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capitalism - the unknown ideal 2007-07-06 06:33 UTC
It's summer - the time that the minds of the parents of school age children turn back to their reading lists. Being on a fairly long business trip, I thought I'd have some extra time to catch up on reading. This turned out to be untrue, but I did get some reading in on the plane, and a little more since I got here.

My current selection is "Capitalism - the Unknown Ideal", primarily by Ayn Rand. It was written when her career was in full swing, and includes articles by a few others, including Alan Greenspan.

And what better place to read about the undeniable virtues of laissez-faire capitalism than India! This is a place that, despite some empty propaganda to the contrary, has clearly rejected the concept of economic rights and has left each individual to his or her own devices. I can see the bustling city out the window of the back seat of this plush Toyota SUV in which I'm riding. Hold on a minute, we're stuck at a traffic light among a haphazard array of rickshaws and motorbikes, and there's a 4 year old rapping insistently on my closed window -- very distracting -- OK, we're off again, horn blaring. Much better.

Ayn's just not connecting with me -- she seems to make quick, unsupported assertions, followed by internally consistent but isolated logical discussions, and frequently invokes the names of Hitler, Stalin, and others, seemingly to elicit a strong reaction from her readers. I remember that she's from the Soviet Union, and must know more about these baddies than I do. She also tends to quote liberally from her earlier books and articles, and not from much else.

Her treatments of the value of individual rights are appealing, and her portrayal of the use of "the common good" and other economics-rights doctrines as the basis for tyranny and oppression is interesting and believable, but the nagging suspicion that she has omitted or perhaps obscured something important tugs at me throughout. Off to the left, across a few piles of rubble and litter, I can see several makeshift lean-tos, each constructed by placing a plastic tarp across the tops of two parallel fences about 8 feet apart, then hanging regular blankets down the sides to the muddy ground, forming walls. Bright colors, nicely done. There are some depressed looking dogs lounging outside - fairly healthy looking - not mangy, and each appears to have all four legs.

Rand argues that a system that allows each individual to pursue what he or she wants to the extent of his or her abilities, while providing a framework for the interpretation and enforcement of contracts and protection from physical violence, results in the optimal condition for all people. There is no such thing as wealth, goodwill, welfare, etc., that is owned by the community, but rather all is owned by individuals. It is individuals who are served by society (in the manner described above), rather than the other way around. Exceptionally talented individuals will, in their quest for personal gain, throw off amazing benefits for all the other individuals in the form of technology and other advances. Less exceptional indviduals will enjoy less, but will be much better off by virtue of being around the first group, and each will get everything that his or her less exceptional talents allow. The most deserving indviduals will quickly and naturally acquire most of the wealth, and everyone else happily snaps into place. Fortunately for some, the people with money are free to dispose of it as they wish, and out of pity will provide some money to those who are in desperate need of it, because they're nice. But they don't have to. But they can, because it's their money. Meritocracy - difficult to dismiss.

Then it hits me -- what's missing is human nature! Not that part of human nature that makes people do selfish things and take advantage of powerful positions, but rather that part of human nature that makes it so that people *need* stuff, not want, but need, and also that part of human nature that makes people be helpless infants, infirm, old, that part that makes them want the best for their children and that part that makes them die. That's what's missing.

Briefly, the system she describes makes sense if everyone has equal bargaining power and can take or leave any deal on the table. But when someone has to have something like food, clothing, shelter, etc., then the equation changes in a way that defeats the neatness of her system, it seems to me. Lots of people need things, some more than others. Further, are we to assume that the children of these most talented people are also the most talented? If Rand wants us to believe so, then she conceals a strand of eugenics that most would find objectionable, to say the least, and in any event the kids would not have acquired wealth through their own merit, which is an essential part of her system. If not (and I think our experience confirms not), then she has a problem -- what happens to the money when the parents die? 100% inheritance tax? I've heard that advocated, but not by her - maybe I need to keep reading. Such a tax would sit in stark contrast to her otherwise hands-off ideal government, and I'll be impressed if she navigates through that bear trap of an inconsistency. If there's no tax, then the money goes to the kids, right? But what that means is that generation #1 is a meritocracy and generation #2 is an inheritocracy. A fool and his money are soon parted? Maybe so, but just because you're not talented enough to make lots of money and change the world doesn't mean you're a fool. In Rand's world making lots of money is the destiny of the bestest people, but I don't hear her talk about those who merely have the guile to hold on to lots of money, mainly by manipulating money-less people who are beholden to their own unmet needs (and therefore to those who can meet them for a short time), and not by improving the world. Maybe I need to keep reading, so I will.

This post is getting long - I'll continue with another later.
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