Consider an excerpt from Trend Commandments:
Thanks to Facebook, generations are willing to share anything and everything. However, many are still ambivalent about money. Some want more money, but feel guilty about openly admitting it. A few have lots and feel guilty for reasons that don’t make sense. Many feel guilt if they did not come about it honestly (as they should) or at least in proportion to their labor to achieve it. Some dream of making a sex tape and building a reality TV empire. Fair enough. Yet take a moment to think through your motivations for trading. If you have any reason for trading except to make money, find something else to do and avoid the stress from the start.
There is nothing good or bad about money. Money is just a tool. Ayn Rand countered brilliantly the desire of some to classify money as evil: “You think that money is the root of all evil? Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible by the men who produce. Is that what you consider evil?”2
If all ethical people think money is bad, who’s going to get the money? That’s my question. Here is a great example of money and emotions in full bloom. Years back, talk show king Phil Donahue was interviewing free market economist Milton Friedman. He wanted to know if Friedman had ever had a moment of doubt about capitalism and whether he thought greed was really a good idea.
Friedman was quick in response: “Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way. The only cases in which the masses have escaped from the kind of grinding poverty you’re talking about, the only cases in recorded history, are where they have had capitalism and largely free trade. If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that.”
Donahue countered that capitalism doesn’t reward virtue, but instead rewards the ability to manipulate the system. Friedman balked: “And what does reward virtue? You think the communist commissar rewards virtue? Do you think American presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? Just tell me where in the world you find these angels who are going to organize society for us?”
America has long seen certain contingents push the belief that there could be a government angel to let the proletariat have more money—with no effort.
Consider President Franklin Delano Roosevelt talking to America on January 11, 1944. He gave a caring government hug across the airwaves as he proposed what he called a second Bill of Rights—an economic Bill of Rights for all regardless of station, race, or creed that included:
• The right to a useful and remunerative job in the industries or shops or farms or mines of the nation.
• The right to earn enough to provide adequate food and clothing and recreation.
• The right of every farmer to raise and sell his products at a return that will give him and his family a decent living.
• The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad.
• The right of every family to a decent home.
• The right to adequate medical care and the opportunity to achieve and enjoy good health.
• The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment.
• The right to a good education.
What is left for us to accomplish if the government gives us all of that?
Come on. Let’s face it head on. The market does not care about you or me. If you can accept that reality, then you can deal with it and trade it. You need to decide how much money you want over the course of a lifetime. You want a little? Or do you want a lot? Or are you satisfied believing empty investment promises made by suits in Washington D.C.? Regardless, you will get exactly what you want out of life through your actions.
It is the survival of the fittest. Eat dinner or be dinner.
Feedback from a listener:
I’ve been listening to your podcast since your interview on Barry Ritholtz’ Masters of Business podcast. Your episodes are interesting, informative, and overall enjoyable. I’ve also gone back and listened to about a dozen past episodes, some I’ve saved to listen to over and over again (e.g. #278 with Larry Swedroe), a few I didn’t care much for, and one that prompted this email, #183 with Yaron Brook.
At the beginning of episode #183, you say that you feel very strongly about Ayn Rand and objectivism and I believe you were genuine in your request for response from those who disagree with her along with our reasons. Before I get into my feedback, first let me tell you a little about myself so that you know I’m not an ignorant hater. I have a B.S. in Economics-Finance, a Master’s degree in Accounting, and am a licensed C.P.A. I work in public accounting as an auditor and am a (very) small-time real estate investor. I once identified as a libertarian, believing in a 0% tax rate on businesses among other ideas. It’s probably also worth mentioning that I’ve never been a trader as that is one of the focuses of your podcast. Please excuse me if I blur the boundaries between Ayn Rand, objectivism, and libertarianism.
One reason that I disagree with Ayn Rand is that her policies would lead to a more stratified society. The rich would continue to get richer and separate themselves from their employees. As their resources grow, so does their political power. They can manipulate laws to suit their own purposes making it harder for others to achieve their goals. One idea of objectivism that people should act in their own self interest to get what they deserve, not to take whatever they can weasel out of the political system.
It bothers me that Ayn Rand’s supports seem to be almost exclusively people who are already well off or inspired young people who believe they will be productive and wealthy in the future. Their arguments that objectivism will help poorer people by unleashing companies’ potential are a justification for their own personal desire for wealth and/or freedom rather than a true concern for the poor. Otherwise, they would suggest their free-market policies as a way to help the poor rather than listing it as an example of why we should adopt libertarianism.
This leads into the minimum wage. Yaron gave an example of the government interfering with a private agreement between a person and an employer because their agreed upon wage was below the regulated minimum wage. The person would be better off with the lower wage because he would learn the skills that would help him get promoted, earn more money, and maybe eventually become an entrepreneur. This is nonsense to me for three reasons:
1) In real life there would be several applicants for this unskilled job and they would “race to the bottom” with the applicant who is willing to work for the least amount of money getting the job. Price theory would suggest the “winning” applicant would be the one with the lowest cost (as an employee) to work, and his/her “profit” as an employee, the difference between the wage and cost to work, would approach zero, especially during worse economic times.
2) The jobs that would pay below the minimum wage today are unskilled, dead-end jobs. Cleaners, cashiers, and farm workers are not going to learn the skills on the jobs need to become more productive. They may go into the job capable of doing more but they won’t come out more skilled.
3) If the business owner can’t afford to pay a poor employee just a little bit more so that the employee can afford basic life necessities (food, clothing, housing, health care of some sort), then the business is a crappy one and probably shouldn’t continue to exist. Better to free the entrepreneur to start a more successful business.
I don’t remember hearing it in the interview but a common argument is that regulations are strangling businesses. Remove them and the economy will flourish. Yes, there are many illogical, annoying regulations but the idea behind regulations is to protect others who would not otherwise be protected. Properly disposing of waste may be costly and unproductive, but the idea is to prevent companies from acting in their best interest and destroying the environment for others’ enjoyment or even economic benefit (think tourism). Not locking employees in factories to prevent them from leaving early is another regulation that prevents one’s self interest from harming another. Proper labeling of food, proper storage of perishable food, proper sanitation in food processing areas, restrictions against what can go into food – these prevent us from getting sick. The government can remove all regulations and jobs will be created, but at what cost? I’m sure you see plenty examples in Asia of how lack of regulations, regulators, or the adherence to regulations harms society more than it helps. I’m not advocating implementing more regulations or keeping the ones we have, but I am in favor of weighing the harm of a regulation on businesses against the harm the lack of a regulation will have on other businesses and people.
During the interview you or Yaron made a mention of how much Asia’s economy has boomed, attributable to some free-market principles. I wonder how much of the boom is due to poor living conditions in some areas leading to people accepting work for low wages to manufacture for export, or the growth of companies supporting such manufacturing, and how much is due to the importation of advanced technologies (relative to local existing technologies) into their economies.
Again, I enjoy your podcast, I will keep listening, but I may skip the episodes with libertarian themes. Keep up the good work.
Thanks for the feedback.
Let me sum up the counter courtesy of Ronald Reagan: