Dr. Yaron Brook on Ayn Rand, Capitalism and the War on Terror

The Daily Bell is pleased to present this interview with Dr. Yaron Brook.

Introduction: Dr. Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a columnist at Forbes.com, and his articles have been featured in major publications such as the Wall Street Journal, USA Today, and Investor’s Business Daily. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV programs.  He is co-author of Neoconservatism: An Obituary for an Idea and a contributor to Winning the Unwinnable War: America’s Self-Crippled Response to Islamic Totalitarianism. Dr. Brook, a former finance professor, is an internationally sought after speaker on such topics as the causes of the financial crisis, the morality of capitalism, and U.S. foreign policy.

Dr. Brook was born and raised in Israel. He served as a first sergeant in Israeli military intelligence and earned a BSc in civil engineering from Technion-Israel Institute of Technology in Haifa, Israel. In 1987 he moved to the United States, where he received his MBA and Ph.D. in finance from the University of Texas at Austin; he became an American citizen in 2003. For seven years he was an award-winning finance professor at Santa Clara University, and in 1998 he cofounded a financial advisory firm, BH Equity Research, of which he is presently managing director and chairman.

Daily Bell: Acquaint us with your background, and how you became interested in Ayn Rand.

Dr. Yaron Brook: I read Atlas Shrugged when I was 16. I was born and raised in Israel and was living there at the time, and I would say at the time when I read Atlas Shrugged I was a committed socialist, altruist and collectivist – the opposite of Ayn Rand. When a friend handed me the book and I read it, I really fought the book, but by the end Ayn Rand had won. She had convinced me that she was right and the ideas that I had held before were wrong.

It's quite different than a lot of people who read Atlas Shrugged. Their experience of it is, yes, this on some level is what I believe; she's putting it into words. In my mind it wasn't. It was a real revolution, an intellectual revolution. So once I read Atlas Shrugged, I tried to read everything else I could get my hands on. It wasn't easy to do in Israel in those days. There was no Internet, no clubs or organizations where I could get my hands on books. Eventually I got my hands on more material and became more and more committed to her ideas.

Daily Bell: Tell us about the Ayn Rand Institute (ARI), a non-profit organization in Irvine, and your role there. Tell us more about your journey from socialism to Rand-ism. What were some of the landmarks?

Dr. Yaron Brook: Well, really there was only one landmark, and that was Atlas Shrugged. After that I read everything else she had written. About three years later, I got some people in Israel interested in her ideas, and we would get together on a regular basis to discuss them. After getting my undergraduate degree in Israel, I moved to the United States, where again I met more people who were interested in Ayn Rand's ideas. I ended up attending some conferences that the Ayn Rand Institute was involved in at that time and attended classes and seminars with the Institute in philosophy.

I also started a company that put on objectivist conferences all over the United States and other countries as well. We had one in Belgium, one in London, Italy, a cruise on the Greek Islands and did a lot of fun stuff. So I got to know everybody who was involved at the Institute and taking courses from them, and many of them were speakers at my conferences. When the previous Executive Director of the Institute retired, they came to me and offered me the job. That was in 2000, and I have been President and Executive Director of the Institute since then.

Daily Bell: You worked not only in the Israeli army but also for Israeli intelligence. Did you work directly for the Mossad? Are you entirely free to speak your mind now?

Dr. Yaron Brook: Yes, I am (laughing). Well, I am not sure what they would say but yes, I think I am. During my compulsory military service, I was a 1st Sergeant in the Israeli Army Intelligence – from 1980-82, not a very long time. Initially I was in the tank corps for nine months and then spent the rest of my three years of service in military intelligence; I never worked for the Israeli intelligence agency.

Daily Bell: You are an associate of Leonard Peikoff, who seems to be a kind of lightening rod for controversy as well as a champion of Ayn Rand. Can you tell us something about him and why that is so?

