The Rinehart attacks: business leaders must show pride in rational self-interest

Recently we’ve seen a series of verbal attacks on Gina Rinehart and other mining magnates. Firstly there was Wayne Swan’s essay in The Monthly in which he claimed mining magnates were “misrepresenting their self-interest as the national interest”.

Then there was the ferocious union reaction to the announcement of the Roy Hill EMA approval, which allows Hancock Prospecting to bring in 1700 foreign workers if needed, to assure investors that the construction phase of the project will be able to proceed. Paul Howes, national secretary of the Australian Workers Union, exploded “I thought we were actually attacking these guys at the moment . . . Whose side are we on? This is a big win for Gina Rinehart.” Meanwhile Dave Noonan of the Construction Forestry Mining and Energy Union called the decision “a sellout of Australian jobs in the interest of a few greedy billionaires.”

Next on ABC’s Q&A we had the unedifying spectacle of personal insults directed at Ms Rinehart by Barry Humphries and Miriam Margoyles.

Fortunately, commentators such as The Australian editorial writer have pointed out what should have been blindingly obvious to the mudslingers: that Ms Rinehart’s energy, planning, perseverance and dedication bring enormous benefits to the rest of us: hundreds of thousands of jobs at Hancock’s mines, in related industries, and anywhere these employees spend their hard-earned cash. Moreover, owing to the pyramid of ability, these mining jobs are very well paid.

We must also keep in mind the powerful inspirational effect of successful entrepreneurs on those with their own value-creating dreams.

But as is so often the case, showing how much we are indebted to the mining magnates has had little effect. The negative reaction has resulted in more bureaucracy and accordingly greater sovereign risk for mining investment. To placate ignorant union leaders, the EMA approval process will now be overseen by a parliamentary sub-committee. This is a classic case of how distrust of entrepreneurs paves the way for more regulatory impositions.

So why are union leaders and senior members of the government so ready to denigrate entrepreneurs? Instead of listening to the advice from these figures that taxes and regulations will erode our competitiveness and impel mining companies to look elsewhere to maximise the returns to their shareholders, they rush to more regulation.

It’s just Groundhog Day, a continuation of the centuries-old pattern of bashing those who attain financial success. For thousands of years our culture has condemned those who grow rich: Jesus chased the money lenders from the temple; wealthy Jews have been reviled throughout the ages; a medieval legend robbed from the rich to give to the poor; and in modern times, every second movie has a businessman as the villain. A large segment of the population believes that great wealth is evidence of wrong-doing, that business ethics is an oxymoron, and that successful entrepreneurs should “give back to the community.”

What is the root of this hostile attitude to business? Central to it is a misunderstanding of the source of profit. Profit is viewed by many as a lucky surplus that remains when wages and other costs are deducted from sales. The story goes that profits come from keeping costs low (exploiting workers) and/or keeping prices high (swindling customers). This is one root of the view that entrepreneurs don’t deserve their wealth.

But more fundamental than economic ignorance is the unquestioning acceptance of traditional morality that teaches that selfishness is bad. This is the philosophy of altruism. “Altruism” does not mean generosity or benevolence or the desire to support those who cannot support themselves, but self-sacrifice. Based on the Latin “alter” for “other”, the term was coined by Augustus Comte in the 19^th century to refer to the policy of always placing others before oneself.

This has been the dominant ethics for centuries and explains why those who are regarded as highly virtuous and worthy of sainthood – such as Mother Teresa – were those who helped others at the greatest cost to themselves.

Altruism results in the conclusion that in spending so much time on their interests, and retaining so much of their wealth, entrepreneurs are ignoring their moral duty. The great wealth creators are therefore condemned as evil by altruists for their selfishness and “greed”.

And entrepreneurs are selfish. By selfish, I don’t mean trampling over others or pursuing irrational short-term desires. I mean the pursuit of a rational productive dream – for example the development of a mining project. I mean the passionate commitment to whatever is required to do this: the putting at risk of large sums of capital (and often the stressful acceptance of high levels of debt), the rigorous analysis, the detailed and long-term planning, the leadership of a large team, and the enormous patience to work often for decades towards one’s dream. This is selfish work just like the dedication of a great composer or musician, an architect or painter or novelist or surgeon. It has to be selfish: as Leonard Peikoff points out in Why Businessmen Need Philosophy, it would not be possible to exact so much effort out of oneself for anything less than a passionate love of the activity and the goal. And part of realising this dream for the entrepreneur is the profit that is the reward for the clear thinking and the determination to produce something of great value.

