Waksal Should Have Read Ayn Rand

The Rational Argumentator ^ | June 24, 2003 | David Holcberg

[G. Stolyarov II]

If Sam Waksal had read Atlas Shrugged, he may have walked free.

In a memorable scene in Atlas Shrugged, Hank Rearden, a self-made steel magnate, sat, like Waksal, in a courtroom, on trial. Rearden, like Waksal,had violated the law.

Rearden's crime had been to sell four thousand tons of Rearden Metal, his own creation and property, the result of ten years of his arduous labor, to a customer of his choice, in violation of a law that dictated what quantities and to whom he could sell.

Rearden, like Waksal, had "cheated the law" and "broken the national regulations designed to protect the public welfare." Rearden, like Waksal, was denounced for his "selfish greed," and for being "prompted by nothing but the profit motive."

But Rearden, unlike Waksal, was shameless about his motive: "I work for nothing but my own profit. I earn it," he proudly told the court.

Rearden, in contrast to Waksal, knew he had committed no crime. "I do not recognize my action as a crime," he told the judges.

When the judge told Rearden, "Your only alternative is to state for the record that you throw yourself upon the mercy of the court," Rearden answered: "I do not. I will not apologize."

Waksal apologized profusely--to family, friends, employees, shareholders, cancer victims, society, the universe at large. "I am deeply disturbed and so very sorry for my actions." "I want to apologize to all the people who may have had confidence in me and whose confidence I betrayed." "To cancer patients I am so sorry for any delay I might have effected in the approval of Erbitux because of my actions."

What about the government's actions? From the cumbersome and bureaucratic process of FDA approval, to the FDA's initial refusal a year ago to even review Erbitux's record, to the subsequent legal persecution of Waksal while he worked to make Erbitux available to the public. It was the government, in all instances, that delayed the use of Erbitux--and almost rejected it.

Rearden realized the government had turned the law on its head--instead of protecting his rights, it denied them. "I will not help you to preserve an appearance of righteousness where rights are not recognized," he told a stunned courtroom. "I will not help you to pretend that you are administering justice."

But Waksal did not demand justice--he pleaded for mercy. Unlike Rearden, he failed to understand and assert his innocence.

Waksal didn't stand a chance.

It should not have been surprising that he was denied both justice and mercy. Yet, like Rearden, he had committed no crime.

A crime, in a proper legal system, is a violation of individual rights. Selling you property--be it a ton of metal or a million shares of your company's stock--is an exercise, not a violation, of individual rights.

"Insider trading" should not be considered a crime because there is no violation of rights in a voluntary trade between individuals, where no force or fraud are involved. Waksal violated no one's rights and initiated no force. He sold to willing buyers and, like any other trader in the stock market, didn't promise or give guarantees that the shares he sold would not fall.

In a free society what Waksal knew or what the buyers failed to know is none of the government's business. In a free market, individuals must be free to trade their stocks and property at any time, for any value, for any reason (unless bound otherwise by contract).

Waksal doomed himself because he did not realize that he was morally innocent--although legally guilty. Rearden knew better. Because Rearden was convinced of his moral innocence, he had the courage to stand up to his accusers and refuse to give them what Ayn Rand called the "sanction of the victim."

"The 'sanction of the victim,'" explained philosopher Leonard Peikoff, "is the willingness of the good to suffer at the hands of the evil, to accept the role of sacrificial victim for the 'sin' of creating values."

Rearden was unwilling to play such a role. Waksal embraced it. Rearden understood that the court had the legal but not the moral authority to condemn him--and that it might not exercise the former if lacking the latter. Rearden knew that his only chance to walk free was not to grant the court the moral high-ground.

There is no businessman or trader in America who can afford not to learn the lesson from Rearden's--and Waksal's--trial. Rearden walked free.

If Waksal had read Ayn Rand, he too may have walked free.

[G. Stolyarov II]

David Holcberg, a former civil engineer and businessman, is a writer living in Southern California.

[G. Stolyarov II]

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[new cruelty]

...(unless bound otherwise by contract).

That says alot.

[elbucko]

If Waksal had read Ayn Rand, he too may have walked free.