Dr. Yaron Brook: Sure. Leonard is the foremost expert today on Ayn Rand's philosophy, Objectivism. He's one of the smartest people I know. I don't think anybody understands Objectivism as well as he does, and knows how to apply it as well as he does. He was Rand's longtime student, and he wrote a landmark book on Objectivism. Across many decades, he's been loyal to his ideas; he's a man of principle and believes in Ayn Rand's philosophy and has stayed consistent to it. He has often made statements or disapproves of things that people are doing or saying, and he expresses his assessment in a very blunt, straightforward way. That turns some people off. He takes judging people very seriously. He takes the nature of justice and the nature of morality very seriously. Unlike many people today Leonard is willing to be just; he actually makes a case for why he believes certain people are the way they are, and certain views of the way they are. It's his uncompromising style and his uncompromising views that make him a lightening rod.

Daily Bell: On foreign policy, the ARI advocates American national self-interest, including ending the regimes that sponsor terrorism. Is that a true summary of ARI's perspective?

Dr. Yaron Brook: That's a brief sound-bite version of it, and of course, it's important to flesh out the details. I would encourage your readers to have a look at two ARI books that discuss our views on foreign policy at length: Winning the Unwinnable War: America's Self-Crippled Response to Islamic Totalitarianism, and The Foreign Policy of Self-Interest. But let me sketch the bare outlines.

We believe that the only purpose of government is to protect individual rights. So in the context of foreign policy, the only purpose of government is to protect the lives and property of American citizens. When those lives or property are endangered, threatened or actually attacked, it is the job of the American government to do whatever is in its power to stop those attacks, to get rid of the threats, to allow Americans to live in peace without that threat laying over them. That's the guiding idea.

In the case of terrorism, I'd make two key points: "terrorism" is one particularly heinous tactic, but still just a tactic, employed by the Islamist movement; and that the fundamental problem is that ideological movement – which is inspired, funded and actively spearheaded by state-sponsors, prominent among them Iran and Saudi Arabia. Islamist terrorist organizations rely on (and often act as proxies for) regimes that share their goals and that provide them with infrastructure, training, logistical support, safe haven, weapons – and, crucially, intellectual inspiration. Consequently, following 9/11, we needed to stamp out not just the particular Islamist faction behind the attack, but the culpable state-sponsors. We believe that those regimes should be punished for their actions.

Daily Bell: Can it be said that you saw the Bush Administration's policies as weak ones, and that you advocate a stronger response to aspects of Islam that you consider terrorist?

Dr. Yaron Brook: Absolutely. I think George Bush's policies made America look like a complete weakling. I think he engaged in the wrong wars and when he engaged in war he did so in a self-sacrificial, wimpy way, that undercut our military goals. On this, I'd refer you to Winning the Unwinnable War, which analyzes in detail the policies of the Bush administration post-9/11. The Iraq war needlessly cost thousands of American lives, billions of dollars, and worked to undermine our security in many ways.

If somebody attacks us, they should suffer the consequences, which I believe should be pretty horrendous. I don't believe that Iraq was a significant threat to the States in the context of 9/11. I think there were other countries that were – chiefly Iran – and they got a free pass. All of which has left us worse off.

I really believe – and I know many, particularly in the libertarian movement disagree with me – but I believe that the war was motivated by Bush's messianic agenda to bring democracy to the Middle East, and lift the region's people out of their misery and destitution. But that's not a legitimate goal for war.

I don't believe you go to war to build sewers, open schools, and bring democracy – as our military was ordered to do in Iraq. I believe that it's proper to go to war in self-defense, and when you go to war, that entails destroying the enemy. History shows that whenever you go to war for any other reason, you lose. World War II was the last war America won; since then our approach to war has been incoherent, our purposes unclear – think of Vietnam – and the results, tragic.

Daily Bell: Is it true that the motivation for Islamic terrorism comes from Muhammad's teachings, not poverty or a reaction to Western policies?

Dr. Yaron Brook: At root it's ideas, not poverty, that drives the Islamist cause. There are plenty of poor people around the world who don't strap bombs to themselves and go blow up innocent people in malls or restaurants or in places of business like high rise buildings. Empirical evidence tells us that many Islamic terrorists are middle class and tend to be well educated. Osama bin Laden was a multi-millionaire. Some of the 9/11 hijackers had engineering degrees. I completely reject the notion that Islamist terrorism is motivated by poverty.

