John Galt is the small and medium business owner in your town. He runs the bakery. He’s the franchisee of the local Price Chopper. He designed your car for General Motors.
Atlas Shrugged, Ayn Rand’s opus to Objectivism, was published in 1957 and has never been out of print. It sold over 70,000 copies annually in the 1980s, over 95,000 copies a year in the 1990s, and is up over 100,000 copies a year in this decade. This year is different, though. As America moves more toward Euro-style socialism, with Joe the Plumber paying more in taxes to buy Henrietta Hughes a house, sales of the book are up. In the two months since President Obama’s inauguration, sales of Atlas Shrugged are triple what they were for the same period last year.
Back in October of last year Dr. Helen Smith, forensic psychologist and staunch libertarian, predicted on her blog that people may begin ‘Going Galt’.
Obama talks about taking from those who are productive and redistributing to those who are not -- or who are not as successful. If success and productivity is to be punished, why bother? Perhaps it is time for those of us who make the money and pay the taxes to take it easy, live on less and let the looters of the world find their own way.
Recently there’s been a run on the concept, with conservative author and blogger Michelle Malkin leading the charge.
But is this really a new concept? After all, wealthy businessmen have been hiding their money from the tax man in Grand Cayman for decades – and in Switzerland for centuries. True, hiding your income isn’t quite the same as running off to live in a gulch and withdrawing your particular talents from society. It is, however, a small way of Going Galt.
So is cutting back spending. In tough economic times, the average American might cut out the family holiday or the weekly trip to Ruby Tuesday’s, but the economy will pretty much keep rolling along. What would happen if the upper classes suddenly decided to stop spending, though? What if those in the highest tax brackets decided to drive their cars into the ground before replacing them, or plant a vegetable garden and fire the nanny? That nanny wouldn’t have an income. The local grocer would see less revenue (especially if an entire upscale neighborhood took the same action). The Lexus dealer in the next town over would lose out on profits, which means no trip to Ruby Tuesday’s for him and his family. If enough people did this, then Toyota would have to cut staff in its Lexus division. Ruby Tuesday’s would lose out on all those families.
The knock on effect of small scale Gulching – or Going Galt – would be catastrophic as the government spins its wheels attempting to stimulate the economy. To have the top brackets simply cease to spend would be disastrous. Remember, income tax isn’t the only way to get into the pockets of people. There are sales taxes out the wazoo in every state, plus federally. Gasoline tax. Hotel taxes on the weary business traveler. Restaurant tax. Municipal parking fees for the commuter. If Galt, a mythical medium business owner, decides to give up his lifestyle and join the lower classes, he won’t be spending any of that as he goes to work at Arby’s or at the Port Authority.
While some companies are not quite ready to give it all up, they are certainly doing what they can to avoid the cash-grab coming from the government. Offshore drilling contractors Noble Corp have announced that they are moving their base of operations to Switzerland, a company with no real oil production of its own. The same goes for engineering group Foster Wheeler and oilfield services company Weatherfield. Swiss taxation is lower than what they would be facing in America right now. They will technically be Swiss companies; though they will still be contracted out to whatever part of the world they are needed. America will lose out on the revenue. They will have Gone Galt, in their own small way.
What if tomorrow the Walton family decided to do the same with Wal-Mart? Or if McDonald’s decided Mumbai might be a better place for their corporate head office? Coca Cola? Would it still be US Air if they were based out of Jamaica?
Those of us in the lower tax brackets might be flip and say eat the rich, but we do so at our own risk.
Comments
I would like to see more of you actually Go Galt.
The example I use to prove my point is the one I personally experienced. We had bought a house last fall and wanted to get our hardwood floors refinished.
A few weeks ago we interviewed two contractors.
One came and shared with us that "The project is going to take 5 business days. Times are tough, Obama is going to tax me, so I have to cut down on business and lay off some staff to avoid paying extra taxes. It is a matter of principle. "
The other one did not share his political opinions with us and told us he has enough staff to complete the project in 2 business days. He offered recommendations and showed us samples of his work.
Needless to say we hired the second contractor.
I suppose this is a win-win -- we got a better job done faster using a fully-staffed firm, while the first contractor avoided paying extra $300 in taxes this year.
What's the moral of this story ?
If more of you went Galt the world would be a better place and we would all get an opportunity to express our creativity and hire competent staff.
