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Atlas Shrugged and the Wisdom of Bailouts

I caught an interesting article today over at the Wall Street Journal reflecting on the prophetic wisdom of Ayn Rand's epic novel, Atlas Shrugged. I haven't actually read the novel, although I've wanted to read it for some time - I just haven't had the chance quite yet. I've enjoyed many of Ayn Rand's non-fiction books, including The Return of the Primitive: the Anti-Industrial Revolution and Capitalism: the Unknown Ideal. The Wall Street Journal sure makes me want to go out and get a copy:

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

Sound familiar? The funny thing is, Ayn Rand said this in 1957, well before banking bailouts, auto bailouts, bailout bailouts, and other assorted government nonsense. Many in my generation don't really appreciate that socialism has had its claws in our country for quite some time. From the failed New Deal policies of Franklin Roosevelt, to the misguided interference of the Community Reinvestment Act, we've been at this misguided attempt at central control for quite a while. We desperately have to recognize what Ayn Rand did: there's something special about the creative ability of the human mind. While she sought to justify laissez-faire capitalism on a completely moral basis, she nonetheless observed the decay that comes with central economic planning. Disrespecting and punishing creativity cripples the economy:

The current economic strategy is right out of 'Atlas Shrugged': The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to 'calm the markets,' another trillion of national wealth is subsequently lost. Yet, as 'Atlas' grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate 'windfalls.'

[...]

In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "'the public good.' The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.

The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in 'the public interest.'

We'd do well to listen to Ayn Rand.

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