DEAR BUBBAS AND BUBBETTES,
If and when Congess starts to get serious about the financial future of our country, here is some very useful background information that they will be referencing during the next few months.
A lot of this will probably be debated in one form or another during the current Presidential campaign as well, in the occasional slightly more serious moments.
You might enjoy it too. The full report is attached.
All the very best, Andy
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MAJOR FISCAL ISSUES BEFORE CONGRESS IN FY2013
Congressional Research Service, 10 August 2012.
This report provides a brief overview of the major tax and spending policy changes set to take effect under current law at the end of 2012 or early in 2013. Collectively, these policies have been referred to by some as the “fiscal cliff.” Extending current revenue policies (e.g., extending the Bush tax cuts) and changing current spending policies (e.g., not allowing the BCA sequester to take effect) would increase the projected budget deficit relative to current law.
The Congressional Budget Office (CBO) estimates that if current law remains in place, the budget deficit will fall by $502 billion between FY2012 and FY2013.
Revenue provisions that are set to expire at the end of 2012 include the “Bush tax cuts,” as well as provisions related to the estate tax and the Alternative Minimum Tax (AMT). Collectively, the Bush tax cuts reduced income taxes by reducing tax rates, reduced the marriage penalty, repealed limitations on personal exemptions and itemized deductions (PEP and Pease, respectively), expanded refundable credits, and modified education tax incentives. The Bush tax cuts also reduced estate tax liabilities by increasing the amount of an estate exempt from taxation and by lowering the tax rate. The two-percentage-point reduction in the Social Security payroll tax is also set to expire at the end of 2012 and a number of temporary tax provisions (also known as “tax extenders”) expired at the end of 2011 with more scheduled to expire at the end of 2012. Under current law, these provisions are collectively estimated to reduce the budget deficit by nearly $400 billion between FY2012 and FY2013.
There are a variety of spending policies set to change at the end of 2012 or early in 2013. These include the federal share of extended benefit payments for unemployment and the authorization for temporary emergency unemployment benefits. Payments to physicians under Medicare are scheduled to be reduced by 27% in 2013 under the Sustainable Growth Rate (SGR) system.
Automatic spending cuts enacted as part of the Budget Control Act of 2011 (BCA; P.L. 112-55) are scheduled to reduce spending beginning in FY2013. Under current law, these policy changes are collectively estimated to reduce the budget deficit by over $100 billion between FY2012 and FY2013.
In making fiscal policy choices, Congress will have to weigh the benefits of deficit reduction against the potential implications of fiscal policy choices for the ongoing economic recovery. Maintaining current revenue and spending policies will add to the deficit, while increasing revenues and reducing spending, as under current law, could slow economic growth. Thus, deficit reduction measures must be balanced against concerns that spending cuts or tax increases could dampen an already weak economic recovery.
CBO has concluded that allowing current law fiscal policies to take effect will dampen short-term economic growth, but accelerate long-term economic growth. Conversely, CBO has concluded that postponing the fiscal restraint would accelerate short-term economic growth, but dampen long-term economic growth. In that context, several policy observers have recommended implementing a credible medium-term plan that balances economic considerations with deficit reduction.
Can’t get much better than this.
RYAN TO STAY ON BALLOT FOR RE-ELECTION
By Alison Bauter of the Journal Sentinel, Aug. 11, 2012
U.S. Rep. Paul Ryan will be in two places on the ballot Nov. 6 now that he has been picked by Republican Mitt Romney as his running mate.
Ryan will remain on the Wisconsin ballot for re-election to his seat in the House of Representatives, said Susan Jacobson, finance director/campaign manager for his House campaign.
Ryan represents the 1st Congressional District that includes Janesville, Kenosha and much of southeastern Wisconsin, including portions of Waukesha and Milwaukee counties. He has won election to the seat seven times.
Ryan, of Janesville, can run both for vice president and for re-election to Congress thanks to a 1968 law that permits a candidate to be on the ballot twice, but only if he or she is running for president or vice president.
Ryan faces Democrat Rob Zerban of Kenosha in November.
Zerban has raised $1.2 million in his race. Ryan has raised $4.3 million as of July 25, according to the Federal Election Commission. Zerban is a former small businessman who sold his last business in 2008.
Now you see her, now you don’t. What might be the next big surprise in this ever evolving election extravaganza? This could be lots more fun than the London Olympics!!!
PAUL RYAN DOES AN ABOUT-FACE ON AYN RAND
Republican vice-presidential nominee Paul Ryan once credited Rand as
the reason he entered public service, but now says, 'I reject her philosophy.'
Two years ago Republican vice presidential nominee Paul Ryan said he regularly gave out Ayn Rand novel ‘Atlas Shrugged’ as Christmas gifts, but today he says he no longer espouses her beliefs.
By Husna Haq, CSMonitor 14 August 2012.
Eager to brush up on the new Republican vice presidential nominee and the inspiration behind his budget-cutting “Path to Prosperity”? Dust off your library of Ayn Rand – “Atlas Shrugged” or “The Fountainhead” will do – and settle in.
Paul Ryan, the boyish young representative from Wisconsin who is injecting Romney’s presidential bid with fresh conservatism, is an ardent Randian who often cites Rand as his inspiration for entering public service and the philosophical basis for his economic vision for America.
“[T]he reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand,” Ryan said in a 2005 speech to the Rand-devoted Atlas Society.
“I grew up reading Ayn Rand and it taught me quite a bit about who I am and what my value systems are,” he told the group, adding, “It’s inspired me so much that it’s required reading in my office for all my interns and my staff.”
In fact, two years earlier Ryan told the Weekly Standard, “I give out ‘Atlas Shrugged’ as Christmas presents.”
Rand, “an atheist with a tartly Darwinian world view,” as the LA Times recently wrote, was a Russian émigré, author, and the philosophical force behind objectivism, the idea that people should pursue their own rational self-interest rather than the good of others. As such, laissez-faire capitalism is the ideal economic system according to Rand’s views, and the only system that embodies the Randian philosophy.
Rand rendered her philosophies into the bestselling “Atlas Shrugged” and “The Fountainhead,” two books which form part of the modern conservative canon, books which helped inspire generations of conservatives and libertarians like Ryan. (Incidentally, Ryan’s mentor, Jack Kemp, the New York congressman and Bob Dole running mate, was also a huge fan. So was five-time US Senator Barry Goldwater, Supreme Court Justice Clarence Thomas, and Wisconsin Sen. Ron Johnson.)
But Ryan took his Randian devotion further, using it as the inspiration for his “Path to Prosperity,” his controversial austere budget plan that calls for ending Medicare as a mandate and replacing it with a voucher system.
You see, Rand abhorred social welfare programs like Medicare and Social Security (though she reportedly signed on for both when she reached eligibility). She frequently spoke of “makers” subsidizing society’s “takers,” and warned against such “parasitic behavior.”
“What’s unique about what’s happening today in government, in the world, in America, is that it’s as if we’re living in an Ayn Rand novel right now,” Ryan said in a series of videos posted to Facebook in 2009. “I think Ayn Rand did the best job of anybody to build a moral case of capitalism, and that morality of capitalism is under assault.”
Now here’s the funny thing. After years of praising Rand, assigning Rand readings to subordinates, and gifting friends and colleagues “Atlas Shrugged” for Christmas, Ryan has recently taken pains to distance himself from the conservative matriarch.
The congressman from Wisconsin characterized his Rand-devotion as “urban legend” in a recent interview in the National Review.
In fact, his romance with Rand was nothing more than a youthful dalliance, Ryan told the National Review. “I, like millions of young people in America, read Rand’s novels when I was young. I enjoyed them,” he said. “…[but] I reject her philosophy.”
Why the sudden about-face?
The atheist Rand, as the New Yorker pointed out in a recent piece, “is something of a philosophical wedge issue on the right, dividing religious conservatives from free market libertarians.” As such, continued the piece, “Ryan’s sidestep from Rand was politically essential. As a Mormon, the last thing Romney needs is to alienate the Christian Right further by putting an acolyte of an atheist on the ticket.”
And let’s not forget the sting of social Darwinism, a no-no in these tough economic times. As the LA Times suggests, “[B]y the time he introduced his austere budget plan this year… Ryan was being depicted as a harsh absolutist. He did not need to be tied too closely to Rand and her sink-or-swim imperatives.”
Which brings us to this, uttered by Ryan in the same National Review article. “I reject her philosophy,” Ryan told the Review. “It’s an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview.”
And so, when push comes to shove, Ryan has shrugged off Ayn Rand. The only thing more insightful than Ryan’s devotion to Rand, it turns out, is his rejection of her.
PAUL RYAN LOVED AYN RAND, BEFORE HE SAID HE DIDN'T
By James Rainey, LATimes, 12 August 2012.
Back in 2005, an up-and-coming lawmaker named Paul Ryan credited the polemical novelist and libertarian Ayn Rand as a central inspiration for his entry into public life. Ryan toiled in those days in relative obscurity, a well-respected but low-profile member of the House of Representatives.
By the spring of 2012, the boyish congressman had become a Republican star, widely named as a possible vice presidential pick. He also had become considerably less comfortable being linked to the controversial Rand, an atheist with a tartly Darwinian world view.
As Ryan and the Republicans look to define the new vice presidential choice’s brand, part of the commentary will be about just how Randian (read: unsympathetic to the weak) the candidate really is.
Ayn (rhymes with “fine”) Rand wrote the bestselling “Atlas Shrugged.” She also encouraged the world’s “makers” to pursue “rational self interest” as “the highest moral purpose of [one's] life,” while giving little care to the nefarious “takers.”
Journalists who have recently written about Ryan suggested that his infatuation with the Russian émigré author, who died in 1982 at age 77, has hardly waned. The favorite son of Wisconsin has recently been insisting that his embrace of Rand amounted to a youthful infatuation. In an April interview with the National Review, Ryan said that the reports linking him to Rand were essentially “an urban legend.”
“I reject her philosophy,” Ryan told Robert Costa of the National Review. “It’s an atheist philosophy. It reduces human interactions down to mere contracts and it is antithetical to my worldview.” He added that he had merely “enjoyed a couple of her novels,” which also included another bestseller, “The Fountainhead.”
But Ryan made no bones about his philosophical influences just a few years ago. He told the Weekly Standard in 2003 that he gave his staffers copies of “Atlas Shrugged” as Christmas presents. Speaking to a group of Rand acolytes in 2005, Ryan said, “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand. And the fight we are in here, make no mistake about it, is a fight of individualism versus collectivism.”
Even three years ago, Tim Mak of Politico noted, Ryan channeled Rand. “What’s unique about what’s happening today in government, in the world, in America, is that it’s as if we’re living in an Ayn Rand novel right now,” Ryan said. “I think Ayn Rand did the best job of anybody to build a moral case of capitalism, and that morality of capitalism is under assault.”
But by the time he introduced his austere budget plan this year — calling for an end to Medicare as a mandate and its replacement for many Americans with a system of vouchers — Ryan was being depicted as a harsh absolutist. He did not need to be tied too closely to Rand and her sink-or-swim imperatives.
Jonathan Chait, writing in New York magazine, suggested Ryan cannot slough off his connections to Rand’s thinking that easily. The journalist cited Ryan’s 2009 remarks about the immorality of government attacking productive members of society.
“It is not enough to say that President Obama’s taxes are too big or the healthcare plan doesn’t work for this or that policy reason,” the lawmaker said. “It is the morality of what is occurring right now, and how it offends the morality of individuals working toward their own free will to produce, to achieve, to succeed, that is under attack, and it is that what I think Ayn Rand would be commenting on.”
Chait said that Ryan has frequently invoked Rand’s idea of “makers” subsidizing society’s “takers.” In the New York story, he summed up the writer’s libertarian philosophy as “a defense of capitalism in general and, in particular, a conception of politics as a class war pitting virtuous producers against parasites who illegitimately use the power of the state to seize their wealth.”
