Gyroscopic Investing

Has anyone read Ayn Rand, more specifically have you read Atlas Shrugged?  If so, what did you think?

Some seem to think it's the Bible of Libertarianism... though most on this site would probably prefer HB's books.

Just curious... I kind of want to read it just to say that I have.

Is it just a coincidence that there is a link between the PP and libertarianism? If the PP had been invented by some statist politician then would it predominately get adopted by people who had come to it via an interest in that style of politics? Based on the wikipedia Ayn Rand entry she doesn't really come across as my bag but then I didn't come across the PP via an interest in HB's politics (quotes on here from him often do seem to make a good deal of sense though).

It's badly written with characters so cartoonish and formulaic they seem silly.  

There are many novels that were written with a specific sociopolitical agenda in mind (Animal Farm and 1984 by George Orwell come to mind), but those by Ayn Rand seem pretty bad.  Supposedly  that may be related to her being a Hollywood screenwriter, but I can't say that for sure.

That doesn't mean you should not read it. With classics, a good reason to read them is the same reason to read Shakespeare. There are so many cultural references from such books that to not have read them may mean you miss the total meaning of the reference. Who "John Galt" was is an example of that.

It's a good book for a college student to read.  I think that it wouldn't seem so silly to someone whose mind is not very critical, but is still open to new and big ideas.

I think that there was probably a period several decades ago when all informed people were expected to have read "Atlas Shrugged", but at some point she just lost her cultural relevance before seeing a resurgence in recent years.  (I once heard that there was a period of time in U.S. universities where ending a paper with "Who is John Galt?" was good for a bump up in your grade.)

I think, however, that Rand was like many ideologues in that she was simply unable to see the flaws in her own reasoning.  To me, this limits the durability of her ideas and makes them look more and more one-dimensional the more time that passes.

She also wasn't a very good fiction writer, though she was obviously a deep thinker with some very big ideas about the ways in which unfettered capitalism could change the world for the better.

Simonjester wrote: i saw the movie first, and it inspired me to read the book, i have to agree the writing is a bit much, a little to "harlequin romance" if instead of well muscled studs the men were successful businessmen, if you can get by the romanticism and the over the top idealism of her writing (and her followers) the underlying philosophy is a good one, well worth exposing yourself to. the parallels with a lot of what is going on in the news today is jaw dropping and some of it could be easily ripped from today's headlines..

She's not Tolstoy as far as writing style/quality, and I'm sure she is far from infallible, but she correctly predicted some VERY important things and ideas which are VERY MUCH in vogue today (on the left).  There is a speech near the end that is VERY worth reading.

Benko wrote: She's not Tolstoy as far as writing style/quality, and I'm sure she is far from infallible, but she correctly predicted some VERY important things and ideas which are VERY MUCH in vogue today (on the left).  There is a speech near the end that is VERY worth reading.

Can you provide a general overview of her correct predictions?

In general, I don't think that Rand appreciated the extent to which, when faced with the opportunity to have the government "get out of the way", corporations opt instead to turn the governmental apparatus itself toward the protection of certain competitive positions within the corporate world. 

A great example of what I am describing is Ronald Reagan's presidency.  During Reagan's two terms in office, the size of the federal government grew significantly (that's not government getting out of the way--that's government becoming a larger agent in society than ever).  What changed during Reagan's presidency was the interests that were being served by the government (and it made many corporations very happy).  The government didn't get out of the way of business so much as it became a more enthusiastic advocate for certain businesses. 

Rand would have predicted that a Reagan presidency would have resulted in a significantly smaller government at its end with a more utopian form of capitalism in place.  The reality was that at the end of Reagan's presidency the government was larger than ever, while the distribution of wealth within society was on its way to a level of disproportionality that typically creates political and cultural destabilization that weakens the entire society (along with its economy), which is sort of where we are today.

