Sunday, March 8, 2009

Going Galt?

Last night, her Knight Errant out of town on business, the Chemistry Geek Princess came home for Shabbat dinner. She did not bring the granddog this time because our new girl, Shayna is extremely timid, and Ruby the Granddog's very extraverted, puppy ways would have sent Shayna Sunshine to her corner for a week

We lit candles, we sang Shalom Aleichem, Malachei ha-Malakim, we blessed the children--including the 23 year old--the Engineering Geek read Eyshet Chayil (A Woman of Valor), we made Kidush over the wine, we made the blessing for bread.

It was all very pleasant, but as we began the main course, the talk turned to literature which turned quickly to the state of the Republic.

The Chem Geek Princess began by saying: "I am re-reading Atlas Shrugged, and this time through I am noticing that the words on the page reflect reality even more starkly than they did last summer." She went on to talk about the Bank President with a Heart in the book, who loaned money to people who needed it even though they could not afford the loans, and who was thereby responsible for bringing down the economy of Wisconsin, making it a blighted area with no industry and no future. Then she said, "You know, that is a literary version of what actually happened when the Community Reinvestment Act forced the financials to lend money for people to buy houses, people who could not afford those houses and those loans. Then the banks failed and . . . well, here we are."

We went on talking seriously about the economy, the stimulus that isn't one, and the fact that it won't work and that it cannot work. The CGP went on to talk about the Laffer Curve, and how she sees it's basic truth because she knows a lot of people in small businesses that will make more than $250,000, and they are already finding many ways to either cut that down to $249,000 (at least on paper) or are looking to shelter their money in other ways, so that they don't have to start producing less or laying off workers.

The talk turned to the galloping socialism that the Obama adminstration wants to introduce to our country, in the middle of the night. The CGP is very angry because, as she puts it, this administration is selling her future and children's future to his "utopian nightmare." They will be paying a tax rate of 60 -80 percent, just to pay off what Obama and Bush have borrowed in the past six months for the bailouts and the stimuli. She pointed out that she, a mortgage holder for a a very small house in an older neighborhood of Albuquerque, is going to have to pay off the mortgages of people who foolishly bought houses they could not afford. She and others like her, will have the crushing debt of the irresponsible to deal with, making it impossible to ever get ahead. "It's tax slavery, Mom!" she said indignantly. "Why should I bother to work hard and be responsible when the sweat of my brow will be taken by force to pay mortgages for those people who were not so responsible and who are likely to lose those houses anyway? Why should I have to pay to keep the financials that made the bad loans in the business of paying huge bonuses to failing CEOs?"

Why should she indeed? Soon, it's not going to be worth it for her to earn more, to create more, to work harder, because the harder she works, the more the fruit of her efforts will be taken from her by force to support nameless others who do not work as hard as she does. She will not reap the rewards of her effort, she will not be able to put by money for her children's future (as we did for her).

This is what Santelli meant when he said, "The government is promoting bad behavior!" And the nameless trader said, "It's a moral hazard." (See the Shout Heard 'Round the World if you haven't already).

We then began to discuss the story of Twentieth Century Motors as told by the tramp who had worked there, a key piece of plot in Atlas Shrugged. The story illustrates the inevitable result of forcing the Marxist principle of "from each according to his ability, to each according to his need" on free human beings. What happened in the factory is that when the old man died, his heirs got the workers to vote in the use of this principle for the factory and its workers. They were to be all one big family, they thought. And the workers voted for it, because, in the words of the tramp who'd once been a skilled worker:

"There wasn't a man among us who didn't think that under a setup of this kind he 'd muscle in on the profits of the men abler than himself. There wasn't a man who . . . didn't think that somebody wasn't richer or smarter, and this plan wouldn't give him a share of his better's wealth and brains. But while he was thinking that he'd get unearned benefits from the men above, he forgot about the men below who would get unearned benefits from him . . .The worker who liked the idea that his need entitled him to a limousine like his boss's, forgot that every bum and beggar on earth would come howling that their need entitled them to an icebox like his own . . ." (Ayn Rand. Atlas Shrugged, Centennial Edition, p. 666, italics in the original).

