Laissez Faire

Maybe you’ve heard this story. A father asks his liberal daughter, after she has spent the day studying for a test, how she would feel if her professor just decided to give everyone an A. “That would be unfair,” she says. “Why should people get the same grade as me when I worked really hard to earn it and they goofed off?” That, the father says, is why he supports free markets rather than wealth redistribution.

It’s a powerful analogy, but by itself goes only so far. Although most Americans would agree that it is wrong to deprive people of what they earn in order to give other people the unearned, they have a hard time seeing how a businessman earns vast fortunes. What’s worse, capitalism’s opponents are hard at work trying to prevent them from grasping this fact.

This, for instance, was the purpose of Marx’s labor theory of value, which says that only physical laborers are truly productive. It was the purpose of Elizabeth Warren’s rant, in which she declared, “There is nobody in this country who got rich on his own.” It’s the purpose of Warren Buffett’s declaration that the extraordinary successful “get lucky.”

You could write entire books dissecting the errors in these arguments, but if you know the stories of capitalism—of how America’s most successful producers became successful—you’ll be sporting intellectual Kevlar.

Capitalists are unproductive? I think of J.P. Morgan risking vast sums of his wealth on Thomas Edison’s electric light bulb, without which we would still be lighting candles in the darkness.

No one gets rich on his own? I think of Apple’s Steve Wozniak. While other kids were out partying, the teenage Woz spent countless hours in his bedroom designing computers, before going on to create the first personal computer, the Apple II.

Successful producers just “get lucky”? I can’t help but think of John D. Rockefeller.

When Rockefeller was sixteen he set out to find his first job. He made up a list of the companies he was interested in working for and then started knocking on doors, delivering a simple pitch: “I understand bookkeeping, and I’d like to get work.”

The first business Rockefeller approached turned him down. So did the second. But Rockefeller wasn’t discouraged. For six consecutive weeks, he spent six days a week going from business to business looking for a job and coming up empty. Once he had gone through his entire list, he simply started back from the beginning, visiting some companies two and even three times. Finally got hired and got the chance to start his meteoric rise.

The history of capitalism is filled with such stories: tales of men and women who display unmatched feats of ambition, dedication, hard work, creative thought, and commitment to learning. You need to know these stories if you want to be able to appreciate—and defend—capitalism.

Where to start? Here are a few I’d recommend:

• Burton Folsom – The Myth of the Robber Barons
• Richard Tedlow – Giants of Enterprise
• Walter Isaacson – Steve Jobs
• Steve Wozniak - iWoz
• Sam Walton – Sam Walton: Made in America
• Tony Hsieh – Delivering Happiness
• Ron Chernow - Titan

France Entrepreneurs Flee From Hollande Wealth Rejection

Jeremie Le Febvre, the 30-year-old founder of private equity marketing-services firm TBG Capital Advisors, plans to move to Singapore from Paris this year.

Not because of President-elect Francois Hollande’s pledge to boost taxes; rather for what Hollande’s victory says about how wealth is viewed in France, the entrepreneur said.

“What’s really driving my departure is the fact that I don’t share the values that emerged during the election, the rejection of ambition and success,” he said in an interview. “It’s part of France’s difficult relationship with money, but it has reached a new level. Even if it’s utopian, I need to believe for me and my descendants that the sky is the limit.”

More here.

HT: RT

In this video I mention the research of Steven Kaplan. Here are a few examples:

If you would like to ask me a question, you can submit it here.

Virginia Governor Bob McDonnell recently gave a commencement address in which he declared that,  “Serving others, I believe, is the highest calling for a person in our society. I tell you as you leave here—be great and serve others.” A harmless bromide? Most people would say yes, but in this interview with Kerry Lutz I talk about why anyone who values happiness, success, and freedom should question statements such as McDonnell’s.

I’ve already commented on part of Will Wilkinson’s recent post “Arthur Brooks and Ayn Rand on the Moral Case for Free Enterprise.” Later in the same post, Wilkinson raises an objection to a key portion of Rand’s (and Brooks’s) critique of the welfare state.