I totally understand what you're saying, OD. Not everyone is of a "Galt" quality to make a difference - at least not right away. But how can you know for sure that Contractor #2 did a better job than #1 would have? What if #1 was the very best in his business?
This is a great point and something that my family has already started to do. On a combined basis, my wife and I made just under 7 figures last year. She was laid off in July and decided not to go back to work. I was laid off in Jan and am now looking for something that will just pay the bills because I have no interest in working hard to have half my marginal income go to the government to support these programs. As a result, we have decided not to buy that car we were considering, instead driving the minivan into the ground, we are canceling all the lawn and landscaping services we were paying for over the last few years. We are basically re-evaluating every single dollar we spend. I have enough savings to get my kids a top quality education at any school in the country and that is my biggest concern at this point. After that, I would be content to just work until I drop.
I have already paid more into the system in the form of income and payroll taxes than most Americans earn in a lifetime and yet I hear about how I am not paying my fair share. I have already paid my fair share and then some. I think I am going to spend more time with my family and work at getting some of that hard cash back.
Wendy,
You are confusing production and consumption. Failing to consume is not the same thing as failing to produce. If we fail to produce, all the paper money in the world won't buy them food to eat. That is why the world can't get rich by printing money. Read Atlas Shrugged.
If the business owners really did decide to "Go Galt", there would be a revolution. This would in effect be holding the American worker hostage, not allowing them to work all in the interest of some pseudo self-important grandstanding would be seen as treasonous. Not only would it be seen as unpatriotic, but would also spur a quicker move to socialism, (opposite of the desired effect). Sorry, "Mr. Keynes", but you made close to a million last year? Nobody feels sorry for you, let's start acting like adults, we are all in this together...
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Wendy:
With hardwood refinishing it is a pretty simple matter -- it is either good or it is bad. Maybe in other fields the differences are more pronounced.
But nevertheless, my experience with contractor #2 was quite pleasant and did not involve uncomfortable ideological discussions.
It DOES have a lot to do with capital projects. If you want to expand your business, you are not guaranteed increased cash flows. Even if you are, increased taxes by as little as 5 percentage points (e.g., 32% to 37%) can mean the difference between you doing the project (e.g., buying heavy equipment or physical plant and hiring people) and you passing on the project (sorry, job-seekers).
I agree that one should stay away from ideological conversations with customers or employees. However, our village, county, state and federal governments are NOT on our side.
"Going Galt" is not primarily of an economic concern, rather it is a moral concern. Specifically, it is the withdrawal of the sanction of an altruist morality by altruism's victim's. This problem is what Ayn Rand termed the "sanction of the victim". It is only by it's victim's sanction that altruism, collectivism, and statism is able to get a stranglehold on a country. Because evil is essentially impotent, i.e., the irrational cannot lead to practicality, it is only by the good's compromising/appeasement that enables the evil to grow.
As it relates to the novel, Atlas Shrugged, it was shown concretely how the great titans of industry withdrew and left their businesses to rot rather than to be the state's siphon. But it is their reason for doing so that is key in understanding their motivation. A good example in the novel, again, for what I'm talking about is Hank Rearden's withdrawal of sanction from his wife, Lillian. When Rearden finally comes to realize his wife's altruist motivations he decides to withdrawal his sanction thereby enabling him to pursue a guiltless romance with Dagny Taggart. In Rearden's action of "Going Galt" it is his sanction of altruism that he is withdrawing. And this is the reason behind the striker's actions. They understand that it is their sanction of altruism that ultimately is what is destroying them. They know that they are their own worst enemy in this sense. So the best possible response to this is to shrug. Shrug off the chains of altruism, the Morality of Death, and realize that egoism is the Morality of Life.
This idea of altruism vs. egoism as it relates to the novel is discussed further in an interview by Yaron Brook, president and executive director of the Ayn Rand Institute in a recent article at The Objective Standard website entitled, "Ayn Rand’s Atlas Shrugged and the World Today".
Clinton, you may not feel sorry for Mr. Keynes, but how do you feel about his landscaper being out of a gig?
What if it were you? Maybe your family didn't make 7 figures last year (Lord knows mine didn't!). Maybe you made 5 or 6. Can you afford to give up half that? And even if you could afford it, should you? After all, you worked for it, didn't you? You go out and spend a little of it every day, on a product or service that someone else supplies. You are part of the food chain, just like Mr. Keynes. If you lost or job or were being robbed by the administration, would you like Mr. Keynes telling you that you don't matter?
