Goddess of the Market

Ayn Rand and the American Right

By Jennifer Burns

[Available Here]

Of all the second acts in American lives, perhaps none is more remarkable than the recent conservative embrace of Ayn Rand, the long-dead doyenne of American capitalism. During the market nosedive of 2008 it seemed her version of free market capitalism had been discredited altogether; even former acolyte Alan Greenspan had his doubts, famously telling Congress he had found "a flaw" in his Rand-inspired ideology. Yet in 2009 sales of her books began a ferocious climb, with Atlas Shrugged alone selling more than 300,000 copies. Signs referencing her hero John Galt dotted the tea party protests, and she's been a staple of right wing talk radio and a new favorite of rising stars like Glen Beck. On the campaign trail, candidate Obama would sometimes criticize the virtue of selfishness, making a veiled allusion to Rand's ideas. Now President Obama has wrestled firsthand with the virtue of selfishness, for it is Rand's ideas that have undergirded conservative response to his economic proposals from the auto bailout to health care reform. Nor is she likely to fade away anytime soon; the Washington Post just declared Randroids "in" for 2010.

Though Rand's newfound popularity may have caught liberals and progressives by surprise, my book Goddess of the Market: Ayn Rand and the American Right, shows that Rand has always been a staple of political thought on the right. As I describe in the book, her ideas become especially prominent in eras of liberal dominance. She first caught the eye of business conservatives when she worked as a volunteer for Wendell Willkie's 1940 presidential run against Franklin Roosevelt, and she inspired legions of young volunteers who campaigned for Republican contender Barry Goldwater in 1964. The same cycle continues today, as the presidency of Barack Obama has energized and outraged his conservative opposition.

Ayn Rand was born Alissa Rosenbaum in 1905 in St. Petersburg, Russia. When she was twelve, Bolshevik revolutionaries seized her father's chemistry shop, an experience that left young Alissa with a bitter hatred of government and an abiding suspicion of any collective action justified in the name of social good. In 1926 she left Russia for America, where she changed her name and embarked on a remarkable career as a screenwriter, playwright, novelist, and political activist. She developed a Nietzschian-style philosophy of ethical selfishness, holding that traditional values like altruism lay at the root of totalitarian systems such as communism, socialism, and fascism. Rand called her mature philosophy "Objectivism," and it proved wildly popular among college students in the 1960s. Objectivism helped inspire the Libertarian Party, the Cato Institute, and Reason magazine.

Today, Rand's best known work is her politically charged 1957 novel Atlas Shrugged. The 1,084 page book is set in a future dystopian America, where overbearing government regulation and taxation have strangled the economy. In response, the country's top capitalists have gone "on strike," heroically refusing to work for an exploitative system that redistributes their wealth to the needy. Ever since it was published more than 50 years ago, readers have hailed the work as prophecy, seeing in Rand's villains the dim outline of liberal presidents from Lyndon Baines Johnson to Jimmy Carter.

This understanding of Rand as prophetess is widespread on the right today. "Read Atlas Shrugged before it happens" warned a sign at last spring's tea parties. Or as Rush Limbaugh put it: "Ayn Rand, she wrote ‘Atlas Shrugged.' The sequel: ‘Atlas Puked.' We're in the middle of it."

What's different now is that for the first time, conservatives are willing to overlook Rand's once-controversial atheism. Rand's materialistic philosophy is pivotal to her attack upon government, as both she and an earlier generation of conservatives understood. William F. Buckley, Jr., the founder of National Review and himself an avid fan of capitalism, tried to run Rand out of the conservative movement because she was an atheist. He rightly perceived her work as not just as a defense of capitalism, but an attack upon Christianity itself. For Buckley and other traditional conservatives, government charity might be wrong, but charity itself was to be applauded. That Rand criticized Christian morality made her anathema to believers like Whittaker Chambers, who wrote the message of Atlas Shrugged was "to a gas chamber - go!"

