Are you free to use your own body’s cells to treat your medical condition? Under the rule of the FDA, apparently not. A U.S. District Court has sided with the FDA in its lawsuit against Regenerative Sciences, stopping the company from treating orthopedic injuries by culturing and re-injecting a patient’s own stem cells.

Adult stem cell therapies are relatively new; their promise is only starting to be realized, as in a recent study, which saw the safe regrowth of damaged heart tissue in 17 heart attack patients. Yet just as these first successful treatments are emerging, the FDA is flexing its regulatory muscle.

The lawsuit against Regenerative is precedent-setting, because the FDA is, in effect, applying drug manufacturing standards to the use of your own bodily cells. As one researcher put it, “The FDA does not come into a cardiology practice and tell doctors how to do their surgeries or how to do heart replacements. And yet they feel they can come into a stem cell clinic.”

The problem with the FDA “coming into a stem cell clinic” is that it could have a chilling effect on this whole field of medical research. What, for instance, might happen to the costs of developing adult stem cell treatments under the burden of the FDA’s regulatory intervention? The history of drug development over the past few decades offers a hint.

According to the Tufts Center for the Study of Drug Development, the cost of getting a new drug developed and approved 30 years ago was around $138 million (adjusted for inflation). Today, it’s around $1 billion. Another study finds that only 2 out of 10 drugs ever earn enough to cover the R&D costs for the manufacturer — and that’s after they make it to market. How many potentially lifesaving drugs never even make it out of the lab, being too expensive to pursue under FDA control?

How many promising avenues of adult stem cell research will be cut off by the same regulatory oversight? And how many of us who could benefit from new treatments will instead be forced to endure pain and debilitating disease?

Christopher Centeno, the director of Regenerative Sciences, sees his company’s lawsuit as “a 21st-century civil rights issue that will define what control you have about the use of your own cells and tissue. If a loved one is dying in intensive care and a well-done study shows that the patient’s own cells can be used to help, does the patient get to decide to use those cells, or is that a decision for the FDA? Will the patient still be alive while we wait on Washington to issue this decision?”

Unfortunately, the prospect of patients dying waiting for the FDA to act is all too real — as suggested, again, by its regulation of drugs and medical devices.

Because the agency has the power to keep drugs and devices off the market while its regulators plod through their labyrinthine review process, we and our doctors are forbidden by law from using treatments that lack the FDA’s stamp of approval, even with informed consent. In cases where the patient has little time left and no other options, this leads to tragic outcomes.

Consider a recently approved device designed to replace a brittle aortic valve. During a four-year period of FDA review, the device was used safely in Europe while being forbidden in America. According to one commentator, “More than 15,000 patients worldwide will receive the device by the time it’s slated for approval in the U.S. Some Americans healthy enough to fly have sought the procedure in Europe. Tens of thousands of Americans unable to travel, and too sick to undergo open-heart surgery, have died during the intervening four years.”

The tragedy of dying patients denied the right to use drugs under FDA review is one that has occurred again and again — as in the case of the cancer drug interleukin-2, or beta blockers, which reduce the risk of secondary heart attacks. Estimates put the death toll from the FDA’s withholding of these drugs in the tens of thousands. Do we really want to see the same tragic toll occur in the context of stem cell therapies?

There is no question that the government must spare no effort in defining and prosecuting real cases of medical fraud, malpractice and criminal negligence — and there is no question that such cases exist in the stem cell market. But instead of serving as our protector against charlatans who prey on the sick and desperate, the FDA has itself become an agent of coercion, forcibly denying us the freedom to use treatments that could save our lives.

Regenerative Sciences plans to appeal the decision. It would be a tragedy if we allow the FDA’s regulatory tentacles to extend into adult stem cell research and choke off this promising area of medicine in its infancy.

About The Author

Keith Lockitch

Vice President of Education and Senior Fellow, Ayn Rand Institute

My grandfather, a gruff and uneducated but whip-smart guy, started out poor. Following a stint in the Army, he spent a few years working and scrimped together enough money to start his own restaurant in a small town near Philadelphia.

