Objectivism Teaches Honesty in Business
“Rand says you can derive ethics from reality. If anything, Rand is more rigorous in her ethical system than most codes are. If you’re dishonest, you are disconnected from reality, and that has consequences.” — John Allison, BB&T Chairman
Success is not simply about making billions, but about pursuing and living up one’s values and principles. There are a lot of billionaires and millionaires in the world today who are filthy rich. Some dishonestly acquired their wealth through political pull, political connections, corruption, and through human exploitation.
Consider the case of the old-rich royalists in Europe and the Middle East who regard the government coffers as their personal wealth. Consider the case of a number of elected dictators like ousted Philippine president Ferdinand Marcos, former Indonesian tyrant Suharto, and many other corrupt government leaders who stashed away the money of their people before being ousted or leaving public office. However, there are certainly some self-made billionaires in the world today who relied only on their own ability without exploiting others like Microsoft founder Bill Gates, world’s biggest investor Warren Buffett, and Dallas Mavericks owner Mark Cuban.
Among the world’s financial titans, it was Mark Cuban who publicly stated his admiration of Ayn Rand, a Russian-born American philosopher who authored best-selling fiction books Atlas Shrugged and the Fountainhead. Mark Cuban once told the press:
“The Fountainhead by Ayn Rand. It was incredibly motivating to me. It encouraged me to think as an individual, take risks to reach my goals, and responsibility for my successes and failures. I loved it. I don’t know how many times I have read it, but it got to the point where I had to stop because I would get too fired up.”
Ayn Rand said that money or profit is the reward of one’s pursuit of success. Money is not an end in itself. According to her, “money rests on the axiom that every man is the owner of his mind and his effort.” Francisco D’Anconia, one of the leading characters of Ayn Rand’s Atlas Shrugged defended the virtue of man, to wit: “Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss- the recognition that they are not beasts of burden, born to carry the weight of your misery- that you must offer them values, not wounds- that the common bond among men is not the exchange of suffering, but the exchange of goods.”
Apart from billionaire Mark Cuban who admires Ayn Rand, there is one of the few great men in business who expressed his appreciation of and respect for Ayn Rand both in words and in deeds. This man is none other than John Allison, the current Chairman of BB&T that has over $143 billion in assets. The most amazing fact about Mr. Allison is that he joined BB&T as an employee in 1971 after finishing college. He became the president of the company in 1987, which he successfully transformed from being a local bank in North Carolina to being the top 10th banking institution in the United States. As president and then CEO of BB&T, he applied the philosophy of Objectivism, an integrated philosophy conceptualized by Ayn Rand.
John Allison described Atlas Shrugged as “the best defense of capitalism ever written”. Mr. Allison says of Ayn Rand:
“A lot of people miss the fact that Rand has a very strong ethical system. Rand says you can derive ethics from reality. If anything, Rand is more rigorous in her ethical system than most codes are. If you’re dishonest, you are disconnected from reality, and that has consequences. However, simply because Rand doesn’t endorse altruism for altruism’s sake, many people misconstrue her to be amorally selfish. Rand “doesn’t view ethics as self-sacrificial,”
Okay, I’m quoting from Mr. Allison’s interview with the National Review that published an article entitled Objectivist Philosophy for Fun and Profit. I know it’s best for you to read the whole article so I’m sharing it with your. Enjoy
By Mark Hemingway
John Allison isn’t your typical bank executive. For one thing, when he retired at the end of last year as CEO of BB&T — a North Carolina–based bank with more than 1,500 branches managing $143 billion in assets — he had recently shepherded it through the worst banking crisis since the Great Depression, leaving it in fairly good shape. He’s certainly seen as a success where many others in his field have failed miserably as of late.
But there’s another thing that makes Allison far from typical. When he discusses his profession, he doesn’t talk about numbers; he talks about values and principles. In fact, when you go on BB&T’s website, you will find a section entitled “Our Philosophy”:
In a rapidly changing and unpredictable world, individuals and organizations need a clear set of fundamental principles to guide their actions. At BB&T we know the content of our business will, and should, experience constant change. Change is necessary for progress. However, the context, our vision, mission and values, are unchanging because these principles are based on basic truths.