First, though, let’s get clear on Rand’s view. According to her, we face a choice between a growing welfare state and capitalism. Capitalism, she argues, is a system based on the protection of individual rights, while the welfare state says that the individual’s right to his wealth is trumped by other people’s need. Others are entitled to live at his expense.

Once the latter principle is established, Rand observes, the welfare state has a tendency to expand. What starts with a few needs entitling a few people to a little of their neighbor’s wealth ends up as a dog-eat-dog fight for other people’s money. Wilkinson quotes her thusly:

Morally and economically, the welfare state creates an ever accelerating downward pull. Morally, the chance to satisfy demands by force spreads the demands wider and wider, with less and less pretense at justification. Economically, the forced demands of one group create hardships for all others, thus producing an inextricable mixture of actual victims and plain parasites. Since need, not achievement, is held as the criterion of rewards, the government necessarily keeps sacrificing the more productive groups to the less productive, gradually chaining the top level of the economy, then the next level, then the next. (How else are unachieved rewards to be provided?)

But according to Wilkinson, “The problem with both Brooks’ and Rand’s claims is that they’re totally spurious.” Totally spurious? Even if you disagree with Rand, it’s hard to deny that there’s plenty of evidence that the process she describes takes place all the time.

Consider the history of government involvement in health care. In the 1960s there was a perception that some elderly were not receiving adequate health care. To meet this need, Congress passed Medicare. The same concern was voiced about the poor. To meet their need, Congress passed Medicaid. The same concern was voiced about those too destitute (or too irresponsible) to buy health insurance, and in the ’80s Congress passed the Emergency Medical Treatment and Labor Act, forcing emergency rooms to treat anyone who needed medical attention, regardless of their ability to pay. The same concern was voiced about parents who were too well off for Medicare, but who nevertheless couldn’t meet their children’s health care needs, and in the late ’90s Congress passed the State Children’s Health Insurance Program. And so on, through George W. Bush’s prescription drug bill and Obamacare.

What Wilkinson actually seems to be objecting to is not the claim that the welfare state has a tendency to grow—clearly Rand is right about that—but the claim that such expansion must come at the expense of economic freedom. The welfare state can grow right along with economic freedom, he says: “there is no clear trade-off between the size of a country’s welfare state and its level of economic freedom.” That’s a different point—albeit equally false. The clear trade-off is that the more of your money the government takes, the less economically free you are.

What is economic freedom? Wilkinson never tells us what he thinks, but Rand is clear. It means that one’s economic activities are free from government coercion, that the government exists only to protect individual rights, including the right to property. So what’s the welfare state? It’s when the government violates your right to property, confiscating the wealth you earned in order to give other people the unearned.

Add to that: The welfare state inevitably leads to other restrictions on economic freedom as well. Go back to health care. As Yaron and I catalog in our forthcoming book, although Americans were promised before the passage of Medicare and Medicaid that the government would just be footing the bill, not exercising control over doctors and hospitals, it soon found that, in the words of one of Medicare’s architects, “We did have to interfere.” Of course they did. If the government is cutting checks you had better believe it’s going to exercise some form of “oversight.” The result is that health care today is one of the most government-controlled industries in the country.

Wilkinson’s claim, as far as I can tell, is based on a single piece of evidence: the fact some countries the Heritage Foundation ranks as very economically free have large welfare states—larger than other countries it ranks as less economically free. I’m not sure when we decided that Heritage’s definition of economic freedom and methodology for measuring it are beyond question, but even granting their accuracy, I’m genuinely perplexed by what Wilkinson thinks he’s proved. Is there really anyone who disputes that if you add up all of a country’s freedom-destroying programs it’s possible for a country with a large welfare state to be marginally freer overall than a country with a somewhat smaller welfare state?

One of the reasons capitalism has been losing and why government has grown so enormous over the last century is that people have no clue what it is. They equate capitalism with today’s mixed economy, and their view amounts to: unless a commissar is tossing people in prison for violating his latest five year plan, what you have is a free market.