He — and the rest of his family — worked incredibly long hours, first to keep the restaurant in business and then to turn it into a success: cooking the food, managing the employees, sweeping the floors, keeping the books, pleasing the customers, and a great deal else. It was a struggle, but he ended his life as a modestly wealthy man.

But according to President Obama, “If you’ve got a business — you didn’t build that. Somebody else made that happen.”

No, Mr. President, “somebody else” didn’t. My grandfather did.

To be fair, the president’s defenders claim Obama is being taken out of context, that by “that” he was referring to infrastructure such as roads and schools. But even granting that, the entire thrust of the president’s comments was to minimize the importance of individual initiative.

[I]f you’ve been successful, you didn’t get there on your own. . . . I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

So it’s not your mind that explains your success. And it’s not your hard work. What is it?

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. . . . Somebody invested in roads and bridges.

You get the idea. According to Obama, anyone proud of his own achievements and opposed to having the government tax and regulate them more must be so deluded as to think he never received any benefit from others. Since anyone living in society obviously has benefited from others, individual achievement is, well, not quite a myth, but a bit of a delusion.

Individual businessmen? Sure they contribute something, but it’s small change compared to the contribution of others — especially the state.

Obama wants to wipe out the enormous difference between people like my grandfather, who succeed because they choose to think, create, work, and build — and those who don’t. In the president’s account, what makes us successful isn’t our intelligence, it isn’t our ambition, it isn’t in the end even the infrastructure: We all drive on the roads and go to school; we don’t all create a successful restaurant let alone a Fortune 500 company.

No, the real root of success is dumb luck. Some happen to get a lot from society, others happen to get a little. To borrow my colleague Harry Binswanger’s apt summary of Obama’s argument, “The only reason Joe Sixpack didn’t find the Higgs boson is that he didn’t happen to be provided with a large hadron collider.”

Well, Mr. President, my grandfather was not given a lot. (And how many people have been handed a Fortune 500 company and destroyed it because they didn’t exercise the intelligence and productive effort necessary to make it successful?) He was primarily responsible for his own success.

Did he benefit from others? Of course. We all do. One of the greatest things about freedom is the extent to which we can profit from collaborating with other people. As Ayn Rand points out, “Men can derive enormous benefits from dealing with one another. . . . The two great values to be gained from social existence are: knowledge and trade.”
But knowledge and trade are not gifts from the collective — let alone gifts that come with undefined strings attached. They come from the past and present achievements of other individuals.

Individuals — Aristotle, Galileo, Newton — made possible modern science. Individuals — Franklin, Edison, Tesla — created revolutionary inventions. Individuals — Rockefeller, Ford, Jobs — catapulted our standard of living forward. On a smaller level, my grandfather didn’t build the streets or invent the stove. But his restaurant? It was his blood, sweat, and ambition that made it a success.

Every creator makes use of the achievements of those who go before him. But what he creates by building on his predecessors is his achievement.

In America, it has always been hard to demonize, tax, and control someone who has clearly earned his success. Obama’s recent comments, like Elizabeth Warren’s earlier rant, are aimed at destroying the very concept of individual achievement in order to pave the way for an anti-capitalist agenda.

My grandfather is no longer alive, but I’d like to think he would have responded to Obama’s comments with an unapologetic: “I earned my success.” In truth, I suspect his message would have been somewhat more brief and a great deal more obscene.

About The Author

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Objectivists know that the entitlement state is an immoral institution that needs to be abolished. But most Americans regard this as unthinkable. Why? What ideas have made the entitlement state sacrosanct? Why haven’t traditional arguments against wealth redistribution — for example, “Social Security is theft” — been effective? How do we convince Americans that need truly isn’t a claim on other people’s wealth? 

To answer these questions, Don Watkins examines how, over a hundred years ago, the left transformed America from an essentially free market into a regulatory entitlement state. Arguing that its success was the result of a powerful moral narrative, Mr. Watkins discusses how supporters of capitalism can develop an even more persuasive moral narrative of our own — one that will change the debate over entitlements from how to save them to how to end them. (Recorded July 2, 2012.)