If Waksal had read Ayn Rand, he would have kept his mouth shut.

[Pukin Dog]

Nice read, thanks.

[vp_cal]

waskal, if guilty of the accused crme, is morally guilty as
well. We all agree to play by certain rules when trading in the stock market. If these rules are not skirted by a few, many other people could get hurt financially and the long term effect will be that no one will particiate in the stock market.

[lelio]

"Insider trading" should not be considered a crime because there is no violation of rights in a voluntary trade between individuals, where no force or fraud are involved.
While I like to agree with all things Rand, this article is a little off base. Part of the requirements of having a public company is that you don't tell your friends to sell their stock so that the entire system doesn't appear rigged.
How many people would attend basketball games if both coaches could huddle near the end of the game and decide the score? Hey, its just a voluntary agreement between two individuals. See how many people stick around to watch the next game if this happens. Likewise with the stockmarket.

[SolidSupplySide]

The utter lack of morality is what repels me from objectivism. This article exemplifies objectivism's lack of morality.

[lady lawyer]

Sorry, Waksal knew his stock was going to plummet, and knew the poor non-insider schmuck who bought it was going to get shafted. This was not a victimless act, like the one in Atlas Shrugged.

[mass55th]

I heard that Martha has been keeping in touch with Sam Waksal's parents. Wasn't his father somehow involved in this selling off of shares? Even if he wasnt' what better way for Martha to get messages back and forth between her and Sam than through his parents.

[DeFault User]

Rearden realized the government had turned the law on its head--instead of protecting his rights, it denied them.

Waksal denied the rights of his employees to sell the stock. For that alone, he needs to be in jail.

[KarlInOhio]

If an employee of the company uses company property to for personal gain at the expense of the owners, he as failed in his duties to the owners and likely defrauded them also. This is just like if he used the company's labs and employees to develop drugs for him to patent and sell himself. He used the knowledge that the FDA was going to reject Erbitux (knowledge which belonged to the company and therefore to the shareholders) to profit at the shareholders' expense. The current insider trading laws may be a clumsy way of handling it, but he cheated his employers and should have to pay for it.

[ml/nj]

waskal, if guilty of the accused crme, is morally guilty as well. We all agree to play by certain rules when trading in the stock market. If these rules are not skirted by a few, many other people could get hurt financially and the long term effect will be that no one will particiate in the stock market.

What twaddle!

Almost everyone who buys stock is hoping that he knows something that other people are ignorant of.

ML/NJ

[KarlInOhio]

Waksal is more of a James Taggart than a Hank Reardon.

[squidly]

Atlas Shrugged was about as grounded in reality as Ken Kesey's bus. Why any writer would use it to make a point is beyond me.

[Sonny M]

Waksal denied the rights of his employees to sell the stock. For that alone, he needs to be in jail.

Thats true, sadly enough, he will probably be remembered for 2 things. Screwing his own people, and being the leading pioneer in the cure for cancer, he is a brillian scientist and his company will be at the forefront when the cure for cancer is found, sadly, he will always be known as a cheat.

[aynrandfreak]

I have tremendous respect for most posters on FR, but your statement represents ignorance. Objectivism presents a rational morality, derived from the requirements for human survival & prosperity. It is from that morality that the defense of "insider trading" comes from. You seem to have dismissed the ideas without ever reading them (probably because you heard she was an athiest), but don't say Objectivism lacks morality. That's just not true as any cursory study of the ideas would have shown you.

[lady lawyer]

Remind me what James Taggart did. It's been decades since I read Rand.

[kesg]

The problem is that in the novel Ayn Rand got to decide whether Rearden would be convicted, acquitted, or (as it turned out) essentially slapped on the wrist. In real life, had Waksal taken the type of stand that Rearden took, he would almost surely have been convicted and may have been punished even worse than he was.

[KarlInOhio]

James Taggart was the CEO of Taggart Transcontinental, the main railroad in the story. His sister, Dagny, really ran it. He was one of the bad CEOs in the book. I'm sure that there was a minor character who would better portray the screw the shareholder type CEO, but I don't have a copy of the book with me.