The Helpless French Mind

A recent news article describes a new law in France which, if passed, will make it illegal to promote “extreme thinness.”  This ban outlaws images of excessively skinny models in the media and on websites that incite people to severely restrict the amount they eat.  The purpose of this law is to protect individuals, particularly children, from the saturation of unhealthy dietary habits in the culture.  Such regulation will purportedly reduce the prevalence of anorexia in France.

The underlying premise of this law is that people cannot help being influenced by these images and websites and so need the government to protect them.  If someone reads that “eat[ing only] an apple a day” is the key to looking thin and beautiful, he or she will helplessly eat only an apple a day.  Using this logic, if I demanded that everyone who reads this blog give me all their money, people would have no choice but to empty their wallets.

This is obviously absurd.  People are not mindless robots; they hold the capacity to think, reason, and make conscientious decisions.  Seeing an excessively thin model in a magazine does not force anyone to change their dietary habits, just as reading that I want all your money does not force you to give it to me.  Human beings have the capacity and the responsibility to think for themselves and to decide which course of action best furthers their lives.

Regulating the content in magazines and websites is an insult to human nature and will not reduce the prevalence of anorexia precisely because people have minds of their own.  If not, then the next logical step is to ban excessively thin individuals from walking the streets.

Jimmy Carter Embraces Terrorism

Former President Jimmy Carter, already famous for surrendering America’s interests to militant Islamists during the Iran Hostage Crisis in the late 70’s, is yet again betraying America. Last week, Carter met with Nasser Shaer, a senior Hamas politician, under the pretense of promoting “peace” in the region. Hamas, internationally recognized as a terrorist organization, has continued to fire rockets at Israeli towns and send suicide bombers to slaughter Israeli civilians.

During their meeting, Carter literally embraced Shaer as a friend and ally, and he later placed a wreath at the grave of life-long terrorist Yasser Arafat. Hamas, Carter says, must be engaged in any discussions to “lead to a final peace.” But the only “final peace” acceptable to Hamas is the same “final solution” proposed by the Nazis during WWII. Both the PLO and Hamas have the explicit goal of eradicating Israel and all of its civilians.

By embracing the Hamas leadership, Carter has sanctioned some of the bloodiest savages in human history. He should be vilified and damned for what he is: a traitor and an enemy of freedom.

A Tale of Two Economists

The New York Times recently published an op-ed by Paul Krugman on McCain’s healthcare plan. Krugman, an economics professor at Princeton University, describes what he sees as the ‘voodoo’ economics of healthcare:

“…the foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone.” 

The alternative, of course, is that the government can provide cheap health care for everyone.  Which of these two claims has really been refuted by all available evidence?

Capitalism Magazine has just published an article on the same issue.  Richard Ralston discusses the current state of the British National Health Service, a universally available, free healthcare plan that should make Krugman swoon.  Except that the plan is failing.  The article discusses the burgeoning ‘medical tourist industry,’ as patients flee to third world countries to obtain timely care, and the British government’s attempt to integrate more market forces into their system.

The articles present a disturbing picture of America’s desire for socialized medicine, set against the backdrop of the failure of socialized medicine abroad. The irony, apparently, is lost on the New York Times.

Consumer Protection in a Free Market

An article in the latest issue of the Undercurrent examines the cultural vilification of Big Pharma. The piece argues that pharmaceutical companies deserve their profits because they invest a tremendous amount of time and energy researching and developing their products. In this post, we look at the oft-made criticism that the only reason pharmaceutical companies engage in R&D, and more generally the only reason corporations engage in honest practices, is that the government requires them to do so.

Many people believe that without government regulation, pharmaceutical companies will dupe consumers and cut corners in order to make a quick dollar. They believe that the regulatory restrictions imposed by the Food and Drug Administration (FDA) are necessary to reign in companies whose greed would otherwise lead them to engage in a range of unscrupulous practices.

This view fails to recognize that the free market already has a means of rewarding integrity—the profitability of a good reputation.

Reputation is a crucial business asset. Companies work for years, sometimes, decades, to earn a reputation for providing quality products, impeccable service, customer care, timely delivery. The hint of a bad reputation—that a software company’s programs are liable to crash, that a delivery company damages fragile goods, that a bank overcharges on service fees, or that a pharmaceutical company releases medication hastily—can be fatal for a company. In a free market, a competitor is ever ready to exploit such weakness.

