How Ayn Rand's ideas could kill the economy

In response to claims that her Objectivist beliefs justify profit-above-all strategies, Henry Blodget argues the opposite.

By Jason Notte Sep 27, 2013 8:50AM
Ayn Rand (© AP)There isn't a bridge big enough to contain Harry Binswanger's trolling.


The Ayn Rand disciple went looking for a fight earlier this week when he insisted in a column for Forbes that not only should the nation's financial elite avoid taxes and be publicly feted for their contributions, but that folks including Goldman Sachs (GS) chief Lloyd Blankfein should be considered great humanitarians.


That led Blankfein, the Objectivist Mother Teresa, to just flat out agree with that assertion. He posited that his business -- which created a market for the toxic mortgage default swaps that led to the recent financial crisis, bet against its own products without telling investors and helped Greece hide debt and nearly destroy the euro -- fights poverty better than philanthropy.


While that's somewhat true when times are good and companies create more jobs and cheaper goods, the entire purpose of a publicly traded business is to look out for the financial well being of one particular demographic: shareholders.


That's how corporate profits rose last year, but both the U.S. poverty rate and median income remained stagnant. That's how Goldman Sachs has outgrown some of its more high-end employee perks while U.S. families are at the same income level they were when "The Simpsons" first aired.


But on Tuesday, a somewhat unlikely voice took issue with all of that -- and also suggested that Ayn Rand and her Objectivist philosophy are killing the U.S. economy. In the interest of full disclosure, let's make it very clear that the man making that charge -- Business Insider editor and chief executive Henry Blodget -- is the same guy who was charged with fraud by the Securities and Exchange Commission while he worked for Merrill Lynch. After e-mails showed he was telling investors one thing about their holdings and assessing them in a completely different manner in private, he was permanently banned from the securities industry and relieved of about $4 million in fines and damages.


That said, Blodget is exactly the kind of guy who would flourish under unfettered Objectivism, which is the idea that laissez-faire capitalism is the best means of helping the smart look out for their own happiness and self-interest and keeping collectivist remora from draining both the "job creators'" talents and money.


Instead, Blodget puts forth the following argument against Randian ideals:


Instead of making them feel selfish about taking such a big share of the country's wealth for themselves, it actually makes them feel magnanimous. If they weren't "creating all those jobs," then most Americans would have nothing to do! Unfortunately, this argument is both startlingly selfish and economically wrong.


He explains that investors and entrepreneurs don't live in a vacuum, but rely on both employees and customers for their success. Without financially flush versions of latter, the former can't create sustainable jobs or dynamic products. That makes sharing the wealth with employees a valuable portion of the equation.

Binswanger recently debated Blodget and argued that employees should be paid as little as possible, since they need an entrepreneur's money far more than he or she needs their labor. Blodget countered with the assertion that without those employees -- that without a team -- nothing is created and, therefore, nobody profits. Meanwhile, Blodget credits his readers and sponsors with keeping his own business alive.


In his view, employees deserve a share of the product they help create, which Blodget backs up by giving BI employees stock options. If businesses keep treating their employees as "costs" rather than contributors and hollow out their paychecks while reaping maximum profit, those consumer/employees will get the last word by dragging down product sales and tanking the economy. 


It seems like an odd point for someone with Blodget's background to make, but it also makes sense: If greed shrinks the overall revenue pool, then the greedy are just cheating themselves by not sharing the wealth up front.

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243Comments
Sep 27, 2013 9:34AM
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"He explains that investors and entrepreneurs don't live in a vacuum, but rely on both employees and customers for their success"

Ford figured this out 100 years ago.
Sep 27, 2013 10:48AM
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Actually Henry Ford did have it right...

 

Taxes overall have came down for years, EXCEPT for the "working stiff" in a general trend total taxes decade after decade have affected middle America and have been increasing...

Income, Sales and Property, etc., etc.

The Wealthy have found ways around taxes, have off-shored accounts and properties, along with businesses they may be associated with....And "some"Corporations have not helped foot the bills.

I cry no river of tears for these bastards....

Sep 27, 2013 10:14AM
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You are responsible for yourself. I am not responsible for you, your actions, your faults, your addictions, your screw-ups, or your choice of where to live. I am not your keeper. It is not my job to protect you or secure my property from your lack of intelligence. There are no excuses for true irresponsibility. You screw up, you deal with the consequences. I am not responsible for your self esteem or hurt feelings. It is not my responsibility to make sure you are not offended. I owe you nothing, the world owes you nothing. This country owes you nothing except a return on what you have given; Nothing more. WHAT HAVE YOU GIVEN?

Sep 27, 2013 9:49AM
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Corporate profits at all time high, 95% of the recovery went to the top 1%, yet the labor market is still really crappy.  Unemployment is slowly trickling down, but mostly due to people giving up and leaving the work force.  Something is missing here..... I know its best for job creators to be taxed less, but WHO IS CREATING JOBS?!?!?
Sep 27, 2013 11:15AM
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Printing a trillion dollars per year is a great idea.
Borrowing $46.00 for every dollar spent should help.
What a bunch of fools.

Sep 27, 2013 9:40AM
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Ayn Rand and Objectivist philosophy is killing our economy?  What a stupid premise.  The real things that are killing our economy are higher taxes and a 70,000 page tax code, hundreds of thousands of pages of gov regulations on business, rewards for debtors and punishment for savers, Obamacare, lack of a coherent energy policy, NAFTA, massive welfare programs that reward able-bodied people for NOT working, the $10 billion the federal gov spends every day (about $30 per day for every man, woman and child), and the demonization of wealthy people who logically  respond by spending and investing some of their fortunes outside the USA.  Ayn Rand's philosophy is the least of our problems.
Sep 27, 2013 10:00AM
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I don't believe this writer has read Atlas Shrugged. MSNBC is a hard believer in socialism.

