Do fishermen enjoy Hemingway’s The Old Man and the Sea? Do generals like Tolstoy’s War and Peace? I have no idea, but I’m reasonably sure no one looks to these novels for advice on how to catch fish or wage war. The purpose of a novel is not to provide concrete advice on particular tasks, but to present a vision of man and his place in the universe.

In Atlas Shrugged, Ayn Rand presents a vision of man that is unlike anything ever written. Rand’s ideal man is the visionary, the genius, the producer. Her foremost representatives of this ideal are businessmen, whom she portrays, at their best, as heroes, not villains; creators, not parasites.

Rand’s vision has inspired successful people from all walks of life for generations. They love the book, not because it tells them how to make better yoga clothing or run a better taxi service, but because it offers profound insights about the principles that lead to success (or failure) in any field, and it shows those principles playing out in the lives of the novel’s characters.

The book has been criticized often in the five decades since it was published. Most frustrating for those of us who love it are critiques that misunderstand its essential points and end up attacking straw men. Rand, they often say, believed that only the strong should survive or that a man’s worth is measured by the size of his wallet. Writing in the Business Insider, Max Nisen does all this but adds a new twist. In “‘Atlas Shrugged’ is Full of Terrible Business Advice,” Nisen criticizes the book for not being a better version of the Seven Habits of Highly Effective People.

Of course, Atlas Shrugged isn’t a business how-to manual. But it is full of powerful advice if you’re willing to consider what Rand actually says. Here are some of the real lessons in the novel that make it a favorite of so many productive, successful people.

Take pride in your success.

Like so many critics of Atlas Shrugged, Nisen claims Rand conveyed that successful people are inherently superior to everyone else. But anyone who has read the novel knows it is filled with noble characters who achieve only modest financial success. Eddie Willers, friend and ally to railway magnate Dagny Taggart; Gwen Ives, industrialist Hank Rearden’s superlative secretary; Cherryl Brooks, the store clerk who tragically marries a villain thinking he is a hero; Jeff Allen, the proud tramp who stows away on a Taggart train and is hired by Dagny; even a young bureaucrat who is assigned to monitor Rearden Steel and ends up becoming Rearden’s ally. The heroes in the novel don’t look down on these characters. They treat them as friends and allies. Clearly, Rand recognizes that moral character stems from the choices people make, not their wealth or status.

So Rand doesn’t condemn anyone for failing to become rich and successful. But she does condemn those who despise others because they are rich and successful. The “hallmark of the second-rater,” she has one of her characters say, “is resentment of another man’s achievement.” She spends much of the novel showing just how resentment of achievement — which she called hatred of the good for being the good — is destroying society.

Was she right? Well, President Obama thinks that “you didn’t build that.” We hear every day that we should despise and tax the “1%” because they are wealthy. Evidence of the resentment of success is all around us. Ayn Rand saw that in 1957, when Atlas Shrugged was published. And she knew that this attitude could prevail only if the successful allowed it to, by feeling guilty for their achievements. Rand’s response was clear: take pride in any success you’ve earned and never apologize for it.

Pursue your own happiness and achieve it.

Another common criticism of Atlas Shrugged, which Nisen repeats, is that its characters are motivated by money alone. This is an odd claim about a novel that is filled with characters who love their work and continually strive to achieve more and more, often at great short-term cost. Hank Rearden spends ten years developing a new alloy. Dagny leaves a secure position at Taggart Transcontinental and works around the clock to develop a new railroad, the John Galt line. Is money important to these characters? Yes, of course, but making money is not their primary motive. Money, as Rand recognizes, is not an end in itself, but only a means. The end — the purpose of all that hard work — is achieving happiness. And Rand believes that is possible. As her protagonist, John Galt, says, “The world you desired can be won, it exists, it is real, it is possible, it’s yours.”

Money is the product of virtue.

Speaking of money, critics also often misunderstand Ayn Rand’s view of it. In the novel, she gives that explanation to copper magnate Francisco d’Anconia, who answers the claim that money is the root of all evil. Nisen picks out one paragraph where d’Anconia says gold is an objective form of money because, unlike paper, it cannot be manipulated by government. Nisen cites a couple of articles that supposedly show the gold standard is bad, not good. They even have graphs. And he recommends that readers watch a video of Fed Chairman Ben Bernanke saying the same thing.

