Question: Each man as a sovereign intellect, I agree, has a moral duty to learn and adhere to the objective facts of his existence and life-preservation. My question falls into an ambiguous and somewhat objective stance. Man, even productive man, can fall victim to illness, disability, disaster, etc.

If a group of productive, trading people, who accept that at any time a brother can fall, decides to pool a portion of their productive wealth into social safety nets, and have those nets for themselves as well as others, is this not a selfish and rational idea that a civil aware society may subscribe to despite its apparent siphoning of wealth?

Answer: The Objectivist politics is basically libertarian: It holds that the proper function of government is to protect individuals’ rights to life, liberty, and property. Objectivism is opposed to government programs that violate the rights of some to redistribute wealth to others, and as such it is opposed to government insurance and government-provided pensions.
Morally, Objectivism stands for rational selfishness, or the idea that each of us has the ultimate moral claim on our own life and happiness. It is not just wrong to take from others politically, it is also wrong to demand that others sacrifice what they value for the sake of others.
In that context, it is perfectly compatible with Objectivism to favor social safety nets. Social safety nets should be created through private savings and insurance, something no one can be forced into and that no one can be forced to support without their prior consent.
Living virtuously by centering one’s life on the cardinal values of Reason, Purpose, and Self-esteem is the best way to try for a long, healthy, and happy life. The Objectivist "benevolent universe premise" holds that success for the virtuous is to be expected, and suffering and setbacks are just occasional and temporary.
But as we all know, even the virtuous can really fail and really suffer. In the 2008-09 economic crisis, many responsible, productive people all over the world have lost their jobs or seen savings disappear. (Many irresponsible people are paying for their irrationality as well: homeowners and bosses who took on debt they could not pay; securities whiz-kids who exposed their companies to grave financial risks without full disclosure, etc.) Capitalism is the system of productive innovation, wealth-creation, freedom to seek happiness, and opportunity for merit. But like all human endeavors, it rests on the judgments of individuals about what will work and what won’t, what people need and what they don’t. Every so often, many people get many judgments wrong all at the same time, and we have an economic crisis. Further, there are everyday risks we run—of an injury that keeps us from working and of disease.
Generally, the solution to these problems is insurance and savings. We should save for our own retirements, not expecting others to bail us out. We should get insurance for work injuries, unemployment, disease, and other risks. Most of the time, the private market will likely do an excellent, highly professional job of handling this service. When I wrecked my car a few years ago, I was stunned at how fast my insurance company came to my aid and how generally painless it was to get my car taken care of and get back on the road. I wrecked my car in the dead of winter, miles from any town, and was just an hour and a half late getting to work. That’s how it should be for all our insurance needs.
But what happens if the organizations that provide the backbone of the insurance market, companies like AIG, for instance, make cascading errors that have them headed toward bankruptcy, too? That’s just what happened to AIG in the summer of 2008. How we will protect ourselves from risk, then?
In a free society, we could not turn to the government to force us all to pay into a common pot. (And that’s just as well, because the government plays a big role in causing most economic crises.) But we could still set up a common pot, or a set of common pots. Charitable organizations, community groups, friendships, alumni associations, and families would all have roles to play. There would probably develop international institutions that exist just to pool money for severe crises. This is what the International Red Cross does right now, just to name one example. In a free society, no one can demand your money at the point of a gun; anyone with any worthy project must respect your autonomy and your right to direct the use of your time and your property. And a free society will ensure that people can work as fast as possible to get companies in shape to produce again and to put the banks and insurance firms back on a solid footing.
Any insurance company or mutual aid society takes money from some and pays it to others. Insurance is not savings: Its purpose is to protect us from severe risks. Most insured people will probably never face the worst risks. They will never get all their money back—nor should they; they received peace of mind and security to make life plans for their money. So long as one has voluntarily joined an insurance plan (i.e., a social safety net) for the sake of one’s own life and happiness, it is rationally selfish to "lose money" for the sake of the security the insurance provides.


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