Atlas Shrugged and Government Regulation by Val Muller

I saw Atlas Shrugged Part 2 this weekend. For a limited-government fan like me, it’s a must-see.

You don’t have to have seen the first part to appreciate the second. Part 1 established the world in which the characters live—a world dominated by an energy crisis that has “forced” the government to take tighter control of business and production. In this world—a world not dissimilar to ours—masses of people began hating businesses for being greedy and refusing to share the wealth. All the while, a man named John Galt is claiming all the intelligent and competent members of society—people like our Andrew Carnegie and Steve Jobs. People who create products and resources and opportunities that benefit everyone else. These productive members of society have been disappearing—giving up their hard-earned businesses (often by destroying them) to a world that doesn’t appreciate their contribution.

In the midst of this world lives Dagny Taggart, member of the Taggart family that now owns the nation’s largest railroad chain. With the energy crisis, railroad is the primary mode of travel (note that the filmmaker has slightly modernized the book from which the movie is derived, as Rand wrote in a time when even computers didn’t exist). With increasing government regulations, though, it’s becoming more difficult to be productive, and at the end of Part 1, business owners are forced to sell all but one business—because it isn’t fair that one person should own and operate more than one.

Part 2 follows Dagny’s efforts to continue her family’s railroad business despite a brother who is controlled by politicians (and is the incompetent head of the railroad company). She is also thwarted by increasing government regulation (the Fair Share Act) that forces companies to produce and provide equally to all consumers, not to mention the fact that the major suppliers for the railroad’s raw materials have been disappearing with John Galt.

Despite these disappearances, Dagny has not given up on helping her world and saving her business, and her one partner in this is Hank Rearden of Rearden Steel. Even with increasing government regulations (under a state of emergency, the federal government has seized the ownership of all copyrights), Dagny will not give up, and she struggles to discover who John Galt actually is (if he exists at all) and why everyone competent is disappearing. In the meantime, the more the government tries to fix the economy, the more the country falls apart. At the end of Part 2, even the people are realizing that the government is nothing more than a masked thief, taking what belongs to individuals under the guise of law.

While the film is a hyperbole of our current society, it isn’t that far from our reality. The film’s premise is that capitalism isn’t the problem—government-regulated crony capitalism is the problem. As a result of the government’s regulations, Dagny’s company is forced to shut down some of its rail lines. As a result of the government’s regulations, important producers are unable to secure the raw materials needed to run their businesses. A coal mining company, for example, is unable to buy enough steel to reinforce its mines, resulting in a coal shortage, resulting in a further energy crisis, resulting in lower production across the board. The point is, government regulation that claims to be fairly dividing up resources for everyone just ends up hurting a supply-and-demand system that, if left unregulated, would find its own natural balance and create a better world for all involved.

We can see this problem even today—thankfully on a smaller scale (at least, for now). I even have an anecdotal example from my own HOA experience. Our HOA hires a lawn management company to manage common areas—including mowing, aerating, and fertilizing the common grassy areas. A few times per year, the company sprays pesticide on the lawns. When I walk the dogs, I sometimes walk for the equivalent of two city blocks without seeing a single pesticide application notice sticking in the ground. By the time I see one, I’ve already let the dogs run through the grass, and during this time of year I’m usually wearing sandals as well.

When I contacted the lawn company about placing more signs to inform residents with children and pets of the dangerous pesticide, I was told that the company placed the exact number of signs as required by law, so they were already complying and were not required to place any additional signs. It struck me that in this case, government regulation had failed. Some probably well-meaning politician had at some point created legislation mandating the requirements for placing pesticide application warnings. Companies, being held to the law, now fulfill the minimum requirement and then wipe their hands clean of responsibility.

The mistake here is in thinking government regulation is necessary in the first place. In a truly free market, consumers pressure companies into having good ethics. If a consumer is not happy, he votes with his wallet. If a lawn company was not placing signs for pesticide applications, customers would become angry, and the company would either have to start putting up more signs or look for new customers.