About The Author

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Private equity firms have a bad reputation. They’re called “predators,” “job killers,” and “vultures.” Consider the recent attacks on Mitt Romney in an Obama campaign advertisement. We’re told that because of Bain Capital — Romney’s former firm — steel workers lost jobs and health care benefits. Pensions were slashed.

One worker calls Bain a “vampire” that “sucked the life out of us.” Another adds that they “walked away with a lot of money that they made off this plant.” Hurling similar accusations in his New York Times column, Paul Krugman condemns Bain for having “destroyed good jobs.”

Although focused on Bain Capital, these attacks raise important questions about the private equity business as such. Do these firms profit without caring whether their acquisitions survive? Do they eliminate good jobs?

Private equity firms typically invest in relatively mature companies, aiming to later resell their shares at a profit. In most cases, they apply their extensive knowledge of corporate and financial restructuring to improve their acquisitions, similar to how Gordon Ramsay uses his culinary expertise to save struggling restaurants on Kitchen Nightmares.

Skype was purchased by a private equity firm named Silver Lake, which subsequently recruited a new management team, resolved litigation with the company’s founders, forged strategic partnerships with key players like Verizon and Samsung, and oversaw the launch of Skype mobile and Skype Connect. These improvements allowed Silver Lake to resell Skype for a whopping gain of some $3 billion.

Domino’s Pizza is another private equity success. After buying out Domino’s, Bain refinanced the company, launched a new marketing campaign, rolled out new products, and modernized its stores. Revenues grew for the last five years that Bain was in charge, and the pizza chain went from being ranked last amongst its competitors in taste, to receiving high taste marks.

Do private equity firms focus on their own earnings at the expense of the long-term survivability of their acquisitions? To the contrary, they have every incentive to focus on their acquisition’s survivability because they want to resell it at a profit.

It’s much easier to sell a company that is in position to profit for many years than one that is likely to fail in a few months. And the fact that private equity firms have been reselling companies at a profit to willing buyers for decades demonstrates their success at improving companies.

Sure, there are examples of companies that went bankrupt after an attempted reorganization by private equity — GS Technologies, Simmons Bedding, etc. Maybe these failed because the business was unsalvageable. Or maybe the private equity firm couldn’t figure out a suitable reorganization.

Regardless, these cases are no basis to demonize the industry anymore than demonizing emergency rooms because some patients die.

Do private equity firms destroy good jobs? Well, good for whom? Retaining workers is not good for a company if it can drastically improve earnings by shrinking to a more manageable size, which may include closing unprofitable facilities and laying off hundreds.

For example, in 2002, Birds Eye — the frozen foods producer — had a loss of $131 million on $1 billion worth of sales. A private equity firm named Vestar Capital bought Birds Eye and converted it into a smaller, profitable company, which included reducing the workforce from 4,000 employees to 1,700. By 2009, Birds Eye earned a profit of $54 million while selling $936 million of products.

Eliminating jobs to increase earnings is often criticized as “putting profits over people.” But no self-respecting business employs someone unless it thinks it can increase profits thereby, and no self-respecting person demands to be employed at a loss to his employer. Jobs depend on profits.

When Vestar transformed Birds Eye from a struggling producer of commodity vegetables to a leader in branded foods and meals, it refocused Birds Eye on its core brand, sold underperforming facilities inessential to its new strategy, including plants related to a sauerkraut business and a private-label frozen vegetable business.

To stay competitive in today’s dynamically evolving economy, companies must be able to constantly adapt, and this may require substantial reorganization and downsizing.

It is a serious injustice to malign private equity firms as their critics do today. We should recognize that they’re reorganization experts who aim to improve undervalued or underperforming businesses. Their profits should be admired.

About The Author

Doug Altner

Doug Altner was an analyst and instructor at the Ayn Rand Institute between 2011 and 2014.

It’s the same old song: Wherever you go, whatever you do, if it involves making profits, President Obama will be right there criticizing you.

These days, his administration is targeting Bain Capital and the entire private equity industry for seeking to “maximize profits,” which is “not always going to be good for communities or businesses or workers.” 

Let’s be real. Anyone who’s sincerely interested in jobs for Americans needs to understand that the only source of jobs is profitable enterprises. Private equity firms are in the business of creating such enterprises — sometimes by rescuing salvageable companies, sometimes by closing down dying businesses and shifting the remaining capital to profitable firms.

