It has become something of a cliché in recent days to invoke Ayn Rand’s magnum opus, Atlas Shrugged, when discussing the current turmoil afflicting the nation. The parallels between fact and fiction are unavoidable, however: As the United States of Rand’s novel descends steadily into a morass of economic despair, its government intrudes further and further into the affairs of the private sector, assigning itself ever-increasing power and authority. The regulations that are passed as a result of this government intervention, each ostensibly in the name of “fairness” and “equality”, serve only to snuff out the remaining flickers of personal initiative and undermine the very corporate leaders with the capability to reverse the nation’s plight. It is not until the emergence of the charismatic and enigmatic John Galt, Rand’s living embodiment of free market capitalism, that the oppressed and vilified are offered hope: At his urging, they withdraw from society, allowing the socialist playground created by the political establishment and the “intelligentsia” to collapse under its own weight.
While it might not yet be time for the nation’s business leaders to retreat to a hidden valley in parts unknown, the need for action and leadership grows more urgent by the day. With the removal of General Motors CEO Rick Wagoner at the “behest” of the Obama Administration, the boundaries separating the public and private sectors continue to crumble, opening the doorway for a troubling reimagining of the government’s role in the business world.
Make no mistake: It was the Bush Administration that put the initial cracks in the citadel walls with its bailouts of Fannie Mae, Freddie Mac, AIG and the auto industry, as well as its passage of the $700 bllion TARP plan. The siege, however, has intensified to levels thought unthinkable only a short time ago, spearheaded by President Obama and his Treasury Secretary, Timothy Geithner, and supported by Democratic leaders Nancy Pelosi, Harry Reid and Barney Frank. They have appropriated the current economic downturn, and the accompanying fear of the American public, and attempted to use the ever-increasing panic to push through a radical liberal agenda, one that includes nationalized health care, cap-and-trade environmental restrictions and a drastic increase in the government’s role in education. Such plans, it has been made clear, would be funded by an increase in taxes on the “rich”, a punitive confiscation of wealth from the top 5% of earners in this country.
As the crisis has worsened, and as public discontent has grown, the Obama Administration has fanned the flames even further by encouraging a populist revolt against the corporate world. The AIG bonus scandal was a disgraceful sham on the part of the President and Congress: Despite the fact that Secretary Geithner was aware of AIG’S intentions well in advance, and despite Democratic Senator Chris Dodd’s admission that the Treasury Department had insisted on inserting a loophole into the stimulus bill allowing for the bonuses, shock and anger were feigned all around. AIG CEO Ed Liddy, installed after the insurance’s firm’s downturn last year, was paraded in front of Congress for a show trial, during which he was given a stern rebuke by the very men who had voted in favor of the controversial payments in question. The House doubled-down on its hypocrisy by passing legislation to tax the bonuses at a 90% rate, retroactively attempting to recoup that which it had permitted.
In the days that followed, the Obama Administration continued its assault: Congressional committees were held to discuss limiting employee compensation, while Secretary Geithner laid out a plan which would allow the federal government to exert increased influence over non-banking institutions. Most notably, the proposed initiative would allow the government to take control of companies which it deemed a “systemic” risk to the economy.
And then on Sunday came word that the head of the troubled General Motors Corporation, Rick Wagoner, had been removed. The Obama Administration, upset with the progress the company had made since its initial bailout least year, demanded that the CEO be let go before it would consider providing additional funds. Wagoner stepped down immediately.
As the federal government crosses the imaginary line from impartial regulator, seeking to uphold the rule of law and protect private property, to authoritarian decision-maker, choosing executives and determining “appropriate” levels of compensation, the comparisons with Atlas Shrugged are hard to ignore. As Rand’s novel progresses, we watch with a mixture of amusement and anger as the story’s politicians continually undercut the very businessmen whose help they need the most. As the country’s infrastructure destabilizes to the point of collapse, two of the book’s protagonists, Dagny Taggart and Hank Rearden, offer the nation its last glimmers of economic hope, Dagny with her successful management of the Taggart Transcontinental Rail Line and Rearden with the invention of Rearden Metal, an alloy that is stronger than steel and cheaper to produce. Rather than embracing the accomplishments of these corporate leaders, the government attempts to punish them, placing crushing restrictions on Dagny’s rail lines and forcing Rearden to release his formula to the public. Inevitably, the intervention of the government pushes each of these businesses to the brink of ruin, further degrading the domestic economy. Blind to their own hypocrisy, the very same political leaders who have nearly destroyed Dagny and Rearden then turn to them for help in fixing the nation’s problems.