The unionists and politicians and left-wing cultural commentators see this financial success (the effect) but are ignorant of the decades of planning and hard work (the cause). Their unquestioning acceptance of a morality which condemns selfishness and denigrates wealth results in angry attacks on successful entrepreneurs.

These attacks will continue until the business world confronts altruism and speak out against it. Here are five reasons altruism is senseless and impractical.

Firstly, it is incompatible with life. If any animal consistently acts against its interests, it will die. Not surprisingly therefore, for most of us the important decisions in life are not selfless. We decide what we want to do for a living and take the course or learn the trade that will take us there. We decide whom we want to marry and go after him or her. We decide we want to have children and we have them. We then work hard to provide for them and educate them because we love them. We decide what sort of house and what sort of car we want to buy and buy them. Life requires us to act in our interests. Why are all the actions we need to take to live and be happy deemed unworthy of moral praise – why is all this outside the scope of morality? Why is only the opposite policy of altruism considered moral?

Actually, we need a code of morality to guide us in these decisions that life requires. Giving us altruism as a code of morality – telling us that the only moral decisions are those that do not benefit ourselves – is about as useful as equipping a plane with an autopilot that avoids other aircraft by flying the plane into the ground. And to call the actions that we need to take to live selfish, and therefore evil, is about as evil as it gets.

Secondly, altruism is manifestly unjust. It claims that those with learning, initiative, and drive must work for those in need. So if you study long hours at school to get into university where you learn all you can about business administration, then work 14-hour days 7 days per week dedicating yourself to building something of enormous value, your reward for all of this is to hand over your “surplus” income to those who’ve done none of this? Are the diligent and astute to be rewarded by serving the lazy and ignorant?

Thirdly, altruism requires hypocrisy and destroys happiness. If the able must give away their “surplus” earnings to those in need, how can it be morally acceptable to keep any of one’s earnings above what is needed for a bare nomadic existence, while there is still a person in need in some despotic failure of an African country? Hypocrisy leads to guilt, which is the most powerful weapon of those who wish to control the producers.

Fourthly, altruism encourages immorality and destroys self-esteem. If the incompetent and lazy will always be looked after, what motivation have they to become competent and hard-working? Altruism rewards unprincipled behaviour on the part of the recipients. Haven’t we seen this all too clearly in remote Aboriginal communities living on welfare: drunkenness, high domestic violence and even widespread child abuse? A code of morality that leads to immorality? Now there’s a contradiction in terms.

Fifthly, altruism produces economic misery. When those “in need” are considered to have a right to the earnings of the productive, laws are enacted to force producers to provide. In every country (the Soviet Union, Cuba and Vietnam to name but a few) that has enforced the altruist precept ‘from each according to his ability, to each according to his need’ – the basis of socialism and communism – living standards have plummeted. In contrast in those countries (amongst them Australia, the UK and America especially in the 19^th century and the first part of the 20^th century, free Europe and lately the Asian tigers and even China), where we have seen producers free to pursue their rational self-interest, the living standard of even the least skilled worker has risen. Unfortunately developed nations are spiralling down the altruist sinkhole with higher taxation and deficit spending as the welfare state expropriates more and more for those “in need.”

It is high time that wealth creators rejected the nonsense of altruism. It is high time they instead spoke out for a morality that upholds rational self-interest, that sees great productiveness as a primary moral virtue, and that sees a highly successful and principled entrepreneur as a hero. Such a morality does exist: Objectivism, the philosophy of Ayn Rand, the most broad-ranging and penetrating thinker since that giant of the ancient Greek world, Aristotle.

In her essay “The Objectivist Ethics” in The Virtue of Selfishness Rand shows that our lives need a morality of rational self-interest. Success in life and happiness require that we live as rational productive beings embracing the seven virtues of rationality, productiveness, pride, independence of thinking, honesty, integrity and justice.

When a wealth creator next hears cries of “selfish!” and “greedy!”, he or she should follow the example of the productive heroes of Ayn Rand’s prophetic novel Atlas Shrugged and calmly state: “I am proud of my achievements. These were possible only because of my selfish dedication. And I am proud of my wealth – I have earned every dollar I’ve made.” For it is only when business leaders proudly uphold the morality of rational self-interest, and when altruism is exposed for the fraud that it is, that the wealth creators will be paid the respect and gratitude they deserve. Only then will the attacks on the selfishness and “greed” of mining magnates and other great achievers cease. Only then will the torrent of business regulations be slowed, stopped and eventually retracted.