Consider the signs at the demonstrations: “You cannot multiple wealth by dividing it.” “Spread my work ethic, not my wealth.” “Stop rewarding failure. Stop punishing success. Stop spending. Start cutting.” “Don’t tax what I haven’t earned yet.” “Cut the size of government, not our wallet.” “Pro-capitalist producers, not moochers.” “I’ll keep my money, my freedom & my guns & you keep the ‘change’.”
Many signs explicitly referenced Atlas Shrugged
, showing that the book has helped spur this revolt and why the novel is growing in popularity.
Today, with the national debt growing to trillions of dollars and the collapse of major corporations, Ayn Rand
’s novel Atlas Shrugged
now seems prescient. In the specifics of the book we see government, controlled by alleged do-gooders, corrupt businessmen, and labor union thugs, restricting economic liberty and punishing productive individuals.
In Atlas, Rand depicts America’s economic collapse resulting from a morality that, on its surface, sounds fine—help others, love thy neighbor, don’t be selfish. But such percepts, taken out of all context and followed to the letter, have a logic all their own that drives those who accept them to destruction, taking many others with them in the process. Talk about a counter-intuitive and challenging proposition!
Accounting for Atlas’s popularity are scenarios strikingly similar in detail to what’s happening in the world today as well as deeper insights that allow us to understand our world.
Businesspeople, Good and Bad
The premise of Atlas is seen in the clear classes of heroes and villains. The world consists of producers and looters. Both classes include businesspeople and Rand makes clear a distinction that the enemies of freedom wish to gloss over today. Some individuals grow rich by producing goods and services to satisfy the needs of willing customers and employers. This is a relationship based on voluntary trade. Others seek government favors, restrictions on competitors, and handouts extracted from producers. This is a relationship based upon coercion.
In Atlas, Dagny Taggart, operating vice president of Taggart Transcontinental Railroad, wants to grow rich by building new lines with cutting-edge metal tracks to meet the needs of emerging, growing enterprises. James Taggart, the company’s head, wants to expropriate wealth via government mandates to restrict competitors and via moratoriums on paying back loans to the company.
Hank Rearden wants to grow rich by creating a new type of metal that is both stronger and less expensive than competing products. Steelmaker Orren Boyle wants to grow rich by having his political friends restrict the production of Rearden Metal.
In our real world today there are entrepreneurs—Bill Gates, Steve Jobs—who have created new consumer products and offered new information services that have revolutionized entertainment and communications as well as business. These are the producers, the creators of wealth.
There are also individual businessmen who try to grow rich by taking from others; Enron’s Ken Lay manipulated government regulations of energy markets. American tire manufacturers are only the latest in a long line of special pleaders to secure government restrictions on imports by competitors—in this case Chinese ones—so that they can charge higher prices. And let’s not forget the tens of billions of taxpayer dollars handed to failed American auto companies.
Banking on Altruism
In Atlas, Rand also exposes the nature of those who, rather than simply expropriating wealth, actually destroy it in the name of high moral principle. Here too the echoes with today’s world are loud and clear.
For example, in the novel Eugene Lawson was president of the Community National Bank of Wisconsin. That bank collapsed because of the bad loans it made, destroying the economy of Wisconsin as well as several surrounding states. The final trigger that brought down his bank was lending to the Twentieth Century Auto Company, which Lawson knew was mismanaged and bankrupt.
In the novel Lawson explained his philosophy: “My father and grandfather built up … [the bank] just to amass a fortune for themselves. I placed their fortune in the service of a higher ideal. I did not sit on piles of money and demand collateral from poor people who needed loans. The heart was my collateral.”
In other words, profits are an evil end for any enterprise—or individual—to pursue; meeting the needs of others should be the goal of businesses, whether doing so brings profits or not and even if it destroys the enterprise.
Does this scenario sound familiar?