Is it motivated by a reaction to American policies? Again, no. American policy in the Middle East has been a farce for most of the 20th century; I'd argue we were unable to properly define and effectively pursue our self-interest. But the fact is, the animus of Islamists predates substantive US involvement with the area – Britain and France were much more significant powers in the region when the Islamist movement began its ascent. Their animus against us has everything to do with their ideas.

Consider what the Islamist ideologues themselves say and write. Look at the theoreticians, the people who bin Laden and people like him read and studied and based their organizations and their activism and their terrorism upon. Those intellectual leaders have a deep-rooted hatred of the West that has nothing to do with the West's activities in the Middle East. It has everything to do with the fact that we are secular, that we are successful, that we are capitalists.

Take, for example, Sayyid Qutb, an intellectual father of the Muslim Brotherhood in Egypt, and a leading intellectual of the jihadist movement more broadly. Around 1949 or so, he lived in the US briefly, and observed American culture. Now, bear in mind, although he lived in a tame, small town in Colorado, he came away fearing that our influence would further drive Egyptians away from Allah. He considered even Christians, even religious Americans, as fundamentally secular because he went to church dances and saw men and women dancing together. That was horrific to him. His enmity to the West was fundamentally rooted in the fact that America is secular, non-Islamic, and respects the individual's political sovereignty. That, at root, is why he thought the West should be fought and destroyed.

Part of the Islamist outlook is that the Muslim world is impoverished and lacking in political power (compared to its long-ago empire days) because it has drifted away from piety. The existence of a stupendously powerful, wealthy and, crucially, secular nation – the U.S. – is an implied rebuke to their ideal. And they feel it is an obstacle to their political goal of establishing religious rule.

Based on what Islamists think Islam says, they believe it is their moral responsibility, their duty to their religion, to bring about a world dominated by wholesale submission to Allah's laws. A necessary means to that end is to destroy secularism and in particular to destroy the most powerful secularists in the world, which is today the United States.

If you think about the values that the West, primarily the United States, has to offer to the Middle East in terms of technology, education, wealth, capitalism, individual rights, the principals by which the West functions, then they should embrace our presence, they should welcome it.

Daily Bell: Have you urged that the US use overwhelming, retaliatory force to "end states who sponsor terrorism"? What would that consist of?

Dr. Yaron Brook: Yes, I believe that the regimes that support terrorism should be destroyed. That means the leadership and the infrastructure that makes that leadership possible should be replaced as long as the regime continues to support terrorism. That means using overwhelming force. That means supporting internal revolutionary countries, whatever the means necessary. Americans should not live in threat because Iranian or Saudi or Afghan or Iraqi regimes are plotting to kill Americans.

Daily Bell: Leonard Peikoff wrote an article entitled, "End States Who Sponsor Terrorism," which was published as a full-page ad in the New York Times. Can you summarize it? Is that ARI's current position?

Dr. Yaron Brook: Yes, and I think we have summarized it in the previous question; but that's not a substitute for reading the article. I think the role of the United States government is to protect the lives and property of Americans and if there are regimes out there that are threatening the lives and property of Americans, those regimes need to be dealt with, and dealt with in the harshest military means if that is the best way of getting eliminating the threat to the lives and property of Americans. If there are better ways of getting rid of them like through encouraging an internal revolution in Iran, then that's better. It's cheaper and it's easier and it doesn't imperil the lives of Americans.

Daily Bell: You make a distinction between Israel and Zionism. Can you explain? You have said that the West isn't at war with terrorism but the ideology of Islamic totalitarianism. Can you elaborate?

Dr. Yaron Brook: First, my view of Israel is that it is a moral country, it is a good country, and it is a country that deserves our moral support and our political support. And the reason for that is it is a Western country and it respects, to the extent that any Western country does, the individual rights of its citizens. In Israel you have such a thing as property rights, you have freedom of speech, you have freedom of mobility – you can leave and return to the country freely – as we have in all Western countries – France, Britain, United States, Germany and Italy and so on – all legitimate, moral countries that deserve moral and political support. I think Israel is morally on par with those countries. The Arabs who live in Israel, whether they are Muslim or Christian, have more rights in Israel than they do in any Arab country out there.