So the workers who "played it straight" and put forth their best efforts soon found out that they would not be able to have butter on their bread until everybody else had bread; that their children could not go to college until everybody else sent their children to high school. And of course, there were those that gamed the system and brought in every "worthless relative from all over the country, every unmarried pregnant sister, for the extra disability allowance." And since ability and need were decided by a vote, there was an endless drain on those who were responsible. Those who worked hard were forced to work harder, in order to provide for the endlessly growing need of those who did not. And since human beings do not like to be slaves, what happened next was predictable:

"We began to hide what ability we had, to slow down and watch like hawks that we never worked any better or faster than the next fellow. . . We knew that for every stinker who'd ruin a batch of motors and cost the company money . . . it's we who'd pay with our nights and our Sundays . . . What was it they told us about the vicious competition of the profit system where men had to compete for who'd do a better job than his fellows? Vicious, was it? Well, they should have seen what it was like when we all had to compete with one another for who'd do the worst job possible . . . Ability was like a mortgage on you that you could never pay off . . ." (Ibid. p. 662-663).

The story of the factory in Atlas Shrugged is not real, but is an illustration of the consequences of the idea placed in closed system. But this kind of behavior is the consequence of the redistribution of wealth writ large or small, wherever it has been tried. When Stalin starved the peasants off their land, the result was famine for all, because the peasants weren't willing to work hard and well to benefit others when they received no benefit from their work themselves. And in the United States, at the height of the Great Society, when the marginal tax rate (defined as the tax on every dollar over a set amount) became greater than 90%, people began making sure that they did not earn a dollar more than that margin. Ronald Reagan did just this, and stopped working as an actor mid-year when he reached the marginal limit. This caused him to change his party affiliation and work for the Goldwater campaign. The Beatles protested the same kind of "tax-the-rich" scheme in their song The Taxman, and then moved their business to Holland.

President Obama's plans to "spread the wealth around" (as he put it to Joe the Plumber) will not result in stimulating the economy. It will result in tax slavery for generations of Americans who work and pay taxes. And don't think that everybody who works will have their wealth confiscated equally. Remember, those will pull in Washington don't have to pay their taxes. (Think of the tax cheats now in Obama's cabinet). No, it will be ordinary, ambitious Americans who will see their dreams stifled and their savings taken from them as they are condemned to work and leave it up to the Obamas of the world "to decide whose stomach will consume the effort, the dreams and the days of your life." (Atlas Shrugged, p. 670).

There comes a point when it is not worth it work to earn beyond one's subsistence; a point when the tax rate makes a rising income and rising productivity a liability. This is where our children may well find themselves due to the spending without reason or end, as the federal government spends trillions that it does not have to prop up industries and businesses that cannot succeed.

And this is why many hard-working young Americans are thinking of Going Galt.

The Chem Geek Princess is one of them.
Oh, she is not thinking of trying to find the mythical Galt's Gulch in a valley in Colorado.
She is trying to figure out how not to earn past the margin, where the fruit of the days of her work will be taken from her to pay for Peggy Joseph's mortgage and gasoline.

And many of the rest of us are "going Galt" too. We are doing it by planting gardens, trading favors among neighbors, becoming frugal. Paying fewer taxes by making less money and buying fewer things. We are doing it by taking our money out of the stock market, not counting on that 401K cum 201K, refusing to invest in bonds and currencies that will soon have no value. This is why every time Paulsen opened his mouth, and every time Geithner opens his, the stock market falls. A whole lot of us know that we are being scammed into tax slavery.

The press elites call us wingnuts, but we are the ones paying their salaries, and those of the pols and bureaucrats, too.

