be a naysayer. It's harder, but much more rewarding, to offer hope. To win hearts and minds, objectivists need to show not only why they're right, but how to get from here to there.

—Pick your controversies selectively, and don't be afraid to court the controversies you pick. Conservative Republicans have dominated presidential politics for over half a century by deftly capitalizing on wedge issues—the latest example being same-sex marriage. Objectivists would do well to steal a page from that playbook by picking a battle on a specific issue in the area of individual rights.

Read the whole thing.

There is also an article in today’s Orange County Register about the fiftieth anniversary of Atlas Shrugged. This piece is worth reading too, but don’t go there unless you can laugh off the absurdity of an English professor who says that Atlas is “sloppy and it's exuberant and it's overwritten and it's melodramatic”—and who likens the novel to Catcher in the Rye(!).

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Wednesday, September 26, 2007

Congress Should Not Dictate Mental Health Benefits

Posted by ARI Media at 8:26 PM

Irvine, CA—By a unanimous vote, the Senate has approved the Mental Health Parity Act of 2007, which would forbid employers to offer less favorable insurance coverage for mental illness than for physical illness. Support for a similar measure is widespread in the House, so passage of a new federal law this year seems likely.

“This bill violates an employer’s right to set the terms of the benefits he offers," said Thomas Bowden, an analyst at the Ayn Rand Institute. “The bill’s supporters point to the obvious fact that mental illness is as real and as destructive as physical illness. But employers have no duty to offer coverage for all ills, or any ills; they have an absolute right to limit or deny coverage on any basis. For example, many employers are reluctant to foot the bill for what they see as open-ended therapies whose great expense is not justified by any certain cure.”

Back in 1996, Congress enacted the first federal Mental Health Parity Act, which prohibited employers from imposing lower annual or lifetime limits for mental treatment, as compared to physical treatment. The new bill, which would apply to employers of more than 50 people, mandates equal coinsurance, co-pays, deductibles, and equal limits on frequency and duration of treatments.

“This legislation shows the insidious process by which creeping government regulation transforms independent employers and insurance companies into servants of politicians,” Bowden said. “Health care is not a right. It is a value offered by physicians, insurance companies, and employers who have a right to set their own terms of trade. The government should be phasing out, not expanding its coercive regulatory control over medical care."

Mr. Bowden is an analyst at the Ayn Rand Institute. His Op-Eds have appeared in the Philadelphia Inquirer, Miami Herald, Los Angeles Daily News, and many other newspapers. Mr. Bowden has given dozens of radio interviews and has appeared on the Fox News Channel's Hannity & Colmes.

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Caps on Fossil Fuels Would Be Devastating by Alex Epstein

Posted by ARI Media at 12:47 PM

The UN Secretary General echoed a common sentiment Monday when he claimed that the failure to take dramatic action in response to global warming would bring "devastating" consequences. But the truly devastating thing about the global warming issue is the proposed response to it: a severe cap on carbon emissions. The supposed "crisis" of manmade global warming is completely overblown. Even if the United Nations' incredibly speculative projections of an 8-degree warming occurred, they would easily be dealt with by industrialized people with ample energy, transportation, sunscreen, air-conditioners, and sturdy houses.

But this ability to cope with any negative weather patterns depends on utilizing our most plentiful, practical sources of energy--including fossil fuels. Yet this is precisely the value that drastic caps on fossil fuels would destroy. Such a cap would stunt development of every facet of industrial civilization through energy shortages and higher energy costs in the industrialized world--it would deprive the Third World of the ability to generate desperately needed energy. Nothing could be more devastating than that.

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Tuesday, September 25, 2007

Reject the Latest Push for Net Neutrality

Posted by ARI Media at 8:23 PM

Irvine, CA—U.S. senator Byron Dorgan, a leading advocate of "Net Neutrality" legislation—which is supported by Microsoft, Google, and many other software companies—promised last week at the Future of Music Policy Summit that the push for this legislation would continue. Americans, he said, to a standing ovation, must "fight back and say this is something that's important for our country's interests." But, said Alex Epstein, an analyst at the Ayn Rand Institute, "Any law enforcing 'Net Neutrality' would be a terrible blow to Internet freedom."