The banking industry is perhaps the finest example of what big business really wants.  The banking industry doesn't want the government to get out of the way; rather, it wants government to be available to help it ensure that the banks' debtors have to pay the banks back no matter what, while also making sure that when the banks are faced with their own insolvency the government stands ready to bail out and recapitalize them (with public money, of course).

I think that if Rand had been less of an ideologue she might have had an easier time seeing that the system she thought might one day might produce John Galt has instead produced lots of corporate leaders who are all too happy to feed from the public trough, even as they talk about how influential "Atlas Shrugged" was to them.

Someone could write a parody of "Atlas Shrugged" and call it "Atlas Got a Government-Provided Shoulder Brace" and talk about all of the huge companies that would have gone under in 2008-2009 without very significant help from the government.

MediumTex wrote:

Benko wrote: She's not Tolstoy as far as writing style/quality, and I'm sure she is far from infallible, but she correctly predicted some VERY important things and ideas which are VERY MUCH in vogue today (on the left).  There is a speech near the end that is VERY worth reading.

Can you provide a general overview of her correct predictions?

In general, I don't think that Rand appreciated the extent to which, when faced with the opportunity to have the government "get out of the way", corporations opt instead to turn the governmental apparatus itself toward the protection of certain competitive positions within the corporate world. 

I think in a way she did predict it because the protectionism of government was a central part of the book. Railroads, steel mills, etc. used their D.C. men to curry favors in a mix of crony capitalism and collectivism. So in many ways I think she did predict quite a few things very well. The story has its holes, but I do think she did a good job illustrating what happens when the negative feedback loop of free markets (allowing incompetent people to go bankrupt) is disabled and merged with statist expansion.

I just re-read the book a couple years back. I was amazed at how much she had gotten right. Not just about the US, but about how these systems implode in places like the Soviet Union. She predicted the destruction there decades before it happened and was pretty much correct on the consequences of their policies internally.

I enjoyed reading "Atlas Shrugged" when I read it about 20 years ago.  I enjoyed "The Fountainhead" a little more, which was also a long time ago.

A few years ago I read "Anthem" and didn't like it very much.

A Rand quote I always liked is:

"Ask yourself whether the dream of heaven and greatness should be waiting for us in our graves - or whether it should be ours here and now and on this earth."

Whether or not there is a hereafter, I thought that was a pretty forceful reminder that there is plenty to be experienced in the here and now.

MT,

1. The speech that I refers to starts on pg 1009 in my paperback which ends on pg 1168 and is well worth reading.

2. From WIkipedia:

":In the final section of the novel, Taggart discovers the truth about John Galt, who is leading an organized "strike" against those who use the force of law and moral guilt to confiscate the accomplishments of society's productive members. With the collapse of the nation and its rapacious government all but certain..."

"Confiscate the accomplishments of society's productive members"  Sound familiar?  "spread the wealth around"

I guess it was Margaret Thatcher who said "the problem with socialism is that you run out of other people's money."  Here Rand is warning that they are coming for your money (in the guise of doing good of course) and her answer was Galt's Gultch.  If you have a better solution, I would really like to hear it as I think we in the US will be needing it before all that much longer (5 years?  10?).

"With the collapse of the nation and its rapacious government all but certain..."  I can't imagine why that would happen.

3. MT,

"In general, I don't think that Rand appreciated the extent to which, when faced with the opportunity to have the government "get out of the way", corporations opt instead to turn the governmental apparatus itself toward the protection of certain competitive positions within the corporate world.  "

What you say is true, but not related to Ann Rand's points.  Jerry Pournelle likes to point out:

"Adam Smith told us that whenever two capitalists get together, their conversation turns to scheming on how they can get the government to restrict entry into their business, and thus reduce competition."

I thoroughly enjoyed Atlas Shrugged, but it should be read as a work of entertaining fiction without trying to put too much additional thought into it.  Ayn Rand has a distorted world view because she thinks of everything in terms of black and white, with no shades of grey.  There are only the moochers and the inventors.  Every independent businessman is a saint, every lobbyist, politician, or moocher is the devil.