By suggesting that capitalism is not only compatible with the welfare state, but that the size of the welfare state bears no relation to economic freedom, Wilkinson is muddying the waters in a new and dangerous way.

Ayn Rand is known and often criticized for her defense of selfishness and capitalism. “Doesn’t she have any concern for the poor?” her interlocutors ask. In “Arthur Brooks and Ayn Rand on the Moral Case for Free Enterprise,” blogger Will Wilkinson raises a novel criticism. Rand, he suggests, was concerned for the poor, or at least recognized the rhetorical value of appealing capitalism’s positive effects on the poor, and this, he claims, was a concession to altruism.

The criticism comes as part of a lengthy and sometimes hard to follow post that covers a lot of ground. I’ll comment on the rest of it later, but here I want to focus just on this single point.

Wilkinson argues that “Rand, despite the vehemence of her rhetoric, seems to go out of her way to communicate that under capitalism” the poor do well. He offers into evidence this passage from Rand’s essay “What Is Capitalism?”:

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. [Emphasis added by WW.]

Wilkinson characterizes the passage this way:

Capitalism achieves the common good, by the way. But it’s real justification is that capitalism is just, which Rand understands to mean, more or less, it gives people what they deserve. It’s telling, though, that the rhetorically fearless Rand in this instance gave into the rhetorical pressure to note that capitalism is justified on “altruist” common-good grounds.

I think Wilkinson misunderstands Rand’s point. Rand is not saying that capitalism is good on altruistic grounds. On the contrary, she stresses again and again in her writing that if you accept altruism—the theory that man’s moral duty is to sacrifice himself for others, to put their well-being ahead of his own—then you cannot consistently defend capitalism. (Indeed, that was precisely the criticism Yaron and I made of Arthur Brooks in an article Wilkinson links to.)

Rand’s defense of capitalism is entirely egoistic. It is rooted in her conviction that each individual is an end in himself, not a means to the ends of others. Morally, she argues, the individual should support his own life by exercising his faculty of reason. A proper social system, therefore, is one that protects the individual’s ability to live by guarding his ability to be rational. Capitalism, she concludes, is the only moral system because only it bars the initiation of physical force from human relationships—and physical force is the only way others can stop us from being rational. (This is obviously a brief summary. For the entire progression of Rand’s argument, see “What Is Capitalism?”)

You don’t get more egoistic than that. Rand’s entire focus is on what’s required for the individual—any­ individual—to flourish in society.

What, then, should we make of the sentence Wilkinson draws our attention to: “It is true that capitalism does [achieve the “common good”]—if that catch-phrase has any meaning—but this is merely a secondary consequence”? That becomes clear after we read ahead a few paragraphs in the essay Wilkinson quotes. According to Rand:

“The common good” is a meaningless concept, unless taken literally, in which case its only possible meaning is: the sum of the good of all the individual men involved. But in that case, the concept is meaningless as a moral criterion: it leaves open the question of what is the good of individual men and how does one determine it?

What Rand is saying here is that all good is individual good, and only a principle that identifies what’s good for the individual can serve as a moral criterion. Applying that criterion, one can know what’s good for a group of individuals—but the process doesn’t work in reverse, because the “common good” is empty as a moral criterion.

Capitalism is good for all men—for each and every man—not for some collective apart from and superior to the individual. Capitalism is good for Bob, it’s good for Gus, it’s good for Tammy—and so capitalism represents “the common good” of Bob, Gus, and Tammy.

But, Rand is stressing, such “common good” is “merely a secondary consequence” because it’s caused in the first place by acting on an individualist moral criterion, embodied in the principle that capitalism is good for man as an individual rational being. Capitalism is a system that is geared toward each person’s survival—not just that of the productive genius but of any person willing to think and produce. That’s what makes capitalism a moral system.