Certainly, if you are interested in all the debates about the gold standard, you can watch the government’s chief money manipulator respond to the view that he shouldn’t manipulate the money supply. After that, you might read the hundreds of books and articles on monetary policy from the last eight decades or so. Ayn Rand doesn’t try to address all of that in Atlas Shrugged. There are no graphs in the novel.

Instead, Rand focuses on fundamental questions about money, just as she focuses on fundamental questions on every issue. She asks: what is money and what role does it play in our lives? She argues that it isn’t the root of all evil, but the product of all the hard work and thought that sustains us. Money, as Rand says, “is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men.” If you value your mind, your work, and your life, Rand holds, then you will value money. And if government can control and devalue our money, then government can control and devalue our lives.

When have you ever heard an economist say that?

Trade is a virtue, but sacrifice is not.

Nisen says that the businessmen in Atlas Shrugged have contempt for their customers because in one scene, Hank Rearden says he would rather destroy his metal than sell it to anyone who demands that he produce it for them as his duty. But Rand’s point is that there is a big difference between trade, which is a virtue, and sacrifice, which is a vice. In fact, the heroes in the novel treat their real customers — those who want to trade with them, rather than take from them — with great respect. Rearden, for example, spends much of the novel figuring out how to produce enough of his metal to satisfy customers who are becoming more and more desperate for it as the economy collapses. But one of the primary points of the novel is that no one should work for their own destruction. Today, we see calls for businessmen to sacrifice more and more every day. Is that good business advice?

Government is a necessary good.

Finally, Rand does not treat government as a “pure antagonist” as Nisen and other critics claim, but as an essential institution that protects the rights on which individuals and businesses depend every day. Of course, Rand does illustrate the evil of a government that becomes a violator rather than a protector of rights. If you think she is wrong, look around. Is our ever-expanding government really the solution to what ails us today, or the problem?

The bottom line is that Atlas Shrugged isn’t an economics text or a business how-to manual, it’s a brilliant novel of ideas that challenges conventional thinking on every major issue in life — not just money, but work, family, politics, and even sex. It does contain great advice, just not the sort of advice that critics like Nisen prefer.

But if you want to see that, my advice is to go read it yourself.

About The Author

Steve Simpson

Former Director of Legal Studies (2013-2018), Ayn Rand Institute

Twenty years ago, the “peace process” ignited fervent hopes of Mid-East peace. But that policy collapsed. Peace remains elusive. Why? Now, amid the rise of Islamists, the upheaval in Egypt, the Syrian civil war, and an imminently nuclear-capable Iran, what might it take to achieve peace? Following the so-called Arab Spring, how should we view the Israel-Palestinian conflict? What should America’s policy be toward the region, and Israel in particular? (Recorded September 10, 2013.)

About The Author

Elan Journo

Senior Fellow and Vice President, Content and Advanced Training, Ayn Rand Institute

Starting next year, the Affordable Care Act will severely weaken the link between health insurance premiums and age-related risks. Health insurance companies won’t be allowed to charge older people any more than three times what they charge younger people for premiums. This is bad news for the young.

Preventing health insurers from fully accounting for age will not change the reality that, in general, the older you are, the greater your medical expenses (six times greater, when you compare 64-year-olds to 18-year-olds). These are costs that someone has to pay. If insurers can’t charge those older according to their risk, they have to overcharge those younger to make up the cost. In California, for example, once the new health law’s various rate restrictions and other provisions kick in, 25-year-old non-smoking men will see their premiums at least double.

As slogans go, “Let’s fleece our children and grandchildren” is not likely to draw much support. So proponents of the health law are trying to make their scheme palatable by arguing that it actually benefits the younger generation.

“[T]oday’s young people will be tomorrow’s old people,” says Matthew Yglesias of Slate, so while this arrangement may not benefit the young now, it will eventually do so. A senior official at the AARP echoes this sentiment, insisting, “If a younger, healthier person is spending a little more now, it’s okay because at some point they’re going to be a less healthy, older person too.”

But it’s of no benefit to anyone, young or old, to be forced into a scheme in which others dictate how he should arrange for his medical expenses. What’s in a young person’s interest is to be free to decide that for himself, in the context of his other priorities in life.