Today’s banking collapses have their origin in the same morality, in most cases mandated by law as well as adopted by bankers. For example, the Community Reinvestment Act sought to force banks to make loans to the poor, even if they were poor credit risks. Indeed, CRA and Federal Reserve regulations declared that the inability to make a down payment on a house shouldn’t be held against potential borrowers. Further, feds stated that government welfare received by such borrowers shouldn’t count as evidence that they had little income but, rather, should be counted as income.
The New York Times reported on September 30, 1999 that, “Fannie Mae, the nation’s biggest underwriter of home mortgages [and a government-established enterprise], has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.” Fannie really didn’t need to be pushed too hard. Many of its executives followed Lawson’s morality of banking.
The Times article explained that Fannie had taken action “which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.”
You know the rest of the story—bad loans in portfolios, collapsed banks, foreclosures, dried-up credit markets.
Many Americans seemed to be getting the moral lesson that Rand presents in Atlas. When commentator Rick Santelli did his famous February 19th rant on CNBC from the floor of the Chicago Mercantile Exchange, he asked, “How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” He called for a tea party against high taxes like the one in colonial Boston. This idea ignited the 2009 protests from coast to coast.
No doubt most Americans still have confused notions about the morality of helping the poor. But they do feel that it is unfair to penalize them, the productive people, to make them poorer, in order to help the poor. And they understand that wealth transfers from prosperous to poor in the end remove the incentive to be productive and better one’s situation.
In Atlas, Rand depicts the human costs of such “help-the-poor” policies. In a destroyed Wisconsin town we’re shown “a white-haired charwoman, moving painfully on her knees, scrubbing the steps of a house.” The town’s mayor explains, “They used to be solid, respectable folks. Her husband owned the dry-goods store. He worked all his life to provide for her in her old age, and he did, too, by the time he died—only the money was in the Community National Bank.”
Middle class Americans who have seen their investments disappear with the collapsing economy and fear their savings will disappear in hyperinflation brought on by massive government deficits understand that they or their children could be in the position of that charwoman as well. No wonder Atlas Shrugged
The “Aristocracy of Pull”
In Atlas Rand does a masterful job of showing the process by which raw political power—the aristocracy of pull—replaces individual productive activities and free exchange as the means for determining who gets what. Dire consequences follow.
The government agents take up residence in corporate offices to make sure that businesses are following political dictates. The loathsome Cuffy Meigs is the pol who pulls the strings at Taggart Transcontinental to get favors for his friends. Rand no doubt was thinking of the political model of the Soviet Union from which she fled, where Communist Party officials were assigned to every enterprise—owned by the government anyway—to make certain that managers strictly followed party dictates.
The Obama administration has taken up this model in practice. It has insisted on assigning its own political friends to the boards of the auto companies—e.g. General Motors—and banks that it has bailed out or taken over.
In Atlas the unelected and unaccountable bureaucrat, former lobbyist Wesley Mouch (aided by bank-destroyer Lawson in a new political job) essentially is made economic dictator as head the Bureau of Economic Planning and National Resources.
Under Obama we have by one count 32 “czars” who are not elected and who, for the most part, are not approved by Congress. Many have wide, extra-Constitutional powers. Among them there’s an Auto Recovery Czar, Car Czar, California Water Czar, Climate Czar, Economic Czar, Energy and Environment Czar, Green Jobs Czar, Health Czar, Information Czar, Pay Czar, Regulatory Czar, Troubled Assets Relief Program Czar, and Technology Czar. Obama certainly has a preference for the worst from Russia!
The behavior of one current congressional creature is like a composite of Randian political villains. Rep. Barney Frank (D-MA) was one of the principals facilitating Fannie’s “help-the-poor” policies and protecting it from other policy-makers who feared it would collapse under its bad loans and require huge taxpayer bailouts. Frank’s lover for many years was Fannie executive Herb Moses—can you say conflict of interest? In June, 2009, only months before the banks crashed, Frank was pressuring Fannie to liberalize lending for the purchase of condominiums.