She uses entertaining stories and writing to make us empathize with the heroes and heroines in her novels while making us hate the moochers.  While reading her books, I'm sure many students felt indignant against the moochers, while conveniently forgetting that they might have received federal financial aid to give them the opportunity to read her book...

I wonder what it would really be like if we lived in an Ayn Rand utopia, where the best capitalists were left alone and allowed to thrive.

I wonder if this would even ever be possible  It seems like there would always people and governments trying to redistribute their wealth. 

Adam1226 wrote: I wonder what it would really be like if we lived in an Ayn Rand utopia, where the best capitalists were left alone and allowed to thrive.

I think that the basic question is whether a society can stay together once the distribution of wealth in that society reaches a certain degree of disproportionality, and it seems as if unfettered capitalism always leads to increasing concentrations of wealth in the hands of fewer and fewer people.  Thus, the question is at what point an economy premised upon unfettered capitalism begins to devour itself socially and culturally.  I don't know that it is possible for increasing concentrations of wealth to go on into perpetuity.  Sooner or later one guy owns everything and everyone else works for him, and at some point a member of the palace guard decides to make a change...All I am saying is that it's an unstable arrangement at the extremes.

History is filled with examples of societies where the rich got richer and the poor got poorer and the rich didn't seem to think there was anything wrong with that, but sooner or later the poor get fed up with their lot in life and then the stage was set for a revolution.  Sadly, the post-revolution world in these cases is often not a lot better than the pre-revolution world (except that there is a new group of rich people).

At some point (and I don't know where that point is), unfettered capitalism goes from making a country stronger to making a country weaker.  One of the prerequisites for a good place to do business is to have a relatively stable political situation with strong property rights, a clean court system, and a population that is willing to work and be productive.  At some point, increasing concentrations of wealth begin to undermine all of these things.

I started a thread on this a while back because it is a really vexing issue and I don't know what the right answer is--I just know that at some point the 99% (or whatever the percentage is) simply lose faith in the system and are no longer willing to strive to keep it together.  Once that happens it takes very little for the system to begin falling apart.

I guess what I am describing is sort of like a poor man's "Atlas Shrugged."  Maybe you could call it "Atlas's Trainer Shrugged", and it would be how legions of poor people just throw in the towel once they lose a certain degree of self-determination through excessive levels of debt, high unemployment and a loss of upward mobility.

Gerald Celente (who normally annoys me) captured the sentiment I am describing when he started saying in 2009 that: "When people lose everything, and they have nothing left to lose, they lose it."

Is there some truth in the idea that what it means for a "best capitalist to thrive" is for that person to be controlling (perhaps indirectly via money) a large number of less able (in that regard) people. Putting all the best capitalists together would mean that they would not be able to do what they do best and that is to productively organize (or exploit) less capitalistically proficient people's labour etc. It would be a case of too many chiefs and not enough indians. It might make sense to have all the best subsistance farmers/ hunters together but I don't see that as the same as all the best capitalists.

Anyone here familiar with Aristotle's "natural slave theory"??

Keep in mind that 5 days ago we had a record-breaking retail black friday, despite terribly high unemployment and incredible private sector debt...

Honestly, I think consumerism is largely to blame for where we stand right now - it wasn't those 1%'ers who were out pepper-spraying each other in Walmart, it was the 99%'ers like me!!  They're probably the same people who are complaining about having to work until they're in their 70's.

I once heard the theory that if you took all the money in the country and redistributed it evenly to everyone, 20 years later all the same people would be rich again...  I never would have believed that before, but seeing how careless many people can be with their money, perhaps there's a slight hint of truth to that concept.

Overall, it's really a great book.  The flaws are that Rand lacks any trace of subtlety and the bombastic writing is at times a bit of a "bodice-ripper for businessmen".