I recently saw the Chinese Premier threaten Obama on his economic policy. The Chinese Premier is worried that huge US government deficits to fund consumption (Obama: moving the money around plan) will negatively impact the value of China's investment in the US (US Treasury securities). He sail that China may look at diversifying their holdings (selling their $1 trillion of US Debt).
The Chinese premier understands that the stimulus package is going to rewarding consumption and not investing in productive investments. There will be nothing to pay the bill later. Higher taxes will actually produce less revenue for the government. The Chinese premier understands John Galt and what Atlas Shrugged was all about. I wonder if Obama and Pelosi know who Ayn Rand is?
Uh, "JR", Obama is a Harvard educated lawyer, you think he doesn't know who Ayn Rand is? Talk about pompous...
Anyway, the thinking spawned by Rand is the reason we are in this predicament today. Egoism is the folly of Madoff, it is not to be rewarded, it is to be punished. The rich people owe their money to the workers, the workers make the money for the rich. The wealthy have supposed that they were special because of their wealth, when in fact they are just as immoral as any normal man. When the titans of industry assume some sort of superiority to their workers, (as "going galt" suggests), it's time to chop that tree down.
I like Sen. Grassley's answer to these bloated executives..."have some honor, kill yourself"...
My wife and I used to earn over $250K combined. But once Obama announced his plan to punish us for that, my wife quit her job to stay at home with our toddler. One small way to go John Galt. The impacts are enormous. It resulted in the government receiving less than half of the taxes they used to get from us. No longer will the government collect payroll taxes on her, also we are in a lower tax bracket now. In addition, our sales tax bill diminished significantly. 1) She no longer needs the expensive shoes and clothing for work, or the daily $14 lunches (plus $3 tip to the waitstaff). 2) Her gas tax contribution decreased to near zero. 3) We no longer pay the daycare center so their tax contribution decreases. 4) Etcetera, etcetera. So, I apologize America for being so greedy previously. Hopefully our withdrawal from job creation via our supposed over-consumption will make all you Socialists very pleased. Greed is all around us. You can criticize the productive citizens and businesspeople for being "greedy", but right now Government and Healthcare are the only two industries gaining employment - check the BLS data....it is true. Just remember, when someone speaks to you of COMPULSORY "service" and "sacrifice" as Obama did in his inauguration speech, he is speaking of Masters and Servants...and he intends to be the master who directs you with regard to whom, what, and how much they will be sacrificing. Have a nice day.
Because Obama is fairly young, as far as politicians go, it's more than likely that he's heard of Ayn Rand. However, that doesn't mean he's understood her philosophy. Of all the criticism that I see of Ayn Rand I'd say 99.99% of it is from distortion, dishonesty, context-dropping, misapplication, ad hominem, outright falsehood, etc. This is no exaggeration on my part and "Clinton"'s comment is representative of what I'm talking about.
He is wrong to state that Rand's ideas are what caused the economic recession. Rand advocacy of laissez-faire capitalism is exactly what this country has yet to see. It is the unfree market that has failed not the other way around.
See here: www.theobjectivestandard.com/issues/2009-spring/altruism-financial-crisis.asp
As for Madoff, please...Rand took explicit care to explain what it means to be an egoist in her novel The Fountainhead and in The Virtue of Selfhisness. Don't assume that because she uses the concept "selfishness" that you know what she is talking about. It is neither the case that her use of "selfishness" entails exploiting others or that she someone how is rewriting the dictionary. She is in fact using the concept in its true, pure form, i.e., concern for one's own interest. This does not yet tell us what interest that is or how to achieve it. This is what Rand sets out to explain in her ethics. Of which Madoff has no part, only in that he is a criminal fraud whose exploitation of others is more akin to the collectivist mentality implicit in "Clinton"'s comments. These points may not be obvious to those unfamiliar with Rand, so I suggest those interested start reading her works, especially The Virtue of Selfishness.
Also: "the workers make the money for the rich"
The Labor Theory of Value has been thoroughly repudiated, for evidence look at Soviet Russia, East Germany, even Zimbabwae today. Can't we leave Marx in the trash where he belongs?
And finally, I think you call for the death of businessmen speaks for itself. Even if someone else says it first, it only shows that you're too much of a coward to take responsibility for your own ideas. And please don't act offended at my characterization, it's your words that are the morally reprehensible.
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