<< ARI vs. George Reisman

Memo from Reisman and Packer to Leonard Peikoff and the ARI Board of Directors

DATE: September 27, 1994

SUBJECT: September 19 Conference Call

FROM: George Reisman and Edith Packer

TO: Leonard Peikoff and the ARI Board of Directors

On Thursday, September 15, Leonard Peikoff called us and said he wanted to arrange a conference call between us, himself, Harry Binswanger, Mike Berliner, and Peter Schwartz. The purpose, he said, was to enable him to get to the bottom of the differences between the two sides and thereby to help to resolve the differences.

In preparation for the call, we sent him our memos to ARI, dated October 26 and 27, 1993, which had precipitated our being thrown off the ARI Board of Advisors. We also sent him a copy of George's article The Real Right to Medical Care Versus Socialized Medicine, along with a copy of Harry Binswanger's memo to ARI which concluded that the article "should not be promoted by ARI (or any Objectivists)." We were confident that a reading of these materials would provide a prima facie case that we were being attacked unjustly.

In further preparation for the call, we prepared a brief statement, which George read as the first statement of the conference.

Harry and Peter sent letters to Leonard, which were forwarded to us by Leonard subsequent to the conference call.

These letters set the agenda for the whole of the conference call following the reading of our opening statement. They consist of a list of spurious accusations against us, and make clear the actual purpose of the conference call, which, as soon as we became aware of it, we identified as that of placing Edith on trial before a Kangaroo Court. We refused to comply with that plan, and insisted on receiving the charges in writing. Now that we have them in writing and have had the opportunity to think about them, we are in a position to answer them.

As to Harry Binswanger's charges: if you notice, he first refers to Edith's hostile and irrational behavior. But he immediately changes to accusing us both, when he refers to their ideas in connection with the Poupore conference of 1987. He does not mention the fact, which is the most important one, that Poupore was using our mailing list to set up his conference, which is what made John Ridpath and Ed Locke decide to withdraw from it, while David Kelly, George Walsh, and Nort Buechner sided with Poupore and withdrew from our 1987 conference. In addition, in one of the conversations with Harry at that time, he said that since the speakers didn't originally know that Poupore was using our mailing list, it was okay for them to continue. He forgot the principle that even an innocent beneficiary of a wrongful act is not entitled to benefit from it at the expense of the victim. (For example, an innocent buyer of stolen goods must still return them to the rightful owner even though he, the innocent buyer, suffers a loss.) We want to point out that Harry had never made the Poupore matter an issue until our last private conversation with him in September of 1993. In fact, during the whole of the period from the Poupore incident until early 1993, George continued to think of Harry as one of his very best friends. We spent two very pleasant evenings with him in New York, at the time of our Fall 1992 seminar there.

As to Edith's conflict with Mike when she was on the Board of Directors of ARI, other members of the Board at the time also thought that Mike was not doing what was necessary to overcome his lack of administrative experience. Edith was in a position to see that he was unwilling to take any advice at all. A particularly important instance of this was the fact that directly contrary to his agreement with Edith, he went ahead and hired the previous fund raiser of the Institute without bothering to investigate the man's employment record. The result of this was eight years during which ARI's fund raising ability was far less than it could have been.

As to Harry getting on her "[explitive] list" in 1982 and 1983, the only thing we can think of that can be interpreted as an attack on Harry is that just prior to the first TJS conference, in a faculty luncheon called to discuss operational policies and faculty conduct toward enrollees, we asked Mike and John to try to be sure that Harry did not intimidate any of them (which he subsequently did anyway). For professional reasons, Edith is constrained from answering Harry's innuendo that he was on her "list" because he had stopped therapy with her, or from making any statement as to when he finally stopped therapy with her.

As to Peter's memo and the conflict-of-interest issue raised therein, when Edith sat on the Board of ARI (which she had helped to found two years after the start of TJS), there was no basis for a conflict of interest arising. This was because she was never paid by the Board for any work she did. The scholarships ARI provided to students to attend TJS conferences were strictly to cover costs incurred by TJS on the students' behalf and were accompanied by TJS tuition scholarships. TJS did not realize any financial gain from them. To the contrary, TJS contributed money to ARI--$5,000 in the year 1985, the one year in which Edith was a member of ARI's Board and there was also a TJS conference.

