In the years leading up to 2008 – 09’s financial meltdown, government control over mortgages, interest rates and America’s banking system was at an all-time high.
And yet when crisis struck, free enterprise took the blame.
The cure, therefore, was to give government even wider powers. Washington can now bail out any company, fire CEOs, override contracts and print billions of dollars to “stimulate” the economy — all in the name of the public interest. The result? Our deficits and debt continue to mount, and there’s a real possibility of a future like Greece’s.
This is the state of our world today. It’s remarkably similar to the state of the world in Ayn Rand’s Atlas Shrugged, a mystery story about a future America whose economy is disintegrating and whose government is accumulating power faster than anyone thought possible. This parallel is a big reason a record 500,000 people bought Atlas Shrugged last year.
So what can we learn from a book that foresaw in 1957 what few believed possible in 2007? We can learn a lesson the heroes of the novel learn: the cause of the government’s greater, destructive control of business. And we can learn how to oppose it.
Many of the heroes in Atlas Shrugged are the kind of men and women who built, and continue to build, America into the economic power that it is — inventors such as Edison, industrialists in the mold of Rockefeller and Carnegie, business visionaries reminiscent of Bill Gates and Steve Jobs.
In logic and justice, the heroes of Atlas Shrugged should be admired and appreciated for their efforts; instead, they’re demonized and shackled.
Man of Steel
Take the case of Hank Rearden, the leading industrialist in Atlas Shrugged and inventor of Rearden Metal, an alloy superior to steel. Rearden is denounced and forced to surrender his iron and coal businesses because the Equalization of Opportunity Bill demands he create business “opportunities” for struggling competitors.
His production of Rearden Metal is capped by the Preservation of Livelihood Law designed to keep other steel makers afloat. Key businesses can’t buy enough Rearden Metal because Rearden’s forced to give every customer an equal portion under the Fair Share Law.
Each new government scheme to control Rearden’s industry brings a new crisis, and each new crisis brings a new scheme.
The result is the accelerating collapse of Rearden’s business empire — and of all the other productive enterprises that depend on Rearden’s enormous productivity. The only beneficiaries of this orgy of government authority are power-lusting politicians and the pseudo-businessmen who lobby for and profiteer from these laws.
This scenario from Atlas Shrugged is an incredibly destructive one — and yet it is all too reminiscent of recent bailouts and power grabs in Washington.
Why? Why does government control over the economy only grow? Part of the answer in Atlas Shrugged is that those seeking power over business triumph because they claim, unchallenged, the moral upper hand.
Bankers and hedge funds today, like Rearden and the other industrialists in Atlas Shrugged, are denounced as selfish, greedy profit seekers.
And everyone knows that selfishness and profit seeking are evil, right?
Further, the justification of every new government scheme in our world, as in the world of Atlas Shrugged, is that it places “the public interest” above private profit.
When the government created Fannie Mae and Freddie Mac, authorizing them to guarantee trillions of dollars in mortgages, what was the justification? It’s in “the public interest” to promote homeownership for countless Americans.
When the housing bubble collapsed, what was the justification for bailing out failing institutions? “The public interest” demands the preservation of illiquid and insolvent banks. The justification for bailing out GM? It’s in “the public interest” to keep GM workers employed.
And who, after all, dares question the morality of pursuing the public interest?
So when government controls inevitably create an economic crisis, there exists a ready-made explanation and scapegoat: The evil profit seekers must be responsible and so must be further reined in, and the good, public-spirited officials charged with reining them in must have had too little power, which must therefore be increased. Which means: more shackles for productive American businessmen and more power for government.
And so America moves, step by step, in the direction of the economic shambles of a banana republic or a Soviet Russia.
How to reverse course? Challenge these moral ideas.
“The public interest” is an immoral idea.
As Rand puts it elsewhere: “Since there is no such entity as ‘the public,’ since the public is merely a number of individuals, the idea that ‘the public interest’ supersedes private interests and rights can have but one meaning: that the interests and rights of some individuals take precedence over the interests and rights of others.”
This is precisely what we witness in Atlas Shrugged as Rearden’s business is torn apart in the name of the public interest: His money, property and life are sacrificed to anyone and everyone who can gain the title of “the public.” Rearden has no right to his money and metal, because he’s selfishly produced them; sundry other people have a right to both, because in their selflessness they have produced neither, which entitles them to be regarded as “the public.”
This is precisely what we see all around us today, as failing banks are bailed out by healthy banks and taxpayers (are they any less the public?), unprofitable GM is saved at the expense of profitable businesses and their employees (are they any less the public?), and homeowners who cannot pay their mortgages are bailed out by prudent people who didn’t even buy a house (are they any less the public?).
The lesson? Anytime anyone calls for economic policies to promote “the public interest,” he’s calling for evil — the sacrifice of individuals who’ve earned something to those who haven’t.
What’s the alternative to the tyranny of “the public interest”? Each individual’s pursuit of his private interests — in Jefferson’s words, the pursuit of happiness.
The result is a nonsacrificial society, in which government is stripped of the power to concoct schemes to promote “the public interest” and is solely focused on protecting each individual’s rights, including his property rights.
Doing What’s Right
But such a society, Atlas Shrugged shows us, can exist only if we regard making (and enjoying) a profit as an unmitigated, life-sustaining virtue. Rearden comes to realize this — and the importance of speaking up morally. He declares publicly what no Rockefeller, Carnegie or Gates would ever dare declare:
I work for nothing but my own profit — which I make by selling a product they need to men who are willing and able to buy it. . . . I do not sacrifice my interests to them nor do they sacrifice theirs to me; we deal as equals by mutual consent to mutual advantage — and I am proud of every penny that I have earned in this manner. . . . I refuse to apologize for my ability — I refuse to apologize for my success — I refuse to apologize for my money.
Rearden takes this moral stand because he’s realized, in the words of a friend, that:
If you ask me to name the proudest distinction of Americans, I would choose — because it contains all the others — the fact that they were the people who created the phrase “to make money.” . . . Men had always thought of wealth as a static quantity — to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words “to make money” hold the essence of human morality.
Unless we recapture this quintessentially American spirit, this independent, individualistic ethic — and discover the words fully to name it, to understand it, to defend it and to implement it — we’ve no right to expect the freedom and progress that earlier Americans achieved.
This is one of timeless themes of Atlas Shrugged.