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  • The Accidental Eloquence of Mrs Rearden

    Posted by David Foster on October 18th, 2010 (All posts by )

    I’m a bit reluctant to post anything that mentions Ayn Rand, for fear of triggering some very heated and off-topic discussion…but recent trends in the political and business spheres have reminded me of a line in Atlas Shrugged which was spoken by Henry Rearden’s mother:

    All business is just dirty politics and all politics is just dirty business.


    Mrs Rearden is not drawn as a very attractive character, and the above assertion portrays her cynicism and her disrespect for her son, a very successful industrialist. Under a properly functioning system of democratic capitalism, the statement is certainly not true. But it describes very well what happens when business and government become excessively interwoven.

    Under the policies established by Barack Obama and his congressional allies, the single most important factor in the success or failure of an American business lies increasingly in the strength of its relationships with politicians and regulators. (Consider, for example, the special exemptions to certain requirements of the new healthcare law that were handed out to McDonalds and 29 other specifically-identified companies. Or consider the damage now being done to many small businesses by the “consumer product safety improvement act”–can anyone doubt that this problem would have been fixed, or would never have arisen in the first place, had only the affected industries been better organized for lobbying purposes?) Given the overwhelming importance of these relationships, businesses will be increasingly desperate to do whatever it takes to get the power brokers on their side. And politicians and senior regulators will find their power and influence greatly increasing, will sponsor legislation and regulations to further increase it, and will take full advantage of their increased market value in their post-government careers. A back-and-forth career pattern between business and government will become increasingly key to individual career success. And companies and individuals who find themselves outside of the charmed circle will find their options increasingly circumscribed, with malign consequences for innovation and productivity.

    Benjamin Franklin observed that: There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice—the love of power and the love of money. Separately, each of these has great force in prompting men to action; but, when united in view of the same object, they have, in many minds, the most violent effects. Connecting these passions together too tightly is inherently dangerous.

    Irving Kristol noted that: ..the pursuit of power is a zerosum game: you acquire power only by taking it away from someone else. The pursuit of money, however, is not a zero-sum game, which is why it is a much more innocent human activity. It is possible to make a lot of money without inflicting economic injury on anyone. Making money may be more sordid than appropriating power—at least it has traditionally been thought to be so—but, as Adam Smith and others pointed out, it is also a far more civil activity. But when the pursuit of money is linked too closely to political factors, it ceases to be inherently civil and positive-sum.

    Excessive interweaving of business and government hinders the ability of each of these institutions to do its work properly, and–as the rule more and more becomes “it’s not what you know or what you can do, but who you know”–acts as a corrupting influence on the entire society. And Mrs Rearden’s cynical statement:

    All business is just dirty politics and all politics is just dirty business.

    …becomes a concise description of a grim reality.

     

    14 Responses to “The Accidental Eloquence of Mrs Rearden”

    1. Kirk Parker Says:

      the special exemptions to certain requirements of the new healthcare law that were handed out to McDonalds and 29 other specifically-identified companies.

      Yeah, how is this not the moral equivalent of a bill of attainder?

    2. Lexington Green Says:

      Bills of attainder pertain to criminal punishments, not civil duties or rights.

      It’s bad, but its not a bill of attainder.

    3. Kirk Parker Says:

      Lexington, that’s why I prefaced the magic words “the moral equivalent of”.

    4. Lexington Green Says:

      Kirk: The difference between imprisonment and other, lesser sanctions is why I disagree with the equivalency!

      Rather than equivalency, it is literally a violation of a basic principle of the rule of law, that the law should be applied equally to all.

      Perhaps businesses not blessed with this exemption can bring a lawsuit based on the Equal Protection clause to enjoin the enforcement of the exemptions, or in the alternative, of the whole new statute.