When Fannie and many other banks holding bad loans that it facilitated collapsed, Frank spewed out the moral indignation of a bully, hauled bank executives—though not his friends—before congressional commits where he denounced them for their greed and threatened them with punitive government action. He also demanded government control of corporate salaries.
The sleazy, hypocritical politicians found in the pages of Atlas are seen in all their moral ugliness in the halls of Congress today. No wonder Atlas is so popular again.
From Starnesville to Detroit
Businesses fail during any economic downturn. But Atlas Shrugged
depicts a kind of economic carnage that, until today, was hardly imaginable by most American.
Rand describes Starnesville, the home of the Twentieth Century Motor Company, formerly one of the country’s biggest and best enterprises which were destroyed by its founder’s heirs who ran the business on the socialist principle, “From each according to his ability, to each according to his need.”
Here’s one of the descriptions of the once-motor Mecca:
"A few houses still stood within the skeleton of what had once been an industrial town. Everything that could move, had moved away; but some human beings had remained. The empty structures were vertical rubble; they had been eaten, not by time but by men; boards torn out at random, missing patches of roofs, holes left in gutted cellars.”
Many American cities today have declined past the point of simply being dangerous, rundown, but populated ghettoes. They’ve become depopulated. Take the train from Baltimore heading north and you’ll look back on abandoned blocks of boarded up houses. Drive through parts of St. Louis and you’ll encounter urban deserts.
With the collapse of General Motors and Chrysler, the fate of Detroit is like something out of Atlas Shrugged
. That city has become so de-industrialized that the Sustainable Development Assessment Team, headed by Alan Mallach, suggests huge swaths of abandoned areas simply be bulldozed. The Detroit Free Press
reports that “In a new vision of Detroit’s future, a team of visiting urban planners suggests the city might one day resemble the English countryside, with distinct urban villages surrounded by farms, fields, and meadows.”
A once-great industrial city will sink back into the earth, covered by a landscape of little farms and grazing animals. It’s Rome after its fall, with the forum covered by weeds and mud and the remains of basilicas serving as cow barns.
Productive People Shrug
The title of Rand’s great opus is a prediction about what will happen if governments continue with policies that penalize the productive, and a warning about what would happen if all productive individuals who are damned for being productive cease to “inflict” their competence on an ungrateful world. We’ve seen the predictions come true.
In past decades businesses have moved from states with high taxes and heavy-handed government regulations to those that place less of a burden on the productive, for example, from California to Nevada and Arizona. More businesses likely will shut their doors entirely or relocate overseas if Obama’s punitive environmental regulations threaten to drain their capital and revenues.
In recent years medical doctors have grown sick of having their wealth drained away in nuisance lawsuits by predatory lawyers—big-times donors to the Democratic Party—facilitated by government. Many have periodically gone on strike for tort reform. Many specialists at the peak of their talents have retired early out of frustration with government restrictions and paperwork. And in a September 2009 Investors Business Daily/TIPP survey, 4 out of 9 doctors said they "would consider leaving their practice or taking an early retirement" if Congress passed the new health plan.
We see even more obvious indications today that productive people are voting with their feet. A May 27, 2009 story in the Washington Examiner reported that the number of high-income taxpayers in the high-tax state of Maryland had dropped by one-third over the prior year.
The U.S. government has brought bogus criminal charges against Swiss interests in the United States in order to pressure the Swiss to turn over information about so-called “tax evaders.” And so many productive individuals are fleeing their own countries to escape confiscatory government policies that have resulted from the Obama administration and major Western European governments targeting “tax havens” in Switzerland.
Atlas has a currency that goes beyond its parallels with American politics today. Rand shines a light on a more fundamental cause of the country’s problems that is so obvious and ever-present that, remarkably, most people until now have ignored it even as it was killing them.
We all understand that politicians spin the facts to suit their agendas. That’s been going on since the ancient Greeks both created and abused the art of rhetoric. But we assume that despite the “show,” politicians can actually distinguish in their own minds, facts from fairy tales.
