AIG Shrugged?

Yesterday's NY Times published the resignation letter from AIG executive Jake DeSantis ("Dear AIG: I Quit" http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=1&ref=opinion) to CEO Edward Liddy. Mr. DeSantis worked in the financial products division of AIG and received one of the now-infamous bonuses that has inspired members of Congress and the President of the United States to lead an angry mob of citizens, talking heads, public chatterers, and state attorneys general to do everything short of storming AIG's gates with pitchforks and torches and hauling their executives off to be burned at the stake. (By the way, would the denunciations of AIG executives by politicians constitute "fighting words" under the First Amendment that could be banned or regulated? But I digress.) Mr. DeSantis is fed up with being denounced as evil by his elected representatives for simply receiving a bonus to which he was contractually entitled and which he was repeatedly assured he would receive even after the government bailed out AIG. He's also angry at Liddy for essentially throwing DeSantis and his colleagues to the wolves during Liddy's show trial before Congress last week.

DeSantis spent 11 years at AIG. He had nothing to do with the credit default swaps that brought down the company, and, as he points out, most of the people who did have long since departed. As DeSantis says, "After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials." As a result of that persecution, according to DeSantis, "The only real motivation that anyone at A.I.G.-F.P. now has is fear. Mr. Cuomo has threatened to 'name and shame,' and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press." Unfortunately, DeSantis makes a cardinal error. Because he is financially secure and thinks, like many people, that those in his profession often make too much money, he's decided to donate his bonus to charity. He claims that he is not motivated by guilt, but he has nonetheless bought into the altruistic premise that motivates the mob mentality against him and the others who have received these bonuses.

If you want a sense of this mob mentality, read the comments to the piece on the NY Times's website. There are over 900 comments. I didn't read all of them, but based on my rough sampling, the vast majority are critical of Mr. DeSantis. Here's a sample.

"I would respectfully suggest that Mr. DeSantis not let the door hit him on the butt on the way out. He can preen all he wants about how his grotesque levels of past compensation were fully justified, but they weren't. What we have in this letter is the infantile whining of a overstuffed baby who just had the teeth pulled from his mouth. Good riddance!"

"Mr. De Santis and his cohorts believe, sincerely, that they are entitled to their outrageous riches."

"Mr. DeSantis received, in one check and after taxes, more than I will earn in my professional management position in the next 7 years. . . . He points out that he's contributed to profitable business for AIG; he ignores the fact that he helped AIG earn those profits using other people's money."

"This gentleman still thinks he deserves this obscene compensation because he worked hard!!! He worked in the company for ten years creating this bubble, he should return all the bonuses he has received and dedicate the rest of his life to charitable work. He needs to be reeducated in the new reality."

Reading these comments, I can't help but wonder whether it is too late to save America. The level of blind hatred for wealth and those who create it, the level of pure envy, to say nothing of the level of economic ignorance in these letters is striking. Then I remind myself that these are readers of the New York Times, which represents the worst of the worst of envious, man-hating leftist thought, and that not all Americans think this way.

If you have trouble understanding why altruism--the code of self-sacrifice--is evil, read these letters. Ask yourself how a code that is allegedly motivated by benevolence and love of one's fellow man can result is such venom directed at a man who worked hard and believed that his company would honor its contractual obligations. And note that none of the letters are satisfied with Mr. DeSantis's decision to donate his bonus to charity. Why? Because he committed the irredeemable sin of making money and refusing to apologize for it. He is still wealthy, and thus has so much more to sacrifice before he can be considered moral. Indeed, he has a lifetime of sacrifice left to atone for his sins.

If you want to understand more about these issues, and, indeed, what is happening to the world, read Ayn Rand's Atlas Shrugged. Mr. DeSantis's letter and the AIG bonus issue call several scenes to mind. In one, Francisco D'Anconia is trying to convince, Hank Rearden, a steel producer, that he has accepted a moral code that is leading to his and other producers' destruction. Rearden has produced a new alloy that is stronger than steel. It was used for the rail of a new line of railroad company Taggart Transcontinental. Here's an excerpt, slightly edited for space:

Francisco: "Are you proud of the rail of the John Galt line?"

"Yes."

"Why?"

"Because it is the best rail ever made."

"Why did you make it?"

"In order to make money."

"There were many easier ways to make money. Why did you choose the hardest?"

" . . . in order to exchange the best of my effort for the best effort of others."

"[H]ave you achieved it?"

. . . "No."

"Have you made any money?"

"No."

"When you strain your energy to its utmost in order to produce the best, do you expect to be rewarded for it or punished?" Rearden did not answer. "By every standard of decency, of honor, of justice known to you--are you convinced that you should have been rewarded for it?"

"Yes" . . .

"Then if you were punished, instead--what sort of code have you accepted?"

Later in the scene, Francisco asks Rearden what sort of person he wanted to see use his rail. Francisco lists a number of examples, then gets to this:

"Did you want to see it used by whining rotters who never rouse themselves to any effort, who do not possess the ability of a filing clerk, but demand the income of a company president, who drift from failure to failure and expect you to pay their bills, who hold their wishing as equivalent of your work and their need as a higher claim to reward than your effort, who demand that you serve them, who demand that it be the aim of your life to serve them, who demand that your strength be the voiceless, rightless, unpaid, unrewarded slave of their impotence, who proclaim that you are born to serfdom by reason of your genius, while they are born to rule by the grace of incompetence, that yours is only to give, but theirs only to take, that yours is to produce, but theirs to consume, that you are not to be paid, neither in matter nor in spirit, neither by wealth nor by recognition nor by respect nor by gratitude--so that they would ride on your rail and sneer at you and curse you, since they owe you nothing, not even the effort of taking off their hats which you paid for? Would this be what you wanted? Would you feel proud of it?"

