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Author: PuddinHead42 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4  
Subject: Rational Self-interest Date: 11/8/2009 5:52 PM
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I was thinking about this recently. While it seems to make pretty good sense, it has the same basic flaw as other economic systems, from communism to socialism to capitalism: people are not rational. For the most part, greed is a substitute for rational self-interest, but it does not bother to stop short of making money on the backs of others. I have not read Atlas Shrugged and will probably have to retire before I have time, but I have wondered about some of the main concepts.

For instance, where do "Randians" or objectivists (libertarians?) stand on regulation? Given that people are not rational and never will be, we cannot have unbridled capitalism anymore than we can live without speed limits or criminal laws. Sure, most of your neighbors would not steal your lawnmower, but the consequences of the law help stop the one "bad" neighbor. I am for small government and despise the big giant health care, stimulus and cap-n-trade bills. However, I don't think I would shrink the gov back to defense only like a Ron Paul or "pure" libertarian.


Does anyone believe we are rational enough to make rational self-interest work?
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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4 of 4
Subject: Re: Rational Self-interest Date: 11/11/2009 8:05 PM
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Here's my own libertarian view.

A good Ayn Rand book on the subject would be "Capitalism: The Unknown Ideal"

I was thinking about this recently. While it seems to make pretty good sense, it has the same basic flaw as other economic systems, from communism to socialism to capitalism: people are not rational. For the most part, greed is a substitute for rational self-interest, but it does not bother to stop short of making money on the backs of others. I have not read Atlas Shrugged and will probably have to retire before I have time, but I have wondered about some of the main concepts.

The different economic systems have different weaknesses.

Communism/Socialism has two main weaknesses. The first is a moral one. These systems instill power in the collective/community at the expense of the individual. This leads to the oppression of the individual (often mass slaughter) who's basic interests, even the right to life, are secondary to the supposed interest of the collective. The second is an economic one. These systems confiscate the fruits of individual labor and distribute these to the overall community. This deprives the individual of any incentive to excel or innovate. These systems also substitute the judgement of a few bureaucrats for that of hundreds of millions of individuals. This results in poorer choices overall and a mismatch of supply and demand. This leads to less economic prosperity (indeed extreme economic deprivation) than a system which allows the individual the freedom to make his/her own choices and to benefit fully from his/her labor.

Unfettered capitalism, on the other hand, has one main weakness. It rewards unlimited greed which concentrates wealth and economic power among an elite few. This can result in economic deprivation for many and also political corruption. We attempt to mitigate this outcome with rules against monopolies and tax policies which take more from those who make more - this describes even a flat tax which is the tax system most compatible with pure capitalism. Our complex discriminatory "progressive" tax code actually exacerbates corruption since it is easily manipulated by politicians. But, even the poorest in unfettered capitalism tend to be much better off than the poorest in communism/socialism. Society is more prosperous overall and individuals retain the fruits of their labor. The wealthiest depend on the continued consumption of the middle and lower classes to maintain their own prosperity. Even at its most extreme, capitalism requires respect for individual economic rights and liberty. It does not have the moral weakness of communism/socialism.

For instance, where do "Randians" or objectivists (libertarians?) stand on regulation? Given that people are not rational and never will be, we cannot have unbridled capitalism anymore than we can live without speed limits or criminal laws. Sure, most of your neighbors would not steal your lawnmower, but the consequences of the law help stop the one "bad" neighbor. I am for small government and despise the big giant health care, stimulus and cap-n-trade bills. However, I don't think I would shrink the gov back to defense only like a Ron Paul or "pure" libertarian.


Does anyone believe we are rational enough to make rational self-interest work?


I disagree with your basic premise that people are not rational. People often act irrationally. In fact, in my profession (emergency medicine), I am continually amazed at the apparently irrational behavior of most people. But, nevertheless, people are still mostly rational. One individual may rationally choose a destructive behavior (such as smoking) if they derive great enjoyment from that behavior.

I also don't think it's accurate to state that Ron Paul or "pure" libertarians wish to "shrink the gov back to defense only." There are some nutjobs who call themselves libertarians and who might favor such an approach but their beliefs are not consistent with libertarianism. In fact, there are some anarchists who vote libertarian. Libertarianism requires not only a government which provides a national defense but one which provides the entire apparatus which protects one's civil liberties, protects common resources and provides basic infrastructure. It requires a constitution which enumerates basic rights and government limitations as well as a judiciary which helps enforce these rights and restrictions. Without these government functions, "liberty" is meaningless. Government must provide the rules that determine when one person's liberty infringes on another person's liberty.

Therefore, as a libertarian, I recognize the need for laws and regulations or rules that protect individual liberties and ensure that capitalism functions fairly and optimally. But today, we have too many laws and too many regulations. This makes us all criminals - all of us break several laws every day. These rules don't even address major criminal acts by capitalists - executives loot companies which are then bailed out by the government. This is not fair and this is not capitalism. It is theft. We have a discriminatory tax code which is ridiculously complex and which is routinely manipulated by politicians to reward and punish. It greatly distorts our economy - including the health care industry. Yet anybody who favors tax code simplification or a nondiscriminatory flat tax is considered "loonie." It has grown so complex that even the IRS doesn't give accurate advice half the time. We have politicians who are running up massive debts - spending our children's and grandchildren's money - with impunity. Are there any limits to this irresponsible behavior? We have immense government corruption which awards/sells rights to a select few (our gambling and liquor laws for example) while depriving others of these rights. Our government even operates gambling operations while forbidding most citizens to do likewise. And our judiciary ignores this unconstitutional behavior. I could go on and on. Our country is becoming progressively more socialist with every passing minute. This diminishes our liberty and economic prosperity. Both major parties share the blame. But the current administration is greatly accelerating this entire process.

This country's economic and moral strengths are due to its original libertarian nature - its respect for the dignity and rights of the individual. The constitution which recognized basic rights and liberties is basically a libertarian document. We are freer and more prosperous today then other countries in large part due to this great document. It did have some major flaws - most notably slavery and the disenfranchisement of women - and major struggles were needed to rectify these anti-libertarian flaws. Yet most Americans today fail to understand the concept of libertarianism which has given them so much. And they vote for politicians who are leading us farther from this ideal and endangering our future freedom and prosperity.


dave

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