The press elites may sneer, but many of us are preparing ourselves and our children to be able to ride out the storm and we are working to protect our rights. We are organizing ourselves to demand a redress of our grievances from our government by having Tea Parties and the 2009 Continental Congress. We are gathering to remind our servant government that We Surround Them. We are gathering at the Campaign for Liberty to remind our public servants that they are elected at our pleasure for the purpose of protecting our Liberty. This is what happens when you try to foist "from each according to his ability to each according to his need" on a free people.

Are you listening, Mr. President? We're going Galt.


Rational Jenn said...

Sounds like an interesting discussion. It is sad that your daughter is facing these issues when she's just starting out. Of course, it's sad that we are all facing this, really. I really hope that many people take the time to re-read Atlas Shrugged and think about some of the things that Ayn Rand was saying. When the government makes achievement something to be penalized (through taxes, for example), people will not want to produce. Those people will be rightfully looking out for their own self-interests, taking care to minimize the fruits of their efforts that can be stolen from them.

Elisheva Hannah Levin said...

Jen, that's exactly it.
I am very worried about where this Obamamania is taking the nation and how fast it is happening. That he is a socialist is now clear, even though his pragmatism will not allow him to admit his real ideological roots.

Anonymous said...

And yet "Do not stand idly by while your neighbor bleeds." Leviticus 19

Elisheva Hannah Levin said...


Actually the verse you cite has more to do with justice in the case of murder than it does tzedakah--which is the Hebrew for charity. (I hesitate to use the word charity which has a different meaning than the Hebrew word, but that is the common understanding in English).
However, it is true that Torah requires Jews to give to those in need. Nowhere in Torah, however, is tzedakah defined as confiscatory taxes paid at the point of a gun to a government agency. Rather, to have any moral meaning, tzedakah is the voluntary action of individuals to address need that they see in their own communities.

To that end, because my husband and I are serious about Torah, we give about 10% of our income to charity; the largest portion goes to carefully vetted organizations in our local community and in our state, with a smaller portion going to certain national and international organizations.
We also give of our time as volunteers to organizations in our community, and our priority is to those organizations that feed the hungry and clothe the naked.

I am not a conservative, rather I am a libertarian, however, I find it interesting that in sociological studies, those who tend to conservative values also tend to give more of their incomes to charity when compared with progressives and liberals--those people who believe that someone else i.e. the federal government should do it.

Gershon said...

The Torah requires everyone to help his/her neighbors. Everyone can find poorer persons than ourselves, so this is only fair. As I understand this, a tithe or 10% is suggested for the average person. A wealthy person normally is forbidden to give more than twice that, since that person and the family deserve a reasonable portion for working harder and/or smarter.
20% is not close now: Considering hidden taxes, the poorest of us contribute more than that.

Brianna said...

I recently talked to my mother about Eugene Lawson too. I must admit I had underestimated her; I read Atlas in high school and I knew she had read it too, but back then she used to tease me that the only reason I liked the book so much was because I supposedly had a crush on Rearden (after all, SHE had one). What she said about the book in high school made me assume she had not taken it seriously, so when I discussed it with her recently, I was surprised to find that she actually did take Rand's ideas seriously, and knew many of the things that I have only recently become aware of.

I do not think she and my stepfather are preparing to shrug though (actually, I'm not sure my stepfather even engages in recreational reading). I think my mother is simply waiting for the shoe to drop, and refuses to worry about it until then.

To a certain extent I do not blame her, since it's not exactly something one can predict as occuring in a definite way or a definite point in time. Also, she is your age, so maybe she'll be lucky and not have to see it. But I am your daughter's age, and will definitely have to see it. I live as best I can, and I make what preparations for the future that I can, but it is hard.

Elisheva Hannah Levin said...

Brianna: Isn't interesting when we get to the age where we can really listen to our parents? My mom knew all sorts of things that I didn't she knew.

About the "other shoe." I tried hard for a while to bury my head in the sand and just wait for it, but when we lost 1/3 of our investments in the fall of 2008 I could no longer do so. It was a substantial chunk of change.
But the cool think about the investment we are making now, is that if the other shoe drops, we will be protected. If it does not we have a cool retirement project. Either way, it's a good thing.