A century ago, profit-seeking capitalists were shifting money out of the horse-and-buggy industry and into automobiles. Were the resulting shutdowns and layoffs painful? Sure they were. But everyone — even former buggy whip makers — had the chance to live better in a car economy. 

Today, private equity is, among other things, helping reallocate capital from steel mills that can’t compete on a global market to American high-tech companies, which are industry leaders. More broadly, Bain Capital and other private equity firms engineer the difficult structural, managerial and financial changes necessary to make long-term successes out of companies like Skype, Staples and Domino’s Pizza.

Sometimes these ventures fail, despite best efforts. But companies like Bain could not stay in business by repeatedly luring investors into multimillion-dollar failures. 

As for layoffs, employers aren’t parents and employees aren’t children. They’re grown-ups cooperating in the pursuit of profit. Employees want to profit by earning a paycheck, and businesses want to profit by selling at a price that exceeds all costs of production, including wages.

That’s the sort of win-win relationship that makes capitalism great. We don’t blame employees who quit to take higher-paying jobs elsewhere. Why should we blame companies that lay off employees to stay or become profitable? 

Businessmen who prosper in private equity earn their wealth. That’s something to celebrate, not condemn.

About The Authors

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Yaron Brook

Chairman of the Board, Ayn Rand Institute

“From cradle to grave.” So goes the motto of the entitlement state, whose creator Otto von Bismarck said: “Give the working-man the right to work as long as he is healthy, assure him care when he is sick, assure him maintenance when he is old.”

Are you bothered by the thought of government embedding itself in every aspect of your life? According to President Obama, the only alternative is “a government that tells the American people, you are on your own. If you get sick, you’re on your own. If you can’t afford college, you’re on your own. . . . That’s not the America I believe in.”

It is, however, the America the Founding Fathers believed in. What made America great was the fact that it was the first country in history where you were on your own.

Roll back the tape a few thousand years to when every element of life was controlled by the tribe. You could not live an independent existence, you could not choose your own ideas, your own values, your own destiny. You belonged to the group. The group, in turn, gave you a certain measure of protection: so long as you obeyed its commands, kept your place, and tended to its needs, you would get your scrap of food (if there was food to be had).

The story of freedom is the story of how the individual escaped from ownership by the tribe. As Ayn Rand once observed, “Civilization is the progress toward a society of privacy. The savage’s whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men.”

The Founding Fathers took a crucial leap forward in that process, declaring that the collective has no claim on you; that the government exists only to protect your right to live your own life, earn your own wealth, and seek your own happiness. Other people’s wants and needs are not your responsibility.

The corollary was that you and you alone were responsible for securing your own wants and needs. You were responsible for developing the knowledge, skills, and traits of character you needed to earn a living. You were responsible for saving to meet life’s unexpected twists and turns. You were responsible for educating your children. You could ask for help from other people — but you could not demand it as a right. You were on your own.

Did people shrink from the twin values of freedom and responsibility? On the contrary, the vast majority of Americans during the 18th and 19th centuries eagerly embraced life’s challenges and flourished under the new system. People didn’t flee from America, they fled to America. They came here poor, but ambitious — ready to carve out a life for themselves in a country that offered them the only thing they asked for: an open road.

Of course, Americans during this era were not “on their own” in the lone-wolf, asocial sense implied by Obama. Free Americans developed complex webs of association based on voluntary agreement. An unprecedented division of labor — capitalists, businessmen, and workers coming together to create wealth on an industrial scale — was a product of this newfound freedom.

Far from leaving people unable to afford life’s necessities, it was this system of voluntary cooperation that enabled the masses to afford modern luxuries — things like cars, microwaves, and air conditioning, which the wealthiest men of past eras did not own.

What Americans of yesteryear lacked was not voluntary cooperation and trade, but involuntary servitude (slavery being the glaring, deplorable exception). Starting at the end of the 19th century, however, the Progressive movement began replacing individual freedom, individual responsibility, and voluntary association with an entitlement society. They promised to keep the benefits of the industrial economy that capitalism had created, while replacing the freedom that made it possible with a modern form of tribalism. The group would take responsibility for us from cradle to grave, and we in turn would become servants of the group, burdened with responsibility for the lives of others.