Alan Greenspan [writing in Ayn Rand’s essay collection Captialism: The Unknown Ideal] notes: “[I]t is in the self-interest of every businessman to have a reputation for honest dealings and a quality product. Since the market value of a going business is measured by its money-making potential, reputation or ‘good will’ is as much an asset as its physical plant and equipment…“

The idea that profit could incentivize moral behavior sometimes strikes people as counter-intuitive. What about all the cases in which it would be more profitable for a company to deceive customers, distort earnings, cut corners? Without government regulation, what would check a pharmaceutical company seeking profit in situations where profit required immorality?

These questions equivocate short-term and long-term gain. It is possible for a company to benefit short-term from unscrupulous practices. A company can misrepresent its product or service to generate some immediate interest or revenue. But then what will happen? Dissatisfied customers will take their business elsewhere; the media will criticize; affiliates will distance themselves; honest employees will seek out other employers. The price for that immediate gain was real damage to the company’s reputation, and thus to its long-term gain.

The fact that short-term deceit is possible is an argument for, not against, the role of the profit motive in protecting consumers in the marketplace. It is precisely the fact that companies can be motivated by earning a quick dollar, rather than providing a real value, that makes reputation such an important asset. How many of us invest in the Nigerian businessmen contacting us via spam? How many of us buy medical products from infomercials? We don’t do these things because the seller has not earned a reputation with us.

As Greenspan puts it: “[I]t requires years of consistently excellent performance to acquire a reputation and to establish it as a financial asset. Thereafter, a still greater effort is required to maintain it: a company cannot afford to risk its years of investment by letting down its standards of quality for one moment or for one inferior product; nor would it be tempted by any potential ‘quick killing’…””

Over the long term, the only way for a company to achieve success is honesty and integrity. Deceiving customers to make money simply isn’t practical. As historical example after example shows, sooner or later, one way or another, such deception comes back to haunt a company.

[In this post we’ve presented, in brief, the positive argument that the free market rewards integrity and honest practices, and therefore serves consumer interests. For more on this argument, and also the negative argument that government regulation does not protect consumers, see the aforementioned Greenspan article, “The Assault on Integrity”, in Rand’s Book "Capitalism: The Unknown Ideal".]

Girls Gone Mild

An article in the New York Times titled “Students of Virginity” reports on the surprising number of “abstinence clubs” popping up on university campuses all over the country. These clubs try to discourage students from engaging in pre-marital sex.

According to the article, a growing number of students that have been exposed to similar clubs in their high schools, called “chastity clubs”, are now entering university. They are alarmed by the prevalence of promiscuity on campus. Harvard abstinence club member, Janie Fredell, for example, said: “The hookup culture is so absolutely all-encompassing. It’s shocking! It’s everywhere!” Many of these students have created or joined these clubs in response to what they see as an immoral “sexualized culture”.

Presumably in order to have a balanced perspective, the article presents the opposing view, represented by another Harvard student, Lena Chen. Chen is a sex blogger who doesn’t see any problem with meaningless sex: “to say that I have to care about every person I have sex with is an unreasonable expectation. It feels good! It feels good!”

By the end of the article the reader is left with a very clear picture of the two disparate positions. As one blog puts it, you have Jezebel, on the one hand, and the Virgin Mary, on the other. Demonstrating this alternative, the article compares the miniskirt wearer that leaves nothing to the imagination versus her modestly dressed counterpart. Even their eating habits are compared in the article. While Fredell overcame her cravings for a sinful “chocolate explosion” dessert, Chen indulges her every desire “including a ginger cake with cream-cheese frosting and raspberry compote.”

The article leaves us with the choice between self-deprivation or indulging every whim one happens to feel. Are these really the only options?

A third alternative, which the writer does not mention, is that two people might value each other and engage in pre-marital sex. Such couples do not fall into either of the categories presented in the article—neither self-sacrificing nor hedonistic. They are not senselessly “sleeping around”, nor are they depriving themselves of the immense emotional/psychological benefits and pleasure that come from sex. To deny oneself these benefits, if one has found a worthy partner, is worse then senseless. If sex is a celebration of one’s life and existence, as Ayn Rand believed, then the self-denial of sex is one of the worst forms of abrogating one’s life.