"'Net neutrality' is the idea that ISPs should not be able to favor some types of data over others; they must be 'neutral' toward all the data they carry. But just as cable companies have a right to apportion their bandwidth between Internet and television data, so Internet providers have a right to apportion their bandwidth between standard and premium Internet data."

"'Net Neutrality' laws would forcibly prevent network owners from selling innovative services to their customers," said Epstein. "Shame on Microsoft and Google for trying to deny their competitors the freedom that has made the Internet great—and shame on the politicians and activists who support this corrupt idea."

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Reject the 'Values Voters'' Culture of Living Death

Posted by ARI Media at 8:22 PM

Irvine, CA—On Monday, the Republican Values Voters Presidential Debate was held, billed as representing " America's Largest Voting Block." Most of the candidates involved, including straw poll winner Mike Huckabee, pledged their support for building a "culture of life"—a rallying cry for America's "values voters" in their opposition to all abortion and embryonic stem cell research, and in their opposition to euthanasia and assisted suicide. By doing everything possible to preserve embryos, fetuses, and the incurably ill or vegetative, they say, we will bring about a "culture of life."

Alex Epstein, an analyst at the Ayn Rand Institute, denounced this idea. "Think about the reality of such a culture. Pregnant women who rationally desired to abort—whether because of accidental pregnancy, rape, birth defects, or danger to their lives—would be forced to attempt dangerous, 'back-alley' abortions, the kind that crippled or killed untold numbers of women before Roe v. Wade. Individuals with incurable and unbearable diseases would not be able to die with dignity at a time of their own choosing, but would be subjected to a protracted existence of often unspeakable agony. The potential millions who could be cured by treatments derived from the promising field of embryonic stem-cell research would instead suffer and die.

"To call this a 'culture of life' is a colossal fraud. In reality, it is a culture of suffering—of living death—in which actual human lives are sacrificed because 'God's will' commands it. It is a culture that consistently accepts the Christian ideal that human life is properly lived in sacrifice to God, and that suffering is proof of virtue.

"A true 'culture of life' would leave individuals free to pursue their own happiness—free from coercive injunctions to sacrifice themselves to religious dogma. Such a culture is what we must seek to create, as we do everything possible to fight religious conservatives' 'culture of living death.'"

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Make TV Free

Posted by ARI Media at 8:20 PM

Irvine, CA—The FCC plans to consider banning television content providers from bundling mainstay channels with less popular ones when negotiating broadcast terms with cable companies. This is seen as the first step to eventually forcing cable companies to offer cable channels to consumers "a la carte," rather than as part of a bundle. According to FCC chairman Kevin Martin, "If you only want one channel, you shouldn't have to take ten or twenty."

"This is an example of the government trying to solve a problem it created," said Dr. Yaron Brook, executive director of the Ayn Rand Institute. "In a free market, if consumers wanted to purchase cable TV channels 'a la carte,' there would be cable companies trying to cash in on that demand. But the TV industry is not a free market—at every level, the government controls and regulates it.

"Most cable companies, for example, are government-protected monopolies in the markets in which they operate, preventing consumers who are unhappy with their service from patronizing a different cable provider. At the same time, a tangled host of regulations and restrictions enable content providers to strong-arm cable companies into accepting bundled channels or else pay high retransmission fees.

"The end result of such regulations, and  others  like them, is that cable companies are both protected and hamstrung from freely trading their services at a range of price-points and channel combinations. It is ridiculous to think that the solution to this regulatory mess is more regulation.

"What we need is freedom in television, where content providers, cable companies, and consumers are free to deal with one another on mutually agreeable terms, without government interference or government favor."