The Progressives and their present-day descendants have largely succeeded at eroding freedom. But the inevitable consequence is an economy nowhere near as vibrant as before. In a free country, you would decide how to live, whom to deal with, what obligations to accept, what projects to undertake, what values to uphold. But in entitlement America, you are forced to pay for other people’s tonsillectomies, other people’s Women’s Studies degrees, other people’s retirements, other people’s business subsidies, other people’s bailouts.

Americans today face a choice: Do we want to be on our own — or continue as society’s servants?

About The Author

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

It’s an open secret that America’s entitlement state is in disarray, and that the United States faces a crushing debt, thanks to programs such as Social Security, Medicare and Medicaid. But according to Don Watkins, ARI fellow, that’s not the biggest problem with entitlements.

In this talk, you will discover the unknown history of life in America before the entitlement state, and discover the surprising reason why the United States went from a limited government to an entitlement nation. In the process, you will find out why all of the usual solutions to our entitlement crisis cannot work — and what kind of solution can work. (Recorded February 21, 2012.)

About The Author

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

In the summer of 1921, a young Ayn Rand saw Moscow for the first time. “I remember standing on a square,” she would later recall. “And it suddenly struck me. . . . ‘How enormous it is, and how many people, and it’s just one city’ . . . . I suddenly had the concrete sense of how many large cities there were in the world — and I had to address all of them. All of those numbers had to hear of me, and of what I was going to say. And the feeling was marvelously solemn.”

Today, on the 107th anniversary of her birth, it’s hard to doubt that the world has indeed heard of Ayn Rand. Her books — including titles like “The Fountainhead” and “The Virtue of Selfishness” — have sold nearly 30 million copies, with sales of her 1,100-page opus, “Atlas Shrugged,” surpassing a million copies in the last three years alone.

Rand has clearly inspired millions. But a debate has emerged over the question of Rand’s political influence, with many commentators claiming her ideas have played a key role in shaping the political landscape. As former Maryland Lt. Gov. Kathleen Kennedy Townsend said in 2011, “Ayn Rand has a large and growing influence on American politics.”

But to gauge Rand’s influence, we need to know more about her views than the sound bites we’re typically offered.

Rand is usually thought of as a political philosopher, but that is not how she viewed herself. “I am primarily the creator of a new code of morality,” she once said. Whereas previous moral codes bestowed sainthood on those who served and sacrificed for others, Rand’s morality extolled “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.”

This is the philosophy embodied by fictional characters such as Hank Rearden, the industrialist in “Atlas Shrugged,” who — in the tradition of Thomas Edison — creates a new metal that’s stronger and cheaper than steel, and who — in the tradition of countless entrepreneurs — struggles to produce his revolutionary product in the face of government obstacles. At one point, Rearden is brought to trial for violating the government’s economic edicts, and he proudly defends his right to produce and prosper:

“I work for nothing but my own profit,” he says, “which I make by selling a product they need to men who are willing and able to buy it. I do not produce it for their benefit at the expense of mine, and they do not buy it for my benefit at the expense of theirs. . . . I made my money by my own effort, in free exchange and through the voluntary consent of every man I dealt with. . . . I refuse to apologize for my ability — I refuse to apologize for my success — I refuse to apologize for my money.”

It is this moral outlook that underlies Rand’s advocacy of free markets, and it suggests where those looking for Rand’s influence on today’s politics can see it.

Above all, you can see it in the moral outrage of the Tea Party activists, many of whom carry signs championing Rand’s works and ideas. 

Recall the Rick Santelli rant that started it all: “This is America. How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills, raise their hand? . . . We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing. . . . at the end of the day, I’m an Ayn Rander.”

But what you don’t yet see is large numbers of people who have actually grasped the moral and political position Rand defined. Even among the Tea Party activists, there exists no positive, principled platform challenging today’s status quo. 