Having said that, the ideas that she explores are very important and almost never addressed in fiction.  The picture she paints of a tired civilization yielding weakly and willingly to decline and chaos is without peer.  Her fictional town of Starnesville, Wisconsin is still an especially vivid (and vividly Detroit-like) image to me.

MediumTex wrote: In general, I don't think that Rand appreciated the extent to which, when faced with the opportunity to have the government "get out of the way", corporations opt instead to turn the governmental apparatus itself toward the protection of certain competitive positions within the corporate world. 

Wow!  I couldn't possibly disagree more -- to me, the very hallmark of Atlas Shrugged is the way that Ayn Rand absolutely skewers crony capitalism.  What made Dagny Taggart, Hank Rearden, and all the other denizens of Galt's Gulch so unique is that they wished only to be traders, asking only of others what they would willingly give in mutually profitable exchange.  Rand's whole point was how rare such people are.  Her fictional world is mostly populated with pathetic men like James Taggart and Wesley Mouch.  She spends 1000 pages showing us how that turns out.

Most of the supposed "captains of business" proved to be just more club-wielding looters.  Rand saves her greatest disdain for these "businessmen" who wrap the use of naked force in layer after layer of equivocation and simpering excuses.  They were all too willing to use force (in the form of a corruptible government) to take what wasn't theirs.

I read Atlas Shrugged in the teeth of early 2009, the height of the Barack W. Bush torrent of bailouts, stimuli, and governmental interference.  Rand's ability to predict how big business and big government would cling to one another when the water got choppy was bang on.  Whether I was reading the book or checking out the day's news, the corrosive effects of crony capitalism were always the story of the day.  It got downright eerie.

My great takeaway from Atlas Shrugged was a simple idea: a virtuous person lives a life of non-aggression and in return demands non-aggression from others.  The rest of the book is exploring all the ways (many of which are rarely addressed in fiction) that this basic idea relates to how we live our lives and treat one another.

Lone Wolf, you've persuaded me to get hold of a copy

I haven't read the book so I don't know whether this is relavent but for me one big problem with capitalism is that free trade does not preclude someone getting bamboozled into getting a raw deal. Someone can provide something of real value and yet loose out to someone who is a mere trickster. I kind of see evolution of capitalism as being towards ever greater resources going towards tricksters.

Lone Wolf wrote:

MediumTex wrote: In general, I don't think that Rand appreciated the extent to which, when faced with the opportunity to have the government "get out of the way", corporations opt instead to turn the governmental apparatus itself toward the protection of certain competitive positions within the corporate world. 

Wow!  I couldn't possibly disagree more -- to me, the very hallmark of Atlas Shrugged is the way that Ayn Rand absolutely skewers crony capitalism.  What made Dagny Taggart, Hank Rearden, and all the other denizens of Galt's Gulch so unique is that they wished only to be traders, asking only of others what they would willingly give in mutually profitable exchange.  Rand's whole point was how rare such people are.  Her fictional world is mostly populated with pathetic men like James Taggart and Wesley Mouch.  She spends 1000 pages showing us how that turns out.

I see what you are saying and I think the point I was trying to make was slightly different. 

To me, Rand seems to be saying that if the government just let capitalists be capitalists, a utopian form of capitalism would naturally emerge with people like her heroes leading the way.

What I was saying is that this is not the way it would actually go down.  What I am suggesting is that once the political environment was optimized for utopian capitalism, it would still be subverted by capitalists who see the obvious benefits of using the governmental apparatus for their own aims.

Perhaps the more basic problem is that Rand was presenting a configuration of human beings that may not actually exist--a utopian capitalist whose greed has in no way compromised his higher ideals and when offered the reins of political power he will voluntarily decline to take it.  There may be such people, but I'll bet there aren't many.  I don't know if there would be enough to populate a John Galt utopian capitalists' refugee camp.