This is one reason why, as Wilkinson points out elsewhere in his post, Rand will sometimes point specifically to the beneficent effects of capitalism on the poor. The fact that even people of limited means can prosper under capitalism testifies to the fact that it is not a system where “the strong exploit the weak” but where each individual can flourish to the extent he exercises his mind.

But there is another reason I think Rand points out the effects of capitalism on poor people: a rationally selfish individual, on her view, cares about other people’s well-being and wants to see poor people get richer. That’s not altruism—it’s not a matter of self-sacrifice. As I have discussed elsewhere, other people’s well-being is a value to the rationally selfish individual. All else being equal, it’s good for me when good people flourish. The richer and happier the world I live in, the better it is for me—both materially and spiritually.

For Rand, the fact that capitalism allows poor people to make themselves richer is something we should celebrate. That doesn’t mean “the poor” ought to be one’s primary concern, which is why in all the quotes Wilkinson points to, Rand treats it as an aside. But it is an error to conflate concern for others with altruism.

Bottom line: Wilkinson is wrong if he thinks that a persuasive moral argument for capitalism can and should include appeals to altruism. Ayn Rand’s entire body of work compels the opposite conclusion.

What Wilkinson’s post reveals, I think, is an all-too-common failure to take the time to comprehend what Rand is arguing—which leads to treating her, not as a deep and careful thinker, but as someone who can be understood at a glance.

It simply ain’t so.

I got to talk to our friend Mike Slater this morning about why it is that some people would rather have the government take care of them than live in a free society. In the process we discuss mustard, the Julia controversy, and the movie The Avengers. My segment starts a few minutes in.

If you would like to ask me a question, you can submit it here.

From “What Can One Do?” in Philosophy: Who Needs It:

Man cannot exist without some form of philosophy, i.e., some comprehensive view of life. Most men are not intellectual innovators, but they are receptive to ideas, are able to judge them critically and to choose the right course, when and if it is offered. There are also a great many men who are indifferent to ideas and to anything beyond the concrete-bound range of the immediate moment; such men accept subconsciously whatever is offered by the culture of their time, and swing blindly with any chance current. They are merely social ballast—be they day laborers or company presidents—and, by their own choice, irrelevant to the fate of the world.

Impact, the Ayn Rand Institute’s donor newsletter, recently interviewed Yaron and me on our forthcoming book, Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government. In it we discuss the writing of the book, how our view of the audience evolved, and our plans for the future. You’ll also get a sneak preview of a pamphlet we’re going to be making available to people who preorder the book, “Ayn Rand and the Fight to Limit Government.”

• I haven’t commented on the Julia controversy. Personally, my reaction was, “Who the hell would want to live that way?” Think of the people you admire, the people who have accomplished great things, who have a real sense of purpose and are happy with their lives. Were they perpetual government dependents? Or were they ambitious, self-made men? Well, just note that they are the ones footing the bill for all the Julias—and that in Obama’s world, they are entitled to exactly zero consideration. Some well-deserved mocking of Julia here.
• The UK allows pregnant women to take a year off of work with partial pay. Result? Women start having babies in order to take time off of work. Imagine that.
• How entrepreneurs, not government bureaucrats, are leading the fight against fake pharmaceuticals.
• A sorta-kinda-case for private roads.
• Commentators such as Krugman have been talking about Europe’s failed austerity agenda. But has Europe actually cut government spending? “First, France and the U.K. have not cut spending. Second, when spending was actually reduced—between 2009-2011 in Greece, Italy, and Spain—the cuts were relatively small compared to the size of their bloated European budgets.” Dan Mitchell has more.
• “Americans Paying More in Taxes than for Food, Clothing, and Shelter”
• What worries me most about the Occupy Wall Street mob is not their ideology, such as it is, but the breakdown in rule of law that happens when they are allowed to blatantly engage in criminal activities without consequences. So long as there is rule of law, we can fight them ideologically, but if mob rule becomes the norm, then we’re in real trouble. Thomas Sowell has similar concerns.
• An interesting take on the question: Are corporations people?
• Alan Reynolds does a number on the claim, which I’ve written about, that 70% marginal tax rates won’t decrease government tax revenues or even hamper productivity. The statistics are challenging enough to make you reach for the Advil, but what I find interesting is that most of the people who have cited the original 70% claim have never even bothered to regurgitate the authors’ reasoning. They just declare, as if it were settled, that confiscatory tax rates will have no negative effects, citing a couple academic papers that they know you won’t read and probably wouldn’t understand if you did read. Well, as Reynolds’s piece suggests, these allegedly “settled issues “seldom are.