Consider that 25-year-old non-smoking male in California — let’s call him Brian. Brian is a freelance web developer committed to gaining enough experience and saving up enough money to one day start his own company.

Every dollar Brian can save right now brings him one step closer to starting and growing his business. In a truly free market, Brian would be able to choose a health insurance policy that best aligns with this goal. He could, for example, buy a policy that’s priced to reflect the real risk that he’ll get sick — just as he buys car insurance priced according to his risk of meeting with an accident. Since Brian is young and healthy, his premiums would be relatively low (just as safer drivers pay lower premiums), allowing him to put more of his income toward his start-up. Brian knows that when he’s older and in a higher-risk category, health insurers may charge him higher premiums, but that’s a fact he’s willing to face.

Even though Brian judges this to be the best way to manage his medical expenses, under the health law, it’s illegal for insurers to offer him a policy geared to his actual risk. Instead, per government mandate, a portion of the income he earns and intends to use to build his life is channeled into the pockets of others.

As a result of this and the many other wealth redistribution provisions in the health law, Brian’s goals are impeded. Maybe it takes him much longer to start the business he’s always wanted. When he finally does, maybe his venture is stunted by a lack of cash to put back into the business. Or maybe Brian must scale back or give up entirely his life-long goal, because by the time he can finance the start-up, he has a family and decides he can’t afford to take such a big risk.

Whatever the case, when Brian is sixty, he might get a few dollars from the younger generation (if they haven’t yet awakened to the injustice of the scheme, and if the whole system hasn’t already crashed). Meanwhile, Brian will have paid a high price, having been denied throughout the course of his life the right to decide how best to use his earnings.

Is it any wonder that the health law’s redistribution schemes had to be forced on people, by law? Nobody would choose to spend their own money this way.

The health law’s age-related rate restriction milks the hard-earned income of young people — those just starting out in life — for the sake of those older, sacrificing in the process a young person’s own goals and dreams. If they were honest, supporters of the law would admit this openly, instead of adding insult to injury by calling their immoral scheme a benefit to the young.

About The Author

Rituparna Basu

Rituparna Basu was a researcher and analyst at the Ayn Rand Institute between 2011 and 2016.

This past Valentine’s Day, American Airlines and US Airways announced their intention to merge — but now, six months later, the federal government wants to cancel the wedding.

Unexpectedly, the Department of Justice has filed an antitrust lawsuit to block the merger, citing potential “harm to American consumers.”

The airlines’ merger proposal was based on ten months of intense negotiations in which CEOs dealt with complex relationships among labor unions, bondholders, and other financial stakeholders. If all that ends up in the wastebasket, so do the hopes and plans of American Airlines, which is emerging from bankruptcy, and US Airways, both eager to achieve economies of scale that could help them compete with Delta, United, and Southwest.

In America, big companies cannot merge without government permission. For the largest firms especially, it’s a tortuous and inscrutable process with no guarantee of success — just ask AT&T, which wrote off $4 billion when its planned merger with T-Mobile in 2011 was barred by the Department of Justice.

Conventional wisdom holds that business mergers are not private matters — final authority must rest with antitrust regulators who can monitor, limit, and even forbid mergers and acquisitions that supposedly threaten the economy. Pursuant to the Hart-Scott-Rodino Act of 1976, businesses exceeding a certain size must ask federal permission to merge, and then endure a legal gauntlet to get an answer.

In this “Mother may I?” system, each proposed merger is automatically delayed thirty days — longer if the government requires it — while the DOJ and Federal Trade Commission sift through company documents and emails, compile statistics, run computations, and consult experts. Out of all the proposed mergers subjected to this legal scrutiny, only a select few are blocked. Which ones? Those that promise to be the most successful.

Antitrust enforcers want us to fear that mergers, if left unregulated, would allow large companies to destroy competition and hurt consumers. They use scary terms like “barriers to entry” and “monopoly prices” to paint a dire picture. 

Into this dangerous landscape rides the antitrust cavalry, flags flying and guns blazing, offering itself as a brave guardian of economic freedom against rapacious capitalism.

Now let’s switch off this Hollywood movie and look at the facts. So long as government stays out of the picture — that means no protected monopolies, franchises, subsidies, licensing schemes, bailouts, or other forms of coercive favoritism — merging companies have only one avenue to success. They need to offer products and services that people want to acquire through voluntary, win/win transactions.