While the congressman may not be a pure Randian “Objectivist,” Chait opined, he hews to a particular vein the philosophy in support of supply-side economics and the imperative of cutting taxes and reducing role of government. Jack Kemp, an earlier Rand-follower and vice presidential nominee, took the same position. (He also was one of Ryan’s first bosses when Ryan worked as a Capitol Hill staffer.)
In his National Review interview contesting his ties to Rand, Rep. Ryan suggested another more important influence. “If somebody is going to try to paste a person’s view on epistemology to me,” he said, “then give me Thomas Aquinas.”
Aquinas was a saint, after all, who was said to disdain secular philosophy in favor of Christian revelation — a view unlikely to scare up criticism at a town hall meeting in Sheboygan or Rapid City.
DEAR BUBBAS AND BUBBETTES,
“When you are too big to fail, you apparently also become too grand to jail”.
When you finish reading this provocative article, please also take a look at the book reviews below of an enticing new opus by Glenn Greenwald.
It is hard to grasp how profoundly our system has now been perverted by those with mega-budgets which not only buy them such enormous power, but also such incredible legal impunity too.
It is shocking and dismaying because the scale and scope of reform that will be required to try to get back to a real function republic is so enormous today.
Yet hope springs eternal!!
| | WHY GOLDMAN SACHS, OTHER WALL STREET TITANS ARE NOT BEING PROSECUTED
The Justice Department's decision not to prosecute Goldman Sachs in a financial-fraud probe is another sign of the cronyism that has kept Attorney General Eric Holder from taking action against other big Wall Street firms, says Peter Schweizer.
By Peter Schweizer, The Daily Beast, 14 August 2012.
On Thursday the Department of Justice announced it will not prosecute Goldman Sachs or any of its employees in a financial-fraud probe.
The news is likely to raise the ire of the political left and right, both of which have highlighted one of the most inconvenient facts of Attorney General Eric Holder’s Justice Department: despite the Obama administration’s promises to clean up Wall Street in the wake of America’s worst financial crisis, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions. Why is that? In a word: cronyism.
Take Goldman Sachs, for example. Thursday’s announcement that there will be no prosecutions should hardly come as a surprise. In 2008, Goldman Sachs employees were among Barack Obama’s top campaign contributors, giving a combined $1,013,091. Eric Holder’s former law firm, Covington & Burling, also counts Goldman Sachs as one of its clients. Furthermore, in April 2011, when the Senate Permanent Subcommittee on Investigations issued a scathing report detailing Goldman’s suspicious Abacus deal, several Goldman executives and their families began flooding Obama campaign coffers with donations, some giving the maximum $35,800.
That’s not to say Holder’s Justice Department hasn’t gone after any financial fraudsters. But the individuals the DOJ’s “Financial Fraud Enforcement Task Force” has placed in its prosecutorial crosshairs seem shockingly small compared with the Wall Street titans the Obama administration promised to bring to justice.
Will bipartisan outrage boost the decibels in D.C. loud enough for Holder to hear and heed?
Consider the following small-time operators as listed on the Financial Fraud Enforcement Task Force website :
• “Three Connecticut Women Charged with Overseeing ‘Gifting Tables’ Pyramid Scheme.”
Three women in their 50s and 60s were indicted for conspiracy, tax, and wire-fraud charges. “These arrests should send a strong message to all who threaten the financial health of our communities,” one federal agent declared.
• In March, 2012, the DOJ sent a property appraiser in Washington, D.C., to the slammer for 65 months for fraudulently inflated prices in a scheme to “flip” properties. The scheme was a small-time $1 million operation, a sharp contrast with the billions on Wall Street.
• The DOJ’s “get tough” on financial crime strategy included sending two health-care software company executives to the clink for 13 and 15 years.
• A Florida resident was charged and sentenced to 14 months in federal prison for falsifying documents, thereby resulting in the obstruction of an SEC investigation.
• Five people in California were charged with bid-rigging foreclosure auctions. The individuals have been charged with violating the Sherman Act and could face up to 10 years in jail.
• Federal officials went after 10 people in Las Vegas because they tried to “fraudulently gain control of condominium homeowners’ associations in the Las Vegas area so that the HAOs would direct business to a certain law firm and construction company.”
• The owner of a Miami company got 46 months in prison for creating fake loan applications.
• Four people in Tacoma, Wash., were indicted for conspiracy that caused a small bank to fail. Their crime: making false statements on loan applications and to HUD.
To be sure, financial fraud of any kind is wrong and should be prosecuted. But locking up “pygmies” is hardly the kind of financial-fraud crackdown Americans expected in the wake of the largest financial crisis in U.S. history. Increasingly, there appear to be two sets of rules: one for the average citizen, and another for the connected cronies who rule the inside game.
That could be changing, as critiques of Eric Holder’s lack of financial prosecutions have now come from the political left and right; indeed, battling cronyism may represent one of the rare points of common ground in today’s fractious political environment. As progressive Richard Eskow of the Huffington Post recently wrote: “More and more Washington insiders are asking a question that was considered off-limits in the nation's capital just a few months ago: Who, exactly, is Attorney General Eric Holder representing? As scandal after scandal erupts on Wall Street, involving everything from global lending manipulation to cocaine and prostitution, more and more people are worrying about Holder's seeming inaction—or worse—in the face of mounting evidence.”
Will bipartisan outrage boost the decibels in D.C. loud enough for Holder to hear and heed? We’ll see. He’s got at least three months to get moving. “With Liberty and Justice for Some”: How the Law Is Used to Destroy Equality and Protect the Powerful
By Glenn Greenwald
Metropolitan Books; First Edition edition (October 25, 2011) Language:
978-0805092059 Glenn Greenwald
is the author of the New York Times
bestsellers How Would a Patriot Act?
and A Tragic Legacy
. Recently proclaimed one of the "25 Most Influential Political Commentators" by The Atlantic
, Greenwald is a former constitutional law and civil rights attorney and a contributing writer at Salon
. He lives in Brazil and New York City. A SYNOPSIS From "the most important voice to have entered the political discourse in years" (Bill Moyers), a scathing critique of the two-tiered system of justice that has emerged in America
From the nation's beginnings, the law was to be the great equalizer in American life, the guarantor of a common set of rules for all. But over the past four decades, the principle of equality before the law has been effectively abolished. Instead, a two-tiered system of justice ensures that the country's political and financial class is virtually immune from prosecution, licensed to act without restraint, while the politically powerless are imprisoned with greater ease and in greater numbers than in any other country in the world.
Starting with Watergate, continuing on through the Iran-Contra scandal, and culminating with Obama's shielding of Bush-era officials from prosecution, Glenn Greenwald lays bare the mechanisms that have come to shield the elite from accountability. He shows how the media, both political parties, and the courts have abetted a process that has produced torture, war crimes, domestic spying, and financial fraud.
Cogent, sharp, and urgent, this is a no-holds-barred indictment of a profoundly un-American system that sanctions immunity at the top and mercilessness for everyone else. A BOOK REVIEW A SCATHING INDICTMENT
By Tiger CK, October 2011.
In With Liberty and Justice for Some, Glenn Greenwald, a former civil rights litigator has produced a troubling indictment of the American justice system. His basic argument is that the system really has two tiers--one for the elite, who can often escape prosecution for serious crimes and another for the rest of us. The law, he argues, no longer creates a level playing field the way the founders of our constitution intended it to. During the last several decades in particular, the powerful have used the law as a weapon against the poor and the weak.
In a tightly written narrative, Greenwald covers how the law has been used to favor what he calls political and financial elites since the 1970s. He begins with President Ford's decision to pardon Richard Nixon despite his egregious crimes against the constitution and carries forward to the present day. Neither Republicans nor Democrats are spared. He is critical of the worldwide torture and doemstic spying that occurred during the administration of George W. Bush. But he also criticizes Obama for failing to prosecute both former members of the Bush administration and the financial elite on Wall Street.
The book is divided into five sections. The first covers the origin of elite immunity and talks about how the problem of inequality first developed in the public sector. The second covers the spread of elite immunity to the private sector including Wall Street. The third section entitled Too Big to Jail deals with how many on Wall Street and in the banks have escaped prosecution. The fourth entitled Immunity by Presidential Decree deals with presidential pardons; and the final section on the American justice system's second tier deals with how the system works for non-elites.
Greenwald's book is a passionately written one. The pages seethe with the author's moral outrage at the inequalities that exist within the American justice system. And the book will not fail to provoke the same sense of anger in the reader. Some of the problems that Greenwald points to really are inexcusable in a prosperous and democratic society and the author rightly argues that we need to find a way to address them.
I have given this book a high rating because it definitely forced me to rethink some of my fundamental assumptions about the American justice system. At the same time, I did not agree with Greenwald on all of his points. I sometimes found him to be a little bit TOO critical of the government. After September 11, in particular, I believe that the government was faced with unique and shocking circumstances. American officials believed that they had an urgent obligation to find new ways of protecting national security. Although the war on terror led to some acts that were not justifiable, to me these are different in a different category from the government's failure to prosecute Wall Street criminals. In the case of the latter the rich are more or less escaping justice for no good reason. On the whole, however, this book is an important one that raises fundamental questions about how justice is dispensed in America. ANOTHER BOOK REVIEW SOME USEFUL OBSERVATIONS IN THE SERVICE OF A FANTASTIC ARGUMENT
By John Winters
, October 29, 2011
When I say fantastic, I mean of or relating to fantasy. And that fantasy is the idea that the "law" or the "state" ever equally represented people, that it was ever not a tool ultimately under the control of the economically powerful, that it ever functioned to provide liberty and justice for ALL.
As he does on his blog, Glenn fills his book with example after example of the legal double standards in the United States. It is in pointing out these double standards that he's at his most impassioned and readable. But just as his strengths carry over from his blog to the book, so do his weaknesses. The biggest one is that Glenn never really gets beyond the listing of grievances to offer a compelling explanation of why injustice has grown in recent decades (although, to Glenn's credit, he notes it has coincided with a massively growing economic gap). In other words, Glenn describes well, but explains poorly.
His attempt to provide an over arching framework is to cite the pardon of Nixon as a watershed moment, as if the pardon was a consciousness raising moment for political elites who were then emboldened to break the law with impunity. The problem with this historical narrative isn't that Nixon's pardon wasn't exceptional. It was indeed exceptional, but for a completely different reason. It symbolized a brief moment in U.S. history where grassroots pressure resulted in the exposure of crimes at the highest level of government. It was the exposure of the crimes, crimes which LBJ, JFK, and so many other previous presidents (of both parties) engaged in, that was remarkable. Not the fact that political leaders were getting away with the crimes, not the fact that political leaders began to expect to get away with their misdeeds.
Glenn fails to offer any decent explanatory foundation for the problem he identifies because he doesn't grasp enough of the history of power and how it has operated in the United States. An unfortunate consequence of this is the implication that we need to get back to some kind of legal garden of eden that Glenn seems to think we have fallen away from after Gerald Ford bit the forbidden fruit. It appears Greenwald hasn't read Howard Zinn, or has any familiarity with the fact that the powerful have always believed that their political and legal domination are the equivalent of justice for all, even when that "justice" has excluded women, Native Americans, African Americans, etc. Today is no different. There is injustice and inequality that benefit the people who think society and its application of laws are just and equal. The only notable change has been in how the elites reconcile their domination with the myth of equality.
The problem with Glenn's failure to construct an adequate explanatory frame is that it leaves him confused about where to go politically. Because Glenn keeps looking back to a paradisical time when capitalism supposedly rewarded the hard-working and punished the slothful, because he mistakes a presidential pardon with the underlying roots of inequality and injustice, he is left in a situation where he senses that roots of injustice run deep but where he is still implicitly wedded to the notion of "reclaiming" the democratic party. As if the party was ever not dominated by the powerful, who have only occasionally had to make concessions in periods of intense popular upheaval.
After hundreds of pages, the reader is left convinced that the law is indeed largely formulated by and at the behest of the powerful. But this observation is hardly new. Crack open any text by Marx or Bakunin, and you'll get a much more compelling expose, one that links up with an explanatory map capable of guiding activists who want to change the world for the better.
As her name will be bouncing around the chatosphere for a few months, given Paul Ryan’s randy tropisms, here is some interesting background.