This is why you also find at their gatherings signs like “Keep Your Government Hands Off My Medicare.” Apparently, paying for your neighbor’s mortgage is bad, but paying for his health care is just fine.

Rand has helped many people see that something has gone wrong in America. But they haven’t yet understood the source of the problem or Rand’s radical solution.

A political movement truly shaped by Rand’s ideas would not flinch, as Republicans and Tea Partiers do, from charges that it is the mouthpiece of the rich and the mean-spirited. It would declare that it is a movement for all producers, proudly embracing the innovative rich, the ambitious poor, and everyone in between. If you earn your wealth through production and voluntary trade, a Rand-inspired political movement would affirm that it is yours by right.

And instead of looking at programs like Social Security and Medicaid only from the recipients’ point of view, a Rand-inspired political movement would point to the great injustice committed against those who are forced to provide retirement and medical care to others. It would ask: by what right does the government seize wealth from some people so it can dole out unearned rewards to others? Nothing, it would declare, is more mean-spirited than depriving an individual of his property and liberty.

In other words, a Rand-inspired political movement would be a principled movement. It would champion laissez-faire capitalism — the total separation of state and economics — as the only system that fully protects the rational and productive individual, securing his moral and political right to pursue his own happiness.

To what extent has Ayn Rand shaped our political landscape? So far, not nearly enough.

About The Author

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Watching the world mourn Steve Jobs, we are reminded of how massive crowds of Americans used to gather to celebrate the launch of a new bridge or a new railroad. There is a widespread recognition that Jobs was a creative genius who changed our world profoundly and for the better. Even President Obama, not usually given to praising businessmen, said that Jobs “transformed our lives, redefined entire industries, and achieved one of the rarest feats in human history: he changed the way each of us sees the world.”

All of this raises an important and to-date unasked question: what do we owe Jobs and productive geniuses like him?

For one, we owe them gratitude, which we do not always give them — Jobs, here, is the exception that proves the rule. But we owe them something more than that, something not even Jobs has received. We owe them the recognition that their achievements are profoundly moral.

If dedicating your life to creating the values that advance it is a moral achievement, then there is nothing greater or nobler than the creative geniuses whose productive ability has created our modern world: a world where we live more than three times as long as our ancestors; where our homes are heated in the winter, cooled in the summer, and lit at night; where we can travel across a continent in a matter of hours; where we can say goodnight to our children from the other side of the globe.

But far from holding up the great producers as moral exemplars, we lump them in with the Al Capones and the Bernie Madoffs as people who must be stopped or at least shackled until they learn to selflessly serve others. Even Jobs was criticized because he devoted his life to Apple rather than philanthropy.

This perverse attitude has led us to deny creative heroes like Jobs the third thing we owe them: freedom. Innovators by definition challenge convention, and it is only freedom that protects their right to do it. When government infringes on freedom by initiating force against producers — by regulating their actions, by controlling their choices, by seizing their wealth — it stifles and ultimately crushes the creative mind.

Jobs was able to thrive because the tech industry has been left relatively free. But what if it had been subject to the same regulatory morass as the automotive industry? What if bureaucrats in the 1970s had started dictating the specifications for making microprocessors, or if they had dictated energy efficiency standards for server farms? It is doubtful we would have ever had the information revolution.

Let us mourn the loss of Steve Jobs — but let us also use this as an opportunity to look in the mirror and question whether we have treated Jobs and others like him as they deserve.

About The Authors

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Yaron Brook

Chairman of the Board, Ayn Rand Institute

After Rick Perry called Social Security a Ponzi scheme, pundits everywhere smugly assured the world that Perry is crazy because, after all, the government can never really go bankrupt: it can always print money to pay its debts. Of course, that’s hardly a comfort to those who know what hyperinflation can do to an economy.

In any case, Perry can be commended for daring to violate the first law of politics: whatever you do, do not question entitlements. Despite the fact that the big three entitlement programs — Social Security, Medicaid, and Medicare — have the U.S. government facing upwards of $100 trillion in unfunded liabilities, they largely remain a third rail: touch not lest ye be voted out of office.

