Ayn Rand's Social Policy

One of the most popular philosophers of the 20th Century was Ayn Rand. She used her two popular novels to illustrate her philosophy of society which she called "Objectivism". This is a belief system predicated on certain human characteristics which are assumed to exist. It is part of a long line of such philosophical systems extending from Plato through J.J. Rousseau. In each an ideal type of human is defined and then the organization of society follows from the characteristics.

What most of the philosophies have in common is the belief that humans are essentially rational in their makeup. Rousseau, for example, claimed that society stemmed from a "noble savage" and that society was formed by a "social compact" between free and equal people. Modern problems arose when civilization altered the rules of this social compact. His premises, rather than being taken as metaphors, assumed a wide following and much sociological and anthropological research has been devoted to seeing if society was actually formed by negotiated "social compacts".

In the case of Ayn Rand the part of her philosophy that most concerns us is encapsulated in this quotation:

"He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself.
The pursuit of his own rational self-interest and of his own happiness is the highest moral purpose of his life."
This has widely been interpreted as meaning that each person should be maximally selfish. The balance of all these selfish behaviors will yield an optimal society. Whether she meant that self-interest should be equated with selfishness is not clear, however many people have taken it as such. Her beliefs have permeated the belief systems of many of the now in power in the U.S. Among the most influential of her followers is the Chairman of the Federal Reserve, Alan Greenspan.

One of the consequences of this philosophy is that people should be self-reliant and that government should not meddle in human affairs. In her novels those who are dependent in society cause the breakdown of civilization, while those that are self-reliant are able to succeed. As with all utopian philosophies the ideal ignores some of ugly realities of our world. Not all people are endowed with the capabilities to compete successfully. Some people have obvious congenital handicaps, but even more serious is the fact that many are saddled with handicaps caused by their being born into a low social station.

On the other side, some people are born with "unfair" advantages. They may come from well-to-do or well-connected families. These birth advantages mean that people with equal inherent capabilities may achieve much different outcomes in life. So one of the questions about the goals of society is how to treat the different actual resources available to each of us.

In the early days of the U.S. most people were in a similar economic and social condition. For several generations the bulk of people were new or recent immigrants and basically started with almost nothing. In addition there was a large amount of unsettled land and a growing population which meant that opportunities existed for almost everyone. Out of this settler experience a philosophy of rugged individualism arose. Ayn Rand being only one of the most recent.

But starting in the mid 19th century some people began to amass large fortunes from heavy industry and transportation. They were able to control large enterprises and influence the choice of politicians. During the worst period certain senators were widely known to be hand selected by various business interests (especially railroads).

At the beginning of the 20th century this imbalance of society had gotten severe enough that there were a series of revolts. The most prominent being the rise of "Populism" and the "Trust Busters". As a result of this many of the worst excesses were corrected. The country entered a long period where the common man improved his standard of living and the rich retreated to managing their wealth rather than explicitly controlling social policy.

This period came to a rather sudden halt during the Reagan era. Using societal ideas like those of Ayn Rand the government social programs began to be disparaged and the ideas of self-reliance and "personal responsibility" were promoted. The result has been a shift in public opinion about the role of government in determining social policy. The most prominent changes recently have concerned the availability of national health and welfare programs, the treatment of inherited wealth and the responsibility of government to provide for the old and infirm.

With a quarter of a century of "Objectivist" philosophy behind us we can examine how well it has performed. Here are some of the benefits that were stated for various changes in social policy.

Eliminate welfare cheats The percentage of people in poverty has gone from about 25 in 1959 to as low as 15 after the start of the "War on Poverty". It has risen again to the high teens and low twenties since the rise of "Objectivism" in public policy.
Private health plans will eliminate government "waste" Medicare and Medicaid typically have an overhead of 2%. Private health providers are money-making organizations and are expected to have gross profit margins of about 30%. Promised controls of "unnecessary" medical treatments have not materialized. Medical costs have not gone down, but the number of people without adequate medical care has risen.
Private retirement investment will yield higher returns than Social Security Social Security yields about 4% for the average worker as a return on lifetime contributions. The return is higher for low wage workers. The stock market yields about 7% over long periods of time, but as recent events have shown the total value of a lifetime of investment can decrease as much as 30% in a single year. Social Security has no investment fees, private funds take as much as 25% of yearly earnings as management fees. The virtues of social insurance as common good has been forgotten.
Standard of living increases when people are left alone The rise of the selfish philosophy has created an imbalance in the tax code as well as the loss of social opprobrium associated with excessive wealth generation by the managerial class. This has caused the lowering of the standard of living for a large segment of the population and a large increase in the wealth of the richest people.

The adoption of a utopian philosophy as social policy has produced a society where greed is no longer widely condemned, where the condition of the less fortunate is taken as a moral failing on their part, and where the willingness to contribute to broad public projects is replaced by "It's your money, the government shouldn't tell you what to do with it".

A fractured, self-centered society looses its collective will and becomes weak. It will fall behind those areas in the world where a sense of common purpose and willingness to sacrifice to the greater good are seen as the proper aims. Our children will be living in a second-rank society like Great Britain or France.

Moral: Utopian philosophy does not make good social policy.

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Copyright © 2004 Robert D Feinman
Feel free to use the ideas, but the words are mine.