For all of her alleged individualism, and disdain for government, she apparently lived her last few years on Social Security benefits, etc. Sic transit Gloria’s sick ideas, etc.
| | AYN RAND Ayn Rand,
born Alisa Zinov'yevna Rosenbaum
, February 2, 1905 – March 6, 1982) was a Russian-American novelist, philosopher, playwright, and screenwriter. She is known for her two best-selling novels The Fountainhead
and Atlas Shrugged
and for developing a philosophical system she called Objectivism.
Born and educated in Russia, Rand moved to the United States in 1926. She worked as a screenwriter in Hollywood and had a play produced on Broadway in 1935–1936. After two early novels that were initially less successful, she achieved fame with her 1943 novel The Fountainhead
. In 1957, she published her best-known work, the novel Atlas Shrugged
. Afterward she turned to nonfiction to promote her philosophy, publishing her own magazines and releasing several collections of essays until her death in 1982.
Rand advocated reason as the only means of acquiring knowledge and rejected all forms of faith and religion. She supported rational and ethical egoism, and rejected ethical altruism. In politics, she condemned the initiation of force as immoral and opposed all forms of collectivism and statism, instead supporting laissez-faire
capitalism, which she believed was the only social system that protected individual rights. She promoted romantic realism in art. She was sharply critical of the philosophers and philosophical traditions known to her besides Aristotle.
Rand's fiction was poorly received by many literary critics, and academia generally ignored or rejected her philosophy. The Objectivist movement attempts to spread her ideas, both to the public and in academic settings. She has been a significant influence amongst libertarians and American conservatives. Early life:
Rand was born Alisa Zinov'yevna Rosenbaum on February 2, 1905, to a bourgeois family living in Saint Petersburg. She was the eldest of the three daughters of Zinovy Zakharovich Rosenbaum and Anna Borisovna Rosenbaum, largely non-observant Jews. Rand's father was a successful pharmacist, eventually owning a pharmacy and the building in which it was located. Rand was twelve at the time of the Russian Revolution of 1917, during which her sympathies were with Alexander Kerensky. Rand's family life was disrupted by the rise of the Bolshevik party under Vladimir Lenin. Her father's pharmacy was confiscated by the Bolsheviks, and the family fled to the Crimea, which was initially under the control of the White Army during the Russian Civil War. She later recalled that while in high school she determined that she was an atheist and that she valued reason above any other human attribute. After graduating from high school in the Crimea, at 16 Rand returned with her family to Petrograd (the new name for Saint Petersburg), where they faced desperate conditions, on occasion nearly starving.
After the Russian Revolution, universities were opened to women, including Jews, allowing Rand to be in the first group of women to enroll at Petrograd State University, where she studied in the department of social pedagogy, majoring in history. At the university she was introduced to the writings of Aristotle and Plato, who would be her greatest influence and counter-influence, respectively. A third figure whose philosophical works she studied heavily was Friedrich Nietzsche. Able to read French, German and Russian, Rand also discovered the writers Fyodor Dostoevsky, Victor Hugo, Edmond Rostand, and Friedrich Schiller, who became her perennial favorites.
Along with many other "bourgeois" students, Rand was purged from the university shortly before graduating. However, after complaints from a group of visiting foreign scientists, many of the purged students were allowed to complete their work and graduate, which Rand did in October 1924. She subsequently studied for a year at the State Technicum for Screen Arts in Leningrad. For one of her assignments, she wrote an essay about the actress Pola Negri, which became her first published work.
By this time she had decided her professional surname for writing would be Rand
, possibly as a Cyrillic contraction of her birth surname, and she adopted the first name Ayn
, either from a Finnish name or from the Hebrew word עין (ayin
, meaning "eye").
In the fall of 1925, Rand was granted a visa to visit American relatives. Rand was so impressed with the skyline of Manhattan upon her arrival in New York Harbor that she cried what she later called "tears of splendor". Intent on staying in the United States to become a screenwriter, she lived for a few months with relatives in Chicago, one of whom owned a movie theater and allowed her to watch dozens of films for free. She then set out for Hollywood, California.
Initially, Rand struggled in Hollywood and took odd jobs to pay her basic living expenses. A chance meeting with famed director Cecil B. DeMille led to a job as an extra in his film, The King of Kings
, and to subsequent work as a junior screenwriter. While working on The King of Kings
, she met an aspiring young actor, Frank O'Connor; the two were married on April 15, 1929. Rand became an American citizen in 1931. Taking various jobs during the 1930s to support her writing, Rand worked for a time as the head of the costume department at RKO Studios. She made several attempts to bring her parents and sisters to the United States, but they were unable to acquire permission to emigrate. Early fiction:
Rand's first literary success came with the sale of her screenplay Red Pawn
to Universal Studios in 1932, although it was never produced. This was followed by the courtroom drama Night of January 16th
, first produced by E.E. Clive in Hollywood in 1934 and then successfully reopened on Broadway in 1935. Each night the "jury" was selected from members of the audience, and one of the two different endings, depending on the jury's "verdict", would then be performed. In 1941, Paramount Pictures produced a movie version of the play. Rand did not participate in the production and was highly critical of the result.
Rand's first novel, the semi-autobiographical We the Living
, was published in 1936. Set in Soviet Russia, it focused on the struggle between the individual and the state. In a 1959 foreword to the novel, Rand stated that We the Living
"is as near to an autobiography as I will ever write. It is not an autobiography in the literal, but only in the intellectual sense. The plot is invented, the background is not..." Initial sales were slow and the American publisher let it go out of print, although European editions continued to sell. After the success of her later novels, Rand was able to release a revised version in 1959 that has since sold over three million copies. Without Rand's knowledge or permission, the novel was made into a pair of Italian films, Noi vivi
and Addio, Kira
, in 1942. Rediscovered in the 1960s, these films were re-edited into a new version which was approved by Rand and re-released as We the Living
Her novella Anthem
was written during a break from the writing of her next major novel, The Fountainhead
. It presents a vision of a dystopian future world in which totalitarian collectivism has triumphed to such an extent that even the word 'I' has been forgotten and replaced with 'we'.
It was published in England in 1938, but Rand initially could not find an American publisher. As with We the Living
, Rand's later success allowed her to get a revised version published in 1946, which has sold more than 3.5 million copies. The Fountainhead and political activism:
During the 1940s, Rand became politically active. Both she and her husband worked full time in volunteer positions for the 1940 Presidential campaign of Republican Wendell Willkie. This work led to Rand's first public speaking experiences, including fielding the sometimes hostile questions from New York City audiences who had just viewed pro-Willkie newsreels, an experience she greatly enjoyed. This activity also brought her into contact with other intellectuals sympathetic to free-market capitalism. She became friends with journalist Henry Hazlitt and his wife, and Hazlitt introduced her to the Austrian School economist Ludwig von Mises. Despite her philosophical differences with them, Rand strongly endorsed the writings of both men throughout her career, and both of them expressed admiration for her. Once von Mises referred to Rand as "the most courageous man in America," a compliment that particularly pleased her because he said "man" instead of "woman." Rand also developed a friendship with libertarian writer Isabel Paterson. Rand questioned the well-informed Paterson about American history and politics long into the night during their numerous meetings and gave Paterson ideas for her only nonfiction book, The God of the Machine
Rand's first major success as a writer came with The Fountainhead
in 1943, a romantic and philosophical novel that she wrote over a period of seven years. The novel centers on an uncompromising young architect named Howard Roark and his struggle against what Rand described as "second-handers"—those who attempt to live through others, placing others above self. It was rejected by twelve publishers before finally being accepted by the Bobbs-Merrill Company on the insistence of editor Archibald Ogden, who threatened to quit if his employer did not publish it. While completing the novel, Rand was prescribed the amphetamine Benzedrine to fight fatigue. The drug helped her to work long hours to meet her deadline for delivering the finished novel, but when the book was done, she was so exhausted that her doctor ordered two weeks' rest. Her continued use of the drug for approximately three decades may have contributed to what some of her later associates described as volatile mood swings. The Fountainhead
eventually became a worldwide success, bringing Rand fame and financial security. In 1943, Rand sold the rights for a film version to Warner Bros., and she returned to Hollywood to write the screenplay. Finishing her work on that screenplay, she was hired by producer Hal Wallis as a screenwriter and script-doctor. Her work for Wallis included the screenplays for the Oscar-nominated Love Letters
and You Came Along
. This role gave Rand time to work on other projects, including a planned nonfiction treatment of her philosophy to be called The Moral Basis of Individualism
. Although the planned book was never completed, a condensed version was published as an essay titled "The Only Path to Tomorrow", in the January 1944 edition of Reader's Digest
While working in Hollywood, Rand extended her involvement with free-market and anti-communist activism. She became involved with the Motion Picture Alliance for the Preservation of American Ideals, a Hollywood anti-Communist group, and wrote articles on the group's behalf. She also joined the anti-Communist American Writers Association. A visit by Isabel Paterson to meet with Rand's California associates led to a final falling out between the two when Paterson made comments that Rand saw as rude to valued political allies. In 1947, during the Second Red Scare, Rand testified as a "friendly witness" before the United States House Un-American Activities Committee. Her testimony described the disparity between her personal experiences in the Soviet Union and the portrayal of it in the 1944 film Song of Russia
. Rand argued that the film grossly misrepresented conditions in the Soviet Union, portraying life there as being much better and happier than it actually was. When asked about her feelings on the effectiveness of the investigations after the hearings, Rand described the process as "futile".
After several delays, the film version of The Fountainhead
was released in 1949. Although it used Rand's screenplay with minimal alterations, she "disliked the movie from beginning to end," complaining about its editing, acting, and other elements. Atlas Shrugged and Objectivism:
After the publication of The Fountainhead
, Rand received numerous letters from readers, some of whom it had profoundly influenced. In 1951 Rand moved from Los Angeles to New York City, where she gathered a group of these admirers around her. This group (jokingly designated "The Collective") included future Federal Reserve Chairman Alan Greenspan, a young psychology student named Nathan Blumenthal (later Nathaniel Branden) and his wife Barbara, and Barbara's cousin Leonard Peikoff. At first the group was an informal gathering of friends who met with Rand on weekends at her apartment to discuss philosophy. Later she began allowing them to read the drafts of her new novel, Atlas Shrugged
, as the manuscript pages were written. In 1954 Rand's close relationship with the much younger Nathaniel Branden turned into a romantic affair, with the consent of their spouses. Atlas Shrugged
, published in 1957, was Rand's magnum opus
. Rand described the theme of the novel as "the role of the mind in man's existence—and, as a corollary, the demonstration of a new moral philosophy: the morality of rational self-interest." It advocates the core tenets of Rand's philosophy of Objectivism and expresses her concept of human achievement. The plot involves a dystopian United States in which the most creative industrialists, scientists and artists go on strike and retreat to a mountainous hideaway where they build an independent free economy. The novel's hero and leader of the strike, John Galt, describes the strike as "stopping the motor of the world" by withdrawing the minds of the individuals most contributing to the nation's wealth and achievement. With this fictional strike, Rand intended to illustrate that without the efforts of the rational and productive, the economy would collapse and society would fall apart. The novel includes elements of romance, mystery, and science fiction, and it contains Rand's most extensive statement of Objectivism in any of her works of fiction, a lengthy monologue delivered by Galt.
Despite many negative reviews, Atlas Shrugged
became an international bestseller, and in an interview with Mike Wallace, Rand declared herself "the most creative thinker alive." After completing the novel, Rand fell into a severe depression. Atlas Shrugged
was Rand's last completed work of fiction; a turning point in her life, it marked the end of Rand's career as a novelist and the beginning of her role as a popular philosopher.
