Ayn Rand shook the world with her prescription for what ails it. She offered a very simple prescription, one that goes against everything we have been taught so far, from Jesus Christ to Ghandi. She wrote that selfishness is a virtue, and if we simply behaved in our self-interest, things would be better. I have lived by this ethics most of my life, and I recommend it to everyone else.

Austrian economists see the world in similar terms, from the economics point of view. Economics presupposes human economic actors that act in their self-interest. It is impossible to draw conclusions if economics were to start from a different premise. I am not saying that Austrian economists have declared the moral superiority of selfishness, but their methods of analysis would simply be invalid without starting from the premise that everyone is acting in one’s economic self-interest.

What is self-interest, and what is selfishness? These two words mean the same thing, from an ethical standpoint. Self-interest is the euphemism for selfishness. Selfishness is a bad word, and it’s always been used with negative connotation, until Ayn Rand came along.

We use the word self-interest in the context of a legal contract. When we enter a contract or sign an agreement, the presupposition is always that we are doing so in our interest. We never sign an agreement that would be detrimental to ourselves. In fact, lawyers can easily argue that a contract is invalid if it were signed with one side being disadvantaged by it. Contracts have to benefit both sides, both signatories. Notice that lawyers never say “you signed this contract out of your selfishness”. In essence it means the same thing as signing a contract in one’s self-interest, but the connotation is bad if the word selfishness is used.

The word self-interest is also used in the context of an accomplished athlete or musician or any artist. The coach would say to the athlete he is coaching: “It’s not in your interest to skip practice today” or “It’s not in your interest to go drinking with your friends tonight”.

The athlete may respond: “What are you saying? I like to skip practice right now. I’m more interested in something else.”

“Yes, I know you’d rather do something else; but if you want to remain at the top of your game, you will practice today. What is more important for you?”

And so on. We sometimes forget what is good for us, and it is sometimes unclear what is good for us. The point is that, in every situation, we can judge for ourselves and the presupposition is always that we are acting in our self-interest.

The word selfishness is mostly used in the context of misbehaving kids or “greedy” merchants. We don’t normally say that Manny Pacquiao is selfish for aiming to be the best in boxing, but if we think about it for a second, there is really no difference between a merchant aiming for the highest price for his merchandise, and Manny Pacquiao aiming to win his next bout. The merchant looks for that merchandise that he can charge the highest price for. (By definition, it is that merchandise that has low supply in relation to demand.) Nothing wrong with that, because by providing that rare tablet computer (for example), he has served me well as a consumer.

He is selling rare tablet computers at great risk to his capital. If he were to set a price that is too high for me, I simply refuse to buy his merchandise, for selfish reasons.

There are Rules

What makes an action bad? Where goes ethics if we are all to act selfishly? This is where most of the confusion arises. Ayn Rand correctly pointed out that so far, the ethics of altruism has dominated our world view, and we have looked at this question from that standpoint. We can clear this up simply by dissociating the word selfishness from its bad connotation. To act selfishly does not necessarily mean to act badly, and the dissociation is only possible if we give up the ethics of altruism (living for others).

Two points are most relevant here:

1. The ethics of selfishness does not mean the absence of rules. If we are to act in our self-interest, we also have to respect the interest of others.

Many people think in terms of a zero-sum game in which if one side wins, the other has to lose. Not necessarily. If I buy the latest tablet computer from a merchant, he wins, but I also win. I win because I got the tablet computer I have been salivating about, at a price I have emotionally associated with that computer, without having to travel far to get it. He wins because from his standpoint, that tablet computer is costing him money every day that it stays on the store shelf. Now what if the tablet computer is defective? Then I should have the right to return it. If he refuses to take it back and return my money, he has violated the ethics of selfishness in two senses: by not making sure that the merchandise is good, he has effectively fooled the consumer (me); he has also stunted the growth of his business because it is easy to spread bad news about bad merchants, and he may very well lose his market. In essence, he has not acted selfishly by selling bad merchandise.

2. Many people believe that merchants, specially those earning good money, are bad because there’s no other way to win except by cheating. This thinking is so ingrained in us that, most small businessmen also think the same thing, that they can only be profitable by cheating. So we have both sides, merchants and consumers, reinforcing the same belief. To top it off, this belief is also reinforced by laws that small businessmen have to work under.

The merchant is hobbled by so many unreasonable rules that he is forced to cheat and go beyond the rules. These rules were made under the assumption that merchants and traders cannot be trusted and have to be regulated. In this kind of environment, it is almost impossible to be ethical, and so the beliefs become self-fulfilling. Indeed, this bad reputation has become part of our language: in Cebu, to say that some product is “commercialized” means it’s shoddy and has bad quality. In the U.S., “commercialized” means it’s either sturdy or in large quantities.

Lance Armstrong is the epitome of being unethically selfish. He decided that, in order to win, he had to cheat. He justified it by suggesting that it is the trend in sports anyway. No, Lance, you joined Tour de France agreeing to the rules. You broke the rules, so you haven’t really won, no matter how you put it.

If the rules are CoRRECT, it IS possible to win without cheating.

There are CoRRECT Rules

Imagine a game that looks like basketball, but is not really basketball because the scoring rules are heavily skewed to favor the weak. Let’s say the rules were made in the interest of those who are bad at basketball, to “level the playing field”, so to speak. Here are the rules:

1. The winning team is allowed to be ahead of the losing team only if the difference in scores is odd (1, 3, 5, and so on);

2. If the difference in scores is even (2, 4, 6, …), the winning team will have to give up half of the difference to the losing team.