Israel is under constant threat of annihilation. It is the victim in its war with the Palestinians and with its Arab neighbors. They have tried to annihilate it from the day it was established and for no just reason. I am a big supporter of Israel and I think any rational person should be. I think anybody who values freedom should be a supporter of Israel. I think those who are attacking Israel – militarily attacking Israel – whether it's the Palestinians or another neighbor, are the enemies of freedom and have shown themselves to be the enemies of freedom by the way they rule their own people. I think it is horrific that some Americans, some libertarians, find themselves attacking Israel and supporting its enemies. I think it's an example of the fact that key people in the libertarian movement are not advocates of individual freedom and individual rights.

Daily Bell: Do you believe Islamic totalitarians want to spread a global Islamic government across the world using physical force?

Dr. Yaron Brook: Yes. Read Ayatollah Khomeini. Read what he wrote while he was supreme leader of Iran – and in the decades before he rose to power. Read what the current supreme leader of Iran, Khamenei, writes and read his speeches. Read Sayyid Qutb, a founder of the Muslim Brotherhood. Read what the radical political party in Egypt, the Salafi Al-Nour, the party that won over 20 percent of the vote in Egypt, has written. Read what they want to do with Egypt and what their ambitions are beyond Egypt. Read the political manifesto of Hamas or Hezbollah or Islamic Jihad.

All of them have an immediate enemy. In the case of Hamas it's Israel. In the case of Hezbollah, it's Israel and the Lebanese government. In the case of the Muslim Brotherhood and the Salafi, it's the Egyptian government. But all of them, once they have conquered their immediate close enemy all of them want to bring about the establishment of the Caliphate, which is a world empire, a Caliphate, a dictator and governed by Sharia law, which is Islamic law and they are ambitious. They want to dominate the world. They say it, not me.

Now, we look at that and say, 'That's absurd. That's ridiculous. Nobody wants world domination. We live in the 21st century.' But we forget that just a few decades ago the Communists wanted world domination and thought they'd have it, Hitler wanted world domination and thought he'd have it and Japan wanted world domination and thought they would have it. So in the last hundred years we've witnessed ideological movements seeking world domination and willing to use force in order to attain it. The Islamists have just picked it up from there. I think anybody who doesn't understand that hasn't read them and doesn't listen to what they have to say.

Daily Bell: You also believe that the US was attacked first and therefore the US government and the president have a moral obligation to defend American citizens.  

Dr. Yaron Brook: Yes. I think that 9/11 was an unprovoked attack against America. Of course, it wasn't the first unprovoked attack against America. I think, for example, you can go back to 1979, November 4th, when the US embassy in Tehran was taken over and American diplomatic personnel were held hostage for 444 days for no legitimate reason. That is an act of war. Taking over somebody's embassy is an act of war. The United States did nothing; it did not retaliate when that happened.

In 1983 the US embassy in Beirut was bombed. The links to both Hezbollah and ultimately to Iran were very clear and very obvious. Subsequently the Marine barracks in Beirut were attacked and 244 marines were killed. Remember why those marines were there. They were there as part of a ceasefire mission, to protect the Muslims from being slaughtered by Christians. Now, should they have been there? I would say no. I don't believe our foreign policy that sends marines all over the world to be on peaceful missions is correct but it doesn't matter. It was unprovoked. The Marines were not there to kill Muslims; quite the contrary, they were there to save Muslims. They were there partially to prevent the Israelis from finishing off the remnant of the Palestinian terrorists that were still in Beirut, and yet they were brutally slaughtered by the Iranians and the Hezbollah – we could go on and on with how terrorists and Iranian intelligence and PLO have killed Americans all over the world and America has done nothing in retaliation.

And then in 1993 a car bomb explodes underneath the Twin Towers to try to bring them down. Links to existing terrorist groups in the Middle East are quite clear, the people are captured and the plot fails. The people are captured, the links to terrorist organizations in the Middle East are clear. Again the United States again does absolutely nothing, and it's a paper tiger. Throughout the '90s there are small and large terrorist attacks including the bombing of our embassies in Tanzania, Nairobi and Kenya. Hundreds of people are killed and thousands injured, both Americans and Africans. So that is an act of war. There have been numerous attacks on America leading up to 9/11 and the Americans did nothing to provoke them.