Government regulation makes business lazy and makes people stop thinking. Without government regulation, people would have to be much more aware of business and legal procedures. Businesses shipping labor overseas, for example, would have to balance the potential cost-savings with the potential anger (and quality issues) experienced by its customers. Standards for cars and vehicles—gas mileage, safety ratings, etc.—would not disappear if the government were to step down from regulating. Customers would have to become more informed. Private rating companies (they already exist!) would be used to inform customers of the dangers and benefits of each vehicle. Without aiming for the lowest common denominator—government’s gas standards—companies’ brains would start working on their own, innovating to create even more industrious cars. And to take a shot at the Chevy Volt, without government subsidies, this inefficient vehicle would never have left the drawing room. What customer, in a free market, would want a vehicle that is not cost effective, even factoring in gas savings?

Remember when you were a kid, and you did your chores just well enough that your parents wouldn’t make you redo them? Think about things you actually enjoyed doing. Didn’t you do them with much more ardor and investment than something you were forced to do? Probably didn’t even seem like work, did it? It’s how humans operate. When we’re told to do something, we figure out the minimum standards and make sure we tick all the boxes. When we do something we’re passionate about, we’re much more innovative.

This country was not founded on government regulations. It was founded on the belief that individuals are competent enough to make smart decisions. At some point along the way, we’ve “checked out,” as Dagny notes, turning over our brains to government bureaucrats. I say, it’s time we start thinking for ourselves and shrink bureaucracy back to the molecular size it ought to be.

VAL MULLER is a fiction writer and teacher living in Virginia.  Her mystery series, Corgi Capers, is available with DWB Publishing. You can keep track of her at www.valmuller.com

Government Corruption File #1 : The WARN Act

Here we have a prime example of the federal government ignoring its own rules when politically convenient for a government incumbent running for re-election.

A few facts:

1. The Worker Adjustment and Retraining Notification (WARN) Act was passed in 1988 by a Democratic-controlled Congress. President Reagan did not sign the bill, but it became law because it was passed by a veto-proof majority of Congress (during an election year of course!).

2. The Congress passed, and President Obama signed a law stating that if debt commission recommendations did not receive a vote in Congress, there would be drastic cuts to government spending that would take effect January 1, 2013. In federal budget speak, this is known as sequestration.

3. The WARN Act covers employers having 100 or more employees.  Employers must give at least 60 days advance notice or they may face lawsuits from employees for back pay.

4. January 1, 2013 – 60 days = November 2, 2012.

5. November 2, 2012 is 4 days before Election Day (Nov 6).

6. Contractors providing goods or services to the government would potentially be required to mail out thousands of layoff warning notices to employees, particularly in the battleground state of Virginia, which has many federal contractors. Does anyone see a problem?

7. The Administration, via the Department of Labor, issued letters to federal contractors in July encouraging federal contractors not to comply with the law.  They wrote in typical government-speak: “it is neither necessary nor appropriate for Federal contractors to provide WARN Act notice to employees 60 days in advance of the potential sequestration because of uncertainty about whether sequestration will occur…”

Translation: Despite the fact that the Republican-controlled House and the Democratic-controlled Senate have no plan to reverse the pending budget cuts, you, Business Owner, should not comply with the law.

8. Fearing lawsuits, federal contractors announced that they would continue with plans to send out the WARN Act notices.

9. In September, the government again encouraged businesses not to comply with the law and not to send out the WARN Act notices.This time the notice came from higher up in the Administration’s food chain: The Executive Office of the President/Office of Management and Budget.

In a memo dated September 28, the Administration promises federal contractors that they may be reimbursed the cost of any potential lawsuits but only if they followed the Department of Labor guidance. So there you have it. The Administration–standing for re-election–is promising YOUR tax dollars to companies in exchange for not complying with federal law so that the President’s campaign can score political points (or avoid the consequences of its own decisions).

Of course government’s solution would be to pass a new law (after the election of course) with even stiffer penalties for greedy businesses who “don’t follow the rules.”  Never mind that the government takes no responsibility for its own actions.

This is the kind of corrupt government meddling with the private economy that leads to losses of freedom for everyone. The government instructs businesses to ignore a law so that the consequences of that law are avoided at a politically convenient moment. This is why crony capitalism has earned the name “crapitalism”. It stinks!

Atlas Shrugged II Premieres Friday 10/12

Whether you believe Atlas Shrugged is hyperbolic, cautionary, or even prophetic, it’s an important story to read to remind us of the freedom America offers—and to remind us how quickly that freedom can be taken.

Since Ayn Rand is not the most concise author, we’re fortunate that the book is being made into a film. Part One of the trilogy was released on tax day last year, and Part Two will be released on Friday.