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Message to Presidential Candidates: Income Inequality Is Good

Posted by ARI Media at 6:12 PM

Irvine, CA—Presidential candidate Barack Obama is receiving lavish praise for giving a speech on Wall Street that included “tough talk” about the issue of “income inequality”—an issue that he and nearly every other presidential candidate regard as a crisis.

But, said Alex Epstein, an analyst at the Ayn Rand Institute, "there is no such crisis. Income inequality is a natural and desirable part of a free, prosperous society.

"Critics of income inequality act as if American wealth is a communal pie that belongs equally to all of us. But the vast wealth that exists in America has been created—through the productive activities and voluntary arrangements of individuals. And individuals do not necessarily create the same amount of wealth. Because all wealth is created, it rightly belongs to those who earn it (or their chosen beneficiaries)—and no one can rightly claim to deserve wealth earned by others.

"Critics of income inequality point to some legitimate problems, such as poor educational opportunities, growing healthcare costs, and stagnating wages—but these are the result, not of too much capitalism, but of government policies based on the same egalitarian mentality that denounces 'income inequality.' If business and wages were deregulated, we would see a dramatic rise in economic opportunity. If education and medicine were left free, with America's businessmen, doctors, and educators liberated to offer education and medicine at all different price points, we would see quality and price improvements like those for computers or flat-panel television sets. But these benefits of freedom require that we recognize the moral right of each individual to enjoy whatever he produces—and recognize that none of us has a right to something for nothing."

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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The First Day of School: VanDamme Academy Style

Posted by Lisa VanDamme at 4:27 PM

I have often been told that, when asked what was special about their VanDamme Academy education, graduates say, "We always understood why we were learning what we were learning." This important effect has many causes, the most significant among them being that what the students are learning is, in fact, important, and that the teacher always makes a purpose of conveying, implicitly and explicitly, why it is important.

In a discussion of the distinctive VanDamme Academy history program, Andrew Lewis said that the little history that is taught in today's schools typically addresses five questions: Who? What? When? Where? and How? Mr. Lewis recognizes that the answers to those questions are inadequate without answers to two more: Why? and So what? The story of history must be causal and explanatory, the explanations must be relevant to the students' lives, and the students must understand the relevance.

It is this principle that defines the first day at VanDamme Academy. In each class, the teacher begins with the questions: What is this subject? and Why do we need to study it? Here is what I glimpsed walking through the school's halls on that inaugural day:

In Mrs. O'Brien's grammar classes: She discussed what grammar is (principles concerning the proper use of language), and answered the cliché objection, "We don't need grammar; we just need to make ourselves understood." She demonstrated that we cannot consistently make ourselves understood without the rules of grammar, presenting humorous examples from Eats, Shoots, and Leaves and Anguished English of the problems and ambiguities that result from the placement or misplacement of a comma (e.g., "Slow, children ahead," and, "Slow children ahead.") or from an amphibolous construction (e.g., "Customers who find the waitress uncivil ought to see the manager."). She introduced a theme to which she can refer throughout the year: that a mastery of grammar is vitally useful.

In Mr. Travers' literature classes: He began with a discussion of the personal value of literature. He explained that a great plot presents an extraordinary sequence of events that is purposeful and has an abstract meaning, differentiating it from the story of an ordinary day, which is full of the mundane, accidental, and meaningless. He showed how that abstract meaning can illuminate the world around them, and referred to the inspiration they had drawn from the themes of works they had previously studied (e.g., the virtue of independence in An Enemy of the People.) He showed that great works of literature present people who have been distilled to an essence, that they highlight the nature and consequences of certain traits of character, and discussed how this could help the students in understanding and evaluating qualities in others and in themselves.

Educators often wrestle with the question: How do we motivate the students? Many resort to the carrot and the stick, dangling rewards or threatening consequences. But the technique employed by Mr. Travers, Mrs. O'Brien, and Mr. Lewis, and the way they will make good on their promise to present what is important and show why it is important—that is the essence of motivation, and a defining feature of the VanDamme Academy curriculum.