I guess I go into any laissez faire argument with a ton of skepticism, because, as discussed before on this board, the Randian utopia would still have government deeding out land that isn't anybody's, often to a select portion of the population.  Now we have the liberty of most of the desireable land being lived on so we take it for granted, but I truly wonder what gives government the authority to recognize as private property something that is absolutely not inherantly private.  Ayn Rand's utopia would have government deeding land to people, and I'd like to hear her describe what a fair way of doing that would be.

If we can acknowledge that there is a massive amount of wealth on and in the earth as a result of zero human creativity, the next step is how a society should choose to organize on that property and distribute it.  Communists would say have the government control it, Rand would say privatize it all (who do we deed it to?), an anarchist would say the government has no authority to tell anyone that land is anyone elses, and I would say that society could reasonably come somewhere in between... You want the land to be properly managed, AND you don't want massive gov't coercion around the activities on land (though city planning could be considered just that), so I say you DO want to deed a lot of it out and allow people to live freely on it.  That said, there are obviously people that haven't benefitted from this grand distribution... in fact it was often the land taken from one group and the forced labor of another to farm it that built our economy through the 1800's.

So once you've systematically put wealth in the hands of certain people (land & natural resources) assuming that it will be better-combined with their ingenuity in that arrangement (which I'd agree with), you now start the libertarian clock and make poor people that didn't get land and have no education pay for the following: shelter, children's education, healthcare, their own education (if they have time after the factory shuts down), food, etc.

That sounds feudal to me, and I guess this is what I come to with libertarianism: I thin the main flaw of libertarianism is that it tries to illustrate all wealth as a result of creativity, ingenuity, hard work, etc, when a massive amount of wealth is actually simply a result of some people being able to claim resources as theirs that were actually here before any of us were born.  Government shouldn't socialize all land use, but it should, IMO, socialize the "wealth handout" they established by deeding land in the first place.  The deeding was a social engineering move... not a recognition of achievement.  Let's look at it in that context.

Not to rag on our founding fathers, who I respect considerably, but it becomes especially eerie when you look at a government who only let land-owners vote, not to mention the other restrictions put on it (white and male).  

I also think MT's post on distribution of wealth was spot-on.

Lone Wolf wrote: A virtuous person lives a life of non-aggression and in return demands non-aggression from others.  The rest of the book is exploring all the ways (many of which are rarely addressed in fiction) that this basic idea relates to how we live our lives and treat one another.

I agree that this the point being made in the book, but it's also what makes it something of a fairy tale.

There will always be greedy, aggressive people and therefore there will always corruption in business and politics.

I personally get a little bit nervous when I start to hear politicians pushing the Ayn Rand-like philosophies.  I think the reality of what happens is much different than that which is promised.

Not all "bad capitalists" petition government for help.  Some are just bad and simply not punished by the market because the market is often ill-informed as to what just happened (think of all our discussions about unnoticed wall-street tomfoolery... security lending of our ultra-safe long-term treasuries within TLT!)

Many tell half truths and write lopsided contracts in areas of informational assymetry, fooling customers into purchasing their financial, insurance, consumer, or real-estate products.

If our society was one where you could depend on a handshake and honest advice, then I'd be much more enthusiastic about Rand's philosophies.  Unfortunately, the guy making the widget work better often won't turn as much of a profit as the guy who tarts up the widget that doesn't work with a good sales pitch and a nice hair cut.

moda0306 wrote: If our society was one where you could depend on a handshake and honest advice, then I'd be much more enthusiastic about Rand's philosophies.  Unfortunately, the guy making the widget work better often won't turn as much of a profit as the guy who tarts up the widget that doesn't work with a good sales pitch and a nice hair cut.

I think that's one of the places where this debate becomes very complex.  It ultimately becomes an issue of personal due diligence, and then you can have the whole "freedom vs. security" debate. 