In 1958 Nathaniel Branden established Nathaniel Branden Lectures, later incorporated as the Nathaniel Branden Institute (NBI), to promote Rand's philosophy. Collective members gave lectures for NBI and wrote articles for Objectivist periodicals that she edited. Rand later published some of these articles in book form. Critics, including some former NBI students and Branden himself, have described the culture of NBI as one of intellectual conformity and excessive reverence for Rand, with some describing NBI or the Objectivist movement itself as a cult or religion. Rand expressed opinions on a wide range of topics, from literature and music to sexuality and facial hair, and some of her followers mimicked her preferences, wearing clothes to match characters from her novels and buying furniture like hers. Rand was unimpressed with many of the NBI students and held them to strict standards, sometimes reacting coldly or angrily to those who disagreed with her. However, some former NBI students believe the extent of these behaviors has been exaggerated, with the problem being concentrated among Rand's closest followers in New York. Later years:
Throughout the 1960s and 1970s, Rand developed and promoted her Objectivist philosophy through her nonfiction works and by giving talks to students at institutions such as Yale, Princeton, Columbia, and Harvard universities and MIT. She received an honorary doctorate from Lewis & Clark College in 1963. She also began delivering annual lectures at the Ford Hall Forum, responding afterward to questions from the audience. During these speeches and Q&A sessions, she often took controversial stances on political and social issues of the day. These included supporting abortion rights, opposing the Vietnam War and the military draft (but condemning many draft dodgers as "bums"), supporting Israel in the Arab-Israeli War of 1973 as "civilized men fighting savages", saying European colonists had the right to take land from American Indians, and calling homosexuality "immoral" and "disgusting", while also advocating the repeal of all laws against it. She also endorsed several Republican candidates for President of the United States, most strongly Barry Goldwater in 1964, whose candidacy she promoted in several articles for The Objectivist Newsletter
In 1964 Nathaniel Branden began an affair with the young actress Patrecia Scott, whom he later married. Nathaniel and Barbara Branden kept the affair hidden from Rand. When she learned of it in 1968, though her romantic relationship with Branden had already ended, Rand terminated her relationship with both Brandens, which led to the closure of NBI. Rand published an article in The Objectivist
repudiating Nathaniel Branden for dishonesty and other "irrational behavior in his private life." Branden later apologized in an interview to "every student of Objectivism" for "perpetuating the Ayn Rand mystique" and for "contributing to that dreadful atmosphere of intellectual repressiveness that pervades the Objectivist movement." In subsequent years, Rand and several more of her closest associates parted company.
Rand underwent surgery for lung cancer in 1974 after decades of heavy smoking. In 1976 she retired from writing her newsletter and, despite her initial objections, reluctantly allowed Evva Pryor, a consultant from her attorney's office, to sign her up for Social Security and Medicare.
During the late 1970s her activities within the Objectivist movement declined, especially after the death of her husband on November 9, 1979. One of her final projects was work on a never-completed television adaptation of Atlas Shrugged
. Rand died of heart failure on March 6, 1982, at her home in New York City, and was interred in the Kensico Cemetery, Valhalla, New York. Rand's funeral was attended by some of her prominent followers, including Alan Greenspan. A six-foot floral arrangement in the shape of a dollar sign was placed near her casket. In her will, Rand named Leonard Peikoff the heir to her estate. Philosophy:
Rand called her philosophy "Objectivism", describing its essence as "the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute." She considered Objectivism a systematic philosophy and laid out positions on metaphysics, epistemology, ethics, political philosophy and esthetics.
In metaphysics, Rand supported philosophical realism, and opposed anything she regarded as mysticism or supernaturalism, including all forms of religion. In epistemology, she considered all knowledge to be based on sense perception, the validity of which she considered axiomatic, and reason, which she described as "the faculty that identifies and integrates the material provided by man's senses." She rejected all claims of non-perceptual or a priori
knowledge, including "'instinct,' 'intuition,' 'revelation,' or any form of 'just knowing.'" In her Introduction to Objectivist Epistemology
, Rand presented a theory of concept formation and endorsed the rejection of the analytic–synthetic dichotomy.
In ethics, Rand argued for rational egoism (rational self-interest), as the guiding moral principle. She said the individual should "exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself." She referred to egoism as "the virtue of selfishness" in her book of that title, in which she presented her solution to the is-ought problem by describing a meta-ethical theory that based morality in the needs of "man's survival qua
man". She condemned ethical altruism as incompatible with the requirements of human life and happiness, and held that the initiation of force was evil and irrational, writing in Atlas Shrugged
that "Force and mind are opposites".
Rand's political philosophy emphasized individual rights (including property rights), and she considered laissez-faire
capitalism the only moral social system because in her view it was the only system based on the protection of those rights. She opposed statism, which she understood to include theocracy, absolute monarchy, Nazism, fascism, communism, democratic socialism, and dictatorship. Rand believed that rights should be enforced by a constitutionally limited government. Although her political views are often classified as conservative or libertarian, she preferred the term "radical for capitalism". She worked with conservatives on political projects, but disagreed with them over issues such as religion and ethics. She denounced libertarianism, which she associated with anarchism. She rejected anarchism as a naïve theory based in subjectivism that could only lead to collectivism in practice.
Rand's esthetics defined art as a "selective re-creation of reality according to an artist's metaphysical value-judgments." According to Rand, art allows philosophical concepts to be presented in a concrete form that can be easily grasped, thereby fulfilling a need of human consciousness. As a writer, the art form Rand focused on most closely was literature, where she considered Romanticism to be the approach that most accurately reflected the existence of human free will. She described her own approach to literature as "romantic realism".
Rand acknowledged Aristotle as her greatest influence and remarked that in the history of philosophy she could only recommend "three A's"—Aristotle, Aquinas, and Ayn Rand. She also found early inspiration in Friedrich Nietzsche, and scholars have found indications of his influence in early notes from Rand's journals, in passages from the first edition of We the Living
(which Rand later revised), and in her overall writing style. However, by the time she wrote The Fountainhead
, Rand had turned against Nietzsche's ideas, and the extent of his influence on her even during her early years is disputed. Among the philosophers Rand held in particular disdain was Immanuel Kant, whom she referred to as a "monster", although philosophers George Walsh and Fred Seddon have argued that she misinterpreted Kant and exaggerated their differences.
Rand said her most important contributions to philosophy were her "theory of concepts, [her] ethics, and [her] discovery in politics that evil—the violation of rights—consists of the initiation of force." She believed epistemology was a foundational branch of philosophy and considered the advocacy of reason to be the single most significant aspect of her philosophy, stating, "I am not primarily
an advocate of capitalism, but of egoism; and I am not primarily
an advocate of egoism, but of reason. If one recognizes the supremacy of reason and applies it consistently, all the rest follows." Reception and legacy Reviews:
During Rand's lifetime, her work evoked both extreme praise and condemnation. Rand's first novel, We the Living
, was admired by the literary critic H.L. Mencken, her Broadway play Night of January 16th
was both a critical and popular success, and The Fountainhead
was hailed by a reviewer in The New York Times
as "masterful". Rand's novels were derided by some critics when they were first published as being long and melodramatic.
However, they became bestsellers largely through word of mouth.
The first reviews Rand received were for Night of January 16th
. Reviews of the production were largely positive, but Rand considered even positive reviews to be embarrassing because of significant changes made to her script by the producer. Rand believed that her first novel, We the Living
, was not widely reviewed, but Rand scholar Michael S. Berliner says "it was the most reviewed of any of her works," with approximately 125 different reviews being published in more than 200 publications. Overall these reviews were more positive than the reviews she received for her later work. Her 1938 novella Anthem
received little attention from reviewers, both for its first publication in England and for subsequent re-issues.
Rand's first bestseller, The Fountainhead
, received far fewer reviews than We the Living
, and reviewers' opinions were mixed. There was a positive review in The New York Times
that Rand greatly appreciated. The reviewer called Rand "a writer of great power" who wrote "brilliantly, beautifully and bitterly," and stated that "you will not be able to read this masterful book without thinking through some of the basic concepts of our time." There were other positive reviews, but Rand dismissed most of them as either not understanding her message or as being from unimportant publications. Some negative reviews focused on the length of the novel, such as one that called it "a whale of a book" and another that said "anyone who is taken in by it deserves a stern lecture on paper-rationing." Other negative reviews called the characters unsympathetic and Rand's style "offensively pedestrian."
Rand's 1957 novel Atlas Shrugged
was widely reviewed, and many of the reviews were strongly negative. In the National Review
, conservative author Whittaker Chambers called the book "sophomoric" and "remarkably silly". He described the tone of the book as "shrillness without reprieve" and accused Rand of supporting a Godless system (which he related to that of the Soviets), claiming "From almost any page of Atlas Shrugged
, a voice can be heard, from painful necessity, commanding: 'To a gas chamber—go!'" Atlas Shrugged
received positive reviews from a few publications, including praise from the noted book reviewer John Chamberlain, but Rand scholar Mimi Reisel Gladstein later wrote that "reviewers seemed to vie with each other in a contest to devise the cleverest put-downs," calling it "execrable claptrap" and "a nightmare;" they said it was "written out of hate" and showed "remorseless hectoring and prolixity." Author Flannery O'Connor wrote in a letter to a friend that "The fiction of Ayn Rand is as low as you can get re fiction. I hope you picked it up off the floor of the subway and threw it in the nearest garbage pail."
Rand's nonfiction received far fewer reviews than her novels had. The tenor of the criticism for her first nonfiction book, For the New Intellectual
, was similar to that for Atlas Shrugged
, with philosopher Sidney Hook likening her certainty to "the way philosophy is written in the Soviet Union", and author Gore Vidal calling her viewpoint "nearly perfect in its immorality". Her subsequent books got progressively less attention from reviewers.
On the 100th anniversary of Rand's birth in 2005, Edward Rothstein, writing for The New York Times
, referred to her fictional writing as quaint utopian "retro fantasy" and programmatic neo-Romanticism of the misunderstood artist, while criticizing her characters' "isolated rejection of democratic society".
In 2007, book critic Leslie Clark described her fiction as "romance novels with a patina of pseudo-philosophy". In 2009, GQ
’s critic columnist Tom Carson described her books as "capitalism's version of middlebrow religious novels" such as Ben-Hur
and the Left Behind
series. Popular interest:
In 1991, a survey conducted for the Library of Congress and the Book-of-the-Month Club asked club members what the most influential book in the respondent's life was. Rand's Atlas Shrugged
was the second most popular choice, after the Bible. Rand's books continue to be widely sold and read, with 25 million copies sold as of 2007
and another 800,000 sold in 2008. (This includes approximately 300,000 copies distributed for free by the Ayn Rand Institute.) Although Rand's influence has been greatest in the United States, there has been international interest in her work. Rand's work continues to be among the top sellers among books in India.
Rand's contemporary admirers included fellow novelists, such as Ira Levin, Kay Nolte Smith and L. Neil Smith, and later writers such as Erika Holzer and Terry Goodkind have been influenced by her. Other artists who have cited Rand as an important influence on their lives and thought include comic book artist Steve Ditko and musician Neil Peart of Rush. Rand provided a positive view of business, and in response business executives and entrepreneurs have admired and promoted her work. John Allison of BB&T and Ed Snider of Comcast Spectacor have funded the promotion of Rand's ideas, while Mark Cuban, owner of the Dallas Mavericks, and John P. Mackey, CEO of Whole Foods, among others, have said they consider Rand crucial to their success.
Rand and her works have been referred to in a variety of media. References to her have appeared on television shows including animated sitcoms, live-action comedies, dramas, and game shows. She, or characters based on her, figure prominently (in positive and negative lights) in literary and science fiction novels by prominent American authors. Nick Gillespie, editor in chief of Reason
, has remarked that "Rand's is a tortured immortality, one in which she's as likely to be a punch line as a protagonist..." and that "jibes at Rand as cold and inhuman, run through the popular culture." Two movies have been made about Rand's life. A 1997 documentary film, Ayn Rand: A Sense of Life
, was nominated for the Academy Award for Documentary Feature. The Passion of Ayn Rand
, a 1999 television adaptation of the book of the same name, won several awards.