Sep 27, 2013 10:14AM
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You are not entitled to Welfare; you are not entitled to Medicaid. You are not entitled to free legal care, an education, or a cell phone. Anything you get is a gift to you from those who pay your way through life and you should get down on your knees and be thankful. No one is entitled to something they did not earn. Welfare is to be a hand up, not a hand out. It is not meant to be forever, it is not meant to be a way of life. It is not a gift for, or to, your next generation. The world owes you nothing. I owe you nothing. This country owes you nothing except a return of what you have given; Nothing more. WHAT HAVE YOU GIVEN?

Sep 27, 2013 10:14AM
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Democrats believe (they say) in helping the common man. The problem is they want to help by stealing from others by forcing them to pay taxes (and pocketing some for themselves). They want to force people to accept everything they believe in but they do not believe in free thought. For all their talk, they do not really believe in free will. You only have free will if you think like they do.

            Republicans believe (they say) in morality & family values. Great ideals but they want to decide, “What is a family”. They say they believe in freedom but they want to restrict what you can see, read and hear. They believe in free will but don’t trust you to use it properly. You should be free to be irresponsible, free to sin, but you must also be prepared to accept the consequences of your actions.

            Libertarians believe in free will, and they show it. You can live as you choose as long as you don’t harm others. You have the freedom to choose to help those that you feel are in need. You are expected to help your fellow man but you are not forced.

If you do something wrong, it’s your problem and your responsibility to make it right. You are free to worship in your own way or not. You are free to express your thoughts and feelings and no one is allowed to stop you because they are offended. If they are offended they can choose not to watch, read or listen. That is their choice.

 

“Live and let live, I believe. See what it’s like to be free”

                                                            Jon Oliva

Sep 27, 2013 10:06AM
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Why don't these MSN hacks write about how trickle up poverty resulting from the dem's  Robinhood economic plan is killing the middleclass. Its tough to save and invest when the dems are after as much as possible of your paycheck to pay back the freeloaders for their votes.
Sep 27, 2013 10:17AM
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In "Atlas Shrugged", Ayn Rand describes a U.S. government intent on sharing the wealth by taking it away from those who created it. Today, we have that government, and Americans in record numbers are giving up citizenship and taking their money and their skills elsewhere.

Sep 27, 2013 11:07AM
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I don't think Jason has any idea of how an economy works.  When any idea is taken to extreme it sounds extreme.  He should read the book.  The freest markets result in the greatest productivity.  Relatively Free Markets are what made America the Colossus that it became.  Smart employers recognize all the players in the game and reward them for their contribution to their success.
The middle class has vanished because of high taxes at every level of government.  Don't think a 15.00 bridge toll is not a tax. 300.00 a month just for the toll to get to work is just a small example.
Starve government.  Get them out of the redistribution business and we will all be better off.
Trillions have been spent on the poor.  Do we have fewer poor?  Let's try something different.

Sep 27, 2013 10:14AM
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The communist and socialist are brainwashing the feeble minded American public. You want what the rich have then work for it. Equality is not a hand out. It's getting off your ****, learning and working. The only equality government should guarantee is the opportunity to participate and succeed. It's there, study, get off your **** and get it. Libraries are free.

Minorities have had equal rights for decades, but they have a warped sense of equality. Equality means being treated the same. Equality means being given the same opportunity. Equality is not being given special incentive, special privilege, or special consideration.

Sep 27, 2013 12:22PM
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The government required banks to give loans that they would Never had done before, because of bad credit, ect.  The government created the financial crisis.......Freddy /Fannie???  Hello, MSN BS.
Sep 27, 2013 10:31AM
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It only surprises the liberals that the more we look like European socialism the more  poverty grows. They have removed incentive to work hard and better yourself  and replaced it with an equal share of  poverty.
Sep 27, 2013 10:37AM
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When the boardrooms send massive amounts of cash with lobbyists to elected officials to do what they want them to is what has, is, and will continue killing America. Corruption will also kill the capitalistic crusades through the world as well.  America had; but for a short time historically, a period when trust was our best asset.  Think of the trust it takes to build a twenty story building?  The groups like ant colonies all pulling together to accomplish a specific goal.  Well that was the old America.  Now we need handouts, grease, bribes before we even think of the permits to build anything.  Oh and lets not forget the EPA which will need being bought off as well.  The EPA has become the one single most powerfull tool to extract wealth from business to pass to political action yet. JMHO
Sep 27, 2013 9:34AM
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These arguments are worthless rhetoric by fools that have too much time on their hands. Also they are hardly the best spokesmen for the ideas of Ayn Ryan. One always has to consider any philosopher's ideas within the context of the times they were developed or written. So far modern proponents have just distorted what she said for their own purpose.   
Sep 27, 2013 11:27AM
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I wasn't aware than ANY of Rand's concepts were Government/Business policy.
Sep 27, 2013 2:01PM
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He explains that investors and entrepreneurs don't live in a vacuum, but rely on both employees and customers for their success.

BINGO! I know...rocket science! 
Sep 27, 2013 1:51PM
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Is it really Corporate Greed?

To those of you who say jobs have moved oversees because of corporate greed, here are some questions for you.

How far out of your way are you willing to go to buy American?

How much more are you willing to pay to buy American?

Is it really just corporate greed or is it also union and worker greed that caused jobs to move out of this country?

How many benefits are you willing to give up to have some of these jobs back?

How many of you have agreed with government over-regulation of business?

How many of you have stood side-by-side with your employer to fight over- regulation?

How many of you have asked stores to carry American Made items in stock?

I’m sure I can answer for most of the complainers.

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