Why are they sacrosanct? Because, whatever else you can say about the entitlement state, no one disputes that it’s a moral imperative. Inefficient? Maybe. Expensive? You bet. But morally questionable? Absolutely not.

The problem with the entitlement state is not simply that it is bankrupting this country — the problem is that it is morally bankrupt.

The basic principle behind the entitlement state is that a person’s need entitles him to other people’s wealth. It’s that you have a duty to spend some irreplaceable part of your life laboring, not for the sake of your own life and happiness, but for the sake of others. If you are productive and self-supporting, then according to the entitlement state, you are in hock to those who aren’t. In Marx’s memorable phrase: “From each according to his ability, to each according to his needs.”

As we’ve argued in past columns, no system that treats you as other people’s servant can be called moral. What made America the noblest nation in history was that it was the first country founded on the idea that each of us has a right to live and work for our own sake, that it’s our own job to try to make the most of our life, and that the government’s sole purpose is to protect our freedom to do so.

Some have raised objections to this line of argument, however. Here are three of the most popular objections.

1. “The entitlement state is no different from insurance.”

When Social Security first passed, under FDR, most Americans regarded being “on the dole” as shameful. One way the program garnered widespread support was by positioning itself, not as welfare, but as insurance. Medicare would later take the same tack. You pay in when you’re young and healthy, and when money is paid out to you, you’re not going on the dole — you’re simply getting back what’s yours.

This was always a fraud. Your taxes aren’t invested in order to generate your future benefits — they are used to supply benefits to current enrollees. If a private insurance company operated that way, racking up $100 trillion in debts it couldn’t pay, it would be bankrupt and its executives would be sent to prison.

But the most vital difference is this: the entitlement state is involuntary. For the rational person, insurance is something he chooses to buy when he judges that a given policy represents a net gain. Even in a voluntary, competitive system where profit-seeking companies tailor policies to your individual needs, insurance isn’t for everyone. A young entrepreneur might rationally decide to forego homeowners insurance in order to make his fledgling business a success. But the entitlement state forces us into costly, one-size-fits-all programs regardless of whether we think it’s in our personal interest.

2. “The entitlement state benefits everyone.”

Far from offering genuine benefits, whenever the government takes people’s money and decides how that money is “best” spent, it makes life harder for rational people. A rational person needs the freedom to plan his own life, make his own choices, and support his own existence. Consider the impact of Social Security.

In a world without Social Security, the rational person would think about his own long-range plans and interests. He might rationally decide that he loves working and never wants to retire, or that he’d rather invest his current income in growing his business today and start saving once he has established himself. When he does invest, he will think carefully about where to park his savings, consulting experts, judiciously diversifying. As a result he will know where his investments stand and why, and will not be at the mercy of a political process that might raise the retirement age, curtail promised “benefits,” etc. For him, Social Security is all downside. All its alleged benefits he could attain much better on his own.

So why is he deprived of this freedom to live and plan his own life? Because some people may choose not to plan.

Social Security, and the entitlement state more broadly, institutes a basic injustice: the rational and productive are sacrificed in the name of the irrational. “From each according to his ability, to each according to his needs.”

3. “But what about those who can’t take care of themselves?”

Sure, some people say, most of us would thrive without the entitlement state — but what about those who can’t? What happens to them? Don’t they starve in the streets?

In any industrialized nation, it is only a fraction of a sliver of a minority who are unable to support themselves, and even in the days before America’s entitlement state, they didn’t starve in the streets. Most turned to friends and family. Many others turned to voluntary social insurance programs run by private mutual aid societies, like the Security Benefit Association. And some turned to private charities.

If Americans a century ago could flourish without an entitlement state, how much easier would it be today, when even most “poor” people own cars and color TVs?

The entitlement state was never needed to ensure that the unable got fed. It is and always has been geared, not to the unable, but to the unwilling: to that entitlement mentality that expects payment “according to his needs.” And by rewarding that mentality, we foster that mentality.

The entitlement state is geared to the unwilling at the expense of the willing and able. What could be greater evidence that it is morally bankrupt?

About The Authors

Don Watkins

Former Fellow (2006-2017), Ayn Rand Institute

Yaron Brook

Chairman of the Board, Ayn Rand Institute