If you would like to ask me a question, you can submit it here.

Yesterday’s election results in Europe reminded me of a scene from near the end of Atlas Shrugged.

“…Sure, I could pretend—and I wouldn’t save your economy or your system, nothing will save them now—but I’d perish and what you’d win would be what you’ve always won in the past: a postponement, one more stay of execution, for another year—or month—bought at the price of whatever hope and effort might still be squeezed out of the best of the human remnants left around you, including me. That’s all you’re after and that is the length of your range. A month? You’d settle for a week—on the unchallenged absolute that there will always be another victim to find.”

For those of you who haven’t heard me speak on entitlements, I’ll give you the 10 second summary: Why does the entitlement state grow? Because no one is willing to challenge the altruistic notion that we are our brother’s keeper. The only way to stop its growth is to reject this notion.

One of the questions I’m often asked when I make this point is, “Isn’t the problem, not altruism, but the idea that we should be forced to behave altruistically by the government? We don’t need to reject the notion that we are our brother’s keeper to end Big Government. We just need to demand that each person voluntarily assume responsibility for his brother.”

It’s a plausible argument for anyone who believes that being moral means personally choosing to do the right thing. Does a person who helps others because the government forces him to really deserve moral credit? But here’s the problem. This argument puts the emphasis on the moral character of the giver rather than the need of the receiver. Altruism, though, says that what matters in life is other people’s need: their need is a god you have to serve regardless of the effect on you—materially or spiritually.

Imagine a society without an entitlement state. Sure, many people would receive aid through voluntary charity. But if the government stepped in then they would receive even more aid, right? Well, if their need is the standard, then on what possible basis could an altruist object? On the grounds that he wants to get moral credit for his sacrifices? How utterly selfish!

Indeed, this is precisely how the debate played out in American history. In the era before the entitlement state, poor Americans received plenty of aid. But the supporters of government intervention merely came along and said: Fine, but why not do more? As the more consistent altruists, they inevitably won.

The only way out of this trap is to reject altruism at the root. The only way to stop the entitlement state is to defend the individual’s moral right to exist for his own sake.

From “Faith and Force: The Destroyers of the Modern World” in Philosophy: Who Needs It:

It was World War II that destroyed collectivism as a political ideal. Oh, yes, people still mouth its slogans, by routine, by social conformity and by default—but it is not a moral crusade any longer. It is an ugly, horrifying reality—and part of the modern intellectuals’ guilt is the knowledge that they have created it. . . .

Today, their perfunctory advocacy of collectivism is as feeble, futile and evasive as the alleged conservatives’ defense of capitalism. The fire and the moral fervor have gone out of it. And when you hear the liberals mumble that Russia is not really socialistic, or that it was all Stalin’s fault, or that socialism never had a real chance in England, or that what they advocate is something that’s different somehow—you know that you are hearing voices of men who haven’t a leg to stand on, men who are reduced to some vague hope that “somehow, my gang would have done it better.”

The secret dread of modern intellectuals, liberals and conservatives alike, the unadmitted terror at the root of their anxiety, which all of their current irrationalities are intended to stave off and to disguise, is the unstated knowledge that Soviet Russia is the full, actual, literal, consistent embodiment of the morality of altruism, that Stalin did not corrupt a noble ideal, that this is the only way altruism has to be or can ever be practiced. If service and self-sacrifice are a moral ideal, and if the “selfishness” of human nature prevents men from leaping into sacrificial furnaces, there is no reason—no reason that a mystic moralist could name—why a dictator should not push them in at the point of bayonets—for their own good, or the good of humanity, or the good of posterity, or the good of the latest bureaucrat’s latest five-year plan. There is no reason that they can name to oppose any atrocity.