Bad Science for Worse Philosophy: The “Ruthlessness” Gene

Hebrew University recently completed a study on the genetic basis for “ruthlessness,” and it’s getting some media coverage. Nature included it on their news page, with the flattering headline, “Ruthlessness gene discovered.” The story even made it to the Drudge Report for a day or two, assuring wide-spread attention.

All of this sensational coverage, for a study design that should raise some eyebrows–and some chuckles, if not for the fact that it’s being taken so seriously. Here’s the basic study design: 200+ student volunteers participated in what the study calls the ‘dictator game.’ The game is supposed to determine if the volunteer behaves like a ruthless dictator. Students (a class of individuals notoriously in need of funds) are given 50 shekels (about 14 dollars) and told they have the option of keeping the money, or give it to someone they will never meet, for no particular reason. That’s it. That’s the test of a dictator. Apparently, people with fewer repeats at their AVPR1a gene tended to give away less money.

There are some problems here, both with methodology and interpretation, which should jump out at the casual reader. The problems begin with equating a student who keeps $14 he has been given in a game with Hitler, Napoleon, and Saddam Hussein (comparisons explicitly drawn in the Nature article). The problems continue with the unfortunately common “one gene, one trait” fallacy of popular genetics. While the pea plants Mendel first tested his theory of genetics on had a number of traits- height, flower color, etc- which were controlled by one gene, human beings have very few. Not only are diseases like cancer usually caused by multiple genes, not all genes are expressed identically in different people. Environmental factors can play a huge role.

This particular poor study design, with its sensationalistic and scientifically misleading press coverage, joins numerous other attempts to attribute complex character traits to genetic chance, rather than personal choice. The danger from this study does not stem from the fact that the ‘dictator game’ is laughably vague in its implications, or even that the association between a gene of unknown mechanism and an undefined character trait (‘ruthlessness’) is sloppy enough to make even a social scientist blush.

No, the real crime is that this sloppy science is used to “prove” a lack of free will. If a dictator kills and murders (or simply retains $14), he does it because his AVPR1a gene was just too short. He did not choose to overthrow a country and keep its people in chains. And- the implication is obvious- if he did not choose it, if he was born to that destiny, how can we condemn him?

This is biological determinism: the notion that our actions and our character are predetermined by our genetic make-up. This theory, whether it takes the form of the simplistic conclusions of the ‘ruthlessness’ study, or more complex genetic analyses, renders us free from fault, free from responsibility, and free from the possibility of choosing to change. Punishment becomes unjust, morality becomes meaningless, and eugenics or criminal convictions based on genetics become logical possibilities. This is not merely sloppy science. It is sloppy science used to defend a terrifying philosophy.

The profit motive on trial: A look at the famous Raymond Dirks insider trading case

An article in the latest edition of the Undercurrent analyzes the moral arguments underlying insider trading laws. In this post, we recount a specific insider trading case from the early 1980s that revealed that it is indeed the profit motive that insider trading laws exist to penalize.

Here’s the story:

Ron Secrist, an employee at an insurance company, learned that his company was engaged in a massive financial fraud. The company had been making up imaginary insurance policies that existed only on paper, then selling those policies to re-insurers for cash. Learning of this situation, Secrist decided to do the right thing: he quit his job, and reported the fraud to a securities analyst named Ray Dirks.

Dirks immediately went to the Wall Street Journal with the details. To his surprise, the Journal refused to believe that the insurance company, one of the hottest stocks of the time, could be engaging in fraud. Dirks also went to the Securities and Exchange Commission (SEC), but the officers there ignored him for the same reason. Dirks, not dissuaded, used the investigative skills he had developed as a securities analyst to gather more evidence about the fraud, confirm it in a number of ways, and make it public. While he was at it, he told his clients, the only people who would listen to him, to sell their stock in the company.

Dirks should have received a medal, or at least a thank you, for making public one of the most audacious frauds Wall Street has ever seen. Instead, he got a lawsuit. The SEC censured him for “insider trading,” because he had provided his clients with non-public information. Only after a protracted ten-year battle, staggering lawyer fees, and a trip to the Supreme Court did he finally clear his name.

The Supreme Court found Dirks not guilty, so justice was ultimately served in this case. But the Court’s reasoning did not bode well for future insider traders.  The Court argued that even though Dirks’ clients had profited from his actions, Dirks was not guilty because profit had not been his intent in uncovering the fraud.  The implication of the court’s decision was obvious: Since Dirks would have been criminally liable had he been motivated by profit, it is the profit motive that makes insider trades criminal. It is the intention to make money that renders such trades illegal.