What matters most to Rand's latter day conservative followers, however, is how vividly Rand makes the case that government intervention in the economy and social welfare programs are morally wrong. In a clever sleight of hand, Rand's ideas have helped conservatives shift the terms of debate from the causes of the economic crisis to the Obama administration's proposed solutions. She offers a secular version of saints and sinners, for in Rand's world, there are two types of people: producers and looters, or those who work for themselves, and those who work for the government. It's the original version of Richard Nixon's "silent majority" or Sarah Palin's "real Americans."

Rand's acceptance into the pantheon of conservative thinkers is a sign that the libertarian wing of the movement is gaining strength as economic issues move to the fore of American politics. And though liberals expected that the market crash would discredit libertarian economics altogether, Rand's prominence signifies that the ideal of unregulated capitalism itself is becoming more firmly welded to the conservative world view. Whether Rand's popularity lasts into the new decade remains to be seen. But if the history I describe in Goddess of the Market is any guide, Rand and her ideas will be with us for many political cycles to come.

Goldman Sachs, the former bailed out investment bank, wastes too much of the corporate wad on lavish compensation arrangements. Notably, for instance, the company recently announced that it was setting aside $16.7 billion for employee compensation. That's around $700,000 per employee. Really.

At a time when the economy is contracting and job losses expanding, such numbers have observers miffed. At least one pension fund, The Security Police and Fire Professionals of American Retirement Fund, which had invested in Goldman, has hired a lawyer and filed suit to try to put a stop the payout.

Fortunately, such suits raise the issues and send a message to leaders of public companies. But, unfortunately, there's little these shareholders or anyone can actually do to stop the Goldman-like bonanzas.

As it turns out, pay for performance at many U.S. firms is frequently anything but. Often executives at companies receive lavish incomes for average production. Worse, some get fortunes, even though their performance has been subpar. And, worse still, sometimes executives receive sheer windfalls, even while their performance has been awful.

In fact, the Goldman payout isn't the first time high executive compensation has raised shareholder ire.

One of the most egregious examples of this occurred thirteen years ago, when Disney agreed to pay Michael Ovitz, their poor performing company president $140 million dollars in severance package. And, the Disney board and CEO agreed to the payout, after Ovitz had performed just over a year's worth of work!

One of the well known reasons large payouts occur is because of the rampant conflicts of interests that are inherent in many executive compensation decisions. For instance, the CEO plays an important role in selecting the members of the board of directors, which, upon selection, entitles the appointees to very lucrative director fees, stock, and stock options. The CEO's salary, in turn, is determined, by whom-of course, those very directors who owe their appointment in part to the CEO.

Compensation consultants are brought in to figure whether compensation packages are at market rates. For instance, Disney had a compensation consultant to advise them on how to structure Ovitz's pay at the company.

But, the compensation consultants are appointed by whom-the very executives and directors for whom they will offer an opinion. If the compensation consultants want future work or, for that matter, board members want to stay in the CEO's good graces, then there are fairly predictable incentives to come back with a very high executive pay numbers.

Sometimes, as mentioned, stakeholders in US firms-shareholders and the public-fight back. Congress amended the tax code to take away the deductibility that companies who make large salaries receive. And shareholders, incensed by outsized pay arrangements, brought suit against Disney. The Disney shareholders argued to courts in Delaware, where Disney was incorporated, that the directors were uninformed-which they were-the severance was unconscionably large-which it was-and that Mr. Ovtiz was unqualified-which arguably he might have been.

However, it still remains very much a tough path, fraught with difficulties to try to beat back decisions to take on companies, like Disney, Goldman, or others. Firms can game and restructure compensation arrangements to avoid new changes to the tax code, as they have done with respect to the deductibility provisions.