Click here to sign up for the VanDamme Academy's free, e-newsletter, "Pedagogically Correct" featuring articles about the principles of teaching employed at the Academy, along with stories about the results they are achieving.

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Monday, September 24, 2007

More on Ahmadinejad's Forum at Columbia

Posted by Craig Biddle at 1:53 PM

In case the relativist “principle” guiding Lee Bollinger’s choice to invite Ahmadinejad to speak at Columbia was not clear enough in his earlier statement, here is a brief video of him making it even clearer. The “principle” is that anyone willing to “debate”—regardless of his complicity in the torture and murder of thousands of people to date—regardless of his aspirations to torture and murder many more—regardless even of whether he has orchestrated the torture and murder of millions of people—will have a forum to speak at Columbia, because, after all, everyone’s opinions are equally deserving of consideration. To make this point perfectly clear, Bollinger tells us:

If Hitler were in the United States and wanted a platform from which to speak … if he were willing to engage in the debate and a discussion, to be challenged by Columbia’s students and faculty, we would certainly invite him.

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Friday, September 21, 2007

Religion and Relativism: The Axis of Evil (Exhibit 723-B: Ahmadinejad's Visit)

Posted by Craig Biddle at 9:37 PM

That the Bush administration is permitting Ahmadinejad to enter America for any reason other than to kill him on sight is a moral travesty. But, then, given that Bush and company’s philosophy counsels us to “resist not evil” and “turn the other cheek” and “judge not that ye be not judged” and “love your enemies” and the like, this should come as no surprise.

Of course, religionists don’t have a monopoly on such irrationality; relativists partake in the insanity too. While Ahmadinejad is in town, Columbia University is having him lecture to its students. This, says Columbia’s President Lee Bollinger, is in keeping with the school’s “long-standing tradition of serving as a major forum for robust debate.” What debatable ideas might Ahmadinejad present to Columbia’s students? Well, since most American college students are not yet fully primed for his usual directness, perhaps he won’t be as forthright with them as he is in this brief video, but here is what Ahmadinejad has to say on a typical day:

“Robust debate” indeed.

Religion and relativism are evil, America. It is time to discover objective morality.

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Fall Issue of TOS Now Online

Posted by Craig Biddle at 11:10 AM

The online version of the Fall issue has been posted to our website.

In connection with all the press surrounding the fiftieth anniversary of Ayn Rand’s Atlas Shrugged—from the New York Times article “Ayn Rand's Literature of Capitalism,” to the Los Angeles Times piece “Ayn Rand's Epic Storytelling,” to Lionsgate’s selection of a director for the Atlas Shrugged movie—it is my pleasure to present Andrew Bernstein’s essay “Transfiguring the Novel: The Literary Revolution in Atlas Shrugged.” Bernstein examines Rand’s dramatization of the novel’s plot-theme, her use of literary techniques, and the nature and significance of key figures in the story, showing how Rand employed such elements to tap the full potential of this supremely conceptual art form, and shedding new light on Rand’s literary genius.

Also in this issue are “The Morality of Moneylending: A Short History” by Yaron Brook (which is accessible to all for free) and “How to Analyze and Appreciate Paintings” by Dianne Durante (which is accompanied by fifteen color images of the paintings discussed).

If you’ve not yet subscribed to TOS, why not do so today? An online subscription is only $49 per year—about 13 cents per day. Click here to subscribe.

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The Un-American Call for National Service by Alex Epstein

Posted by ARI Media at 11:05 AM

The lead article in a recent issue of Time magazine makes the case for “universal national service”—which the article describes as “the simple but compelling idea that devoting a year or more to national service, whether military or civilian, should become a countrywide rite of passage, the common expectation and widespread experience of virtually every young American.” This is just the latest call from commentators and politicians for Americans to engage in more national service. National service, they all claim, is necessary to preserve and sustain America’s greatness; the Time article calls it “a recipe for keeping a republic.”

In fact, the idea of national service is profoundly un-American.