You can listen to an audio version of this article here.

One of the points I stress when I talk about entitlements is that poverty is a production problem. What brings a person out of poverty is more wealth. If you want to see poverty end—and who doesn’t?—then your main concern is to discover how poor individuals can produce more wealth for themselves.

But many people today treat poverty as a political problem to be solved by transferring wealth from people who have produced it to people who haven’t.

Michael Katz is one of the leading authorities on the history of poverty and government anti-poverty efforts in America. The other day I started reading his book The Underserving Poor and quickly ran into this line: “But poverty, after all, is about distribution; it results because some people receive a great deal less than others.”

Poverty is all about distribution? Were cavemen poor because animal skins and arrowheads were not evenly distributed?

The truth is, we are born into poverty. Poverty is man’s natural state. He has to use his mind to discover the capacities of the raw materials he finds in nature and then exert productive effort to transform those raw materials into wealth. He has to learn that certain berries can be eaten safely, and then he has to pick them.

To be fair to Katz, he might concede that the cure for poverty used to be productive work. A few lines later he writes:

Poverty is no longer natural; it is a social product. As nations emerge from tyranny to subsistence, gain control over the production of wealth, develop the ability to feed their citizens and generate surpluses, poverty becomes not the product of scarcity, but of political economy.

Okay, he in effect says, maybe at one time poverty was a production problem. But now we have enough wealth for everyone, and yet some people have received a lot more than others, leaving many poor.

The problem is that Katz ignores or evades the fact the wealth is not an anonymous social product: it’s created by individuals.

This is a point Yaron and I discussed in a past Forbes column. Although today’s advanced division of labor economies are incredibly complex, underneath all the complexities, your standard of living is made possible by individuals engaging in the same two basic actions that sustained the cave man: thinking and producing.

Today, however, you don’t wander through the woods picking berries. If you’re in the food production industry, you play a small part in the process, say, by driving the truck that takes the berries to market. Unlike a caveman or a self-sufficient farmer, you don’t consume what you produce. In return for your productive contribution you receive money, which you then exchange for what you yourself consume: the clothing, medical care, computers, soft drinks, and TV shows produced by others. The division of labor doesn’t change the individual nature of wealth production—it merely makes it harder to see.

The reason some become rich, then, is not because they receive more than others but because they produce more than others. Our economy is not a collective pie, where a bigger slice for you means a smaller slice for me. Each of us makes himself richer by bringing new wealth into existence.

It’s actually even cooler than that. In the process of enriching yourself under capitalism, you enrich others. Steve Jobs made billions, but he did so by creating revolutionary products like the iPhone: he made his fortune by making the rest of us better off, not worse.

Where does that leave us? The problem we have today is that America is not a capitalist country, but a heavily controlled and regulated one (and don’t even get me started on the rest of the world). As a result, many Americans who would prosper in a free country are struggling to make ends meet. That is unfortunate, but the problem remains one of production. Only the barrier to production is not our lack of knowledge and wealth, as it was for our cavemen ancestors. The barrier is government intervention.

David Frum laments the fact that more and more people on the right are starting to follow Ayn Rand in calling for a moral defense of capitalism. “It reminds me,” he says, “of the dying phase of socialism.”

According to Frum, early socialists championed its economic efficiency over capitalism and only turned to a moral defense of socialism when the efficiency argument fell apart in the 1970s and 80s. “In economics,” Frum concludes, “you only mount a ‘moral defense’ when you feel you are losing.”

Frum needs to check his history. It’s definitely true that early socialists touted the economic superiority of socialism, but it was moral idealism that fueled their crusade for collectivism, and it was deeply-held moral notions that led people to accept the socialists’ economic claims.