And, with respect to a courtroom challenge, judges have been loath to hear shareholders out. There are well-known legal tropes that stop courts from intervening in such decision-making. The importance of "centralized management", the need to avoid "courtroom second-guessing" and so forth mean that courts are inclined to leave levels of compensation up to the directors of firms. It means plaintiffs in cases like Disney's have little legal standing to launch a suit and it means that, even if they take such suits to verdict, they too often lose.

As a consequence, plaintiffs, like the latest group that has decided to take on Goldman, are swimming upstream and fighting the good fight. Hopefully, this time the plaintiffs will fare better.

[Image via say.fromage.]

After extensive dabate, Congress seems on the verge of passing health care legislation. But courts may offer determined opponents their last avenue of attack.

Last week, Florida Attorney General Bill McCollum suggested that his state may challenge the constitutionality of individual health insurance mandates in court. McCollum, who is running for the Florida governor's mansion this year, announced his concerns about health care reform on the heels of an ACS Issue Brief assessing its constitutionality. 

The Issue Brief was authored by Simon Lazarus, public policy counsel at the National Senior Citizens Law Center and a former member of President Jimmy Carter's domestic policy team. Lazarus argues that individual insurance mandates are "lawful and clearly so - pursuant either to Congress' authority to ‘regulate commerce among the several states,' or to its authority to ‘lay and collect taxes to provide for the General Welfare.'" Lazarus writes that arguments against the constitutionality of individual mandates "appear unlikely to gain traction with the current Supreme Court, and, indeed, represent approaches and theories that have been repudiated by justices across the Court's ideological spectrum."

"There are many close constitutional questions. But this is not among them," wrote Erwin Chemerinsky, dean of the University of California, Irvine School of Law, according to yesterday's Washington Post. "Congress clearly has the legal authority to require individuals to have health insurance."  

Workplace laws and norms seriously undercut the ability of mothers and caregivers to handle family demands, thereby depriving the workforce of highly qualified people and harming families, writes Phoebe Taubman in a new report. In "Free Riding on Families: Why the American Workplace Needs to Change and How to Do It," an Issue Brief released today by ACS, Taubman notes an array of obstacles confronting mothers and other caregivers to maintaining successful professional careers and caring for their families.

Taubman, an Equal Justice Works Fellow with A Better Balance: The Work and Family Legal Center, writes:

For a country whose politicians tout family values, the United States has done little to confront [the] costs and support of the critical work that families provide. Compare our public policies to those of our peers around the world. One hundred and seventy-seven nations guarantee leave with income to women in connection with childbirth. Seventy-four countries ensure paid paternity leave or the right to paid paternal leave for fathers. The United States guarantees no paid leave for mothers in any segment of the work force - putting it in the company of Liberia, Papua New Guinea, Samoa, Sierra Leone, and Swaziland - and no paid paternity or parental leave for fathers.

Taubman's Issue Briefs calls for advancing up-to-date workplace fairness laws and norms, including supporting paid sick leave and flexible workplace hours. Additionally she notes that more must be done to combat workplace discrimination leveled at women and other workers who struggle to attend to family needs.

Taubman states:

Although the existing framework of laws captures a significant portion of cases involving unfair treatment of family caregivers, there are still many cases that fall through the cracks. The statutory cutoffs that limit the number of eligible employees under the FMLA, for example, consequently restrict the reach and protection of the only federal law passed explicitly to address work/family conflict.

See Taubman's entire Issue Brief here.

Opponents of health care insurance reform continue to hammer away at health coverage mandates that Congress is mulling. But David Orentlicher, a law professor at Indiana University School of Law-Indianapolis and co-director of the Hall Center for Law and Health, maintains that those opponents are pushing a wobbly argument. In a column for The Huffington Post, Orentlicher, also on the faculty of the Indiana University School of Medicine, concludes that such mandates are "justified by the Constitution's grant to Congress of a taxing power and a commerce clause power."