MediumTex wrote: To me, Rand seems to be saying that if the government just let capitalists be capitalists, a utopian form of capitalism would naturally emerge with people like her heroes leading the way.

What I was saying is that this is not the way it would actually go down.  What I am suggesting is that once the political environment was optimized for utopian capitalism, it would still be subverted by capitalists who see the obvious benefits of using the governmental apparatus for their own aims.

I see what you're saying.  I completely agree that there will always be that desire to subvert and use force for one's own gain.  I think we as a society would be best off choosing to make government nothing more than an agent to combat force and fraud.  But if we don't... then that's simply what is.  I'm not a Utopian.  I don't believe that the world can be perfected.  (And I think that trying to make people or society "perfect" at any cost is very dangerous and rarely works out like one hopes.)

I do think that the world is a very, very good place just as it is.  I also believe that it can and probably will get even better.

An interesting thing about the universe: it was flawed and uneven from the first minute of its existence.  If all the surviving matter from the Big Bang had blown apart evenly, gravity would have maintained it in a "perfect" equidistant lattice, and nothing would have ever coalesced.  The slight unevenness of our beginning was what allowed gravity to collapse matter into nebula, stars, and galaxies.

If the universe had been born perfect, nobody would have ever been around to see how nice it looked.  And what a crying shame that would have been.

stone wrote: I haven't read the book so I don't know whether this is relavent but for me one big problem with capitalism is that free trade does not preclude someone getting bamboozled into getting a raw deal. Someone can provide something of real value and yet loose out to someone who is a mere trickster. I kind of see evolution of capitalism as being towards ever greater resources going towards tricksters.

This is a fascinating point because it brings up the scarcity of information.  If you aren't in possession of sufficient information or do a poor job of assimilating it, you are indeed subject to "bamboozlement".  (More complex systems such as byzantine governmental regulations or enormous contracts written in impenetrable legalese are thus more "expensive" for an individual to process.  This is a reason that there is great economic value in simplicity whenever possible.)

Information is just one more scarce good and like most scarce goods, it's generally more readily available to those who can afford it.

The good news (and the reason I'm optimistic) is that information has become dramatically less expensive in the digital age and this trend looks like it's only going to continue.  As time goes by, I think that ignorance will become more and more of a choice than one's lot in life.

LW,

I like your point on piercing the veil of informational assymetry through our tools today, but for some reason I feel like I'm no closer to understanding an insurance policy or wall street product today than someone was in 1955, in some ways.  Your point is well-taken though, and we really have our own selves to blame in a lot of ways for our financial blunders.

My point on land and natural resources really is my main point of concern with libertarianism, especially when you consider that many areas where we do tend to really test the mix of private/public land (metropolitan areas), rely immensely on governments doing a good job of creating solid infrastructure that all "works" in the form of transportation of various forms interlinked, reliable utilities, and common areas.

Part of that is dealing with having a lot of people in a small area not bother each other in ways that discourage productivity or social behavior, and sometimes having a system that makes sure the uber-poor have a place to sleep and eat will cost far less than if people feel like they could get mugged, are discouraged by an area of the city, and we have to pay to incarcerate someone and provide them with food/shelter anyway!!... though then you have to talk about the dependence factor and that's a whole other arm of the discussion.

I not sure information technology has helped to level off information asymetry. Think of high frequency trading where the worlds most powerful computors are deployed to get ahead of the game. I think simplicity is something that has to be constantly battled for. In the UK we have some archaic regulations such as bread loaves having to be sold at either 400g or 800g. You can't sell a 600g loaf. Personally I think such rules are needed in order to have fair pricing. If every shop had loaves of a different size customers would not get a good price. Competition for electricity pricing is a relatively new thing in the UK. As a result there is no such old school style regulation. The charging is so complex that people just take lucky dip and get ripped off. I'd like financial markets to be like the bread loaf market with all complexity swept aside. The financial system worked perfectly well in the 1960s and has exactly the same purpose now as it did then.