In a free market, we have nothing to fear from mergers, no matter how big the resulting enterprise. Just as a student cannot be “too smart” or an individual “too healthy,” a business cannot be “too successful” or “too profitable.” 

If a particular company offers the most popular smartphones, cars, or airline tickets, then it may come to dominate its market. But no business, whatever its size, can let quality slip or raise prices too far above the cost of production without inviting competition from two sources — existing rivals, and venture capitalists who are constantly searching for opportunities to finance startups.

Regardless of what shape an industry takes, my only right as a customer is to buy or reject the products offered, at the prices offered — and it’s those choices that determine whether any merged company fails or succeeds. 

For example, the 1999 merger between Exxon and Mobil enabled the company to streamline operations and combine exploration and production capacities, despite a government-mandated asset selloff. But ExxonMobil’s resulting success comes with no guarantees for the future, if the company lets product quality slip or raises prices to levels that Shell, Chevron, or some oil startup can undercut.

The bottom line is that corporations have a moral right to merge without government permission — but in our unfree economy, that right is not legally recognized or protected. 

In March, just a month after American Airlines and US Airways announced their plans, both companies’ CEOs had to bow and scrape before a Senate panel, while the Government Accounting Office sounded warnings of projected changes to the airline industry.

Meanwhile, a New York Times editorial urged the DOJ not to approve the airlines’ merger “without requiring some concessions, like giving up gates and takeoff and landing slots.” 

Sure enough, it was soon reported that regulators were holding meetings with the defenseless airlines. We can only surmise that the airlines resisted whatever forms of legalized extortion may have been proposed in those meetings, leading directly to the lawsuit that now threatens to kill the merger.

Antitrust laws deny companies the right to organize their business as they see fit. That’s an injustice we need to identify and condemn, undistracted by the mythical dangers of private mergers.

About The Author

Tom Bowden

Analyst and Outreach Liaison, Ayn Rand Institute

The quickest way to crush a development, water, engineering, or other similar project is to find an endangered species there.

It doesn’t matter if you are rebuilding your home after a devastating hurricane, breaking ground for a new hospital, using desert land for outdoor recreation, or diverting river water to help alleviate the effects of a drought. If a sand crab, flower-loving fly, fringe-toed lizard, or sheepnose mussel is found nearby, the “keep out” signs go up and human activity is stopped in its tracks.

In Atlanta in 2007, in the midst of a devastating drought, billions of gallons of much needed lake water were deemed off limits. That water was instead sent downstream, for the sake of a particular species of mussel. In another case, concern over the heelsplitter mussel led to a moratorium on river water extraction in Mint Hill, North Carolina, leaving residents without access to clean water for eleven years.

These examples aren’t anomalies. They are an expression of the ideas animating the environmentalist movement: That it is wrong for human beings to impact nature, especially if our actions affect endangered species. They consistently prioritize other species above human beings, regardless of what that means for human welfare.

The goal is not to protect nature for human enjoyment — it’s to protect nature from human beings. Forget about enjoying canoeing, swimming or contemplating a tranquil creek. Environmentalists regularly use the Endangered Species Act to limit or ban such activities. Nature, on their view, is intrinsically valuable and even in the process of enjoying it, human beings inevitably stamp their “footprint” on it.

But limiting human beings’ impact on nature harms human beings. Extracting water, for example, is just one of the many feats of engineering that make our lives happier, longer and better. We no longer have to worry about living near to a supply of freshwater such as a river or a lake, because we have the technology to bring that water to where people need it. But if the environmentalist idea that it is wrong to impact nature had been in vogue a century ago, cities such as Phoenix and Las Vegas would have never become anything more than desert outposts.

Human life and happiness requires that we use and transform the world around us. Sometimes that means building flood walls, dams, or extracting water for use in urban areas, other times it means maintaining waterways to enjoy the wildlife naturally found there. But it certainly doesn’t mean sacrificing people to mollusks.

About The Author

Amanda Maxham

Former junior fellow and later a research associate (2012-2018), Ayn Rand Institute

Apple Inc., #1 on Fortune magazine’s list of the World’s Most Admired Companies, is currently on trial in Manhattan federal court, defending against antitrust charges. Question: How many other businesses in Fortune’s top ten have been recently subjected to some kind of antitrust enforcement? Answer: all of them.