Then, of course, they flew airplanes into buildings that killed 3,000 Americans. They could have easily killed 40,000 Americans if the towers had fallen quicker or struck at a different time of day. It was to kill many Americans and it was completely unprovoked, and America needed to do something, finally, after 30 years of terrorist acts against it and I don't think it did much. I think we are heading towards an era when 9/11 type attacks are only going to intensify and increase and where the state sponsorship of terrorism will only increase, and where the terrorists in the Middle East will only be more emboldened to kill more Westerners and more Americans.

Daily Bell: Do you think the 9/11 investigations should be re-opened?

Dr. Yaron Brook: No. The investigations identified the basic facts of the attacks. What we still need to carry out is a public inquiry into the ideas and intellectual myopia that shaped US foreign policy for the preceding decades. Our government failed to connect the dots: It was, in my view, a failure of US policy that our government didn't properly grasp the nature of the increasingly audacious jihadist movement and its state sponsors. I mentioned earlier the string of pre-9/11 attacks – and America's feeble responses – that emboldened the Islamist aggressors to ratchet up their ambitions and bring their holy war to US soil.

Daily Bell: Let's ask some financial questions. Why did you move to the US to study business and finance? You started an investment consulting business called BH Equity Research, located in San Jose, California. Tell us about that.

Dr. Yaron Brook: I moved to the United States in 1987 and got my MBA at the University of Texas in Austin. I then got a PhD in Finance at the University of Texas. I then was a science professor for seven years at Santa Clara University in California and then started BH Equity Research with a partner, who is still a professor at Santa Clara University. For ten years we consulted for a hedge fund or advised what are called market mutual strategies for this hedge fund. Between 1999 and 2006 we also managed a portfolio of private equity investments for high net worth individuals. Then in 2006 we raised our own private equity fund to invest in bank stocks and small community bank stocks. We have raised more money since then and today both manage money in the context of private equity but more of a hedge fund. We specialize really in investments in community banks. Both as long buy investments and short selling investments.

Daily Bell: Do you believe the US and the world are headed for a depression?

Dr. Yaron Brook: What we know is the economic policies of the US and Europe are disastrous and the long-term consequences are all bad. The economic policies of today are unsustainable. The fact that the Federal Reserve is keeping interest rates at zero right now is clearly distortive and creates mal-investment, bubbles and inflation.

Unless there's a fundamental change in course, I believe we're heading toward some form of economic catastrophe. But how that catastrophe manifests itself and the timeline, it's hard to say. I know for sure, though, that bad economic policies have bad consequences.

Daily Bell: What do you think of central banking? Should central banks be done away with?

Dr. Yaron Brook: Yes. I believe in private banking. I believe that currencies should be based probably on a gold standard, but certainly a market-determined standard.

Daily Bell: Is there some sort of power elite that controls central banks and intends to impose a New World Order?

Dr. Yaron Brook: No. That's a foolish idea. Libertarians do themselves a disservice when they get caught up in conspiracy theories. I think the world is pretty straightforward. The world is dominated by really, really bad ideas, by a lot of ignorance, a bad moral code and really bad ideas about politics, which drive people to do things that are not in their (or our) long-term self interest. I think central banks are an example of poor economic understanding and of a moral code that requires that government control as much of our lives as possible. I think this is fundamentally an ideological battle, a battle of ideas, a philosophical battle.

The destructive ideas dominating our culture are out in the open. They emanate from the universities. Their advocates are out in the open, blaring at us from lecture halls, pulpits, political rallies, editorial pages, TV and radio. What's devastating our world is the impact of intellectuals – professors, writers, economists, think-tankers – who advocate for Keynesianism, subjectivism, socialism, existentialism, post modernism, all these ideologies that are anti-capitalist, anti-individual rights, anti-freedom.

Daily Bell: So let's talk about Atlas Shrugged a bit. The movie was out this past year and people are drawing parallels based on what is currently happening in society and the book. Can you give us your take?

