Don Watkins is an analyst at the Ayn Rand Center for Individual Rights. He is a columnist at Forbes.com and his Op-Eds have appeared in such venues as Investor’s Business Daily, The Christian Science Monitor, and CNBC.com. He has appeared on nationally syndicated radio programs including The G. Gordon Liddy Show and The Thom Hartmann Program, and is a regular guest on PJTV’s Front Page with Allen Barton.
Slade Mendenhall is editor of The Mendenhall.
SM: Thank you again, Mr. Watkins, thank you for doing this interview with us. As fans of your writings through the Ayn Rand Center for Individual Rights, its blog Voices for Reason, your Forbes column that you write with Dr. Yaron Brook, and your regular appearances on PJTV, we have enjoyed reading and listening to your perspective on today’s economic woes and the politics that affect them. As an Objectivist, you certainly bring a unique perspective to these topics and one that is direly needed. Getting straight to our questions for you, let’s start with the fundamentals.
Four years into this recession, we’re still gripped by sluggishness. The economy, though creating jobs, is still not doing so at the rate that they are being lost. When this president came into office, we had 7.8 percent unemployment; the latest reports put us at 9.1 percent. Everyone seems divided on where growth should come from, how to achieve solid improvement. Where do we begin? What is step one in your eyes?
Just as a doctor can’t start treating a disease until he diagnoses it, the place for us to start is by diagnosing the cause of today’s economic doldrums. That’s an enormously complex subject, but the basic problem goes back to the financial crisis. In the years before 2008, our economy was distorted by a government-created housing bubble, which involved the diversion of people and resources into housing and related sectors of the economy, even though, in retrospect, they would have been more productive elsewhere. With the housing bust, there needed to be a readjustment: people who had been construction workers, to take just one example, needed to find jobs doing something else, something more economically productive.
But that readjustment process has been stymied by the government. All the bailouts, the new regulations, the massive government spending packages, the Fed’s zero percent interest rates–these and many other policies have prevented the market from correcting the distortions of the housing bubble, and they’ve hindered new businesses from starting up.
Once you diagnose the problems of the economy, the solutions become much easier to see. The first thing we need is for the government to stop: stop intervening, stop draining producers of capital, stop creating uncertainty by imposing vast new regulatory schemes, stop subsidizing unemployment by extending unemployment insurance into infinity. Step two is to start freeing the economy: cut regulations, cut taxes, and above all, cut government spending.
SM: Lately your speeches and writings have come to focus more on the subject of the entitlement state, on Social Security, Medicare, and other related problems. These are very divisive subjects that most Americans feel very strongly about. There are those who say abolish them, others who argue that they can be repaired. You have taken an alternative approach based not strictly on functionality, but on moral grounds. What is your view on these issues?
I would put it a little differently. I am concerned with functionality, but functionality means “ability to serve a certain purpose,” and so the first question has to be: What is your purpose? And since we’re talking about government programs, we need to be clear on what the government’s purpose is.
Most people today hold the view that the government’s purpose is to do whatever is in “the public interest,” or “the common good.” But those are meaningless concepts, and in practice they amount to giving the government carte blanche to do anything it can get away with.
Now, I agree with the Founding Fathers: the actual purpose of government is to protect your rights, including your property rights, so you can pursue your own happiness and make the most of your own life. Wealth redistribution schemes don’t protect your rights but violate them. Under these schemes the state seizes the wealth you’ve earned and gives it away to those who didn’t earn it. That’s no different than stealing, and it has no place in a civilized society. Entitlements don’t need to be saved, but abolished.
SM: If American leaders are persuaded that entitlements are to be dismantled, where do we begin? There is always the problem that so many have paid into the system and have yet to get the value they were promised in return. How do we stop this cycle?
The first thing to do is understand the situation. The government took a tremendous amount of wealth from older Americans, promising that it would give them certain benefits in return. But those benefits can only be supplied by seizing the wealth of younger Americans. So, short term, we’re stuck in a no-win situation: the government either tries to keep its promises by looting the young and productive, or it defaults on its promises with everything that implies.
