John S. Wolfe

When we were little, how many of us were encouraged by our parents to “share,” “care about others’ feelings,” “put others’ needs ahead of our own” and “don’t be selfish” as we played with other children in the sandbox?

Yet, as adults, if a stranger approached us and asked to share our car, we would probably walk briskly in another direction.

This contradiction is one of many real-life examples that reflect the misperceptions and, ultimately, guilt held by many Americans in a capitalist society. It also explains why the nation in the last century has moved closer and closer to socialism, despite the public’s denial about it.

The issue has become even more prominent – and misunderstood – because of the financial crisis since 2008 and the discussion of Obamacare.

The Ayn Rand Institute’s Yaron Brook spoke to 60 people March 25 at Arizona State University.

Fighting that trend is the Ayn Rand Institute of Marina del Rey, Calif., whose president and executive director, Yaron Brook, spoke to about 60 people Thursday night at Arizona State University. The event was staged by the ASU Objectivist Club, a group inspired by the writings of Ms. Rand – author of “Atlas Shrugged” — from the 1930s to 1970s.

The early conditioning of children leads to confused adults, who grow up thinking sharing is the ideal, and want to live in a world of altruism and sacrifice. But that collides head-on with capitalism, which economists note is about the individual, his freedoms, his self-interest and putting himself first.

The problem is, that’s not how adult Americans act. When you buy a new TV, or new shoes or a new dress, are you doing it to help the economy, to give work to someone, to make someone else happier? Of course not. You do it to make yourself feel better, he said.

When you go to work, who are you doing it for? For the owners of the company or for yourself – for pay, for your passion, for your desires?

Did Steve Jobs invent the iPhone to make the world a better place? No, it is a neat product that Apple’s backers thought could make money. The iPhone probably has a 50% profit margin; should Jobs sell it for less because that’s not “fair” to the buyers?

The more successful the product, the greater return for company shareholders and higher salaries for employees. Is that a bad thing?

This is the free market, Brook said. Every individual pursuing his own self-interest. And that’s OK.

But then you hear about someone who is less fortunate, and the guilt kicks in. Capitalism is about the self, but modern morality says that selfishness is evil.

So when it comes time to vote, often Americans are encouraged to do “what’s right,” he said.

“Given a choice between voting for (measures that lead to) a great economy or voting for what’s ‘right,’ people will vote for what’s ‘right,’” he said. “That’s why we’ve moved left. Socialism is consistent with this.”

Politicians – who grew up with the same messages – play to this guilt. Government should take care of those less fortunate – giving them shelter, food, health care, and other services. What uncaring person would be opposed to that?

So the government requires more money to help more people with more things. The government doesn’t make a profit, so its motives are virtuous. These are “public servants,” after all, Brook said.

So here’s the battle: free capitalism where individuals pursue their self-interest vs. a collective socialism in which a central government collects and redistributes what its current leaders deem “fair.”

Put that way, it’s understandable why so few people stand up for capitalism.

Yet, this is where there’s a huge disconnect, Brook said.

“If you look back over the last two and a half years, isn’t it fair to say that capitalism failed?” he asked. “But that’s assuming what we had was capitalism.”

Capitalism is freedom, free markets, acting in your own self-interest, and protecting private property rights, he said.

He argues that the sources of the crisis – the housing bubble, the mortgage industry, and the banking collapse – were because of the lack of free markets.

In housing, the government tells you where you can build, limits land uses and preserves arbitrary “green zones.”

“They control it, not the market,” he said.

Anyone who rents or owns a home outright is subsidizing Americans who have mortgages, because mortgage-holders get a tax deduction, he said.

“So there’s an incentive to borrow,” he said. “Then the government set up Freddie Mac and Fannie May to make mortgages cheaper and insure them.”

The mortgage industry is not a free market; it’s heavily regulated and controlled by the feds, he said.

Now let’s talk about banking, he continued.

“Everyone thinks banking is a free market with no controls,” he said. “Yet to open a bank you need government approvals for your management, your board, your investors and your business plan.

“And you are regulated by four different agencies,” he said. “Government controls about 80% of all banking.”

When the industry failed, who was blamed? “The evil bankers,” Brook said. “Not the government auditors, bureaucrats or regulators.”

The real blame for this crisis belongs to the biggest regulator of all, the Federal Reserve Bank, he said.

“If the Fed does something, who’s affected?” he asked. “Everybody!”

The Fed sets short-term interest rates. That determination sets the value of every asset.

“It’s 12 bureaucrats sitting around a table,” he said. “They can never get the price controls (for money) right.”

“If they make the price too low, everyone wants to buy and you get massive shortages,” he continued. “If it’s too high, no one wants to buy and you have surpluses.”

Last decade the Fed set the short-term loan rate at 1%. The inflation rate was 3%. Everyone borrowed because of the “cheap” money. For homes, cars and on credit cards.

When the price went up – through adjusting rates – people couldn’t pay their debts.

“This crisis is a crisis of leverage,” Brook said.

When there are problems, everyone wants to cite a failure of “free markets.”

You see that with the health care debate, he said.

“Everyone said, ‘We tried to keep government out of medicine and it didn’t work. So we now need government to come in and save us from the free market,’” Brook said. “‘The only solution is government intervention.’”

He noted, however, that more than 50% of all dollars spent on health care in the United States is spent by the government. “It seems like there is a lot of government involvement,” he said.

The federal government is also heavily involved in the health-insurance industry, the pharmaceutical industry and the regulation of doctors.

Brook said that he is disappointed that, in the entire discussion of health-care “reform,” the Republicans’ proposals were simply a version of “Democrats Lite.” There was no real analysis of introducing free markets to the issue of health-care delivery.

Capitalism is freedom, and freedom is free markets.

“Look at Beijing, or Hong Kong, or Eastern Europe,” he said. “You give people a little freedom and see how many more people climb out of poverty.”

Yet the United States is moving in the other direction. More government, more taxation, more central control, more restrictions on individual freedoms.

He believes there should a free-market solution to issues like “climate change.”

“The state should have no role,” he said. “Neighbors can get together to address issues.”

If there is a dispute, between peoples or nations, you fall back on private property rights and the legal system, he said.

Brook saved some of his most pointed comments to undercut opponents of “global warming.”

“What if, in the middle of the 19^th century, the people of London were having trouble breathing because of the smoke from burning coal,” he said. “They decided to end the use of coal out of concern for ‘future generations.’

“So out of concern for us, we wouldn’t have had the Industrial Revolution,” he continued. “I say, let the future generations address how to deal with disasters to fit their society .”

But the climate-change proponents push the “guilt” buttons and Americans drive hybrids to make themselves feel better, just like they penalize bankers, he said.

Brook believes the nation has two decades to return to its smaller-government, individual-freedom roots.

“The country will be bankrupt in 20 years,” he said. “Our unfunded liabilities for just Medicare, Medicaid and Social Security are $103 trillion. How are we going to pay it back?”

He sees the country on a raft heading toward a waterfall and “we’re sitting there with our oars and rowing!”

“Sometimes we row fast, like this week with health care,” he said. “Sometimes we row slower, like under Reagan. But the waterfall is getting closer.”

What the raft really needs is a motor to go in the other direction.

“We need a moral revolution,” he said, noting that the phrase should not have religious overtones. “Americans at their core still have that ethic, we’re still about the inalienable right to pursue our own happiness. Not the state’s right to pursue social justice.

“Individuals want the freedom to be left alone.”