How Not to Defend Free Markets

Washington, D.C. – In response to the financial crisis, traditional defenders of free markets have criticized certain controls passed by U.S. regulatory agencies, but are not calling into question the legitimacy of the agencies themselves. But, argued Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, “It is insufficient and indeed counterproductive to criticize a few failed policies of the Fed and the SEC, without challenging the existence of these market-dictating agencies in the first place.
 
“As Exhibit A, consider the response to the SEC’s recent war on short selling. The Wall Street Journal, regarded as a strong defender of free markets, wrote that ‘[T]he SEC first clamped down on so-called naked shorting–a reasonable move under any circumstances, even if there’s no evidence of widespread naked shorting of financial stocks in this panic. But Mr. Cox didn’t stop there. The SEC has also temporarily banned any short selling of hundreds of financial stocks, a list that has grown to include the likes of General Motors. Then, when the SEC was reminded that selling a stock short is a legitimate part of many unimpeachable hedging strategies, it relaxed the prohibition for certain types of sales while continuing to expand the list of “protected” stocks. . . . If the SEC wants to help restore calm, it would stop issuing new emergency rules in the dead of night and bring some transparency and calm to its own rule-making.’
 
“In praising some of the SEC’s actions, while criticizing others, the Wall Street Journal is conceding a disastrous principle: that financial markets should be controlled by government at all.
 
“Under capitalism, the proper role of the government in financial markets is to protect individual rights by banning force and rooting out fraud. This requires objective laws that do not permit would-be central planners to tinker with markets when they don’t like the results. But the SEC’s regulatory authority allows it to coercively prevent individuals from engaging in voluntary transactions like short selling whenever it decides those transactions do not serve the ‘public interest.’
 
“Since the ‘public interest’ is an indefinable standard compatible with any interpretation or rationalization, this means in practice that SEC goons can arbitrarily unleash their regulatory club on financial markets whenever they feel it’s warranted. For example, see Chris Cox’s blitzkrieg of contradictory emergency orders attacking short sellers.
 
“The basic principle behind regulation is that the government can use force, not to protect individual rights, but in an attempt to engineer ‘socially desirable’ outcomes, i.e., outcomes different from what would result from the voluntary choices of individuals on a free market. That is the same premise that underlies all disastrous attempts at central planning–from the Soviet Union to modern-day Venezuela.
 
“If the Wall Street Journal really wants to defend capitalism, this is the premise it must oppose. Instead of prodding government regulators to be better central planners, it should call for a complete end to government control of financial markets. This is the lesson all defenders of capitalism must learn: you cannot defend capitalism by conceding the legitimacy of its opposite.”

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

Stage is set but will U.S. debate go on? (Reuters)

Reuters – The stage is set, but it was unclear on Friday if Republican John McCain would show up to duel Democrat Barack Obama in the first of three debates that could help decide a tight White House race.

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Why Big Government Is Back, and How to Shrink It to Its Proper Size

Washington, D.C. – In a talk delivered last week at the Costa Mesa Hilton in Orange County, California, Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, explained the reasons for the resurgence of big government in America and called for a moral revolution to reduce government to its proper size and function.

According to Dr. Brook, the current level of government involvement in the economy is almost unprecedented in American history. As Dr. Brook noted, even though the current housing and financial crisis was brought about by government regulations, controls, and widespread interference with the markets, all we hear from the left and the right are calls for more government regulations, controls, and interference with the markets.

In Dr. Brook’s view, these calls for bigger and bigger government are due, not to any alleged failures of the market, but to a longtime cultural hostility to its moral basis: the selfish pursuit of profit.

Capitalism and markets, observed Dr. Brook, are all inherently about self-interest and the pursuit of profit. Capitalism encourages and enables selfishness, and as long as our culture looks at profit and self-interest as vices, he argued, big government will always be preferred to free markets.

Dr. Brook also made the point that capitalism has always been defended pragmatically, on the basis that it creates wealth and economic growth–which it does; but it’s time, he said, to defend capitalism on principle, on the basis of its morality, on the basis that it protects the rights of individuals to pursue their own values and allows them freedom to act in their own self-interest.

As Dr. Brook explained, the current crisis is indisputable evidence that we need a massive reduction in the size of government, in the number of regulations and in the level of taxation. But first, he said, we will have to reject the morality of altruism, which holds that self-sacrifice, not self-interest, is the good–and adopt a new morality of rational self-interest, one that says that pursuing our own personal values and goals under freedom is a good thing; and that only a morality compatible with capitalism and private markets will save us from this crisis and prevent an even worse one in the future.