America was founded on the principle of individualism: the idea that each individual is a sovereign being with the moral right to his own life and to the achievement of his own goals. This is the basis of the political idea, enshrined in our Declaration of Independence, that the individual possesses inalienable rights to life, liberty, and the pursuit of happiness. The Founders accordingly reconceived the purpose of government as being the servant of the individual, rather than his master.

But the idea behind national service is that service to the state is a moral duty. The government, its advocates claim, should teach us that service is an integral part of American citizenship. Robin Gerber, a professor of leadership at the University of Maryland, writes: “Young Americans should be told they have an obligation to serve, a duty to actively support their democracy.” Conservative writer David Brooks endorses national service because it “takes kids out of the normal self-obsessed world of career and consumption and orients them toward service and citizenship.” Brooks favors military-related national service, because under it, “Today's children . . . would suddenly face drill sergeants reminding them they are nothing without the group.”

This collectivist belief in the supremacy of the group over the individual is the foundation of the national-service ideology, which regards the individual as a servant to the nation. The notion that people are “nothing without the group” and owe their lives—or any portion of them—to the state is antithetical to American individualism and freedom.

The logical end road of the belief that you have a duty to serve the nation is legislation that forces you to do so—i.e., compulsory national service. Like Time magazine, Senators John McCain and Evan Bayh, who introduced the Call to Service Act in 2003, think that “national service should one day be a rite of passage for young Americans.” But there is only one way to make national service a “rite of passage”: by government coercion. McCain has long favored compulsory national service, but laments that it “is not currently politically practical.” Robert Litan of the Brookings Institution has proposed that every 18-year-old be forced to perform one year of compulsory service. This is nothing less than involuntary servitude of the youth in the land of the free.

On the premise that service is a duty, those—such as President Bush—who have called for voluntary national service will be morally powerless against future bills that seek to make it mandatory.

Every totalitarian society in history has rested on the premise of man’s alleged duty to the state. It was Adolf Hitler, for example, who declared that “the higher interests involved in the life of the whole must set the limits and lay down the duties of the interests of the individual.”

To call service to a collectivist state pro-American is perverse. To preserve our great nation, we must embrace not the subjugation of the individual to the state, but his sovereign right to the pursuit of his own happiness.

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Thursday, September 20, 2007

EU Has No Right to Punish Microsoft

Posted by ARI Media at 12:26 AM

Irvine, CA—Under Monday’s ruling by a European Union appeals court, Microsoft must disclose secret software codes to rivals, strip Windows Media Player from its operating system, and pay a $613 million fine. The court rejected Microsoft’s appeal of a 2004 antitrust ruling in which the company was found to have “abused” its “dominant position” in the marketplace.

“This ruling violates Microsoft’s right to profit from the enormous popular acceptance of its Windows operating system,” said Dr. Yaron Brook, executive director of the Ayn Rand Institute. “Microsoft cannot force anyone to buy its products. If the company sets prices unreasonably high relative to its customers’ interests, then competitors are free to step in and offer a better value.  But if 95 percent of consumers choose to buy Windows software, then Microsoft has a right to profit from that success and not be punished for it.”

The ruling forces Microsoft to disclose the secret codes used by workgroup servers to access Windows-based computers, and it also requires the company to offer a version of Windows that omits the company’s proprietary media player.

“European regulators should have no power to dictate the availability or price of any company’s inventory of goods, services, or intellectual property,” said Dr. Brook.  “Antitrust laws in Europe and America unjustly threaten the freedom of every successful business and should be abolished.”

If Microsoft chooses not to appeal, the multi-million-dollar fine will be distributed to the member states of the European Union.  “The governments of Europe should be ashamed, dividing the loot like highway robbers who have terrorized a helpless victim,” said Dr. Brook.

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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End, Don't Extend, the Persecution of Microsoft

Posted by ARI Media at 12:22 AM

Irvine, CA—The government has been investigating and prosecuting Microsoft under antitrust law since 1990—including a 2001 judgment that forced the company to be subject to government dictates of its business practices that apply to no other software company. This regime was scheduled to end in November, but a group of states, led by California, are saying that it must be extended. According to the Wall Street Journal, their reason was that “Microsoft has faced little new competition” in “operating-systems and Internet-browser technologies.”

