Ayn Rand is probably turning over in her grave at this moment in capitalism.
Her famous novel, "Atlas Shrugged," foretells a time when Big Government gets out of control, stifling individual freedom and entrepreneurism. As economist Stephen Moore writes in the Wall Street Journal, the events of 2008 and 2009 sound strikingly similar to the events in her novel:
"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.'"
I am troubled by the current environment - that it will cause entrepreneurism to wither away. In a time when business failure is rewarded at taxpayer expense, and business owners are looked on as "marks" to be tapped to pay for ever-increasing taxes due to all the spending, the incentive to be creative and take risks could quickly dry up.
I think Big Government is changing commerce - and not in a good way. We are sliding toward a socialist state, with government intervention in business at every turn, spending at records levels, and the prospect of the tax burden on the most successful small businesses increasing. Doesn't anybody in Washington know what it means to live on a budget anymore?
Professor Jeff Cornwall notes that it's the long term effects we have to worry about ... and how it may lead to dysfunctional people and businesses. He is visiting Prague and builds a corollary between communism and its aftermath and the situation in the U.S.:
"Although I am now worried about our move toward socialism in the US, I have become more worried about the aftermath. Economic decisions have a major impact on a culture. Although the communist economic system is officially gone, its effects remain everywhere. People here [in Prague] have become innately dependent upon the state. It is become so much a part of the culture that it is difficult if not impossible for most citizens to break free of that dependence. They are like a 47 year old man who never left home and still lives in his parents basement. He hates his lot in life, but is stuck in a dysfunctional, dependent relationship from which he cannot escape. It reminds me of a flood. Although the flood itself is devastating, the aftermath can be even worse. The stinking sludge that remains after the waters subside can take months to clean up. And the rebuilding can take years. But, nothing is ever the same when all is said and done."
So far we are in early days. We haven't seen the long-term debilitating effects and whether it will stifle entrepreneurship. However, the prospects are troubling.
I worry about how many would-be entrepreneurs will never attempt their dreams, because they deem it's "not worth it."
Discuss
Matt Jessell on June 10, 2009, 3:06 PM
Loved the Ayn Rand reference. Atlas Shrugged is one of my fav. books.
Matt Jessell on June 10, 2009, 3:06 PM
Loved the Ayn Rand reference. Atlas Shrugged is one of my fav. books.
Pamela Parker on June 10, 2009, 6:22 PM
Scary scenario but also a very well-thought-out analysis of this moment in history, Anita.
Staci Collier on June 11, 2009, 11:16 AM
These are great insights into the current situation. You referenced, “People here [in Prague] have become innately dependent upon the state. It is become so much a part of the culture that it is difficult if not impossible for most citizens to break free of that dependence.”
This reminds me of the way its been here in America for quite some time. Take healthcare for instance. If you live on welfare – you can get great healthcare. But then they encourage you to get a job. So you do, and most times, many can only find jobs for $8 an hour and no healthcare benefits. So if you have children, a family or an existing healthcare issue . . . why would you get a job for $8 an hour at the expense of loosing your healthcare?
In that situation – it sounds ludicrous, but it doesn’t pay to work.
It makes more sense to stay on welfare and collect the healthcare benefits along with it for you and your family. ESPECIALLY if you have an existing healthcare condition. The entire situation creates dependence – that neither party really likes or wants to be in – but feels powerless to overcome.
Some great thoughts in this article . . .
tim hall on June 11, 2009, 5:14 PM
Big government is not out of control. Our government is injecting money into the system in order to just barely keep the economy a float while it reorganizes all the screwed up rules and regulations from the past. It takes money to fix an economy that has been ran by fascist pigs for 30 years.
If you work for $8.00 per hour, you are just adding to the fascism that we are trying to correct. If you can only find $8.00 per hour jobs, you need to be stealing and robbing from these fascist pigs instead. Trickle down economics does not work. It only works to create roller coaster markets that serve the wealthy.