To understand the genius of Rand’s work, it’s important to understand a bit about her life. Born in Russia in 1905, Ayn Rand was subjected to the culture of collectivism in Russia. Almost immediately after teaching herself to read, Rand discovered European fiction, which introduced her to the idea of the hero—the individual—something lacking in Russian culture. She saw two revolutions, and a resulting Communist victory forced her father’s pharmacy to be confiscated, causing her family to nearly starve to death. It wasn’t until her last year of high school that she was introduced to American history. The principles she learned led her to hold America as the paragon of freedom.

She continued her studies through college in Russia, but communists continued to take away students’ rights to freedom of thought. Rand took solace in Western films, once again holding Western culture as the paragon of free men. In 1926, she arrived in New York after telling Soviet authorities she planned only a short visit to America to visit family. Her intention was never to return, and indeed she remained in the United States for the rest of her life.

She moved to Hollywood to become a screenwriter, meeting Cecil B. DeMille and Frank O’Connor, her future husband and Hollywood actor, during her first two weeks there. She continued her writing career, creating characters and stories that illustrate the potential of the ideal man. Atlas Shrugged pits the government collective against individual businessmen.

Here is a synopsis from the producers—hope to “see” you at the show!

In Atlas Shrugged II, the global economy is on the brink of collapse. Unemployment has risen to 24%. Gas is now $42 per gallon. Brilliant creators, from artists to industrialists, continue to mysteriously disappear at the hands of the unknown.

Dagny Taggart, Vice President in Charge of Operations for Taggart Transcontinental, has discovered what may very well be the answer to a mounting energy crisis – found abandoned amongst the ruins of a once productive factory, a revolutionary motor that could seemingly power the World.But, the motor is dead… there is no one left to decipher its secret… and, someone is watching.

But, the motor is dead… there is no one left to decipher its secret… and, someone is watching.

It’s a race against the clock to find the inventor before the motor of the World is stopped for good.

Who is John Galt?

 

America’s Fiscal Irresponsibility Fuels China’s Military Rise

US government debt has swelled to a whopping $16 TRILLION dollars last month in September. That’s $16,000,000,000,000.00 or a sixteen with 12 zeros after it. The number has grown so large so fast that some have difficulty putting a number this big into normal terms.

As President Clinton left office in 2000, the US government had $5.6 trillion in debt. This represents the accumulated deficits of every single year of government operations dating back to the founding of the Republic in 1776. (Some may argue on the date, but the US government established in 1789 recognized all debts incurred by previous governments during the revolution and Articles of Confederation period.)

From 2000 to 2012, the US government added another 10.4 trillion–nearly tripling the size of the debt in 12 years. I explained this to a friend, who said, well things just cost more these days. True but, here’s the score:

224 Years: $5.6 Trillion
12   Years: $10.4 Trillion

Clearly this isn’t possible simply because of price increases in the cost of milk and cookies. And unfortunately the consequences of such poor fiscal management extend beyond future tax increases, having no funds for funding essential government functions, or even funding a reasonable social safety net.

All borrowers have to pay their bills. And in America’s case, we owe A LOT of money. Which means when America pays its bills in the form of interest payments, there are lenders on the receiving end of those payments.

The US Treasury maintains a list of foreign governments who own US debt. As of July 2012, China owned $1.15 trillion in US debt securities or about 11 percent of total publicly held debt. The Treasury Department doesn’t publish exactly what maturities and interest rates each country owns–but a fair estimate would be to assume that 11 percent of debt entitles China to approximately 11 percent of interest paid.  That’s 11 percent of total interest payments on the national debt–$250 billion in 2012–for a total of $27.5 billion.

China has announced a 2012 military budget of approximately $100 billion. At that rate of spending, it can be estimated that US interest payments provide about one-fourth of China’s annual spending on building the world’s 2nd largest military budget.

 

So why point this out at all? Well if you’re part of a group of people concerned about China’s military rise and its commitment to peace in the Pacific, it’s difficult to see how providing one-fourth of the money used for military development via interest payments is a good idea. If you’re not concerned about China’s military rise–maybe we could at least agree on the fact that surely the US could find more productive uses for the $27.5 billion given directly to China if not the total sum of $250 billion spent annually on nothing but interest payments to finance the government’s financial mismanagement.

 

Image courtesy of vichie81 / FreeDigitalPhotos.net