So for example, if the score is currently Ginebra at 30, and Alaska at 31, both teams get to keep their scores unchanged, and Alaska is winning. However, when Ginebra scores 3 points, the score can’t be 33 and 31. Ginebra will have to give up one point so that now the score is 32 and 32. Let’s say that Alaska then scores 3 points also, so that the score is now 32 and 35. Alaska keeps the score of 35, and of course Alaska will try to keep their advantage odd by scoring a 2 next time (the next score Alaska should aim for is 32 and 37, keeping the difference odd). Ginebra on the other hand, only needs to score an odd number, say 1, so that if the score is now 33 and 37, the difference is 4 and Alaska will have to give up 2 points making the scores equal again, at 35.

Knowing how difficult it is to win a game of basketball even with normal rules in place, do you think any team would be interested in playing this bastardized basketball game? Probably more importantly, do you think people would be interested in watching it?

And yet that is exactly how laws are formulated in Pinas (which is basically how it is now also in the U.S., the Kingdom of Obama). Article XIII of our 1987 Constitution says, in the very first section:

“The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good.

“To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.”

Our constitution enjoins the congress to make rules that “… reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good”. This gives government all the authority it needs to disregard limits to government power as stipulated in the Second Article (The Bill of Rights), in the name of the “common good”. Here you see the influence of altruism on our constitution. What is the “common good”? Who can define what is the common good in a case? Only the government can.

The second part of Section 1 is a direct consequence of the first part: the governent can REGULATE all aspects of property. The “common good” can only be carried out if property rights are weakened.

These basic rules in our constitution guarantee that the economic game played in Pinas is one where it is very difficult (if not impossible) to win in the market. If you don’t want to cheat, then you have to influence government to grant you exceptions (favors). The government has to decide who wins (not the market) in the name of the “common good”. You, as a businessman, is handicapped from the very start.

Funny thing with our constitution is that it tries to ameliorate one section with another. Right in the second section of Article XIII, it says:

“The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.”

Huh? What does this mean, exactly? Can any lawyer explain this? Can you cite an example of legislation that adheres to this section?

The predominance of the ethics of altruism has skewed our logic so much that it has corrupted Pinas at several levels, from the highest (Supreme Court), to the lowest (local government). Our biggest problem, in my mind, is that we have no politician working with the mindset of the ethics of selfishness; and we have very few intellectuals who constantly drive home the point.

Who Wins and Who Loses in a Society of Selfish People?

In any society there are winners, and there are losers. It does not matter what type of system is in force in a society (Capitalist, Socialist, Communist, or even Islamist) there are those who do very well, and those that do very poorly. Aiming for equality of outcome, as our constitution clearly does, is futile. It is possible to be equal before the law, but equality of outcome is an illusion. What matters is not that there are winners and there are losers (inequality of outcome); rather, what matters is how winners and losers are determined.

In a Communist society, those that belong to the Communist party are automatically chosen to be the winners. The losers are those who choose not to join the party. There are clearly tremendous advantages if you join the party. For one, you can become a government official if you join the party, and government power in a Communist regime is absolute.

In a Socialist society, the winners are those who work in government because government is also very powerful in a Socialist society. In an Islamist society, the winners are automatically chosen to be the clergy; the losers are those who resist Islam and belong to a different religion.

In our current system in Pinas, which is more Socialist than Capitalist, one wins by being part of government. If you are a big businessman, you ignore the government at your peril. This is the reason why Mr. Villar is in government, and likewise many of the ruling families.

In a Capitalist society, people with abilities win. It is not perfect by any means, but in general, if you have some marketable talent or quality (like good looks) you win in a Capitalist society.

So in a Capitalist society, even though there is no guarantee that you win in the game of everyone for himself/herself, you have a shot at it, based solely on your marketable abilities or quality. If your abilities are not good enough to put up a store, then you can’t make it in the Sari-Sari store business. If you cheat, your customers will eventually find out, and you can’t win either. You stay at the bottom. If you have a marketable skill, like writing suspense novels, you can earn good money and win by using your talent effectively. If you are a good boxer, there’s a place for you in boxing. If you have good looks and you know how to use it, then you can end up with a winner as partner, or help a merchant attract buyers and get paid handsomely for it. If you study well and become a good accountant, you win because a job will be waiting for you.

Having seen several countries in various degrees of being Capitalist, I think it won’t be a bad observation to make that, to the degree that a society is Capitalist, it is as difficult to make it to the top as it is to get to the bottom. To the degree that a society is Capitalist, more people stay in the middle (neither very rich, nor very poor). So in the end, without even wishing for it, a society that simply practiced basic rules ends up having more equality of outcome than a society that explicitly aims for it, as Pinas does.

The Freedom to be Selfish

We need rules that allow people to be selfish, while also allowing those who want to be selfless to practice their altruism. It is very difficult to be consistently selfish, but for most people it is impossible to be altruist. The key is to allow people to be either one. Our constitution has a huge bias against selfish people, and we can see the results right before our eyes.

What About the Poor? Most of us are charitable by nature, and we become even more so by winning. In fact, it is good marketing practice to care for the poor. Big companies trip over themselves trying to show who is most charitable. It is proper and good for individuals to be charitable and actually visit the poor, but it is wrong for government to be benevolent, because it just cannot and should not. Government is the only entity in society that we allow to have certain powers over us, and for it to be benevolent it has to use those powers for that purpose. The rise of Communism in the past can be attributed to the very idea of trusting government to be benevolent.

At one extreme, we have seen the horror of a “benevolent” government in the hundreds of millions of people that have been killed by such governments. China has skeletons in its closet in this regard, and it will haunt them later. We in Pinas at least do not have that many skeletons in our closet. Our conscience is clear, and we remain charitable.

I hope we can be ethically selfish as well. Selfishness and the primacy of the individual are the keys to upward mobility of the poor, not ideas for the “common good”, for there is no such thing.