The situation with respect to Peter is very different. He is paid for teaching at OGC and he votes on such matters as whether or not to announce the meetings of the leading competitor of his wife's conference organization. It should also be pointed out that unlike Edith, Peter's policy, as far as we know, has been to refuse to contribute to ARI financially--on the very grounds that he is a director and is thereby contributing his labor to ARI.

The whole conflict-of-interest issue as presented by Peter is completely dishonest. It was Jerry Kirkpatrick who called the California law to Edith's attention, and he later informed Mike Berliner of that fact. According to California law, "51% of the board of a public benefit corporation cannot receive any money for services rendered the corporation in any other capacity (e.g., officer, full-or part-time employee, independent contractor) or be related by blood or marriage to such a paid person...." (Source: Anthony Mancuso, The California Nonprofit Corporation Handbook, 2d ed. (Berkeley, CA; Nolo Press, 1981) p. 31. No one knew at the time, including Mike Berliner and the ARI Board of Directors (Harry and Peter), that the Institute is a Pennsylvania Corporation rather than a California Corporation. (Had they known, all that would have been necessary would have been to say that the California law did not apply, and why.) We think it is outrageous that Edith's motivation in alerting the Board of Advisors to what she had every legitimate reason to believe was a serious danger to the Institute (that could easily be corrected by the enlargement of its Board of Directors from two to five or more members) should be construed as an act threatening the Institute. This is what the last sentence of paragraph five of Peter's memo alleges. In further answer to that paragraph, Edith did not raise the issue of the California law in connection with Harry's phone-teaching because she was not previously aware of the California law. The essential fact is that under California law, when both Peter and Harry began getting paid for teaching at the OGC, they would unquestionably have been in a position of conflict of interest, any advice of ARI's attorneys to the contrary notwithstanding, and they would thereby have been endangering ARI.

As to the charge raised in paragraph four of Peter's letter, that Edith has been telling people "(or, at the very least, one person)" that Peter is a crook, Harry admitted in the conference call that he was that one person and that he had been mistaken in claiming that Edith had said it. (For a moment, this injected a measure of doubt into the proceeding.)

In answer to paragraph six of Peter's letter, Edith stands by her statement that Peter knows nothing about psychology and should not take money for lecturing on the subject (especially when his audience is created by virtue of his position with ARI). She admits to being mistaken in raising this objection in conjunction with his teachings of writing.

In answer to the rest of paragraph six, which is addressed to George's memo, we do not find it "sheer stupidity" to suggest that ARI "could get more for its money by having its curriculum taught by Gary/Linda/Darryl..." On the basis of our experience, there is every reason for thinking that they know much more about philosophy than Peter does. Peter has written some excellent articles about politics, but nothing whatever about epistemology and nothing profound or original about ethics. Nor has he ever made any noteworthy observations on either of these subjects within our hearing. Gary and Linda have displayed much more knowledge of these subjects within our hearing, and they and Darryl are all university trained and thus are at least very familiar with the views they need to refute, which, as far as we know, Peter is not. In addition, they have all had from six to eight years of teaching experience, whereas Peter had had no teaching experience. None of this is to say that others may not have been in a position to observe greater qualifications on Peter's part than we have been able to observe, but at the time we wrote our memos we were not aware of any qualified observer's differing opinion, and we must proceed on the basis of our own experience and judgment in any case.

As to Peter's knowledge of economics, while George believes that Peter knows much more than the average layman about the subject, he also believes that he knows far too little to lecture on the subject. As evidence, Peter has expressed contempt for the notion of "an automatic desire to consume," on the grounds that rational philosophical ideas are needed to instill the desire to consume. Here he reveals that he does not know enough to recognize that the proposition he is actually attacking is that whatever may be true of any limitations of the desire to consume, that desire is always--automatically--far greater than the ability to produce, and thus there can never be a problem of an economy-wide excess of production over consumption, i.e., no such thing as a general "overproduction." Whoever suggests the opposite, implies such naive fallacies as that machinery causes unemployment and that war and destruction cause prosperity.