"I'd blast that rail first," said Rearden, his lips white.

People often accuse Ayn Rand of creating caricatures of those she criticized in her novels. No one really acts like the altruists that Rand depicts in her novels, they claim. No one really says those things.

As evidence that Rand did not exaggerate at all, I give you the 917 New York Times readers who commented on Mr. DeSantis's letter. You be the judge.

Obama’s Moral Crusade

Daniel Henninger points out in his WSJ column on March 12th (http://online.wsj.com/article/SB123681860305802821.html) that that President Obama’s intent to raise taxes on the “rich” has much less to do with finding a way to pay for the stimulus package than with righting the alleged moral wrong of “inequality.” Here are a few representative quotes from the budget statement that make Henninger’s point:

"While middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not. They have taken risks and piled on debts that while seemingly profitable in the short-term, have now proven to be dangerous not only for their individual firms but for the economy as a whole."

"There’s nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few."

"For the better part of three decades, a disproportionate share of the Nation’s wealth has been accumulated by the very wealthy. Technological advances and growing global competition, while transforming whole industries—and birthing new ones—has accentuated the trend toward rising inequality. Yet, instead of using the tax code to lessen these increasing wage disparities, changes in the tax code over the past eight years exacerbated them."

"By 2004, the wealthiest 10 percent of households held 70 percent of total wealth, and the combined net worth of the top 1 percent of families was larger than that of the bottom 90 percent. In fact, the top 1 percent took home more than 22 percent of total national income, up from 10 percent in 1980."

Got that? No one really earns their income or creates wealth, they merely take a share of the “national income” and the “Nation’s wealth.” The middle class have allegedly “played by the rules” and taken only their fair share, but the rich have not. They have somehow gamed the system—perhaps by causing too many “technological advances” and “birthing” too many new industries, which allow them to create—oops, earn—oops, how about “appropriate”—even more of the nation’s wealth, thereby increasing inequality. The tax system has contributed to this inequality, presumably by failing to apportion enough of the “national income” to the middle class. The solution, of course, is for the government to tax the rich at a higher rate, so the middle class can enjoy more of the loot—oops, spoils—oops, umm, how about “largess.”

None of this has anything to do with solving America’s economic problems, unless you believe that the problem is capitalism itself, which Obama and his ilk obviously do. Capitalism is based on the fact that humans must think, work, and create things in order to survive. Capitalism recognizes that wealth is limited only by the capacity of individuals to think and to devise new ways to solve problems, and it ensures them the freedom to do so—to live, work, enjoy the fruits of their labor, trade, be creative, and lead happy, fulfilling lives. Obama’s budget envisions a very different system, one in which wealth simply exists and the primary purpose of government is to distribute it among the various social classes according to whether they have “played by the rules.” If the “playing field” tilts too far in favor the rich and they acquire too much wealth, the government must tilt it back by confiscating that wealth for the benefit of the poor and middle class.

In short, those who think President Obama wants to raise taxes to solve America’s economic problems are only half right. He does want to solve a “problem” as he sees it, but that “problem” is the principle on which America was founded—that individuals have the moral right to life, liberty, and the pursuit of happiness and that government is instituted among men to protect those rights. Obama would like to replace it with some variant of the Marxist principle, from each according to his ability, to each according to his need. In fairness to Obama, most other politicians and intellectuals in this country share his essential views, including, unfortunately, many conservatives. To paraphrase Ayn Rand, the dirty little secret of the American left is that it wants a dictatorship. Judging by their tepid opposition to President Obama’s budget and his economic policies, the republicans seem content to stand by and urge caution as we journey down the road to serfdom. Obama is giving us the next great leap toward that goal. The question is whether Americans will recognize that in time.

Welcome to the Ground of Liberty

I, like many others, have been horrified by the seemingly sudden turn for the worse that American has taken in recent months, not simply, or even fundamentally, in the state of its economy, but in the state of its culture, its ideas, and the intellectuals charged with defending those things. Particularly dispiriting has been the almost total lack of any principled defense of capitalism, individual rights, and freedom. There are notable exceptions, particularly within the blogosphere, and at some point I will get around to creating a blogroll and linking to the blogs that I regularly read. But the response by politicians, the mainstream media and leading intellectuals to the current crisis has been positively abysmal. Rather than ranting at the television, my kids, my wife, and my dog, I figured a blog would be an appropriate outlet and perhaps an opportunity to add some value to the discussion. I've always liked the Jefferson quote from which the title of this blog is derived for what it conveys about the spirit of those who fight for liberty--that they eternally press forward--and for what it says about the process of fighting for liberty--that it can be slow, often frustratingly so, but that progress is possible if we are willing to fight for it. The men who founded this nation achieved what they did by pressing forward, inch by excrutiating inch. The ideals on which America was founded have fallen out of favor through a similar process. If they are to be regained, and America saved, then continuing to press forward, inch by inch, is what will save it. This blog is my contribution to that effort.

Who am I? A father, a husband, a lawyer, an objectivist, a backyard tinkerer . . . an American.