Rand's image also appears on a U.S. postage stamp designed by artist Nick Gaetano. Political influence:
Although she rejected the labels "conservative" and "libertarian," Rand has had continuing influence on right-wing politics and libertarianism. Jim Powell, a senior fellow at the Cato Institute, considers Rand one of the three most important women (along with Rose Wilder Lane and Isabel Paterson) of modern American libertarianism, and David Nolan, one of the founders of the Libertarian Party, stated that "without Ayn Rand, the libertarian movement would not exist." In his history of the libertarian movement, journalist Brian Doherty described her as "the most influential libertarian of the twentieth century to the public at large," and biographer Jennifer Burns referred to her as "the ultimate gateway drug to life on the right."
She faced intense opposition from William F. Buckley, Jr. and other contributors for the National Review
magazine. They published numerous attacks in the 1950s and 1960s by Whittaker Chambers, Garry Wills, and M. Stanton Evans. Nevertheless, her influence among conservatives forced Buckley and other National Review
contributors to reconsider how traditional notions of virtue and Christianity could be integrated with support for capitalism.
The political figures who cite Rand as an influence are most often members of the United States Republican Party despite Rand being a pro-choice atheist. A 1987 article in The New York Times
referred to her as the Reagan administration's "novelist laureate". Republican Congressmen and conservative pundits have acknowledged her influence on their lives and recommended her novels.
The late-2000s financial crisis spurred renewed interest in her works, especially Atlas Shrugged
, which some saw as foreshadowing the crisis, and opinion articles compared real-world events with the plot of the novel. During this time, signs mentioning Rand and her fictional hero John Galt appeared at Tea Party protests. There was also increased criticism of her ideas, especially from the political left, with critics blaming the economic crisis on her support of selfishness and free markets, particularly through her influence on Alan Greenspan. For example, Mother Jones
remarked that "Rand's particular genius has always been her ability to turn upside down traditional hierarchies and recast the wealthy, the talented, and the powerful as the oppressed", while The Nation
alleged similarities between the "moral syntax of Randianism" and fascism.
The 2012 US Presidential Election saw the naming of Paul Ryan as Republican Vice Presidential nominee. Ryan is an outspoken supporter of Rand and her work, saying that "The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand". Academic reaction:
During Rand's lifetime her work received little attention from academic scholars. When the first academic book about Rand's philosophy appeared in 1971, its author declared writing about Rand "a treacherous undertaking" that could lead to "guilt by association" for taking her seriously. A few articles about Rand's ideas appeared in academic journals before her death in 1982, many of them in The Personalist
. One of these was "On the Randian Argument" by respected libertarian philosopher Robert Nozick, who argued that her meta-ethical argument is unsound and fails to solve the is–ought problem posed by David Hume. Some responses to Nozick by other academic philosophers were also published in The Personalist
arguing that Nozick misstated Rand's case. Academic consideration of Rand as a literary figure during her life was even more limited. Gladstein was unable to find any scholarly articles about Rand's novels when she began researching her in 1973, and only three such articles appeared during the rest of the 1970s.
Since Rand's death, interest in her work has gradually increased. Historian Jennifer Burns has identified "three overlapping waves" of scholarly interest in Rand, the most recent of which is "an explosion of scholarship" since the year 2000. However, few universities currently include Rand or Objectivism as a philosophical specialty or research area, with many literature and philosophy departments dismissing her as a pop culture phenomenon rather than a subject for serious study.
Academics Mimi Gladstein, Chris Sciabarra, Allan Gotthelf, Edwin A. Locke and Tara Smith have taught her work in academic institutions. Sciabarra co-edits the Journal of Ayn Rand Studies
, a nonpartisan peer-reviewed journal dedicated to the study of Rand's philosophical and literary work. In 1987 Gotthelf helped found the Ayn Rand Society, and has been active in sponsoring seminars about Rand and her ideas. Smith has written several academic books and papers on Rand's ideas, including Ayn Rand's Normative Ethics: The Virtuous Egoist
, a volume on Rand's ethical theory published by Cambridge University Press. Rand's ideas have also been made subjects of study at Clemson and Duke universities. Scholars of English and American literature have largely ignored her work, although attention to her literary work has increased since the 1990s.
Some academic philosophers have criticized Rand for what they consider her lack of rigor and limited understanding of philosophical subject matter. The Philosophical Lexicon
, a satirical web site maintained by philosophers Daniel Dennett and Asbjørn Steglich-Petersen, defines a 'rand' as: "An angry tirade occasioned by mistaking philosophical disagreement for a personal attack and/or evidence of unspeakable moral corruption." Chris Matthew Sciabarra has called into question the motives of some of Rand's critics because of the unusual hostility of their criticisms. Sciabarra writes, "The left was infuriated by her anti-communist, pro-capitalist politics, whereas the right was disgusted with her atheism and civil libertarianism.
Rand scholars Douglas Den Uyl and Douglas B. Rasmussen, while stressing the importance and originality of her thought, describe her style as "literary, hyperbolic and emotional." Philosopher Jack Wheeler says that despite "the incessant bombast and continuous venting of Randian rage," Rand's ethics are "a most immense achievement, the study of which is vastly more fruitful than any other in contemporary thought." In the Literary Encyclopedia
entry for Rand written in 2001, John Lewis declared that "Rand wrote the most intellectually challenging fiction of her generation". In a 1999 interview in the Chronicle of Higher Education,
Rand scholar Chris Matthew Sciabarra commented, "I know they laugh at Rand," while forecasting a growth of interest in her work in the academic community. Objectivist movement:
In 1985, Rand's heir Leonard Peikoff established the Ayn Rand Institute, a nonprofit organization dedicated to spreading Rand's ideas and promoting her works. In 1990, philosopher David Kelley founded the Institute for Objectivist Studies, now known as The Atlas Society. In 2001 historian John McCaskey organized the Anthem Foundation for Objectivist Scholarship, which provides grants for scholarly work on Objectivism in academia. The charitable foundation of BB&T Corporation has also given grants for teaching Rand's ideas or works. The University of Texas at Austin, the University of Pittsburgh, and University of North Carolina at Chapel Hill are among the schools that have received grants. In some cases these grants have been controversial due to their requiring research or teaching related to Rand.
DEAR BUBBAS AND BUBBETTES,
We look rather trapped right now into several months of increasing Hollywood-style noise about elites, exploitation, betraying traditions, etc, etc. And then we are supposed to vote for someone. Good grief!!
Well, what exactly are/were those traditions, and how has anything really changed in the last couple of centuries?
Here are a few nibbles to enjoy. Take care, Andy
Some voters are in disbelief that Mitt Romney’s tax plan would raise taxes on the poor and the middle class in order to reduce them even more on the rich. But government strategies favoring the rich date back to the origins of the Republic, notes ex-CIA analyst Paul R. Pillar.
By Paul R. Pillar, ConsortiumNews, 6 August 2012. Paul R. Pillar, in his 28 years at the Central Intelligence Agency, rose to be one of the agency’s top analysts. He is now a visiting professor at Georgetown University for security studies.
I recently read a book by University of Maryland historian Terry Bouton, “Taming Democracy”, which is an account of the intense struggles over wealth and power that emerged in the earliest days of the United States. Bouton’s detailed research was focused on Pennsylvania, but he describes patterns that also appeared elsewhere in the infant republic.
The core of the story he tells is that the colonial coalition that made possible the political break with Britain fractured even while the Revolutionary War was still in progress, as wealthy interests in the colonies quickly had second thoughts about the democratic fervor that they had helped to set in motion and how it might jeopardize their ability to amass still more wealth.
Robert Morris Jr., a Pennsylvania financier who signed America's founding documents.
Those interests then devoted themselves to implementing public policies aimed at protecting and promoting the wealth of the moneyed class, and to structuring politics and government in a way that — per the title of Bouton’s book — prevented the more numerous members of lower classes from overturning those policies.
The story demonstrates that strong class consciousness and class-specific drivers of policy have been a major part of American politics since independence. A key part of that class struggle all along has been a strong sense among a wealthy elite of separateness from the non-wealthy, and of having a right to push hard for public policies that favor their own class even if they are clearly detrimental to others.
A major figure in Bouton’s account is the Philadelphia merchant and financier Robert Morris. Morris certainly has a good claim to being considered a Founding Father; he was one of only two persons (Roger Sherman of Connecticut was the other) to have signed the Declaration of Independence, Articles of Confederation, and U.S. Constitution.
Morris also vigorously promoted policies that favored the financial interests of people like himself while adding to the economic difficulties of his less advantaged fellow Pennsylvanians. One of his major projects was the first privately owned bank in the United States, the Bank of North America.
As Morris envisioned it, the bank would be the sole issuer of currency in the state, a function it would perform in the same extremely tight-money way that had gotten Pennsylvanians literally up in arms against the British, and that favored the interests of creditors over those of debtors.
Morris and his fellow share-holders in the bank used their political clout to prevent competition from any additional new banks, public or private. The paper currency that the bank issued did not come close to meeting the broader public monetary needs in the first years of independence.
It circulated mostly among merchants and government contractors, and the smallest denomination ($20) was too large for the average American of the day to acquire. Morris didn’t care. He wrote to Alexander Hamilton, “If my notes circulate only among mercantile people, I do not regret it but rather wish that the circulation may for the present be confined to them and to the wealthier members of other professions.”
An even more blatant ploy of using government to favor his own class’ interests at the expense of others concerned speculation in war debt. Amid poverty, scarcity of money, and uncertainty about government funding of debt, many holders of IOUs — who had furnished support to the war effort ranging from food to blacksmithing — sold them for cents on the dollar to speculators who hoped to redeem them eventually for much more than that.
Morris not only participated in this game but openly promoted it. He told the Continental Congress in 1782 that speculators should be encouraged to buy up the IOUs “at a considerable discount” and then have the government bring the pieces of paper “back to existence” by paying them off at top dollar.
This big transfer of wealth would provide the affluent with “those funds which are necessary to the full exercise of their skill and industry.” Bouton writes, “As Morris saw it, taking money from ordinary taxpayers to fund a huge windfall for war debt speculators was exactly the kind of thing that needed to be done to make America great.”
We have tended to whitewash such aspects of American history from our consciousness, for several reasons. One is the hagiography we customarily apply to the Founding Fathers. Another is that we lose sight of the connections between class consciousness of the past and that of today by euphemizing today’s version and espousing more subtle notions of trickle-down economics than the crude version that Morris espoused.
People of his economic stratum were known at the time as “gentlemen”; today they would more likely be called “job creators.” A further reason is Americans’ belief in the national myth that America is less stratified into classes, and exhibits more mobility between classes, than do other countries and especially the old countries of Europe. That myth has become increasingly distant from fact has become increasingly distant from fact in recent decades.
Morris demonstrated how there was more potential for downward mobility in his time than in ours. Leveraged commitments he made as a land speculator fell through when the Panic of 1797 and the drying up of foreign investors’ money because of European wars caused land prices to collapse. Morris lost his fortune and spent three years in debtors’ prison.
His present-day counterparts who make similarly large losing bets are not thrown into debtors’ prison, regardless of the broader consequences of their bets. Instead they are likely to live comfortably on previously stashed away bonuses, carried interest, and other winnings.
One of the most noticed of the economically driven domestic conflicts in the early days of the republic was the anti-tax resistance centered in western Pennsylvania in the early 1790s that became known as the Whiskey Rebellion.
Hamilton may have regarded his levy on booze as a sin tax and thus as an acceptable way to fund the debt that the new federal government had assumed, but that is not how the tax-resisting common people in rural Pennsylvania saw it. For them whiskey was not just a drink but a form in which to economically market their grain and even a medium of exchange — a substitute for money in what were still extreme tight-money times.
The structure of the tax also favored larger distillers in eastern cities over the smaller farmer-producers in the West. The Whiskey Rebellion tends to get treated in textbooks today as a landmark in establishing the authority of the fledgling federal government.
But it was first and foremost class warfare — as was the forceful response to it, which was cheered on by well-to-do gentry anxious to quash what they regarded as a democratic threat to their class’s economic position.
Today “class warfare” gets hurled as an epithet against political opponents, but class warfare — waged by classes above as well as ones below — has a long history in America.
THE MOBILITY MYTH
Why everyone overestimates American equality of opportunity.
Timothy Noah, The New Republic, 8 February 2012.