Just imagine if Dirks had done everything he had done, but the Supreme Court had found that his reason for doing it was to protect his clients’ investments. Imagine he had been investigating companies on their behalf, to evaluate whether they were worth investing in. According to the law, such a profit motive would constitute an admission of guilt. 

Each year, the government prosecutes hundreds of investors who take the same types of actions that Raymond Dirks took, but whose intent happens to be to make money (or prevent loss), rather than to expose a fraud. In a nation where money-makers were once exalted as heroes for their honest achievements, they are now prosecuted for the crime of profiting from them.

Spring Issue PDF online–it’s not too late to order!

Here’s a PDF of the Spring Issue.

There are a limited number of extra copies remaining, so if this is something you’d like to distribute (at local campuses, subway stations, coffee shops, and other suitable locations), please place your order while you still can! (Orders can be placed here.)

As always, we welcome and kindly appreciate feedback and criticism.

Spring 2008 Articles Posted

In anticipation of the publication of our Spring issue, new articles have been posted to the main site. Enjoy!

Praise Big Pharma

If you are sick, there is no better place and time to live than America in the 21st century. The past 50 years have witnessed an explosion of medical innovation in the West. Drugs have been developed to lower cholesterol, fight AIDS, and altogether eradicate some diseases. Pharmaceutical companies have invested, and are investing, tens of billions of dollars each year researching new technologies to extend human life. Some day in the near future, doctors may be writing prescriptions to slow your grandmother’s Alzheimer’s, to kill your father’s brain tumor, or to vaccinate your baby daughter against the virus that causes cervical cancer. (Actually, cross that last one off the list—the HPV vaccine was invented a few years ago.) Just as our current era has been called the Information Age, the next era of human history may very well be dubbed the Biological Age.

Yet, despite the obvious benefits pharmaceutical companies bestow upon mankind, “Big Pharma” is more vilified than almost any other industry. Critics charge that pharmaceutical companies, in their reckless pursuit of profit, produce dangerous and ineffective medicines. They claim that drugs are rushed to market without ample concern given to possible health risks.

In fact, since the average drug takes 15 years and $500 million to produce, a pharmaceutical company puts its good name on the line every time it produces a new drug. The risk of expensive lawsuits, and the accompanying loss of credibility, always loom large. In the rare instances where drugs are found to have negative effects, they are taken off the market as quickly as possible. No drug company would last five minutes if it disregarded the well -being of its customers.

Big Pharma is demonized not because it profits by harming sick people, but because it profits from treating them. What critics imply, but never say openly, is that there is something nefarious about making money by fulfilling a vital human need.

Is there? Businesses earn profits by creating values to fulfill the needs of potential customers, and the more crucial the need, the greater the value. Big Pharma makes massive profits because it produces medicines that are of great value to sick people—of such great value that the sick are willing to pay top dollar for them.

Does this mean, as Big Pharma’s critics say, that drug companies are holding the sick hostage? Of course not. Such a view implies that sick people are the rightful owners of the drugs, which pharmaceutical companies illicitly swipe and hold for ransom. In fact, it is the pharmaceutical companies that have a right to the drugs that they have created.

Life-saving medicines don’t grow on trees. The “miracle” drugs that improve our health and extend our lives must be discovered. They would not exist were it not for the enormous investments of time and money made by the men and women who work in the pharmaceutical industry. It takes the ingenious effort of thousands of individuals and hundreds of millions of dollars to bring a single drug to market. As with any other commodity, those who create these remedies have a moral right to set the terms of their sale. And to profit handsomely from their achievement.

The enemies of Big Pharma disagree. On their view, achievement is not to be rewarded, but punished. And the greater the value one creates, the less of a right one has to it.

This is a perverse injustice. There’s nothing wrong with making money by servicing people’s needs. Productivity is a virtue, not a vice. The fact that Big Pharma profits by helping sick people is something for which it should be lauded, not derided.

So I say: Praise Big Pharma!

Dan Edge is a 29-year old small business owner living in Rockland County, New York. He earned a Bachelor’s Degree in Philosophy from the University of South Carolina, and is currently a Sophomore at the Objectivist Academic Center. He keeps a weekly blog called “The Edge of Reason” at http://danedgeofreason.blogspot.com.