    5. Michael Kennedy Says:

      I wonder if these large companies that are intent on tipping the scales their way by seeking government favors aren’t losing the edge that makes business successful. Bill Gates jumped at an opportunity that IBM did not see, or at least appreciate. Now Microsoft has become a clumsy bureaucracy that might succumb to the right combination involving Unix and savvy entrepreneurs. The auto companies are such a horrendous example, they’ve become a cliche. One small item in the book “Crash Course” stuck with me. When the Japanese companies opened their plants in the US, they fully expected to be unionized. They were surprised by workers who did NOT want a union.

      The mortgage collapse was part of the bubble in housing but it was also a consequence of an industry that had lost its edge as riches poured in the door. Megan McArdle is worried that the title insurance industry may not be able to handle the complexities of the MBS collapse as the paperwork may not be clean enough to decide who owns what.

      It’s a bit like marrying the boss’s daughter. Once you have it made, you might lose interest in the details of making the enterprise work. Maybe some of us are better off right now as tiny mammals than as lumbering dinosaurs with tiny brains.

    6. Marty Says:

      Michael Kennedy–

      More like marrying the Don’s daughter. Actually, remembering “The Godfather,” that didn’t work out so well for Carlo, did it?

    7. Michael Kennedy Says:

      I don’t know how many people still read any of John P Marquand’s novels. I suppose not many. My favorite contrasts a young man growing up in the 1920s who has a rivalry with a rich young man who marries the boss’s granddaughter that he loves and has known since childhood. It’s called “Sincerely Willis Wayde” and has what is probably a pretty good picture of a young man in business during the Depression. He and his wife, in later years, are acquaintances of the granddaughter and her husband. I reread it once in a while. I like it much better than his better known (at the time) novels which are forgotten anyway. It’s another side of the Depression and shows that, no matter how bad things are, some people can still prosper. Marquand faintly disapproves of his character so there is a tart undertone to the story.

    8. Lexington Green Says:

      Copies for a penny of Sincerly Willis Waye.

    9. Michael Kennedy Says:

      They don’t know what they’re missing. I have mine still. Along with about 300 books I don’t have room for now. Separation anxiety, here I come !.

    10. onparkstreet Says:

      Somewhere on my old blog I linked to another blog called “Forgotten Books” or something like that. Filled with suggestions like the one MK mentions above. Stuff people used to read and not don’t, generally speaking.

      Given the book loving vibe around here, I have to go dig up that link! Or not. Depends on my mood :)

      – Madhu

    11. Lexington Green Says:

      Madhu, find it and repost it on CBz.

    12. mlyster Says:

      I’m glad that I finally read Atlas Shrugged last year; makes the references easier to understand, as well as the decidedly mixed reactions it inspires.
      Splendid premise, that is all too much like reading next week’s newspaper. Ploddingly written (sorry), but worth it.
      Big business now maintains its primacy by tangling the feet of climbing competitors in miles of red tape and regulation. Made worse, by the revolving door of elected office to board of directors to lobbying position: it lowers both business and government further into the mud.

    13. Ric Locke Says:

      Ah, good. Call it “Reardon’s Law”.

      Big business, especially the corporate form it requires to get big in the first place, is essentially a deputy Government. It’s not an accident that the two gradually grow together.

      If both libertarians and communists understood that, it would be easier to explain things.

      Regards,
      Ric

    14. David Foster Says:

      Ric…’tis true that capitalism requires a government strong enough to enforce peace and property laws, whereas in early feudalism, you protect your property by fighting for it…no central government at all required. (Indeed, in feudalism the distinction between the economic sphere and the governmental sphere is indistinct)

      But this doesn’t imply that capitalism requires large and intrusive government, much less one that attempts to micromanage the productive sector. In the early 1800s, the government of capitalist and rapidly-industrializing Britain was considerably less intrusive than the government of less-capitalist and less-industrial France. (Although even in Britain the government did intervene in the economy in harmful and sometimes-corrupt ways, as in the Enclosure Acts and the selective enforcement of the Combination Laws against labor but not against business)