Surely, some would say, if the nation’s top companies are getting caught in antitrust’s grip with clockwork regularity, they must be doing something wrong. But what if they’re not? What if America’s best companies are being targeted not for bad behavior but for good? What if they’re being punished not for their sins but for their virtues? It’s hard to imagine, but consider the evidence.

Here are key facts underlying the Department of Justice case against Apple: In late 2009, Steve Jobs was ready to launch the new iPad and wanted to offer an e-bookstore, similar to Apple’s highly successful iTunes and App Stores. Jobs was confident that readers would value the iPad’s easy and colorful interface enough to pay $13 – $15 per e-book, price levels that the nation’s largest publishers eagerly sought. Five of those publishers agreed to let Apple retail their products at those preferred prices.

Under the Sherman Act of 1890, government lawyers charged Apple with acting as the “ringmaster” in a “price-fixing conspiracy” that imposed “restraint of trade.” Sounds bad, right? The terms evoke images of criminality and physical coercion. But contrary to the law’s pejorative language, Apple was simply trying to make profits through voluntary, win/win transactions with publishers and readers.

Was the economic wisdom of this strategy foreordained? Not at all. If antitrust authorities had not intervened (fining the publishers a total of $170 million and voiding their agreements), the market would have decided whether Apple’s e-book program succeeded or failed. As Jobs himself said in an email, “Heck, Amazon is selling these books at $9.99, and who knows maybe they are right and we will fail even at $12.99.”

Apple’s pursuit of growth and profits in the e-book industry deserved admiration, not legal persecution. Another “most admired” company, Google, is also known for offering products that people really like — and it, too, wears an antitrust target on its back these days.

Over the past fifteen years, Google’s legendary search engine has attracted users en masse, leaving competitors like Bing and Yahoo! in the dust. Leveraging that popularity, Google chose to display its own services (like Google Maps, Shopping, and Travel) more prominently than results for its competitors. So what? Every businessman in America understands that you paint your own company’s name on the side of your truck, not your rival’s name.

While Google’s ingenuity keeps birthing products that engage the 21st-century imagination, vague and elastic antitrust laws empower regulators, here and in Europe, to demonize Google’s business practices as “unfair” competition. By means of grinding, years-long investigations coupled with threats of massive fines, government agencies have recently forced Google to modify business practices that sought nothing but enhanced profits through voluntary transactions.

Antitrust has always worked this way. Go back to the late 1990s, when Microsoft was riding high on the phenomenal success of its Windows operating system. By adding a web browser (Internet Explorer) to every copy of Windows, Microsoft offered customers more value for the same price, leaving purchasers free to adopt competing browsers if they chose. By any rational business standard, Microsoft was pursuing a growth-oriented strategy whose success or failure should have been determined on a free market.

But under the Sherman Act, the Department of Justice had the power to charge Microsoft with “monopolization” and “tying” offenses. The very words evoke scary 19th-century images of a bug-eyed octopus gripping a far-flung economy in its tentacles. After years of litigation and unsuccessful appeals, culminating in a finding that Microsoft had violated the Sherman Act, the company lost whatever innovative edge it had and sank into doldrums from which it has yet to recover.

Precisely what are the bad acts for which America’s best companies — Apple, Google, Microsoft, and hundreds of others — are punished by antitrust laws? If you look closely, you’ll find they’re not bad acts at all. On the contrary, they belong in the same category as all the other growth-oriented, profit-driven strategies by which start-up firms survive, small firms become large, and large firms rise to new heights, flooding our economy with life-enhancing goods and services.

The scandalous truth is that antitrust laws penalize America’s best companies for their virtues, for business practices that generate growth and profit through voluntary trade. Such practices deserve legal protection, not prohibition. Antitrust stands exposed as something quite vicious: a legal regime that punishes good behavior.

About The Author

Tom Bowden

Analyst and Outreach Liaison, Ayn Rand Institute

President Obama has renewed his call for Congress to raise the minimum wage to at least $9 per hour. Advocates claim that raising the minimum wage helps low-wage workers. Opponents point out that if Congress makes it illegal to hire an employee for less than $9 per hour, there will be fewer job opportunities for those who lack skills and experience.

Most minimum-wage debates focus on these arguments — how the minimum wage affects low-wage workers. What’s rarely discussed is how it affects business people, especially start-up entrepreneurs.