Timothy Noah is a senior editor at The New Republic and the author of the forthcoming book “The Great Divergence: America's Growing Inequality Crisis and What We Can Do About It” (Bloomsbury), from which this article is adapted. This article appeared in the March 1, 2012 issue of the magazine.
When Americans express indifference about the problem of unequal incomes, it’s usually because they see the United States as a land of boundless opportunity. Sure, you’ll hear it said, our country has pretty big income disparities compared with Western Europe. And sure, those disparities have been widening in recent decades. But stark economic inequality is the price we pay for living in a dynamic economy with avenues to advancement that the class-bound Old World can only dream about. We may have less equality of economic outcomes, but we have a lot more equality of economic opportunity.
The problem is, this isn’t true. Most of Western Europe today is both more equal in incomes and more economically mobile than the United States. And it isn’t just Western Europe. Countries as varied as Japan, New Zealand, Singapore, and Pakistan all have higher degrees of income mobility than we do. A nation that prides itself on its lack of class rigidity has, in short, become significantly more economically rigid than many other developed countries. How did our perception of ourselves end up so far out of sync with reality?
IN THE 1830s, Alexis de Tocqueville wrote that, in notable contrast to the “aristocratic nations” of Europe, the United States was a place where “new families are constantly springing up, others are constantly falling away, and all that remain change their condition.” Karl Marx sounded a similar note in 1865 when he observed that “the position of wages laborer is for a very large part of the American people but a probational state, which they are sure to leave within a longer or shorter term.” But it was two American writers who probably did the most to shape our country’s self-image as the land of unbounded opportunity. They were Horatio Alger, of whom you’ve probably heard, and James Truslow Adams, of whom you probably haven’t. When Alger and Adams were alive—and also, for that matter, when Tocqueville and Marx contributed their observations—American opportunity was a much closer match to their superlatives than it is now.
Alger wrote Ragged Dick (1868), Luck and Pluck (1869), and other dime novels for boys about getting ahead through virtue and hard work. To call these books popular would be an understatement; fully 5 percent of all the books checked out of the Muncie, Indiana, public library between November 1891 and December 1902 were authored by Alger. Adams was a more cerebral fellow who wrote books of American history. His influence stems from the fact that one of these books—The Epic of America (1931)—introduced the phrase “the American dream” to our national discourse. Writing at the start of the Great Depression, Adams envisioned not “a dream of motor cars and high wages merely,” but rather “a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
Born half a century apart, neither Alger nor Adams could claim to have risen from the bottom. Both came from well-established families whose American roots dated to the early seventeenth century. Alger could trace his lineage to three Pilgrims who in 1621 sailed to Plymouth Plantation on the Fortune, the second English ship to arrive there. Adams—no relation to the presidential Adamses—was descended from a man who arrived in Maryland in 1638 as an indentured servant and, within three years, possessed 185 acres. Alger’s father was a Unitarian minister; Adams’s a stockbroker. Both fathers were men of good breeding and education who struggled to make ends meet but were able—at a time when more than 90 percent of the population didn’t finish high school—to obtain higher education for their sons. Alger went to Harvard; Adams went to Brooklyn Polytechnic and, briefly, Yale. Both sons followed their fathers into the ministry and finance, respectively, before they became full-time writers.
Each author was, in his own way, highly successful, but the upward trajectory of these two literary careers would make poor material for a Horatio Alger tale. The circumstances of Alger’s job change are especially problematic. At 34, he vacated the pulpit abruptly when he was charged with “the abominable and revolting crime of unnatural familiarity with boys.” Alger did not dispute the accusation, which was based on the testimony of two teenage boys in his parish, ages 13 and 15, who said Alger had molested them and on rumors that he’d abused other youths in similar fashion. After confessing his guilt privately to William James, the founding father of American psychology, Alger never spoke of it again. Adams left Wall Street under less lurid circumstances. He simply disliked the work and resolved to stop once he amassed $100,000. Reviewing his accounts on his thirty-fifth birthday, he concluded that he’d achieved his goal—the equivalent of about $2 million in current dollars—and resigned the following day. Adams spent much of his subsequent life abroad and wrote The Epic of America in London.
Alger and Adams celebrated America’s capacity for upward mobility, but neither writer idealized his country to anything like the extent that would later be credited to the name Horatio Alger and the phrase “the American dream.” Alger worked into his later juvenile fiction much moralizing against the robber barons’ self-dealing and cruel treatment of the downtrodden. “He has done more harm than he can ever repair,” a character in Alger’s 1889 novel, Luke Walton, laments about a villain modeled on the Gilded Age stock manipulator Jay Gould. Adams deplored America’s tendency to celebrate “business and money-making and material improvement as good in themselves” and its refusal “to look on the seamy and sordid realities of any situation in which we found ourselves.” He even complained about America’s maldistribution of wealth. Still, neither writer had much taste for radical politics. Alger was essentially a mugwump—a good-government Republican distrustful of machine politics and Free Silver populism. Adams was a Tory-minded political independent who became a severe critic of Franklin Roosevelt’s New Deal, which he deemed financially irresponsible.
Both men bequeathed to the United States an exaggerated notion of itself as a mobile society because they lived during the peak years of American mobility—the latter half of the nineteenth century and the early years of the twentieth, when the American industrial revolution was wreaking maximum creative destruction on what had previously been an agrarian economy. The best way to measure mobility is to calculate the economic position of an individual relative to the rest of society and compare that with the economic position of that person’s child relative to the rest of society once that child has grown to a comparable stage in life. To calculate mobility for society as a whole, you therefore need income data over two generations for a large sample of American families. The government, alas, didn’t collect income data during the late nineteenth and early twentieth centuries, but the Census Bureau did collect data on occupations, which can serve as a rough proxy.
In a 2005 paper, Joseph Ferrie, an economics professor at Northwestern, studied census records about the occupations of fathers and sons between 1850 (the year Alger turned 18) and 1920 (21 years after Alger’s death and the year Adams turned 42). Ferrie then compared these records with father-son data from the Bureau of Labor Statistics during the second half of the twentieth century. He divided everyone into four categories: “unskilled worker,” “farmer,” “skilled or semi-skilled worker,” and “white-collar worker.” To keep both data sets consistent, he limited his inquiry to white, native-born males. Ferrie also made some technical adjustments to allow for the different occupational structures of the two eras. What he found was that the equivalent of 41 percent of farmers’ sons advanced to white-collar jobs between 1880 and 1900, compared with 32 percent between 1950 and 1973. Ferrie’s conclusion held up when he looked at all four job categories and when he compared other stretches of the late nineteenth century with other stretches of the late twentieth. Between the horse-and-buggy days and the interstate-highway era, American society had become significantly less mobile.
These findings are all the more striking because the 1950s and 1960s were a period—the last period in the United States, it turned out—when intergenerational mobility was increasing. The economy was booming, and men born during the Great Depression and World War II were enjoying opportunities that their fathers could scarcely imagine. Even so, mobility in this postwar era was no match for the mobility enjoyed by the generations of workers who lived during Alger’s lifetime and James Adams’s youth and early adulthood.
Adams wrote in The Epic of America that the dream of living “unhampered by the barriers which had slowly been erected in older civilizations” was “realized more fully in actual life [in the United States] than anywhere else.” Was this a fantasy? Probably not at the time Adams was writing. Ferrie and Jason Long, an associate professor of economics at Colby College, looked at mobility during the late nineteenth century in both the United States and Great Britain. At that time, England was still the richest industrial country in the world. But it offered nothing like the opportunities for economic advancement that were available in its former colony. In Britain, for example, 53 percent of the sons of unskilled laborers moved up to skilled and semi-skilled labor or better. In the United States, fully 81 percent did. This was an era when the loftiest rhetoric about the United States as the land of opportunity rang true.
AS RECENTLY AS 1987, economists could still be heard vouching for American mobility. In a speech that year to the American Economic Association, the University of Chicago economist Gary Becker, a future Nobel laureate, said, “In every country with data that I have seen, ... low earnings as well as high earnings are not strongly transmitted from fathers to sons.” Five years later, Gary Solon, an economist at the University of Michigan, would blow Becker’s assertion to smithereens—at least as it applied to the United States.
To measure economic mobility effectively, you need access to good longitudinal data on families and income. Until fairly recently, the pickings were slim. But, by 1992, the University of Michigan’s Panel Study of Income Dynamics (PSID), a longitudinal study of more than 9,000 families from across the United States, had reached its 24-year mark and ripened into an unmatched source for detailed information on two successive American generations. Now old enough to include data on three or four generations, the PSID is the world’s longest-running “panel survey” of nationally representative households. (A panel survey is a longitudinal study in which respondents are interviewed at regular intervals.) Most contemporary studies of mobility trends in the United States make use of PSID data.
Solon’s groundbreaking 1992 paper, which drew on this newly available data, upended our understanding of something that economists call “intergenerational income elasticity” but that I’ll call “income heritability.” It’s a measure of how determinative one generation’s relative income status—what we used to call “station in life”—will be of the next generation’s relative income status. When Becker stated in 1987 that income status wasn’t especially heritable, he was working off studies that showed income heritability to be less than 20 percent, which didn’t seem too bad. Eighty percent of your economic destiny was in your hands—or at least out of your parents’ hands.
Perhaps you’re familiar with the following lines from William Ernest Henley’s “Invictus,” an oft-quoted inspirational poem from the nineteenth century: “I am the master of my fate: I am the captain of my soul.” In 1987, it was possible for Americans to believe, with respect to income: I am the master of 80 percent of my fate: I am the captain of 80 percent of my soul. But, in 1992, when Solon recalculated income heritability based on the more-reliable PSID data, he found income heritability to be at least 40 percent “and possibly higher.” I am the master of 60 percent of my fate.
Or possibly: I am the master of 40 to 50 percent of my fate. In 2001, Bhashkar Mazumder, an economist with the Federal Reserve Bank of Chicago, recalculated income heritability matching census data to Social Security data, which allowed him to compare parent-child incomes over a greater number of years. He found that income heritability was more like 50 to 60 percent. Mazumder later recalculated Solon’s PSID-based findings applying a more sophisticated statistical model and found that income heritability was about 60 percent. Then, in a 2004 study, Mazumder approached the question from a different angle, examining the correlation in incomes among siblings, using longitudinal survey data collected by the Bureau of Labor Statistics. That put income heritability at about 50 percent. “The sibling correlation in economic outcomes and human capital are larger than the sibling correlation in a variety of other outcomes including some measures of physical attributes,” Mazumder wrote. Most strikingly, he found that income among brothers actually correlated more closely than height and weight. I am less the master of my fate than I am of my body mass index.
It’s important to remember that the mobility trend for Americans as a whole is not necessarily a trend for every U.S. subgroup. For instance, upward mobility for women has accelerated in recent decades. The trend can be hard to track in intergenerational family income data because, while a contemporary woman will likely outearn her mother, who lived at a time when society provided far fewer economic opportunities to women, she won’t likely outearn her father, who faced no gender barriers at all. At the same time, upward mobility for African Americans has lagged behind upward mobility for whites.
One especially disturbing 2008 analysis by the Brookings Institution’s Julia Isaacs compared PSID income data from parents in the late ’60s with PSID income data from their children in the late ’90s. Isaacs found that only 31 percent of black children born into the middle fifth of family incomes—dead center of the middle class, where incomes (in 2006 dollars) ranged from about $49,000 to $65,000—ended up with higher incomes than their parents had, corrected for inflation. Fully 45 percent fell all the way to the bottom-income fifth (below about $40,000). By comparison, 68 percent of whites born into the middle-income fifth ended up with incomes higher than their parents had, and only 16 percent tumbled all the way to the bottom-income fifth. Where these white parents mostly saw their children become better off economically than they had been, corresponding black parents mostly saw their children become worse off.
In the United States, economic mobility is lower than it was during the late nineteenth and early twentieth centuries; it is no longer accelerating, as it was during the ’50s and ’60s; and it is either about the same or a little lower than it was in 1970. “Personally,” Brookings economist Isabel Sawhill told me in an interview last year, “I believe that it has slipped.”