Orentlicher writes:

The taxing power is a well-established basis for enacting an individual mandate. Indeed, this country has had a tax-based mandate to purchase health care insurance for nearly 45 years. The Medicare program imposes a payroll tax on Americans as a way to fund coverage of their hospital costs once they reach age 65. People cannot opt out of Medicare; it is an obligatory system of health care insurance for one's senior years. Similarly, Congress can use a payroll tax to implement a mandate for individuals to purchase health insurance before they reach age 65. Under the House bill, for example, people will pay a 2.5 percent tax on their income unless they have health care coverage.

...

Under the commerce clause, Congress has the power to regulate interstate commerce, and the health care insurance industry clearly falls within the Supreme Court's understanding of interstate commerce.

Orentlicher's entire piece is available here. For more on the debate over individual mandates, see analysis from Professors Erwin Chemerinsky and Robert A. Schapiro. 

[Image via drboyceretirement.blogspot.com/ ]

Health care reform legislation has passed the U.S. House of Representatives, to great fanfare, and now proceeds to the Senate, trumpeting universal coverage as it marches on. But amidst the heated debate over procedures, prescriptions and doctors, does the legislation grapple with the serious public health problem of racially isolated poverty? Have we accounted for the myriad of associated costs, both in human suffering and to the public treasury?

Characterizing racially isolated poverty as a public health issue does not require a leap of logic. The tangle of observational facts recording the coincidence of poor nutrition, violence, stress, and poor access to education is known all too well, its impact on children (especially) clearly established. Understood systemically as the risks of living in a "low opportunity" neighborhood, the net result is a constriction of life chances and outcomes unjust to those who disproportionately bear these burdens and unworthy of our nation's founding credo.

As Columbia Law School Associate Professor Olati Johnson explains:

The health of communities is related to spatial inequality and segregation. High-poverty, racially isolated neighborhoods are the ones with less access to green space, healthy food sources, clean air - all of which exacerbate health disparities. Part of the solution requires bringing opportunity and better resources to low-income neighborhoods, as well as providing poor residents access to traditionally high-opportunity areas.

In part because the popular imagination no longer understands these facts as racially inflected, the consequences slip under the national radar all too often, and yet real interventions are within reach.

What roles could nutrition possibly play in such a complicated problem? Potentially, many:

• A recent study covered in Science has demonstrated a link between nutritional supplements and substantial declines in prison violence. If these studies can be generalized beyond prison populations, they significantly empower drives toward improved nutrition.

• Areas of racially isolated poverty very commonly lack supermarkets and residents must depend instead upon convenience stores and fast food outlets. A recent program in Harlem incentivizes chain grocery stores to open where none had previously existed, resulting in upticks of fresh-food purchases. Whole Foods is thinking of opening a Harlem store.

Currently, it is "not clear how we can use law to require government to create healthier communities," Professor Johnson said. "Advocates should at minimum encourage increases in federal funding for programs specifically targeted to address nutritional and health disparities." The federal government has an opportunity here. (See Susan Eaton and Sara Abiola, Getting Under the Skin: Using Knowledge about Health Inequities to Spur Action, and a May 2009 action brief by the Charles Hamilton Houston Institute for Race & Justice Research, as well as this article from The New York Times.)

• Given the opportunity and exposure, teens can successfully agitate for better food in their communities, transforming "food deserts" into "food oases." Dorchester's Codman Academy is a classic example.

• The urban farming movement is booming, fueling farmer's markets on street corners in neighborhoods that formerly knew only packaged food. The movement stimulates the economy by providing jobs for the urban farmers and wellness (and hope) to the neighborhood residents who purchase the food.

• The impact of nutrition on learning, concentration, memory, and general health can no longer be debated. Children who have access to fresh food do better. Children living in racially isolated poverty especially need good food as a buttress against stress and in favor of learning.