Entrepreneurs will come back into the market as it starts growing and government will back out. Quit trying to use Right Wing scare tactics to keep from paying for the mess you got us into. As far as risk goes, there is no such thing. These wealthy people have never put up their personal assets. If they go belly up, their personal assets are protected by incorporating. The only thing that they are risking is company monies that should have been paid out in wages so wage earners could purchase their product and keep the economy going without astronomical credit.
The taxes will go down as the loopholes get corrected. It just means that corporations will actually have to start paying taxes. If the corporations relocate, that is fine with me. The Western world has been listening to there fear tactics way too long. We are an innovative people. We don’t need your crummy underpaid jobs or your throw away products.
Change is here and you Right Wing pigs are being put out to pasture. Go ahead and try to fight it. We the people have had enough of your crap. By the way, what are you planning to change your name to? R.N.C. Rush N Crush. Your top politition is now Rush Linbaugh: LOL
John Kawakami on June 16, 2009, 1:24 AM
I thought the CR had a capitalist in government.
You should check up on that.
BTW, Rand’s ideas have no merit. They were applied to the economy by Greenspan and others, and look where it got us. Not even in the limited situation where finance capitalists were allowed to self-regulate, did they do so. They acted irresponsibly when they were given the freedom to be responsible.
The capitalists are lucky to have some unrepentant criminal neoliberals like Larry Summers in the cabinet. If there were justice, he’d be breaking rocks in prison.
Look at what happened when Communism collapsed. It didn’t become really capitalist, but, in a fundamental way, it became capitalist. What would happen if Capitalism collapsed?
Would we revert to monarchy and theocracy?
Anita Campbell on June 16, 2009, 9:03 AM
Actually, the economy will right itself without the government injecting funds. It is already doing so. Because most of the so called “stimulus” hasn’t been spent yet. That’s how we know the stimulus is not needed. I
Who’s going to pay for all this spending? It’s simple accounting — money goes out and you need money coming in.
Martin Lindeskog on June 16, 2009, 9:09 AM
Anita,
Yes, I think that big government will intrude in today’s business environment and crush the entrepreneurial spirit if this trend will continue for a long time. But I am still positive in the long run, due to the fact that new intellectuals are supporting the inventors, businesses, capitalists and others with great fuel. I think it is still worth fighting for a second renaissance and therefore I will do everything in my power to return to the Land of Opportunity – USA.
Matt Jessell: If you are interested in exploring Ayn Rand’s ideas further, please check out my posts, Ayn Rand Links and Ayn Rand Center TV. Atlas Shrugged is one of my favorite books too.
I am glad to see a place as Big Think, spreading good ideas! :) I will spend time to explore this site in more details in the near future.
Best Premises,
Martin Lindeskog – American in spirit.
Gothenburg, Sweden.
Rick W on June 16, 2009, 9:22 AM
Right you are, Anita. What’s really interesting is that when I talk with fellow business owners that have a liberal bent but take this discussion out of the context of politics, every single one agrees that the government bailing out companies and assisting failures is inherently a bad thing. In the context of politics, though, they flip their position.
If only we could take politics out of the equation and use good common sense. Then, many more eyes would be open.
TJ McCue on June 23, 2009, 9:53 PM
As always, Anita, you inspire great discussion. I know I’m always singing your praises, as the saying goes, but I really value your thought process and how you think of ways that entrepreneurs and small biz owners can navigate through various challenges. This time is no exception.
I took heart at this recent post over at Bnet.com — one of my favorite content sites (formerly called magazines, i think).
http://moneywatch.bnet.com/retirement-planning/article/whats-next-4-big-predictions-for-the-us-economy/313582/#comments
TJ McCue on June 23, 2009, 9:54 PM
Oops — here’s the Bnet link about 4 Big Predictions for the US Economy.
Chris DePuy on October 15, 2009, 1:45 PM
Every day, we interact with small businesses every such as restaurants, retailers, medical professionals, auto repair companies.
Our observation is that a reasonable fraction of them is expecting big government to bail them out. I think this hope if uncalled for. I recently observed that only 1/4th as many SBA loans are being made than just a few years ago.
So, despite the claim by our current federal “big government” that it is trying to help small businesses, there is only so much it can do when loan defaults are on the rise.
We’ve taken matters into our own hands by providing alternatives to loans to small businesses.
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