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article imageOp-Ed: Rewarding the one per cent

By Ken Hanly     Sep 23, 2013 in Business
A recent article in Forbes, by Harry Binswanger has the title: "Give Back? Yes. It's Time for the 99% to Give Back to the 1%". The community the article claims should give back to the wealth creators.
Binswanger maintains that the wealth-creators give far more to the 99% than they get back. He thinks that anyone who earns over a million dollars should be exempt from income tax. Rolling Stone suggests that the article would be better suited to the satirical outlet Onion than the business outlet Forbes. Binswanger quotes from Ayn Rand's novel Atlas Shrugged and the ideas of John Galt the hero: When you live in a rational society, where men are free to trade, you receive an incalculable bonus: the material value of your work is determined not only by your effort, but by the effort of the best productive minds who exist in the world around you.
Ayn Rand s novel  The Fountainhead  provides a outline of her philosophy of  objectivism  as well as...
Ayn Rand's novel "The Fountainhead" provides a outline of her philosophy of "objectivism" as well as her thoughts about humanity, its abilities and the potential of a country like America and also the human mind and spirit.
Ayn Rand was an individualist, atheist, and firm believer in egoism. She was totally opposed to any sort of collectivism and even altruism. However. Rand's model of the creative individual to which society owed gratitude was the iconoclastic creator, such as the architect Frank Lloyd Wright who is probably the model for Edward Roark the hero of The Fountainhead.
One of the models that Binswanger holds up as part of the one per cent that society should reward, seems not at all to be a Randian hero. Binswanger says: Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett. Or if the moral praise showered on Mother Teresa went to someone like Lloyd Blankfein, who, in guiding Goldman Sachs toward billions in profits, has done infinitely more for mankind. (Since profit is the market value of the product minus the market value of factors used, profit represents the value created.)
Instead, we live in a culture where Goldman Sachs is smeared as “a great vampire squid wrapped around the face of humanity.” That’s for the sin of successful investing, channeling savings to their most productive uses, instead of wasting them on government boondoggles like Solyndra and bridges to nowhere.
But what did Blankfein create? We do know that the firm made huge profits particularly when the derivatives market began a steep decline. They sold very risky derivatives to clients without informing them properly of the risks and then bet that they would decline in price making huge sums in the process. In April 2010 at a hearing of the Senate Permanent Subcommittee on Investigations Blankfein said that Goldman Sachs had no moral or legal obligation to inform their clients that they were betting against the products which they were buying since it was not acting in a fiduciary role. It is hard to see what great contribution Goldman Sachs made to society. As the Rolling Stone puts it: But Goldman... remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society
Randian creative individuals are not part of the establishment but iconoclasts who often fight against it. Blankfein is part of the establishment and dependent upon government. Blankfein contributed $4,600 to Hilary Clinton's campaign in 2007. Goldman Sachs and employees gave almost a million dollars to Obama's presidential campaign in 2008 making it the company that gave the most money. In 2012, however, Goldman Sachs gave more to the Republicans. Former Goldman Sachs executives also hold senior positions in the Obama administration. Blankfein describes himself as a Democrat.
During the financial crisis that Goldman Sachs partly caused, the company not only made money but took advantage of government bailout and other programs: Goldman also received a $10 billion preferred stock investment from the U.S. Treasury in October 2008, as part of the Troubled Asset Relief Program (TARP).
The Treasury Department also made short-term loans available for banks: Goldman Sachs was one of the heaviest users of these loan facilities, taking out numerous loans from March 18, 2008 – April 22, 2009. The Primary Dealer Credit Facility (PDCF), the first Fed facility ever to provide overnight loans to investment banks, loaned Goldman Sachs a total of $589 billion against collateral such as corporate market instruments and mortgage-backed securities.[
The Randian hero seems quite reliant on the collectivist pork barrel. Rolling Stone perhaps sums it all up: Five whole years have passed since the crash, and there are still huge pockets of these Fountainhead junkies who genuinely believe that the Blankfeins of the world are reviled because they're bankers and they're rich, and not because they're the heads of unprosecutable organized crime syndicates who make their money through mass fraud, manipulation and the shameless burgling of public treasure." Binswanger not only fails to prove his thesis, along the way he misrepresents the ideas of Ayn Rand at least as I understand them--not that I agree with them.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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