In Atlas, Rand’s villains at first sound like typical politicians, but soon it becomes clear that they believe their own lies. At a certain level they know that they are lying to themselves, that they are ignoring objective reality. They know this because it is an effort to evade facts. They have to work at it. Ultimately they want to believe that if they close their minds and blank out uncomfortable facts that the world will simply change to meet their whims.
In one scene government dictators explain to steel magnate Hank Rearden how they intend to save his industry as a whole—read his incompetent competitor—through a Steel Unification Plan. All income from steel producers will be placed into a common pool and distributed to manufacturers based on how many furnaces each company owns. Follow the math here for a moment as an incredulous Rearden explains their own plan to them:
“Orren Boyle’s Associated Steel owns 60 open-hearth furnaces, one-third of them standing idle and the rest producing an average of 300 tons of steel per furnace per day. I own 20 open-hearth furnaces, working at capacity, producing 750 tons of Rearden Metal per furnace per day. So we own 80 ‘pooled’ furnaces with a ‘pooled’ output of 27,000 tons, which makes an average of 337.5 tons per furnace. Each day of the year, I producing 15,000 tons, will be paid for 6,750 tons. Boyle, producing 12,000 tons, will be paid for 20,250 tons… Now how long do you expect me to last under your plan?”
Rearden can’t believe that these bureaucrats actually believe such nonsense. And their only answers are “In times of national peril, it’s your duty to serve” and “You must make certain sacrifices to the public welfare” and “You’ll manage.”
Think this is fiction?
Many Americans were incredulous when President Obama’s 2009 spending was projected to run a deficit of $1.8 trillion and with projected deficits over the next decade reaching over $9 trillion. The administration, in good Orwellian vision, called much of this spending “investments.” Where on earth was the money going to come from?
On top of this, Obama has pushed universal, government-guaranteed health care as a means to reduce government spending. He wants to heap new goodies on millions recipients as a means to lower costs and has promised not to reduce any current services to the elderly under Medicare. The Congressional Budget Office says such a proposal would add another $1 trillion in new government spending.
Obama claimed he’d be able to pay for a substantial part of the new spending by squeezing the waste and fraud out of Medicare. One might ask how he thinks a government that allows such huge amount of waste in one major program will be able to run a new program any better. In any case the only way to reduce Medicare costs by such a huge amount would be to cut services.
Some of Obama’s minions suggest that new taxes on the “rich” or on pharmaceutical companies could cover a sizable chunk of this spending. But even a 100 percent tax rate on the top five percent of taxpayers would bring in only a fraction of what would be needed to meet Obama’s spending plans.
More and more Americans are asking, “Can these guys really believe their own b.s.? Surely they wouldn’t be so grossly, almost criminally irresponsible as to destroy the American economy and current healthcare system with such a plan?” The answer, of course, is “Yes they can.”
Atlas offers us a way to understand the level of self-delusion we see in the world today. Rand understood that the root of all evil is first and foremost the refusal to think, the refusal to focus one’s minds, the evasion of reality. It might start with individuals deceiving others but, ultimately, it ends in individuals deceiving themselves. It might start in small matters but such a practice in the end can lead to destruction on a national level.
Americans who turned to Atlas because of its parallels to America’s politics and economics will discover this deepest of moral insights, which offers a guide for creating the personal morality that is a prerequisite for the culture necessary to support political and economic freedom.
A morality of rational self-interest must start with the “rational” part. Most Americans do have a strong streak of self-interest, of concern for themselves, their own careers, well-being, friends, and loved ones. Most have morality of “help one’s self” and “earn one’s way.” Most have a common-sense approach to understanding the world. They have their eyes open.
is a novel that offers an integrated philosophy that builds on the best in the American culture. It gives Americans a light for seeing clearly that fine-sounding platitudes about helping one’s neighbor can lead to dire consequences, and destroy one’s poor neighbor in the process.
The popularity of Atlas today offers an opportunity for American not only to reverse the slide toward tyranny but to build an even stronger a polity of freedom and culture of productive achievement.