04 October 2011

Warren vs Rand

Massachusetts Senate candidate Elizabeth Warren is the antithesis of Ayn Rand, the writer and founder of Objectivism. Two months ago Warren gave a speech that was essentially a rebuttal to Rand’s philosophical ideas concerning the rights of the individual versus the rights of the society in which an individual lives.

Rand notoriously rejected the idea that society, i.e. the state, had a rightful claim to a share of the fruits of an individual’s labour, i.e. taxes. Rand believed that taxation was a form of theft, since it involves the use of force or coercion by the state to take people’s money without requiring their consent. However, since governments require revenue in order to function, Rand conceded that taxes were necessary but insisted that they should be voluntary, and only collected to fund the most basic services that the state could rightfully be expected to provide: the police, the military, and the law courts.

Rand wrote the following in her book The Virtue of Selfishness (1964), in the chapter titled ‘Government Financing in a Free Society’ (emphasis hers):
In a fully free society, taxation—or, to be exact, payment for governmental services—would be voluntary. Since the proper services of a government—the police, the armed forces, the law courts—are demonstrably needed by individual citizens and affect their interests directly, the citizens would (and should) be willing to pay for such services, as they pay for insurance. […]

The principle of voluntary government financing rests on the following premises: that the government is not the owner of the citizens’ income and, therefore, cannot hold a blank check on that income—that the nature of the proper governmental services must be constitutionally defined and delimited, leaving the government no power to enlarge the scope of its services at its own arbitrary discretion. Consequently, the principle of voluntary government financing regards the government as the servant, not the ruler, of the citizens—as an agent who must be paid for his services, not as a benefactor whose services are gratuitous, who dispenses something for nothing.

Taking these arguments as her moral basis for opposing compulsory taxation, Rand condemned as immoral any attempt by the state to impose higher taxes on the rich. To do so, in her view, would be to unjustly punish those who benefited others through their ingenuity, risk-taking and hard work. In her 1957 novel Atlas Shrugged, Rand put these words into the mouth of her individualist hero, John Galt:
[W]hen you live in a rational society, where men are free to trade, you receive an incalculable bonus: the material value of your work is determined not only by your effort, but by the effort of the best productive minds who exist in the world around you.

When you work in a modern factory, you are paid, not only for your labor, but for all the productive genius which has made that factory possible: for the work of the industrialist who built it, for the work of the investor who saved the money to risk on the untried and the new, for the work of the engineer who designed the machines of which you are pushing the levers, for the work of the inventor who created the product which you spend your time on making, for the work of the scientist who discovered the laws that went into the making of that product, for the work of the philosopher who taught men how to think and whom you spend your time denouncing.

Contrast this glorification of the individual producer with Elizabeth Warren’s speech where she points out the producer’s dependence on taxes paid by the rest of society:
There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear:

You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific? Or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Warren debunks Rand’s individualist myth that the lone productive genius owes nothing to society. On the contrary, the relationship between producers and society is symbiotic: both parties need each other in order to flourish. Tax rates should reflect this mutual dependency. Rand may be partially correct in asserting the importance of great minds whose ideas have a positive impact on society. Yet her extreme individualism ignores the fact that no man is an island. As Warren mentioned, without society’s collective contribution, the success and wealth of producers would have been achieved with greater difficulty, if at all.


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