Read, for instance, of the moral hatred of capitalism that drove Karl Marx, or about America’s “Red Decade” and why so many found the “Soviet Experiment” attractive. Even during socialism’s heyday (roughly the late 19^th century through WWII), the collectivists harped endlessly about capitalism as a system ruled by “immoral” self-interest, the profit motive, “greed,” individualism, and materialism—and they touted socialism for promoting community, brotherhood, and service to the group.

Frum thinks men are moved primarily by the desire for widespread economic prosperity, and that more basic ideas about human nature and human morality are irrelevant to the political and economic policies they embrace. On this view, moral arguments for socialism or capitalism are just smokescreens to hide economic failures. But this was not true one hundred years ago, and it’s not true today.

In 1946, Ayn Rand wrote a letter to Leonard Read, the founder of the Foundation for Economic Education. As its name suggests, FEE was conceived on the premise that spreading better economic ideas would reverse the collectivist tide. But Rand, in a truly penetrating analysis, argued that people do not accept collectivism because they accept bad economic theories; rather, they accept bad economic theories because they accept collectivism.

The reason is that economics have the same place in relation to the whole of a society’s life as economic problems have in the life of a single individual. A man does not exist merely in order to earn a living; he earns a living in order to exist. His economic activities are a means to an end; the kind of life he wants to lead, the kind of purpose he wants to achieve with the money he earns determines what work he chooses to do and whether he chooses to work at all. . . .

And the same holds true of society and of men’s convictions about the proper economics of society. That which society accepts as its purpose and ideal (or to be exact, that which men think society should accept as its purpose and ideal) determines the kind of economics men will advocate and attempt to practice; since economics are only the means to an end.

What determines the ends we choose to pursue? They aren’t hardwired into us by nature: they are chosen, and people and societies can choose different goals according to their ideas. The Islamic world has embraced service to Allah as its chief goal. The green movement says we should pursue “harmony with nature” (and ultimately subservience to nature). The collectivists put the focus on serving society (sometimes by enriching it, sometimes by fostering things such as “cooperation” or “brotherhood” or an amorphous “common good”). The Founding Fathers put the focus on the individual’s pursuit of life, happiness, and prosperity on earth.

This chosen goal, Rand is arguing—whatever it is—is not only something men strive for regardless of their economic views, but the goal itself influences the economic theories they will find plausible. People will not accept a breach between their view of the moral and their view of the practical. They will not accept that a certain course of action is morally mandatory and yet a complete disaster economically. As a result, they will gravitate toward economic ideas that are consistent with their more fundamental moral and philosophic ideas. You can see this cause-and-effect relationship playing out in the Islamic Middle East, in the green movement, and in dozens of collectivist countries, past and present—including the increasingly collectivist United States of America.

This is why, for  instance, you can bat down fifty economic arguments against capitalism—the myth that it leads to depressions, or to monopolies, or to running out of resources—and the opponents of capitalism won’t blink an eye, but will simply come up with fifty more. They have a moral view that says capitalism is bad, and so they will seize upon any economic idea that tells them they are right. (In our book, Yaron and I talk about how this is precisely what led Karl Marx to embrace and desperately cling to the labor theory of value.)

If you want to change the political and economic policies people accept, then, you have to challenge the goal they embrace. Here’s Rand again:

The moral and social ideal preached by everybody today . . . is the ideal of collectivism. Men are told that man exists only in order to serve others; that the “common good” is man’s only aim in life and his sole justification for existence; that man is his brother’s keeper; that everybody owes everybody a living; that everybody is responsible for everybody’s welfare; that the poor are the primary concern of society, its holy shrine, the god whom all must serve. . . .

How are you going to sell capitalist economics to go with that? How are you going to get them to accept as moral, proper and desirable such conceptions as personal ambition, economic competition, the profit motive and private property?

Frum is wrong. He is profoundly and deeply wrong. Ideas matter, especially moral ideas. If the political right is really starting to see that capitalism needs a moral defense, that’s not a last gasp of desperation but a positive development that opens the door to real political change.

Thanks to Jonathan Hoenig for bringing these chilling videos to my attention.

Update: This comes courtesy of Elan Journo.