Suppose a stay-at-home mom — let’s call her Susan — wants to open a bakery to make a business out of the pies and cakes that have been winning praise for as long as she can remember. To open her bakery, Susan must take enormous financial risks — paying upfront to hire and train staff, buying industrial baking equipment, decorating her store — costs that likely entail taking on a lot of debt.

She will succeed if she can make enough money to cover not only her operating costs but also her initial costs. That, however, is no cake walk as one out of two new business ventures fails in its first five years. Susan will have to work like a dog, knowing that if her business fails, she may lose her home if that’s what it takes to pay back her lenders.

One strategy Susan can take to keep her costs low is to hire some teenagers at $7.50 per hour to help work the cash register, haul supplies, and assist bakers. She prefers to hire several employees who are only looking for temporary work, because she cannot afford to commit to too many permanent employees until she has a steady customer base. And there’s no shortage of teenagers who are happy to work for a small wage for some work experience and extra spending money. For both sides, it’s a win/win trade.

Raising the minimum wage to $9 per hour would make Susan’s business strategy illegal.

Trying to launch a new business is difficult enough without the government passing laws preventing business owners from hiring employees for wages they are willing to accept. Even raising the hourly minimum wage by $1.75 could cost an entrepreneur like Susan thousands of dollars per month.

Susan is fictional but her experience is typical. Holly Wade, a senior policy analyst at the National Federation of Independent Business — a group representing 350,000 entrepreneurs — opposes raising the minimum wage. “We’re hearing from our members that they want more flexibility to structure the workforce as they need to,” she says.

David Houston, who co-owns the Barney’s Beanery bar and restaurant chain in Los Angeles, explains that raising California’s minimum wage to $9.25 “would just squeeze the heck out of us” and that “it would effectively absorb about half of my profits.”

Melvin Sickler, a businessman who “went all in financially” to start his first Auntie Anne’s pretzel franchise, estimates that raising the minimum wage to $10 per hour could swallow nearly 60% of an average location’s income.

Should these businessmen cut employee hours, cancel plans for growth and expansion, or absorb the blow themselves?

The debate over raising the minimum wage is in part a debate over whether entrepreneurs should be forced to shoulder even greater burdens. By not seriously considering what the minimum wage demands from such business people, we are treating them not as human beings with rights, but as pack animals that must obediently carry whatever additional weight is piled on their backs. Their judgment, their career dreams, their lives — why don’t these matter?

People would be outraged if the rights of employees were trampled with such callous indifference. Where’s the outrage over the treatment of entrepreneurs?

About The Author

Doug Altner

Doug Altner was an analyst and instructor at the Ayn Rand Institute between 2011 and 2014.

Anheuser-Busch InBev just wrapped up its controversial merger with Grupo Modelo — the parent company of Corona — despite initial opposition from the Department of Justice and then last-ditch efforts of consumer groups, rejected by the court. The merger, it was alleged, would lead to higher prices and less variety in beer. Leaving aside whether these concerns were real, there is something impacting beer prices and impeding the ability of brewers to bring new beers to market: government regulations.

Delivering better beer at lower prices isn’t easy. To continue to introduce interesting new beers, brewers like Anheuser-Busch are constantly experimenting with new tastes — Christmas beers, “strawberry lemonade” beers, etc. Bud Light Lime resulted from an initial crop of 26 experimental flavors. Brewers are constantly engineering better cans and bottles that are not only pleasant to drink from but also ensure the beer remains cold and fresh during transport. But there is one common business practice that brewers are prevented from undertaking: improving the distribution of their products.

Brewers are forbidden by law in many states from distributing their own beer because the government artificially partitions alcohol distribution into a three-tier system of brewers, distributors, and retailers. A relic from the tail end of Prohibition, this system forbids brewers from selling to retailers directly, mandating that they instead use middlemen. (There are exceptions. For instance, some states allow certain microbrewers to self-distribute provided they secure a license.)

In other industries, large companies such as Coca-Cola frequently distribute their own products to stores, allowing them to cut costs by centralizing operations like truck maintenance and routing. This also allows them to ensure that delivery schedules are planned in a manner that is most efficient for them, rather than relying on third-party shippers who may have several customers to please.

