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Rand and the Bush Tax Rebate

05/25/2011 12:30 pm ET

Did you get your tax rebate check yet? You know, the one that President Bush says will reanimate the economy and lift us out of this metastasizing recession? If you did, you can thank the good folks at the Rand Corporation for that money -- just like you could curse them for the economic mess that prompted that stimulus.

Rand was the first government sponsored think tank, created to give advice to the Air Force on how to make better weapons and wage better wars. In the process, Rand propagated a theory that was even more transformative than the ICBMs and neutron bomb its scientists developed. The theory, in fact, turned out to be the absolute weapon against the oppressive peril of communism that at one point threatened to blanket the world. Rand's controversial contribution, concocted by a young economist named Kenneth Arrow in 1950, is called rational choice theory; its foundations are as massive, and as flawed, as Marxist dialectics.

Simply put, rational choice assumes that people everywhere are rational, and that rationality is self-interest. In other words, I am always looking out for myself and everything I do is exclusively for my own benefit. Although the concept of rational choice had been around for centuries in some fashion, Rand's Arrow was the first modern scientist to define it in formal terms. Very formal. So formal that he was able to express this supremely egotistic worldview in a mathematical formula. Arrow's theorem proved that whenever two or more people are asked to rank their pick of three choices, unless there is a dictator among them who forces his view to prevail, there is no free choice for no one will agree on the same results.

Rational choice theory, developed to game out the Soviet Union's behavior in a war with the U.S., has quietly transformed Western culture. For, if you believe common agreement can't exist without fascism, you delegitimize collective decision making. Each person must decide what is the best choice -- which translates into, what is best is what is best for me, period. Screw the group. Number One Rules. Arrow called this "the sovereignty of the consumer," and popularized his views in a book sponsored by Rand in 1951. Rational choice thus undermined the theoretical underpinnings of the old Marxist credo, "from each according to his ability, to each according to his needs." The individual, and not the state, would decide what is good for the individual. For his efforts, in 1972 Arrow was awarded the Nobel Prize in Economics.

Although admirable in intent, in practice rational choice sweepingly subverted critical notions of collective responsibility, dissolving the glue that binds society. Religion, patriotism, altruism, all were seen by Rand-ites as disguised variations of self-interest. By the 1980s, powerful economic factions hijacked the theory, and used it for their own benefit. Corporations no longer felt compelled to think of their responsibility to the community they were in, as though factories operated in a vacuum. Industrialists pushed for massive government deregulation since, they argued, politicians control the economy to maximize their political power and to extort contributions from special interests. Conservative pundits insisted taxes be lowered because high taxes just feed the interests of those very same selfish politicians, and even well meaning social programs cause more harm than good. Unions became anathema -- and collective bargaining a poisoned fruit. As Ronald Reagan fulminated: government was "the problem and not the solution."

And so we come to today's world. Rational choice, with its concomitant deregulation, lowering of trade barriers, and purposely ineffectual federal government, has given us an economy where five percent of the U.S. population controls 65 percent of the wealth and corporate executive pay is 400 times greater than that of the average worker. It has created the mess that the Bush tax rebates are supposed to palliate: a subprime lending catastrophe, crashing house prices, food shortages, rising unemployment, and a devalued dollar. The Bush administration, happy to continue rolling in the mire of rational choice, firmly believes that rebates will do the trick -- that Americans will just look to their own pocketbook and forget about everybody else. Bread and circuses for the citizens of the empire.

So please, when you get that rebate check, think of Rand's rational choice and ask yourself, is this the world I want to live in? Or is there another way?

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