Dr. Brook’s talk is available for free at: http://www.aynrand.org/site/PageServer?pagename=reg_ls_big_government

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
media@aynrandcenter.org

Don’t Cap CEO Pay: End Bailouts

Washington, D.C. – As the government scrambles to assemble a massive financial bailout package, many are declaring that companies receiving the taxpayer-funded bailouts should face severe restrictions on executive compensation. As Representative Barney Frank put it, “I just think it’s inconceivable that the taxpayer should put some money at risk because of bad decisions made by people who then continue to be rewarded without any restrictions.”

But according to Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, “This is nothing more than a political maneuver designed to establish a precedent for regulating all CEO pay. If these long-time critics of executive compensation were really concerned about the injustice of making taxpayers shoulder the burden of others’ mistakes, they would be opposing government bailouts–not making CEOs into scapegoats.

“It’s true that some CEOs performed poorly in the lead-up to this crisis, but that is no reason to allow the government to nullify private contracts. A company sets its CEO’s compensation based on its best guess as to how he will perform. Just as a baseball team can’t refuse to pay its star pitcher his agreed-upon salary after an off year, so a CEO’s poor performance does not justify paying him less than what he was promised.

“The government should not use this crisis as an opportunity to start dictating to shareholders how much they can pay their managers. Doing so will only compound the injustice of this bailout–not lessen it.”

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

Stop the Bailouts

Stop the Bailouts
September 22, 2008

Washington, D.C.–“Over the last year,” said Yaron Brook, executive director of the Ayn Rand Institute, “the central planners at the Federal Reserve and the Treasury Department have pretended that by bailing out homeowners, then bailing out investment banks, then bailing out Fannie Mae and Freddie Mac, they were wisely ‘steering’ the economy to protect us against some undefined ‘systemic risk.’

“But the mounting financial problems reveal that Paulson and Bernanke are as clueless as any other central planners who try to control an entire economy. They are not saving us from anything; they are delaying some of the pain that necessarily follows from a Fed-induced credit bubble, and redistributing that pain to innocent victims. They are punishing responsible individuals and rewarding irresponsible individuals.

“The bailouts must stop. The government must make clear that from now on, those who are in financial trouble must turn to the private market for help if they are to avoid failure; the government must no longer foist their failures on others, and invite another crisis in the future.”

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Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
media@aynrandcenter.org

For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

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The Unfree Market Has Failed

Washington, D.C. – “Everyone is blaming ‘the free market’ for today’s financial crisis,” observed Yaron Brook, executive director of the Ayn Rand Institute. “But we should be blaming the unfree market. The mortgage and financial markets have been thoroughly controlled by government–and that is why they failed.

“It was the government’s hand in the creation of Fannie Mae and Freddie Mac, the Federal Reserve Board’s inflationary policy of keeping interest rates artificially low, the irrational lending standards forced on lenders by the federal Community Reinvestment Act, and the quasi-official policy of bailing out large financial institutions deemed too big to fail, that contributed to creating a situation in which millions of people were buying homes they could not afford, in which the participants experienced the illusion of prosperity, in which billions upon billions of dollars were going into bad investments.

“We do not need more regulation or economic ‘supervision.’ What we need to do is remove the government’s power to coerce, bribe, reward and bail out irrational decisions. The unfree market has failed. It’s time for a truly free market.”

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world. To interview Dr. Brook or book him for your show, please contact Larry Benson: 949-222-6550, ext. 213 media@aynrandcenter.org

No Caps for Payday Loans

Ayn Rand Center Press Release

No Caps for Payday Loans
September 12, 2008

Washington, D.C.–Across the country, state lawmakers are capping the interest rates “payday lenders” can charge borrowers. According to supporters of these caps, payday loans are harmful to borrowers, trapping them in debt with allegedly exorbitant interest rates.

“The crusade against payday loans is unjust,” said Yaron Brook, executive director of the Ayn Rand Center for Individual Rights.

“Despite the demonization of payday lenders, they provide a valued service: they make it possible for low-income, high-credit-risk Americans to get their hands on cash quickly. Without such loans, many of these Americans would have to resort to leaving bills unpaid, racking up massive credit card debt, or worse. That’s why they voluntarily accept substantial interest rates: they judge it to be their best available option.

“Contrary to the critics’ intimations, interest rates for payday loans are not set by the arbitrary decree of lenders. Instead, they are determined by market forces and reflect certain realities, such as the fact that making small, short-term loans to high-credit-risk customers isn’t profitable unless lenders can charge rates that reflect that credit risk. If it were possible to profitably offer such loans at a lower interest rate, competitors would enter the market and drive interest rates down.