While a lot of financial companies indulge in such boilerplate because it sounds good in annual reports, Allison can credibly assert that living up to that philosophy is one reason BB&T has been able to ride out the current economic crisis. The company made tough decisions consistent with its philosophy, rather than chasing after the latest — and, it turned out, ephemeral — sources of financial innovation.
“We didn’t do negative-amortization mortgages,” Allison told NRO, “and to the degree we’ve had more successes, I believe it’s because we’ve had a long-term integrated philosophy. We’re very much a principle-driven organization, and those principles we adhered to in the good times and the tough times are an example of the reason we didn’t do the negative-amortization mortgages.” Further, it’s worth noting that while troubled banks went looking for handouts, Allison slammed the government bank-bailout program.
The fact that BB&T didn’t dive head-first into the shallow pool of subprime mortgages certainly goes a long way toward explaining the relative health of BB&T as an institution. But how was BB&T able to resist chasing after all that new mortgage money?
The answer is simple: Subprime mortgages were bad for the people who took them out. That went against BB&T’s philosophy — not for reasons of altruism but because it would have been poor strategy. “We’re obviously a for-profit company, but we don’t think that it’s good business in the long term to do bad things to your clients, even if you make a profit doing it,” Allison said. “So we chose not to do negative-amortization mortgages because we knew it was going to get a lot of people in financial trouble.”
In retrospect, the wisdom of this approach might seem obvious. However, Allison navigated through the overheated mortgage market and the ensuing banking crisis by relying, in large part, on a philosophy that many others are now turning to: “I got interested in [Ayn] Rand in the late 1960s. I read Capitalism: The Unknown Ideal. I had already been interested in economics, and as I finished college, I got interested in finance. I saw the banking system as central to a capitalist economy.”
Rand’s seminal work, Atlas Shrugged, is currently #42 on the Amazon bestseller list in paperback and #135 in hardcover. That’s pretty remarkable for a novel that was first published 52 years ago. Allison calls it “the best defense of capitalism ever written” and made it required reading at BB&T. Since 2005 the BB&T charitable foundation has given millions of dollars to dozens of universities to establish academic programs devoted to Rand’s philosophy.
These grants have not always been well received by the faculty. Last year a sociology professor at Marshall University objected to BB&T’s gift to the school. Rand’s Objectivist philosophy, the professor told NPR, “goes against the collective wisdom of the human race, I think, pretty much everywhere. I think it’s a curious interpretation of philanthropy to use corporate money to promote, really, an extreme philosophy.”
Allison holds the exact opposite view. While aspects of Rand’s philosophy might legitimately be called controversial, Allison points out that she is misunderstood more often than not. Rand is often viewed as “extreme” because her defenses of capitalism and “rational self-interest” are seen as promoting greed and selfishness. Yet Allison is quick to note that the strong values and ethics that Rand’s philosophy promotes allowed BB&T to steer clear of shortsighted and greed-driven decisions.
“A lot of people miss the fact that Rand has a very strong ethical system,” he observes. “Rand says you can derive ethics from reality. If anything, Rand is more rigorous in her ethical system than most codes are. If you’re dishonest, you are disconnected from reality, and that has consequences.”
However, simply because Rand doesn’t endorse altruism for altruism’s sake, many people misconstrue her to be amorally selfish. Rand “doesn’t view ethics as self-sacrificial,” Allison says, “she views ethics as a rational means to success and happiness. If you described her in principle, she would say that you shouldn’t take advantage of other people because that is unethical behavior and self-defeating. But you also shouldn’t self-sacrifice. What you really need to do is run your life in relationship to other people in context to what she calls the trader principle. The trader principle is about what I call creating win-win relationships. We trade value for value and we get better together, and we find these common grounds where we can get better together.”
If that can be said to be BB&T’s guiding principle, the empirical evidence would suggest that the bank’s customers and shareholders are better off for it. In fact, it was misguided altruism that got us into the current financial crisis, and Allison has no problem identifying whose economic philosophy was flawed. “I think that government policy is the primary cause” of the financial crisis, he says. “Government policy set up the problems we have in the real-estate market, and it is the Big Kahuna in the room.”
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“Rand predicted what would happen 50 years ago,” says Mr. Allison, who notes that his bank was forced to take the money, which he labels “a rip-off.” “It’s a nightmare for anyone who supports individual rights.”