It is into a similar quagmire that the current Administration is slowly dragging the real-life America of today, led by the ideologies of the President himself. It is crucial to consider Obama’s biography when examining his leadership during this crisis, for it offers insight into the course on which he is steering the country. The majority of his adult life has been spent advocating on behalf of the poor, first as a community organizer and then as an Illinois state senator. His economic philosophy has clearly been defined by those experiences: he is an admitted proponent of the “bottom-up” theory of growth, one which views prosperity as being generated from the lower and middle, rather than upper, classes. Not only does Obama refute the notion that it is the rich who produce wealth, he seems to harbor a resentment of them. This simmering disgust was on display during his recent interview with Steve Kroft of 60 Minutes, during which he repeatedly giggled when talking about corporate failure and spoke in mocking tones when referring to the “best and brightest” on Wall Street. This is a man who long ago bought into the notion that the rich, through unrestrained greed, have stolen wealth from the poor and callously left them to suffer in misery. His recent statements and policy proposals indicate a determination on his part to correct this perceived wrong through a plan of government intervention and economic redistribution.
And yet by pursuing such a course of action now, during a recession, while at the same time encouraging a public distrust in business, Obama is every bit as blind and misguided as the cartoon-like politicians of Atlas Shrugged. Look at the astoundingly contradictory message his Administration has delivered to the business world within the first two months of his time in Office: We will tax you directly to pay for the nation’s health care. We will restrict your ability to grow by limiting your emissions. We will tell you how much your executives will make, and if we change our minds after the fact, we will take what we deem appropriate. We will parade your CEOs in front of a national audience and embarrass them, and if we disagree with their actions we will fire them. And if all else fails, we will take over your company and do as we see fit. You are gluttonous, you are reckless and you must held accountable for your avarice.
Now fix this mess.
How can Obama, in one soaring, Telepompter-induced speech after another, promise to restore our economy to its previous levels of success while at the same time doing everything possible to handcuff the very companies he will need to accomplish such a goal? How can our President expect prosperity when every action he has taken has served to fuel increasing levels of uncertainty? Do none of his vaunted advisors understand that putting undue pressure on our nation’s corporations will only serve to push them elsewhere, thus driving us further into our current predicament?
Look again at the examples of AIG and GM. As CEO Liddy explained during his testimony, the bonuses paid to the company’s employees were not performance bonuses; they were retention bonuses, incentives designed to prevent a mass exodus as the company wound down its financial products division. More importantly, the government was informed of these bonuses late last year and signed off on them, going so far as to create a loophole in federal legislation so as to ensure their payment. Immediately upon sensing public unrest, the government changed course, condemned the company, pilloried those who had received a bonus, and demanded that they return money that they had earned while working under a legal contract. What business will ever feel confident in this country if it believes that the government can intrude into its affairs and break binding agreements? That it can retroactively tax money it feels was not appropriate? Clearly, AIG is not blameless in the current financial mess, and yes, it must expect to alter its business operations while receiving bailout funds. But what is to stop the government in the future, once a precedent has been established today, from waging war against companies which are deemed “harmful” to its ever-changing prerogatives? What would stop the Barney Franks of the world from confiscating “excessive” compensation from oil executives, or tobacco company executives?
GM also suffered a betrayal by acquiescing to the demands of the federal government. What no one on the left will admit is that it is liberal policy which has crippled General Motors, as well as Chrysler and Ford. Under the weight of its commitments to the United Auto Workers, compensation packages which bring the hourly rate of a union worker to nearly $70 an hour, the Big Three have been unable to compete with foreign companies. It is the Democrats, led by Obama, Pelosi and Reid, who have emboldened the unions, leading to such oppressive contracts as those with the UAW. It is also the Democrats who have forced the Big Three to comply with CAFE standards, seeking to improve fuel efficiency by compelling these companies to build smaller, more dangerous cars that consumers do not want to buy. It is as a result of these obligations that the Big Three have been forced to alter their business models, pushed into a corner where no company can hope to succeed. And now they are eviscerated for failing to improve by the very government officials who have contributed to their downfall. Why would any company trust the government to provide room for success, when those in control are pushing an agenda that runs counter to growth? Why would such companies remain in this country, subjugated to oppressive standards and regulations, when they could flee to China or India?
And by the same line of reasoning, why would the rich that Obama has targeted remain here as their government absconds with more and more of their hard-won earnings? The supreme lesson of the Reagan Administration is that liberalism’s bottom-up economy is fatally flawed. The laborers and blue-collar workers of this country, the construction workers, the janitors, the electricians and the plumbers, are all vital components of our country, but in the end, they work as a result of the magnanimity of the upper classes. They work because one of those wealthy individuals that Obama seeks to punish decided to open up a business. Or grow a business. Or enjoy the fruits of his labor by building a home. It will not be the blue collar workers of the nation who will pull us out of this recession. That is the responsibility of the CEOs, the entrepreneurs, the small business owners, the capitalists: they are the ones who drive our economy. And it is only by providing a stable business environment, one that is less burdensome rather than wildly unpredictable and authoritarian, that they will have any chance of succeeding.
If we are to preserve our role as the world’s leading economic power, we must hope that this is a lesson that President Obama learns very quickly.