“This justification for further government control of Microsoft is a microcosm of the fundamental injustice of the government’s entire prosecution of the company,” said Alex Epstein, an analyst at the Ayn Rand Institute. The criticism against Microsoft amounts to: Microsoft has been too successful in comparison to its competitors for their liking. By this perverse logic, only if the company had been a miserable failure in producing desirable operating systems and Web browsers would it deserve to be free.

“Of course, Microsoft’s tremendous success is the whole reason it ever fell under antitrust prosecution in the first place. Antitrust law regards any company that has earned substantial market share as a dangerous ‘monopolist.’ Microsoft has suffered almost two decades of government threats and punishment on the grounds that its 90 percent plus market share in operating systems was a ‘threat’ to the consumers who eagerly chose Microsoft Windows over the competition. Microsoft used no force or fraud against anyone; its ‘crime’ was to choose to add a valuable feature, a Web browser, to its popular operating system.

“If the government extends its coercive ‘oversight’ of Microsoft, it will further compound this injustice. Instead, the government owes Microsoft an apology—and it owes other successful companies the justice of abolishing the success-punishing antitrust laws.”

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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Wednesday, September 19, 2007

The Economics and Ethics of Moneylending

Posted by Craig Biddle at 3:18 PM

In connection with Yaron Brook’s essay “The Morality of Moneylending,” Edward Glaeser’s NY Sun op-ed “Vilifying Lenders” is a hopeful sign. Glaeser makes some good points:

Not so long ago, banks were routinely vilified for not lending to the less fortunate. Over the past 15 years, a revolution in credit has made it possible for millions of less wealthy Americans to borrow to buy a house or a car, or to go on vacation. The rise in subprime lending has made credit available to the many, not just the privileged few.

And so politicians now denounce the banking industry for lending to the less fortunate. Lenders that entrust their money to riskier borrowers are routinely called predators, as if velociraptors crowd creditors' cubicles. Presidential candidates promise to "combat" subprime lending, as if we need a war to ban loans to people without perfect credit scores. More worryingly, politicians have called for a moratorium on foreclosures, which would rewrite the rules of perfectly legal loans. This might help politicians look like they are doing something, but future borrowers will pay the price. Any response to the current crisis must recognize that to protect the rights of future borrowers, we must protect the rights of today's lenders….

As we respond to the current subprime mess, we need to follow the letter of the law, not the rhetoric of anti-banking populists. If lenders broke the law, then they should suffer the consequences. Foolish lenders that made foolish loans do not deserve a bailout. At the same time, we must not help distressed borrowers by expropriating law-abiding lenders.

And:

Senator Obama's Stop Fraud Act threatens lenders with up to 35 years of prison and $5 million fines if they use any "false or fraudulent pretenses, representations, or promises." Given the vagueness of the term "fraudulent pretenses," I would expect to see millions of borrowers use the threat of prison or the threat of a lawsuit to get out of paying back their mortgage. I would also expect to see lenders shun loans that can lead to such lawsuits. Perhaps, the law should be called the "Stop Credit Act."

Unfortunately, Glaeser also makes some concessions to statism, for example: “…we can consider small public grants to ease the distress of people who move because of a foreclosure.” But it is heartening that a major economist recognizes at least on some level that there is something wrong with vilifying lenders for providing objectively valuable goods and services.

I encourage Glaeser and others of his economic persuasion to read Brook’s article, which identifies not only the economic facts in defense of free markets in the moneylending industry, but also the moral facts in support of such freedom. As Brook points out:

An understanding of … economic principles is necessary to defend the practice of usury. But such an understanding is not sufficient to defend the practice. From the brief history we have recounted, it is evident that all commentators on usury from the beginning of time have known that those who charge interest are self-interested, that the very nature of their activity is motivated by personal profit. Thus, in order to defend moneylenders, their institutions, and the kind of world they make possible, one must be armed with a moral code that recognizes rational self-interest and therefore the pursuit of profit as moral, and that consequently regards productivity as a virtue and upholds man’s right to his property and to his time.