The long-term goal has to be to end this vicious system where we sacrifice some Americans for the sake of other Americans. In other words, complete freedom: stop looting people; let them support their own lives on a free market. Create a non-sacrificial society–a society where one person’s gain is not another person’s loss.
So, how do we get there from here? That’s a really hard question, and it’s something we need economists and policy makers working on. As a philosophic analyst, all I can say is that we can’t do it overnight, but that we ought to try to do it as quickly as possible.
SM: Where many political issues have been driven by popular outrage and grassroots initiatives by the Tea Parties and other groups, one subject that has been led more by political leaders has been trade relations with China and careful scrutiny of their currency practices. What is your take on this issue? Do Americans have something to fear from China, as some of our leaders have suggested?
You always have to keep your eye on an authoritarian country like China–especially one that refuses to abandon communism as an ideal–but economically their success is not a threat to us. This whole idea that a rich and prosperous China is a threat to us is nonsense. Would you be better off living in a neighborhood with a lot of rich people or a lot of poor people? Do we benefit more from trade with Japan or with Zimbabwe? As for their currency issues, the real threat to America is our own currency issues. When the U.S. government is engaging in endless rounds of “quantitative easing,” i.e., printing gobs of money, what China does with the yuan is the least of our worries.
SM: In 2010, for the first time in decades, political donations from Wall Street went more to supporting free-market conservatives than to appeasing pro-regulation liberals. Do you see this as just a short-term response to legislation, such as Dodd-Frank and Sarbanes-Oxley, or is there something more fundamental that is changing here?
I would challenge the premise of the question. I don’t think conservatives support the free market. It was President Bush, recall, who started the bailouts, and it was Bush and a conservative Congress who passed Sarbanes-Oxley. In practice if not in rhetoric, they are every bit as pro-regulation as the left. Which is why it doesn’t matter who Wall Street supports: So long as people view Wall Street as immoral and destructive, you’re going to get more government control over the financial industry.
SM: Why are there not more businessmen arguing for capitalism? Why do we not see a broad uprising of, say, investment houses and banks openly defending themselves against government intervention?
There are a lot of factors, but I’ll just name one important one, and that is guilt. Whenever a businessman comes out for less regulation, lower taxes, less government intrusion into his affairs, he’s instantly attacked for being greedy and selfish. Doesn’t he care about the public good? Why does he need an extra million dollars, when some other people are having trouble paying the rent? It takes a tremendous amount of self-esteem to stand up and say: I have a right to pursue my own happiness.
That kind of self-esteem depends on knowing that one’s course is morally right. But the main lesson we’ve been taught about morality is that you shouldn’t be pursuing your own happiness, that your job is to serve other people’s happiness. Indeed, the key to gaining moral praise is to show that you’re actually ignoring your own happiness, your own welfare, for the sake of others. Just contrast the vicious attacks on Bill Gates when he was at Microsoft to the praise he receives now that he’s a full-time philanthropist.
This is one reason why I think Ayn Rand’s ideas are so important. She argues that it is moral to pursue your own happiness–that helping you achieve your own happiness is what morality is all about. A person who accepts Rand’s morality–she called it rational selfishness–can stand up and demand that the government leave him alone without any moral guilt. He knows that he has the moral high ground–not the people who want to sacrifice him to the “public interest.”
SM: The Federal Reserve is currently receiving more political criticism and scrutiny than it has perhaps at any other time in its nearly one hundred years of existence. How much is the Fed to blame for our current situation?