“Caps on interest rates don’t change these underlying realities. Rather, they make it impossible for payday lenders to operate profitably, driving them out of business and depriving their potential customers of access to desperately needed cash. The fact that some borrowers make unwise decisions and become mired in debt doesn’t justify punishing lenders and responsible borrowers.

“It’s time to end the war on payday lenders, and recognize their right to charge whatever interest rates they wish in their efforts to attract willing borrowers.”

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Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
media@aynrandcenter.org

For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

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Freedom First

Washington, D.C. – John McCain has made “Country First” the theme of his presidential campaign. In response, Barack Obama declared that “I’ve got news for John McCain. We all put our country first.”

“I’ve got news for both candidates,” said Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, “Both the left and the right have been ‘putting the country first’ for decades–and that’s the problem.

“When McCain and Obama call for ‘putting country first,’ they are not simply asking us to love our country. They are urging us, as McCain once put it, to place service to the nation above the pursuit of our own values and happiness. This is collectivism, the doctrine that the individual exists to serve society and that his interests should be sacrificed to those of the group.

“This is the exact opposite of America’s founding ideal. In the American system, it is the government, not the individual, who is the servant. The government’s role is to protect our individual rights so that each of us is free to pursue our own lives and happiness. No group–not even society as a whole–can force us to sacrifice for its ends.

“Tragically, for the better part of a century, America has been moving away from the individualist ideals of the Founders and toward collectivism. Just consider the crushing tax burden we all suffer under to fuel an endless list of welfare entitlements in the name of the ‘public good.’ Or consider the policies McCain and Obama promise to enact if elected. To take just one example, instead of leaving business owners free to hire and trade with whomever they wish, McCain says we must protect ‘our’ jobs from foreigners coming in to this country, while Obama says we must protect ‘our’ jobs from foreigners outside the country–both ignoring the fact that those jobs don’t belong to ‘society’ but are created by the very individuals whose rights are being sacrificed.

“None of this is compatible with the individual’s right to life, liberty, and the pursuit of happiness. Instead of leaders who ‘put country first’ we need leaders who will put freedom first.”

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.

To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
media@aynrandcenter.org

For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

Vatican Doesn’t Deserve a Statue of Galileo

Washington, D.C. – According to news reports, the Vatican plans to commission a statue of Galileo, the father of modern science, with support from an anonymous benefactor. Before the story leaked to the Italian press, church officials had tried to keep news of the project quiet for fear of scaring off the donor should the plan generate too much controversy.

“This plan ought to generate controversy,” said Dr. Keith Lockitch, Fellow of the Ayn Rand Center. “It is outrageous for the church to try to pretend to honor a scientist famous for being a victim of its own tyranny.”

“Galileo has always been the most eloquent symbol of the clash between science and religion. He was persecuted by the Inquisition simply for defending ideas that ran counter to church dogma.

“What was Galileo’s ‘crime’? He wrote and spoke out publicly in defense of the scientific fact that the earth orbits the sun and revolves on its own axis. But because this was contrary to scripture, the church convicted him of ‘vehement suspicion of heresy,’ forced him to recant publicly under threat of torture, banned his writings, and sentenced him to house arrest.

“Many today would argue that faith and reason are perfectly compatible. But Galileo’s trial and conviction is a reminder of the evils that can be perpetrated by those who are completely committed to faith, when they are challenged in their blind beliefs by the facts and logic of a determined proponent of reason.

“And this is not just something that happened 400 years ago with no relevance to the present; it is a battle that continues to rage to this day. While few would now declare the Earth the motionless center of the universe, as Galileo’s persecutors did, it is not difficult to find those who claim it to be 6,000 years old and deny the long, slow evolution of its species. If today they are relatively restrained in their war on reason, it is only for lack of political power.

“A statue honoring Galileo, a paragon of reason, would be totally incompatible with the church’s essence as an institution of faith. It would be an honor that the church can never deserve.”

Dr. Lockitch has a PhD in Physics from the University of Wisconsin at Milwaukee and is a Fellow at the Ayn Rand Center for Individual Rights. His writings have appeared in publications such as the Orange County Register and the San Francisco Chronicle.

Dr. Keith Lockitch is available for interviews. To book him for your show, please contact Larry Benson:
E-mail: media@AynRandCenter.org
Phone: (949) 222-6550, ext. 213

For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”

China and Japan hail U.S. mortgage rescue as doubts linger

Reuters – China and Japan, the biggest buyers of Freddie Mac and Fannie Mae bonds, praised Washington for its rescue of the ailing mortgage giants, but investors had no illusions the bailout would end the global credit market misery.
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