MEANWHILE, mobility in the United States has fallen dramatically behind mobility in other comparably developed democracies. A 2007 study by the Organisation for Economic Cooperation and Development (OECD) combined a number of previous estimates and found income heritability to be greater in the United States than in Denmark, Australia, Norway, Finland, Canada, Sweden, Germany, Spain, and France. Italy was a little bit less mobile than the United States. The United Kingdom, which had been far less mobile than the United States during the late nineteenth century, brought up the rear, but this time it was just a bit less mobile than the United States. The OECD’s ranking was based on a somewhat conservative U.S. estimate of 47 percent income heritability; Mazumder of the Chicago Fed puts it at 50 to 60 percent, which would rank the United States either tied with the United Kingdom for last place or dead last after the United Kingdom. Thanks to a 2012 recalculation by Miles Corak, an economist at the University of Ottawa, we can now add Switzerland, Japan, New Zealand, Singapore, and Pakistan to the list of societies that are more mobile than the United States. (Italy and the United Kingdom were once again found to be less mobile than the United States, along with Chile, Brazil, Peru, and China.)
It’s especially striking that Canada should experience more intergenerational economic mobility than the United States. The two countries are, after all, similar in more ways than one can count. The most significant way they differ (at least for the purposes of this discussion) is that the United States is richer, with a per capita gross domestic product that’s 20 percent higher. Most migration between the two is from Canada to the United States, not the other way around. How can Canada be the land of greater opportunity?
The University of Ottawa’s Corak looked at this puzzle in a 2010 paper. Examining several existing mobility studies “using particularly high-quality data,” Corak found that Canada is “up to three times more mobile than the United States.” The difference arises largely from disparities at the top and bottom 10 percent of the income scale. If a father is in the bottom tenth of U.S. incomes, Corak found, his son has a 22 percent likelihood of ending up in the bottom tenth. If a father is in Canada’s bottom tenth, his son’s likelihood of ending up in the bottom tenth is 16 percent. At the other end of the income scale, if a father is in the top tenth of U.S. incomes, his son has a 26 percent chance of ending up in the top tenth. If a father is in Canada’s top-income tenth, his son’s likelihood of ending up in the top tenth is 18 percent.
A crowning irony is that, even though Canada is demonstrably more economically mobile than the United States, Americans are less likely to believe that their chance of financial success depends on their parents’ incomes (42 percent) than are Canadians (57 percent), according to a 2009 poll sponsored by the Pew Charitable Trusts. Indeed, when a survey of 27 nations conducted from 1998 to 2001 asked participants whether they believed that “people are rewarded for intelligence and skill,” the country with the highest proportion answering in the affirmative was the United States (69 percent), compared with a median among all other countries of about 40 percent. Similarly, more than 60 percent of Americans agreed that “people get rewarded for their effort,” compared with an international median of less than 40 percent. When participants were asked whether coming from a wealthy family was “essential” or “very important” to getting ahead, the percentage of American affirmatives was much lower than the international median: 19 percent versus 28 percent.
Perhaps there is a benefit to lacking a realistic understanding about your odds of improving your relative position in society. It is, James Fallows argues in his 1989 book, More Like Us: Making America Great Again, a major driver of the U.S. economy. Paraphrasing the Harvard psychologist David McClelland’s 1961 book, The Achieving Society, Fallows writes that a society in which “people routinely overestimated their chances for success,” in which entrepreneurs “launched ventures that by rational standards were likely to fail,” was a society that, collectively and over the long term, would invent more, innovate more, and succeed more. Society benefits when people don’t know “their place.”
A more jaundiced view of America’s obdurate belief that we are all masters of our fate is expressed in Barbara Ehrenreich’s 2009 book, Bright-Sided: How the Relentless Promotion of Positive Thinking Has Undermined America. What if you don’t achieve your most unrealistic goals, as most of us won’t? “[A]lways,” Ehrenreich writes, “in a hissed undertone, there is the darker message that if you don’t have all that you want, if you feel sick, discouraged, or defeated, you have only yourself to blame.” The American reluctance to regard disappointing outcomes as anything other than failed personal agency, Ehrenreich argues, is not only painful to the spirit; it is also an obstacle to constructive forms of collective action, such as forming a labor union or organizing a political movement.
WHY HAS mobility slowed down or stagnated in the United States? There’s no real academic consensus on this point, but the lingering suspicion is that it’s linked to the trend toward growing income inequality that began in the late ’70s and continues to this day. During the American industrial revolution, growing income inequality was indeed the price the United States paid for growing economic mobility. In the present era, though, income inequality may be choking off opportunity. The oft-repeated metaphor is that as the ladder’s rungs grow farther apart, the ladder becomes more difficult to climb.
The principal advocates for this viewpoint are Corak and Alan Krueger, a Princeton labor economist who is currently chairman of President Obama’s Council of Economic Advisers. For a January 12 speech on income inequality delivered at the Center for American Progress, Krueger took a scatter diagram from a 2011 paper by Corak and plugged in more recent data from the OECD. Corak’s diagram plotted income heritability against inequality (as measured by its most common yardstick, the Gini coefficient) and found that the two tended to increase together. Krueger’s diagram showed an even tighter fit. Krueger called it the “Great Gatsby Curve.” “Countries that had more inequality across households,” Krueger said in his speech, “also had more persistence in income from one generation to the next.” More income inequality, Krueger concluded, leads to less income mobility.
Projecting from the Great Gatsby Curve—and assuming, perhaps rashly, that present trends will continue—Krueger calculated that, by the time today’s children grow up, income heritability will have grown from 47 percent to 56 percent. “In other words,” he explained, “the persistence in the advantages and disadvantages of income passed from parents to the children is predicted to rise by about a quarter for the next generation as a result of the rise in inequality that the U.S. has seen in the last twenty-five years. It is hard to look at these figures and not be concerned that rising inequality is jeopardizing our tradition of equality of opportunity.”
Krueger’s speech drew some criticism on technical grounds from Scott Winship, a Brookings scholar who’s an expert on mobility trends. Other economists drawn into the subsequent online debate (including Corak) favored Krueger’s side of the argument, but it may be some time before the question is settled. For now, what we can say is that income inequality in the United States can no longer be justified by America’s greater mobility, because we’ve stopped winning that race. Indeed, rising income inequality may be the very thing that’s causing upward mobility to slow down.
DEAR BUBBAS AND BUBBETTES,
Read this and weep yet again.
Alas, alas, as is so predictable, the U.S. Government once again seems to have done absolutely nothing at all to try to protect the interests of individual U.S. citizens living in Switzerland who will undoubtedly bear some of the heaviest brunt of this latest hegemonic domination episode.
But, hey, when has the U.S. Government ever really cared about Americans living overseas, other than, perhaps, when candidates want us to dip into our pockets to make contributions to their campaign chests?
What an embarrassing tragedy this is and how sad that there seems to be no end in sight.
But wait, there is some very good news here too!!!
Internal Revenue Service commissioner Doug Shulman and Treasury Secretary Timothy Geithner, who discussed the case with Widmer-Schlumpf in April, are both scheduled to depart after the election. Secretary of State Hillary Clinton, credited by Swiss officials with helping negotiations over a settlement for UBS in 2009, is also leaving her job.
Hooray, hooray, hooray!!! There won’t be many overseas American tears as these jokers leave the scene.
Enjoy and take care, Andy
APOLOGETIC SWISS BANKS SWEAT IT OUT AS U.S., EUROPE MULL REDRESS
By Katharina Bart, Reuters, 12 August 2012.
ZURICH (Reuters) - Swiss banks hoping to atone for decades of complicity in tax evasion may be left to sweat it out for months as the United States and Germany ponder the right level of punishment.
Switzerland has long dodged U.S. accusations of hiding money for wealthy Americans. But now eleven Swiss banks are under investigation in the United States and there is pressure too from Europe where burdened taxpayers want scalps after numerous banking scandals. The Swiss need a deal to remove the taint from their financial industry.
However, Washington must factor forthcoming elections into its thinking, and Germany is delaying ratification of a tax deal key to Switzerland's efforts to strike similar agreements elsewhere in Europe. So the Swiss may be in limbo for a while.
The wait is painful for a country which counts on banking for 7 percent of its economic output: until Swiss banks know how much information they need to share with foreign tax authorities they will struggle to attract new clients.
As a result the share prices of its top banks -- Credit Suisse and Julius Baer are among those being investigated -- are falling as investors fret about earnings.
"We are prepared to sign a settlement with the U.S. for the Swiss banks today. We feel we have made a constructive proposal to the U.S. but it is up to them to accept it or not," said Switzerland's Finance Minister Eveline Widmer-Schlumpf.
"This depends on whether the U.S. is willing to reach a settlement before or after their elections, which is unclear at the moment," she said.
Both Widmer-Schlumpf and chief negotiator Michael Ambuehl have dampened expectations for a U.S. deal by November, stoked as recently as last month by the finance minister herself.
"There is an open window after the summer lull, but it's relatively tight. Otherwise, I think we're looking at next year," said Martin Naville, chief executive of the Swiss-American Chamber of Commerce in Zurich.
"MICE BEFORE A SNAKE"
Switzerland's efforts to spur along a deal include tentatively agreeing with the U.S. Foreign Account Tax Compliance Act, an anti-tax evasion law known as FATCA.
The rules on enforcing FATCA have yet to be finalized, but many Swiss bankers see it as a crippling blow that effectively prevents their clients from investing in U.S. securities.
Acquiescing to FATCA was a tactic to build goodwill for a Swiss bank deal, a source close to the talks said.
But the strategy doesn't seem to be paying off.
Washington is now pushing banks in Switzerland to divulge names and financial details of wealthy Americans hiding money in their accounts, spurred on by success in 2009 when UBS handed over data to avert a criminal indictment.
"Contrary to what may appear as inactivity, the U.S. is in fact keeping the pressure on Swiss banks, which are like mice before a snake," said Martin Janssen, professor of finance at the University of Zurich. "The U.S. is really maximizing its position here."
The tension is such that Swiss bankers are afraid they will be personally targeted by U.S. officials if they leave the country, after Credit Suisse and Julius Baer handed over employee names to U.S. authorities.
Originally a gesture towards cooperation, the move now has many Swiss bankers hunkered down at home, fearful of arrest and extradition if they leave Switzerland.
Adding to the agony, several key U.S. officials plan to step down, which could mean negotiations having to be reset.
Internal Revenue Service commissioner Doug Shulman and Treasury Secretary Timothy Geithner, who discussed the case with Widmer-Schlumpf in April, are both scheduled to depart after the election. Secretary of State Hillary Clinton, credited by Swiss officials with helping negotiations over a settlement for UBS in 2009, is also leaving her job.
Another key U.S. contact, Attorney General Eric Holder, the top law enforcement officer, is under pressure after a Republican-led Congress found him in contempt of Congress for withholding documents in a gun-running sting operation.
But all of that could be trumped by the "fiscal cliff" - a combination of tax hikes and automatic spending cuts that will take effect at the end of the year if lawmakers in the Democratic-controlled Senate and Republican-controlled House are unable to reach a compromise.
By that point, if the Swiss haven't got a deal, they will face an even longer wait.
The going is equally sluggish closer to home. Crisis-hit European countries in need of extra income are delaying settlement with Switzerland as a flourishing trade in leaked bank client data tilts the talks further in their favor.
Those leaks are also complicating an agreed but as-yet unratified tax deal with Germany -- whose citizens hold an estimated 150 billion euros in Swiss accounts -- key to Switzerland's attempts to make amends in Europe.
Prosecutors in the German state of North Rhine-Westphalia said on Thursday they had new bank data with which to pursue tax evaders, strengthening the hand of opposition politicians who say Chancellor Angela Merkel is letting tax-dodgers off too cheaply and should re-word the agreement.
Germany has promised to stop buying data naming tax cheats when the new deal between it and Switzerland comes into force, but the latest incident suggests that may be an incentive for officials to drag their heels in ratifying the agreement.
It also underscores the position in which Switzerland finds itself: out of negotiating room.