But brewers like Anheuser-Busch are prohibited from doing the same, and instead must deal with hundreds of distributors, each of which has its own priorities and procedures. In many states, it does not matter if Anheuser-Busch can cut costs by 20 percent with their own trucks; by law it has to rely on middlemen (five different ones in the St. Louis area alone).

The costs and hardships imposed by the three-tier regulations also impact small brewers. Rhonda Kallman risked everything to start her own beer company. She left a top executive position at the Boston Beer Company — the brewer of Samuel Adams — and mortgaged her house to finance her vision of introducing a caffeinated beer, which she called Moonshot. She worked hard to promote it, often spending late nights promoting her beer in local bars and visiting stores to ensure her beer had the display space she was promised.

But the government-imposed three-tier system was one significant obstacle that stood in her way. “Daily, I will get a request from a consumer that wants to buy a case or two or three,” Kallman explains in the documentary Beer Wars, “[but] I cannot get it to them. We can’t ship beer because we have to go through the three-tier system.”

In a truly free market, the main thing that a craft brewer would need to do to get his product on shelves is persuade the retailer to carry it. But under today’s government-imposed three-tier system, entrepreneurs face a giant hurdle: the requirement that they go through distributors, who may prefer to sign exclusive deals with larger brewers.

How absurd is it that in many states a microbrewer is forced to use a third-party distributor to take a few cases of beer to a convenience store down the street from his brewery?

Beer aficionados debate whether the three-tier regulations favor large brewers or small brewers. But what is essential is that they impose artificial obstacles on all brewers, big and small. Especially at a time when our sluggish economy is at the forefront of people’s minds, policymakers should be bending over backward to remove government-created obstacles that impede American businesses.

About The Author

Doug Altner

Doug Altner was an analyst and instructor at the Ayn Rand Institute between 2011 and 2014.

Long before General Motors neared collapse, it was a proud and flourishing symbol of American manufacturing. In the 1950s, GM was the first company to ever make $1 billion in a single year, and it had 50% of the domestic automobile market. GM executives used to proudly quip, “we’re still losing 5 out of every 10 sales!” What happened to this great company?

Many factors are acknowledged as contributing to GM’s decline: it juggled too many brands, over-extended its dealer network, failed to respond rapidly to market cues, and struggled to work with its union, the United Auto Workers.

But the extent of its problems with the UAW is astonishing — and the problems themselves warrant explanation. Consider some of the onerous arrangements that GM’s management agreed to.

Labor costs for a typical UAW worker at a GM plant were by some estimates $73 per hour — compared to the $44 per hour for workers at non-unionized Toyota and Honda plants in the U.S.

Or take the infamous “jobs bank”: surplus workers, rather than getting laid off, would receive 95% of their full salaries plus benefits while the company waited to reassign them. But instead of being temporarily idle, thousands of “bankers” would be there for months, if not years, while they watched movies, solved crosswords, and just passed the time. Some senior employees would even pull strings to get “laid off” so they could finish their remaining few years “working” in the bank before retiring with full benefits.

There was also the so-called “thirty and out” rule allowing union workers to retire with full pensions and health care benefits after thirty years of work. A worker might be able to retire in his early 50s and collect an annual pension of $37,500, paid wholly by GM. By 2008 there were 4.6 retired GM employees for each active worker. Did anyone think this was sustainable?

Union work rules made it cumbersome to complete simple and vital tasks in a timely manner. For example, Rand Simberg — a former GM employee who is now at the Competitive Enterprise Institute — explained that, while overseeing the flow of components at a GM factory, he was not permitted to flip a circuit breaker if it tripped in one of the assembly robots. Instead, he had to wait for an authorized electrician to flip the switch. Of course, assembly lines could shut down while waiting for the electrician to arrive, costing the plant thousands of dollars per minute.

Why did GM bear these burdens? Some find it plausible to attribute such problems to inept management. After all, Steve Rattner — President Obama’s auto czar — did call GM’s management “stunningly poor.” But we cannot evaluate GM’s decisions without recognizing a wider context: the coercive nature of labor laws.

If labor relationships were completely voluntary, executives would be free to refuse any union demand that they considered unreasonable, and to even expunge persistently troublesome unions from their facilities. However, businessmen lack this freedom today. Labor laws such as the Wagner Act of 1935 prohibit businessmen from discouraging workers from unionizing, force them to recognize a union if it gets enough votes, and force the company to bargain with its union.