This brings us to the fact that Peter's actual problems are with George, not Edith. Edith was drawn into it only because of her outrage at the injustice Peter was committing against George in a telephone conversation in the Fall of 1990. In that conversation he expressed the attitude that he had a right to wait two years or however long he wished before bringing out George's TIA article "Education and the Racist Road to Barbarism" as a pamphlet, and would not allow George to bring out the pamphlet no matter how reasonable the terms offered by George were. Edith called his behavior vicious. (If anyone is interested, we will be glad to make copies available of the letters we have that passed between George and Peter on this subject.)

This matter is also important because it provides a leading instance of what appears to be Peter's habit of proceeding full-steam ahead in the absence of essential knowledge. Bear in mind that Peter was a professional publisher at the time. In that capacity he had a responsibility to be aware of leading features of copyright law. According to the Copyright Act of 1976, which was and is the prevailing law, copyrights to original material created other than by an employee for hire automatically belong to the author, unless explicitly signed away in a written contract. George was definitely not an employee for hire when he wrote that article. Even if his article had been commissioned by Peter and written expressly for him (which it was not), he would still not have been an employee for hire. A leading text notes that "Even under these circumstances, the Copyright Act makes you [the author] the copyright holder unless you do the work under written contract, signed by both of you and whoever commissions the work, which states that you are doing the work for hire. To repeat, if no such agreement dealing with your rights as an author is signed by both of you, then your work is not made for hire even though your work is done on commission or special order." (Brad Bunnin and Peter Beren, Author Law & Strategies [Berkeley, California: Nolo Press, 1983], p. 139.) In other words, under the law, the copyrights on all the articles George had written for TIA belonged to George, because he had never signed any such contracts. Nor would he have, had he known that the law reads as it does. Nevertheless, in his ignorance of what he should have known as a professional publisher, Peter automatically copyrighted George's articles in the name of TIA, even including one that had appeared previously under George's copyright. Ultimately, in desperation, in order to get Peter out of the way, George bought back his own copyrights for an amount of money equal to the fees Peter had originally paid him for the articles. Even though legally entitled to a refund of that money, George accepts the fact of its payment as the penalty for his own ignorance.

Peter's implicit comparison of himself to Rearden and of us to Rearden's family, which appears in the next-to-last paragraph of page two of his letter, deserves no comment.

We have to make an observation concerning Harry's memo about George's article on medical care. Even if Harry were right in everything he said (which is the opposite of the truth), his conclusion that the article "should not be promoted by...any Objectivists" is nothing less than incredible. If taken as a principle, it would mean that the works of Von Mises, who really does say some major things that are contrary to Objectivism, should not be promoted by any Objectivists. It would mean that Aristotle should not be promoted by any Objectivists. The only inference we can draw from Harry's pronouncement is that he is more interested in lashing out at George than in defeating socialized medicine.

Indeed, the emotionalist nature of the whole list of Harry's and Peter's charges is highlighted by the fact that while almost all of the specific charges are against Edith, the judgments Harry and Peter pass and the retaliations they urge apply equally against George and TJS. Despite there being no specific accusations made against George, other than his attitude and behavior toward Poupore and his judgments of Peter's teaching qualifications, Harry writes: "So after enough concretes over enough years, we all have drawn the abstraction about the nature of Edith and George as entities. They are irrational and trouble makers." (Page two of his letter, last paragraph.) Peter displays even more violent emotionalism, when he declares that ARI must refrain from treating us "as decent human beings." (Page two, paragraph two, last line.)

The preceding statement occurs at the end of the paragraph in which Peter charges us with making irrational accusations aimed at him and Harry in their capacity as directors of ARI. He then confuses himself and Harry with the Institute itself, and declares that this requires that "the Institute itself not 'turn the other cheek.'" This confusion of the Institute with their persons is shared by Harry. In our last private telephone conversation with him, in September of 1993, Harry took the position that he did not care what the Board of Advisors or, for that matter, ARI's contributors, thought about ARI's policies--that he had the power to do what he wished (including actively discouraging Objectivist graduate students in philosophy from pursuing their doctorates). We, on the other hand, know that Peter and Harry are not the Institute. They are trustees of the contributors, charged with the advancement of the philosophy of Objectivism, which in the present instance their behavior absolutely and totally contradicts.

The proceeding against us was a major act of injustice. The outcome was decided in advance. It was to be as set forth in the last half of Peter's letter, in which the significant conclusions to be reached are clearly indicated. Our present memo answers the charges raised against us and proves that no just basis exists for condemning us in any way.