Monday, October 13, 2008

Who's John Galt?

Ayn Rand wrote a novel, Atlas Shrugged, that I read when the Soviet empire was imploding. It made perfect sense at the time as the events in the novel, depicted in the US, were mirrored in events in the Soviet Union.

What I didn't realize at the time was that the "strike" against the "looters" described in the Atlas Shrugged had already occurred in the United States. And that strike was only broken by the rise of Nazi Germany and the Japanese attack on Pearl Harbor.

Consider the crash of 1929. It was a major correction as a market bubble popped. It also caused reverberations from Wall Street to Main Street. My grandparents were impoverished and my parents lived with the concern about another depression. My father's friend would invariably ask, "Do you think we'll have hard times, Don?" A generation of Baby Boomers learned to roll their eyes in response to exhortations to economize from their Depression-baby parents. Today, a lot of economists claim that the hard times were prolonged by our politicians response to the crisis.

Here's the problem. Economic corrections are painful and politicians are compassionate people. Yes, they're corrupt and self-serving in too many cases, but you'll never meet a politician who really doesn't feel your pain. And they want to relieve your pain if they can. They'll get reelected if they relieve your pain. Governments relieve economic pain by putting money into the hands of those who hurt most. This takes a number of forms: unemployment benefits, bailouts of critical industries, welfare, entitlements and college tuition grants. But some of these analgesics can be habit forming, like morphine they cause dependence. The greater the pain of an economic correction, the greater the likelihood that the government will be pressured to apply pain-killers. If pain-killers become addictions the electorate will demand more of them.

Governments can pass various laws, but they cannot repeal the law of gravity. They can set up rules for coordinating economic activities in an orderly fashion. But governments can't create wealth out of nothing. Governments can print money, borrow money, and raise taxes. This wealth can be given to those who are hurt by an economic correction. But this wealth is taken from someone. There's a book out there called "The Forgotten Man" about the Depression. I've not yet read it, but I suspect this book's "forgotten man" is not unlike John Galt of "Atlas Shrugged."

Someone has to create wealth and that's done by working. Tonight I watched the movie, "My Man Godfrey," wherein several pointed remarks are made about prosperity being right around the corner and "The only difference between a derelict and a man is a job." In a capitalist country, rich people need things done and they give jobs to people willing to do those things. Or you take what you have, and create a job out of it. In rich countries, those who work harder make more money and they spread the wealth around by buying stuff or hiring others. This is just common sense. It is deprecated by those wiser minds who call it "trickle down" and they hope to change this.

In this country we tax income but not wealth. This enables many wealthy people to live off their trust funds, and this frees up their time to do things like become Senators. This system is very good for maintaining the status quo. It makes it harder for new money to displace old money. This is what I realized when I was hanging out with Democrat community organizers who liked money and tax breaks as much as Republicans. If you're Ted Kennedy, you can stay rich and make everyone else pay for the goodies you buy votes with.

Certain Republicans who are wiser than I am (just ask them) say that the Reagan Revolution is dead. They think the Republican party should move to the center. They now think the McCain campaign that was crafted according to their design along these lines should be rebooted. These same Republicans claim that neo-Reaganism is a cancer to the Republican party. There's an old saying that seems apt, "It's not the mountains ahead of you that grind you down; it's the sand in your shoes." Mr. Brooks and those like him have been the sand in the Republican campaign this year.

The Republican party certainly has a branding problem. And it may not be the political party that is needed to oppose those who would grow an already bloated government and lead us further down "The Road To Serfdom."

I've never been consumed with blind ambition. Depending upon how the election turns out, ambition will only earn you a higher tax bracket. Should I go out on strike? Ask John Galt?

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