In practice, this pushes business and labor into a forced marriage of sorts. Unions like the UAW can get away with making demands that are hard to imagine employers entertaining, if they were free to say no without legal repercussions. Forced between a rock and a hard place, employers like GM must either cave in to some of the demands or risk facing costly and time-consuming litigation over whether they were negotiating “in good faith.”

Even former UAW president Leonard Woodcock confided to a friend: “Our members have the best contract that people with their skills and education could ever hope to get. But we have convinced them that with every new contract, they are entitled to more.” GM’s management and the UAW were locked into a legally mandated, coercive relationship. And the union knew it.

Whatever one concludes about GM’s history with the UAW, the company made many arrangements that a large employer would want to avoid — not have to keep for decades — if labor relations were fully voluntary.

About The Author

Doug Altner

Doug Altner was an analyst and instructor at the Ayn Rand Institute between 2011 and 2014.

Starting next year, the Affordable Care Act will limit how much health insurance premiums can vary based on age. Health insurers will be restricted to charging older people no more than three times higher premiums than they charge younger people. This is bad news for the young.

It’s a fact that, in general, the older you are, the higher your medical costs (six times higher when you compare 64-year-olds to 18-year-olds). If insurers can’t charge older people according to their risk, they have to make up those costs by charging higher premiums to those younger. According to the American Action Forum, once the new health law’s various rate restrictions and other provisions kick in, 27-year-old non-smoking males may see premiums rise, on average, by 189%, while 55-year-old women who smoke may see their premiums fall, on average, by 18%.

No one, presumably, would be comfortable with the idea of fleecing our children and grandchildren in order to lighten our bills. But supporters of the Affordable Care Act have taken to arguing that forcing young people to subsidize older people isn’t some new consequence of the health law — all insurance, they claim, requires some people to subsidize the expenses of others. Take fire insurance. Ten thousand people might sign up to insure their homes, but only a couple of those homes may end up burning down. The premiums paid by those whose homes did not burn down go toward rebuilding the homes of those whose did.

“That’s how insurance works,” insists health policy analyst Aaron Carroll, who concludes that the health law’s age-related rate restriction is “really not much different than how insurance is supposed to function, by transferring money from the more-healthy to the more-ill.”

But by equating traditional insurance with the health law’s age-related rate restriction, commentators like Carroll ignore a key component of insurance in a market absent government intrusion: the freedom to buy a policy that is priced according to your own risk — a policy that subsidizes no one.

Think about why you buy insurance in the first place — you don’t do it to subsidize the expenses of others. You do it because you think that a particular policy — with the benefits it provides, the premium it calls for and the co-pays and deductibles it charges — best meets your particular risk-management needs.

It’s true that the business model of insurance involves selling policies to people on the statistical premise that only a few will file claims, which will be paid for, in part, by the premiums collected from those who don’t. But what an insurer does with the premiums it collects is no more relevant to me, as a consumer, than what Apple does with the $499 it collects for each iPad it sells. The purpose of my buying the insurance policy and the iPad is the same: my judgment that they will both improve my life.

Insurers know we buy insurance for that reason, which is why, absent government meddling, they offer those with lower expected health costs, such as younger individuals, lower premiums. If an insurer instead charged these individuals higher premiums in order to subsidize those older, the company would risk losing ground to competitors willing to charge young people less. Without attracting lower-risk customers, the insurer’s business model would fall apart. This is why premiums on a free market tend to reflect the individual risk each policyholder adds to the risk pool.

An insurance policy that reflects your risk profile is not a subsidy; an insurance policy that has been engineered by bureaucrats to artificially lower the insurance costs for some people at the expense of others is. The age-related rate restriction is but one of the myriad redistribution schemes in the new health law, designed to milk younger people to lower the premiums of those older.

Underneath all its bureaucratic trimmings, what the ACA’s age-related rate restriction amounts to is the declaration that a 27-year-old who is starting out in life, who wants to save up for a down payment on a home, who has his eye on an engagement ring for his beloved, has no right to pursue his goals until he first pays for the health care bills of every generation that came before him. That’s hardly the way to treat those on the cusp of their lives.

About The Author

Rituparna Basu

Rituparna Basu was a researcher and analyst at the Ayn Rand Institute between 2011 and 2016.