Question: If happiness is the highest moral goal humans can achieve, selfishness is virtuous and people should only receive what they deserve (no gifts), does Objectivism endorse cruelty or, on the other hand, giving help or aid to other forms of life (including humans) when they increase the selfish person’s happiness?

Answer:  Objectivism does not oppose the giving or receiving of gifts. However, Ayn Rand did make “give” a culturally forbidden word in the fictional utopia of Galt's Gulch in Atlas Shrugged . Rand did this to show that giving is a kind of icing on human affairs: it is pleasant enough to do, but giving should never be one’s primary motivation or principle expectation. A society without giving—but with loans, insurance, and trade—can thrive and prosper. A society premised on giving and receiving—through taxes, extortion, welfare dependency, regulation, and the like—will collapse under its own weight. In the context of a society that rejects altruism as a standard of moral value, Objectivism is not opposed to generosity towards the people and causes one values, and it holds that those honored with gifts should receive them with good grace and seek to reciprocate how they may.

The Objectivist ethics is not hedonist . It does not hold that one should seek pleasant emotions come what may. Rather it holds, with Aristotle, among others, that happiness is normally the emotional result of a life well-lived. Ayn Rand 's insight was that the values from which we derive our happiness should have their basis in the source of values itself, which is life. The Objectivist ethics is a morality of rational selfishness, centered on man's life as a rational being as the standard of value, and each person's life as the ultimate value for him or her.
In this context, Objectivism holds that our lives and thus our long-term happiness are best served by living as productive and independent individuals who treat others according the principle of trade. Cruelty as such does not enhance one's life and does not contribute to a rational happiness. And a focus on the well-being others, to the exclusion of a focus on one's own needs, is self-sacrifice and is not compatible with a rational happiness either.
No doubt many people are able to embrace anti-life values and achieve forms of positive emotion, at least for a time, from their evasions of what they fear or from the the achievement of their narrowly-conceived goals. Does the success and well-being of others that we care about make us happy, or is it providing a distraction from the emptiness and futility of our own lives? For that matter, do we really care about those we work to make happy? Does cruelty toward and power over others give us confidence and a sense of mastery of our situation (which are good things, objectively speaking), or do they allow us to flee from our lack of confidence and lack of ability to gain real values from others on their own terms?
Ayn Rand envisions man as a being who can live in first-hand contact with reality, making independent choices and supporting his own life, and respecting others as independent beings with their own lives to live. Independent man seeks to live life to its fullest, and does not seek cheap kicks or the false gratitude of dependents.

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