Oh, tremendously. The Federal Reserve, remember, is in charge of the entire banking and monetary system, which was nationalized a century ago. That’s the lifeblood of the economy. Money is the thread that connects the entire economy, and when you mess with it, you can do incredible damage. In my judgment, that’s exactly what happened last decade to cause the financial crisis. The financial crisis is a complex subject, but as I and many others have argued, the first cause was then-Fed chairman Alan Greenspan’s decision in the early 2000s to drive interest rates extremely low–lower than even the rate of inflation. It was those low interest rates that enticed and enabled people to take on huge amounts of debt to buy and invest in homes. You could not have had a housing bubble without the Fed. For more on this, I encourage people to see a course given by my colleague Yaron Brook: “The Financial Crisis: What Happened and Why.”
SM: The overarching nature of the Federal government has become a less controversial topic by the day, with more Americans–Objectivist, Tea Party, conservative, or even rather moderate–finding government’s role in our lives to be excessive. Philosophically speaking, are we on the right track? What do we need to do to turn the current enthusiasm and discontent into lasting change?
A large number of Americans have definitely become alarmed by the growth of government over the last few years. To turn that alarm into lasting change, what we need is for everyone concerned to gain a real understanding of what they’re rebelling against and, perhaps more importantly, what they’re fighting for. It’s not enough to realize that government has “gotten too big.” You need a real understanding of the destructive, immoral nature of government intervention, and then you need to understand and fight for capitalism.
Capitalism, keep in mind, is not what we have today, or even what we’ve had for the last one hundred years. For the last century we’ve lived in a mixed economy, a mixture of capitalist freedom and an increasing amount of government intervention. A truly capitalist society is one in which the government does only one thing: it protects individual rights, including property rights, from violation by physical force and fraud. It is the system of individual freedom and voluntary cooperation. That is the goal we have to aim for. If we do that, then we can achieve lasting change.
I should add, this is the subject of a book Yaron and I have written, which will be coming out late next year. If readers are interested, they can follow me on Facebook.
SM: As a commentator on business and economics, you are unique in that your views are based largely in an explicit philosophy. It’s clear from your answers to these issues and others that you write about, both in Forbes and on Voices for Reason, that you consistently apply philosophy in all areas of study. Can you tell us a little bit about the system of belief that informs your perspective?
Sure. Philosophy is the science that addresses the fundamental questions of life–the basic issues that underlie all the other issues we face. For instance, when scientists investigate the cause of a disease, an underlying assumption is that there is such a thing as cause and effect. That’s a philosophic conclusion.
All of us count on philosophic conclusions–conclusions about the way the world works, about human nature, about how to gain reliable knowledge, about what’s good and what’s evil. That’s certainly true of political and economic commentators. The main difference between my approach and theirs is that I try to be very conscious of the philosophic ideas that shape my political and economic thinking. In doing so, I’ve also come to some very different philosophic conclusions than today’s mainstream.
In brief, I approach things from the perspective of Ayn Rand’s philosophy, which she called Objectivism. Rand was an individualist–she was concerned with the individual, with his success, his happiness, his freedom. The two basic requirements of individual success and happiness, Rand argued, are thinking and producing. In morality, therefore, she advocated pursuing your own interests rationally, producing the values you need, and neither sacrificing yourself to others nor others to yourself. In politics, the essential thing you need is freedom–the freedom to think, to produce, and to act on your thinking. As a result, she was an advocate of laissez-faire capitalism, the system in which the government protects individual rights by banning force and fraud from human affairs.
SM: In an intellectual climate where businessmen are being vilified–not just by movements such as Occupy Wall Street, but throughout the culture–what advice do you give to business students and young businessmen out there today getting started to equip them for what they will face in their careers?
As Bacon said, knowledge is power. The more you understand about history, about economics, about philosophy, the more you’ll be able to deal with opposition. The fact is, in today’s world you will be attacked for your success, and although it is tempting to try to brush off the attacks (or, as too many businessmen try to do, appease the attackers), your freedom and your self-esteem require that you be able to answer those attacks. The best resource I know for understanding why businessmen are so hated, and for answering those attacks, is Ayn Rand’s Atlas Shrugged. I encourage everyone, but especially businessmen, to read and reread it.
SM: As do we. Thank you again for your time. We look forward to reading more from you soon.