Dr. Yaron Brook: With the unfolding of the financial crisis, Atlas Shrugged has received increased visibility in the news in the last four years. 2009 was its peak year in terms of book sales. In its best year ever previous to 2009, Atlas Shrugged sold just over 200,000 copies. In 2009 it sold about half a million copies, which is unheard of, by the way – half a million copies for a 52 year old book (in 2009) is unheard of in the publishing business. Last year, 2011, it sold 445,000 copies and Atlas Shrugged was everywhere.

Yes, I think people see the parallels in the book and what's happening with everything around us. They're looking for answers. What's unique about Atlas Shrugged is not only that it gives us answers, but it gives us solutions. It presents the philosophical explanation for what is going on today in terms of cause and effect, but it also gives us the solutions to these problems and a philosophy that completely turns upside down the statist regimes and the statist ideologies of today and presents us, for the first time in history, with a consistent philosophy that is pro-individual rights, pro-individualism. And I think that's what makes us unique and that's what is so attractive about it and why it selling so much.

Daily Bell: Would you call it a political novel or philosophical one?

Dr. Yaron Brook: First and foremost, Atlas Shrugged is a brilliant novel that draws people in because of its mysterious plot and the larger than life characters. Politics is definitely part of the story, but it's one derivative consequence of the deeper philosophical theme. The novel conveys the destructive results that follow when certain moral ideas shape a society, an economy, the mind of an individual. What emerges from the story is how philosophy drives politics, how the code of selflessness in morality necessitates state intervention, necessitates the destruction of capitalism.

But Rand also dramatizes and articulates a positive vision, a new moral ideal for mankind. A lesson of the novel is that only rational, long-term self-interest can serve as a solid foundation on which to build a capitalist society.

Rand was distinctive in advocating that capitalism as a political system needs a proper moral-philosophical foundation. Politics, in Rand's view, doesn't stand on its own; it is a consequence of philosophic ideas, ideas in ethics, a view of human nature.

She disagreed with libertarians. She believes to ground liberty you need a philosophy. You need a particular view of morality, and in this case, a morality of rational self-interest. You need a particular view of epistemology, of how we know reality: We have to be advocates for reason. She argued that to build a laissez faire capitalist society, we need to base it on the principles of self-interest and the principles of reason and that if we try to circumvent that, which she believed the libertarian movement so often does, we end up losing the battle. We cannot succeed unless we reject the existing moral code, which is pro self-sacrifice, a selfless moral code, unless we reject that in favor of self-interest. Selflessness is consistent with statism. Only self-interest is consistent with capitalism,and that's part of the message of Atlas Shrugged.

Daily Bell: How is ARI doing these days? Membership is growing, lots of interest?

Dr. Yaron Brook: Yes, our membership is growing dramatically and our income is growing dramatically; we have grown fivefold in terms of revenue over the last 10 years. Revenue means contributions because we are not for profit. Interest in our products is growing and visibility is growing. By every parameter – interest in these ideas, books sales and everything – is growing. And I believe we're starting to have an impact on the philosophical, intellectual, political debate that is happening out there.

Daily Bell: Any closing thoughts? Any other books or resources you would like to mention?

Dr. Yaron Brook: Yes. I would like to point out I will have a book coming out in September this year called The Free Market Revolution: How Ayn Rand's Ideas Can End Big Government. I am really excited about that book. And of course, I encourage everybody to read Ayn Rand, and not just Atlas Shrugged but to really understand her philosophical ideas. I think if you read Capitalism: The Unknown Ideal, The Virtue of Selfishness, you will really understand how Ayn Rand ties economic politics to fundamental basic philosophical ideas.

Daily Bell: Thanks for speaking with us.

Dr. Yaron Brook: Thank you for your interest.

[Note: The hyperlinked definitions were created by The Daily Bell. Dr. Brook’s use of those terms does not imply any agreement with those definitions.]

We thank Dr. Yaron Brook for participating in this interview. We agreed to let him speak for himself and the Institute and he was willing to do so, so we won't comment further except to thank him for his forthrightness in speaking up and for presenting the above views. Such opinions are certainly not shared by all within our audience but certainly readers can benefit by understanding a variety of positions within the Randian community, and Dr. Brook is surely an able spokesperson for the Institute's views.