First Lady Michelle Obama has made nutrition, wellness, and prevention her clarion call, and her White House assistant chef Sam Kass has helped carry the message into President Obama's innermost domestic policy circles. The First Lady aligns her efforts with health care reform and pointedly discusses their particular importance to poor children of color. But is the Hill listening as closely as Mrs. Obama's efforts warrant? Science is on her side. And if we want to crack the nut of health care reform, Congress should put its considerable weight behind her too. The results could revitalize a generation.

Professor Orin Kerr, 2007 recipient of the conservative Federalist Society's Paul M. Bator Award, identifies a recent piece by Andrew Napolitano as a prime example of when an op-ed is "filled with so many errors, misstatements, and plainly weak claims that the mere number of those becomes far more interesting than the argument of the op-ed itself."

Here's FOX News's Napolitano in his own words:

[I]t's clear that his plan is unconstitutional at its core. The practice of medicine consists of the delivery of intimate services to the human body. In almost all instances, the delivery of medical services occurs in one place and does not move across interstate lines. One goes to a physician not to engage in commercial activity, as the Framers of the Constitution understood, but to improve one's health. And the practice of medicine, much like public school safety, has been regulated by states for the past century. 

From the other side of the political spectrum, Anonymous Liberal digs deeper into Napolitano's claims:

Napolitano writes that "the delivery of medical services occurs in one place and does not move across state lines." I suppose that's true in some sense (at least most of the time). But the same is true of buying groceries or guns or just about anything else. And all of these things are clearly within the reach of the Commerce Clause.

It's one thing to argue for a crackpot interpretation of the Constitution. Everyone is free to do that. But you can't just blatantly misrepresent what the current state of the law is. You can't just assert that Roe v. Wade means the opposite of what it actually means. The reality is that if Napolitano's interpretation of [Commerce Clause jurisprudence] was correct, virtually the entire post World War II regulatory state would be unconstitutional. If he was correct, Medicare and Medicaid would be unconstitutional. Needless to say, the Supreme Court never intended to suggest anything of the sort in Lopez.

The United States Constitution

A Graphic Adaptation

By Jonathan Hennessey, writer & Aaron McConnell, graphic artist

[Available Here]

Today's is the fifth and final installation in the original series "We the Patients: Health Care Reform and the Constitution" by writer Jonathan Hennessey and graphic artist Aaron McConnell, authors of The United States Constitution: A Graphic Adaptation. Each day this week, Hennessey and McConnell debuted an original work analyzing the central role our Constitution plays in the debate over healthcare reform. Read part 1 here, part 2 here, part 3 here and part 4 here. 

Click on the image below to zoom in on the last of five contributions.

The United States Constitution

A Graphic Adaptation

By Jonathan Hennessey, writer & Aaron McConnell, graphic artist

[Available Here]

Today is Constitution Day, and the day on which writer Jonathan Hennessey and graphic artist Aaron McConnell offer their analysis of where the federal power to enact health care reform comes from. "We the Patients: Health Care Reform and the Constitution" is an exclusive series on ACSblog by the authors of The United States Constitution: A Graphic Adaptation. Read part 1 here, part 2 here and part 3 here. 

Click on the image below to zoom in on the fourth of five contributions.

[Update: The fifth and final panel is now available here.]

The United States Constitution

A Graphic Adaptation

By Jonathan Hennessey, writer & Aaron McConnell, graphic artist

[Available Here]

Constitution Day is Thursday, September 17, and ACSblog is celebrating with an original five-part series examining the provisions of the Constitution relevant to federal legislation enacting health care reform. "We the Patients: Health Care Reform and the Constitution" is by writer Jonathan Hennessey and graphic artist Aaron McConnell, authors of The United States Constitution: A Graphic Adaptation. Each day this week, Hennessey and McConnell are releasing another exclusive installment in the series on ACSblog. Read part 1 here and part 2 here, or enjoy the whole series as it is published here.

Click on the image below to zoom in on the third of five contributions.

[Update: Part 4 of this series is now available here.] 

[Update II: The fifth and final installment is now up here.]