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.