"All Swiss banks can do now is wait it out," said Thomas Braun, founder and partner of fund management firm Braun, von Wyss & Mueller.
(Reporting by Katharina Bart; Additional reporting by Martin de Sa'Pinto in Zurich, Tom Miles in Geneva and Kevin Drawbaugh in Washington; Editing by Sophie Walker)
DEAR BUBBAS AND BUBBETTES,
In case you had any lingering beliefs that there is still a nugget of credibility in the American justice system, or in the ability of the current administration to stand up to the greedsters who seem to control everything, here is yet more proof that the whole charade has become a laughable farce. These firms and those that run them and abuse their customers and the entire American economy are simply untouchable.
Then again, this does make lots of cynical political sense because these are the very same folks who are solicited for campaign contributions every day, so they buy their immunities, and they get their expected special invitations to the White House, private sessions with the President, trips on Presidential planes with high officials to foreign countries, etc, etc. They are demonstrably not ordinary citizens, and therefore ordinary laws and credible enforcement do not apply to them anymore.
You will still, of course, as a common garden variety untermench, go to jail for stealing a basket of fruit, and if it is your third offense in California, it could well mean you will spend the rest of your life in prison. But if you are among the untouchables, you can ruin the lives of millions, and confiscate all of their fruit, vegetables and marbles too, and you are simply not accountable to anyone anymore. At the very worst your institution will pay a fine, wink, smile, walk away and the charade ends right there. It can’t get much better than that, even in Zimbabwe!!
So say yet another tearful bye-bye to our liberal democratic republican illusion. It’s been fun while it lasted. Enjoy.
U.S. NOT SEEKING GOLDMAN CHARGES
By Reed Albergotti and Elizabeth Rappaport, WSJ, 9 August 2012.
After a yearlong investigation, the Justice Department said Thursday that it won't bring charges against Goldman Sachs Group Inc. or any of its employees for financial fraud related to the mortgage crisis.
In a statement, the Justice Department said "the burden of proof" couldn't be met to prosecute Goldman criminally based on claims made in an extensive report prepared by a U.S. Senate panel that investigated the financial crisis.
"Based on the law and evidence as they exist at this time, there is not a viable basis to bring a criminal prosecution with respect to Goldman Sachs or its employees in regard to the allegations set forth in the report," the statement read.
The Justice Department reserved the right to bring charges in the future if new evidence emerges.
In a statement Thursday, Goldman said: "We are pleased that this matter is behind us."
In April 2011, the U.S. Senate's Permanent Subcommittee on Investigations published a scathing report on the financial crisis, highlighting Goldman as a culprit. Lawmakers accused the firm of breeding a greedy culture and running conflict-ridden businesses, and they said Goldman put its own interest ahead of clients.
Sen. Carl Levin, D., Mich., chairman of the Senate's subcommittee, said Goldman executives lied to Congress about the firm's bets against the housing market. The accusation triggered a Justice Department probe of possible perjury.
A spokeswoman for Mr. Levin's office didn't respond to a request for comment Thursday.
The report concluded that even as securities firms flooded the market with securitized mortgages and advised clients to buy them, firms privately used words like "crap" and "flying pig" to describe the financial instruments.
The department's probe was launched when Goldman's reputation already had been battered by civil-fraud charges filed against the New York company by the Securities and Exchange Commission. The SEC accused Goldman of fraud related to a mortgage-bond deal called Abacus 2007-AC1.
Goldman was accused of failing to inform investors that hedge-fund firm Paulson & Co. had helped choose underlying securities in the deal and was betting against it.
Goldman agreed to pay $550 million to end the SEC's civil-fraud suit. The company said marketing materials for the Abacus deal contained "incomplete information."
The announcement comes amid criticism of the Justice Department from some lawmakers for what they contend are disappointing results in efforts to bring criminal cases against firms and individuals for crisis-related wrongdoing.
Justice Department officials have defended the agency's track record, and some legal experts have noted the difficulty of targeting specific individuals and firms given the enormity of the financial crisis.
In the statement Thursday, the Justice Department said prosecuting financial fraud and "protecting the integrity of our banking system" is and will continue to be the department's "top priority."
The criminal investigation was led by the New York field office of the Federal Bureau of Investigation, according to a person familiar with the matter.
The probe also included the U.S. Attorney's Office for the Southern District of New York and the Special Inspector General for the Troubled Asset Relief Program.
| | “AMAZING GRACE” BY WINTLEY PHIPPS From the Soul of the Piano’s Black Keys....
At Carnegie Hall, gospel singer Wintley Phipps delivers perhaps the most powerful rendition of Amazing Grace ever recorded.
He says, "A lot of people don't realize that just about all Negro spirituals are written on the black notes of the piano”.
Probably the most famous on this slave scale was written by John Newton, who used to be the captain of a slave ship, and many believe he heard this melody that sounds very much like a West African sorrow chant.
Mr. Phipps delivers a stirring performance that brings the audience to its feet! http://www.karmatube.org/videos.php?id=1312
DEAR BUBBAS AND BUBBETTES,
This seems to be a war that will probably never end. But who really wins when everyone seems to lose?
The folly of the incurable hubris of a deluded hegemon on steroids perhaps??
US MAY TARGET SWISS BANKERS TRAVELLING IN EUROPE
Swiss bankers travelling to European countries could risk arrest
SwissInfo, 7 August 2012.
Swiss bankers whose names were delivered to the United States in April as part of the crackdown on US tax evaders face the risk of arrest while travelling in some European countries, not just on US soil.
Extradition treaties between the US and countries including France, Germany, Italy, Austria and Britain make it possible for the US to take legal steps via Interpol against bankers suspected of helping US citizens evade taxes, Denise Chervet, central secretary of the Swiss Bank Employees Association told the Swiss News Agency.
“If the US issues an arrest warrant via Interpol, the employee targeted could be arrested in any country with which Washington has an extradition treaty, and where the alleged offences are also punishable,” Chervet said.
Around 10,000 employees of 11 banks under investigation by US authorities could be affected by potential travel restrictions.
Chervet said that employees visiting the US who had had direct contact with American clients “run the risk of being arrested for violating American tax laws for having assisted with tax evasion”. Other bank employees who may not have had direct contact with clients could be called as witnesses, she said.
Bankers’ families could also be implicated: a report in La Tribune de Genève newspaper this week said two teenagers who arrived in the US to visit their grandparents were interrogated by officials for six hours about the whereabouts and working habits of their father, a Geneva banker.
Following pressure from the US government, in April the Swiss government authorised the eleven banks to deliver the names of their employees to the US authorities. The data, however, had to be encoded.
Since then, some 10,000 files have been relayed to the US Department of Justice containing written correspondence and notes of telephone calls made between bank staff and US clients. Some of this data has been used to identify specific bank staff.
Swiss bank employees, fearful of how the decision to hand over data could affect them, have begun legal proceedings against banks and the government in an effort to find out what personal data was transferred to the US.
“You don’t know what the US is planning to do with the data of bank employees. As a precaution I’m advising my clients not to leave Switzerland,” said Geneva lawyer Douglas Hornung, who represents 40 current and former bank employees.
The dispute between the two countries over Switzerland’s bank secrecy laws and US citizens’ use of Swiss accounts to shield untaxed income has overshadowed relations since 2009, when Swiss bank UBS was fined $780 million (SFr.755 million) for helping US citizens dodge taxes.
A double-taxation accord signed by the Swiss and US governments in September 2009 was revised and ratified by the Swiss parliament in March, but still requires ratification by the US Senate.
Swiss Finance Minister Eveline Widmer-Schlumpf said at a press conference on Tuesday that the government had authorised banks to hand over data to US authorities for the purpose of self-defence. The finance minister said she plans to meet with bank employees who may be affected by the delivery of data.
The government had unable to ascertain whether the banks acted in accordance with data privacy acts and labour laws, Widmer-Schlumpf said. However she stressed that the responsibility lies with the banks involved and with Swiss financial market regulator Finma.
SWISS BANKER'S CHILDREN QUIZZED BY US OFFICIALS OVER TAX
US attempts to clean up on tax evasion took a new twist when a Geneva banker's two teenage children were detained when they arrived on US soil, it was reported Monday.
TheLocal, Switzerland, 6 August 2012.
The teenagers, due to visit their grandparents, were questioned for several hours by US officials who asked them the whereabouts of their father and whether he sometimes worked in the country, according to La Tribune de Genève newspaper.
During their six-hour interrogation the youngsters were not allowed to contact their grandparents who were waiting for them at an undisclosed airport, the report added.
The development is the latest twist in a long-running tax dispute that has dominated Swiss-US relations in recent years, with Swiss banks agreeing in April to hand over confidential information to Washington in April so as to avoid US proceedings.
In all, some 10,000 names of people linked to Swiss banks with American clients were given to the US tax office with Bern's blessing, according to SwissRespect, the organisation founded by Geneva lawyer Douglas Hornung who represents bank employees caught up in the affair.
"I advise my clients not to leave Switzerland," said Hornung, who advises around 40 bank staff in the country.
Another six banks are in Washington's sights – Wegelin, Neue Zürcher Bank, Liechtenstein landesbank LLB and Israeli banks Leumi, Hapoalim and Mizrahi.
Switzerland has signed an agreement on the issue with Germany, Austria and Britain on curbing tax evasion and Swiss President Widmer-Schlumpf recently announced that she hoped to come to a "global solution" on the issue this year.
US-SWISS TAX DEAL 'MAY NEVER HAPPEN'
Top Swiss bankers have voiced doubts that the tax deal with the USA will be completed before the end of the year, with some saying agreement may never be reached.
TheLocal, Switzerland, 30 July 2012.
Finance Minister Eveline Widmer-Schlumpf’s aspirations to conclude a tax deal with the USA before the end of the year are unrealistic, according to the newspaper SonntagsZeitung, Tages Anzeiger Online reported.
While some bankers told the paper they believed any deal would take longer to come to fruition, others said they doubted that the two sides would ever reach agreement.
In any event, the banking world is not expecting to see any developments soon.
“We have indications that any solution has been put off indefinitely,” a banking chief told SonntagsZeitung.
The delay has in part been caused by the US presidential campaign, which has diverted Barack Obama’s attention to re-election issues. Should he lose, it is unclear in which direction negotiations would proceed.
Further, the chief negotiator of the new treaty, US attorney general Eric Holder, has lost credibility after having been caught up in a disastrous campaign against weapon-smuggling.
Additional problems have been caused by the fact that those Swiss banks not on the US target list have refused to assist the eleven banks that are. Further, the banks are becoming increasingly resistant to the idea of sharing data with the US as they believe this will have a negative effect on competition.
SWISS RAIFFEISEN TO DROP US CLIENTS AMID TAX ROW
Retail bank Raiffeisen is Switzerland's latest institution to part with its US clients because of increasing red tape and amid an ongoing tax row with the United States, media reports said on Saturday.
AFP/TheLocal Switzerland, 23 July 2012.
"We will soon shed those American clients who are taxable in the United States," bank spokesman Franz Wuerth told ATS news agency confirming reports by several regional papers.
But he added that Raiffeisen had "very few foreign clients and even fewer from America". Only 0.03 percent of its clients would be affected out of a total 3.5 million.
Coop, another retail bank, announced it had stopped doing business with its US clients.
US tax officials have been putting pressure on Swiss banks to release information about clients who are US nationals and who might be evading taxes and the two countries are involved in talks to settle the dispute.
Overall, 11 Swiss or Switzerland-based banks have been targeted including Credit Suisse, Julius Bär, Wegelin, Zürcher Kantonalbank (ZKB), Basler Kantonalbank (BKB), Neue Zürcher Bank, the Swiss subsidiary of HSBC, Liechtensteinische Landesbank (LLB), as well as Israel's Leumi, Hapoalim and Mizrahi banks.
As part of the ongoing negotiations Finance Minister Eveline Widmer-Schlumpf has authorized Swiss banks to reveal to US authorities the names of their staff working with US clients.
The data transfer to US justice authorities has caused alarm among bankers who fear that they might be arrested on arrival in the United States.