Until the morality of moneylending is understood and embraced, economic arguments in defense of the practice will carry little weight.

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HillaryCare 2.0: More of the Poison that Is Killing Our Healthcare System

Posted by ARI Media at 10:24 AM

Irvine, CA—Hillary Clinton has announced her new “universal healthcare” plan, which she claims will solve the problem of high insurance premiums. “You’ll never again have to worry about finding affordable coverage,” says Mrs. Clinton. “Your coverage will be guaranteed—if you pay your premiums and follow the rules, your insurance company will be required to renew at a price you can afford.”

Alex Epstein, an analyst at the Ayn Rand Institute, denounced the proposal. “Like all other ‘universal healthcare’—that is, socialized medicine—schemes, Mrs. Clinton’s is guaranteed to lead to disaster if implemented, because it ignores the basic requirement of medical progress and falling prices: freedom for doctors, patients, and insurance companies.

“Health care is a mess because it is one of America’s most controlled and socialized industries—beginning with the fact that we are all forced to pay for one another’s health care through Medicare and the government-induced third-party-payer system. In the name of the individual’s ‘right’ to health care and the government’s ’responsibility’ to provide it, the government has reached its tentacles into every facet of medicine, from how many doctors are allowed to be licensed to which medical professionals may perform what procedures, to what procedures insurance companies must provide on their plans.

“Mrs. Clinton and other advocates of socialized medicine all seek to ‘solve’ this problem by adding more government coercion to the system. For example, her ‘guarantee’ that ‘your insurance company will be required to renew at a price you can afford’ is a veiled call for price-controls—and a prescription for insurance companies to be exposed to a bankrupting combination of huge liabilities with comparatively low premiums.

“If anyone is interested in fixing American health care, there is only one solution: remove coercion from the system. If medicine were left free, with individuals responsible for paying for their own care and insurance, and America’s businessmen, doctors, and educators liberated to offer it at all different price points, we would see quality and price improvements like those for flat-panel television sets. Indeed, we already see this in the few realms of medicine that are left free; laser eye surgery, for example, has improved dramatically over the years while prices have fallen. We could see such developments with medical care as a whole—as soon as we agree to take responsibility for our own health, and get the government out of it.”

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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What Not to Do about Subprime Failures

Posted by ARI Media at 10:20 AM

Irvine, CA—As high default rates on subprime loans continue, various state and federal officials are eager to “do something” to counter the failures—especially to give aid to the homeowners who bought mortgages they couldn’t afford.

“This is exactly the wrong approach,” said Alex Epstein, an analyst at the Ayn Rand Institute. “The current subprime problems are the result of borrower and lender irrationality, and of government intervention in the market to ‘help homeowners.’ Government housing assistance programs, like Fannie Mae and Freddie Mac, encourage people to buy homes even when they cannot truly afford them. And the government’s longtime manipulation of interest rates to keep them artificially low led many to expect that their adjustable rate mortgages would stay low forever—only to see their fortunes at the mercy of government rate hikes or rate cuts.

“This does not absolve lenders or borrowers of responsibility for taking on risky loans, and it certainly does not justify any sort of bailout. The individual who buys an expensive home counting on interest rates to stay low forever is responsible for the consequences of his risky decision. For the government to ‘do something’—anything—to alleviate a mortgage failure necessarily rewards those who took on large housing risk at the expense of those who didn’t. And it invites future irrationality by telling people that they do not need to think about their financial decisions, because the government will always be there to save the day.

“The only moral and rational response by the government, besides prosecuting genuine cases of fraud, is to stop encouraging people to make bad decisions—but then leave them to face the consequences when they do.”

Copyright © 2007 Ayn Rand® Institute. All rights reserved.

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