“There are four types of people in the world. There are entrepreneurs – who are the guys who get out of bed in the morning and say ‘How can I make money by making things better for people ?’ There are contra-preneurs – who are all the governments and bureaucrats and regulators who try to stop that happening, make it difficult or ban it. There are the con-trepreneurs.. who pretend to be doing the first thing but are just lining their own pockets, usually with government subsidies, with the help of the second group. And there are the non-trepreneurs – which is all the rest of us, who must be pretty bloody thankful every time we jump out of bed that the first lot keep doing it.” - Sean Corrigan of Cantillon Consulting, The State of the Markets podcast.
“Who is John Galt ?”
The question is peppered throughout Ayn Rand’s Atlas Shrugged like a rash. Born in St. Petersburg in Russia just 12 years before the revolution, Ayn Rand (born Alisa Zinovyevna Rosenbaum) emigrated to the United States in 1926, after her father’s business was seized by the authorities during the chaos of 1917. Atlas Shrugged was published in 1957 and became an international bestseller.
The America of the novel is a dystopian nightmare, in which private businesses struggle to survive in the face of increasingly intolerable government economic intervention and corruption. (Rand’s childhood experiences were clearly scarring.) An example:
He knew that it was necessary to have a man to protect him from the legislature; all industrialists had to employ such men..
“Who is John Galt ?”
For most of the book, the question remains unanswered. The very meaning of the enquiry is essentially not to ask questions that nobody can answer. It is typically posed with an aspect of wearied resignation at the parlous state of affairs prevailing throughout an economy managed by incompetents, headed for ruin. Why are things so bad ? “Who is John Galt ?”
John Galt, it transpires, is the hero of the novel.
John Galt is the human epitome of Ayn Rand’s philosophy of objectivism, which can be roughly summarised as a belief in the superiority of laissez-faire capitalism and rational self-interest. A belief in the superiority of innovation, self-reliance, and freedom as opposed to overweening government interference. A belief in the entrepreneurial spirit rather than the corrosive and deadening power of the Big State. John Galt is entrepreneur; philosopher; rational man.
It further transpires that, frustrated by the totalitarian demands of government, John Galt has established a strike by the entrepreneurial class – a strike by “the men of the mind”, tired of being taken for granted and exploited by society at large. When the government finally collapses, Galt announces that the time is right for his fellow entrepreneurs to rejoin the world – and help rebuild it.
Atlas Shrugged is a long read, and fussily didactic. It is a mish-mash of styles, including romantic drama that sits awkwardly with the rest of the narrative. But it also contains some wonderful writing, not least some unforgettably acidic assassinations of certain character types. Here, for example, is Ayn Rand’s depiction of a certain (gutter) journalist, Bertram Scudder of The Future:
He saw the article.. which was not an expression of ideas, but a bucket of slime emptied in public – an article that did not contain a single fact, not even an invented one, but poured a stream of sneers and adjectives in which nothing was clear except the filthy malice of denouncing without considering proof necessary..
(Mainstream news journalism has clearly been rotting for quite some time.)
And the book is also a classic libertarian tract. (Extraordinarily, the Federal Reserve chairman to come, Alan Greenspan, was once part of Rand’s inner circle.)
Some Latin seems justified at this point. Since we remain highly critical of the government (ours, but our lamentable situation is hardly unique in the world), it’s worth asking exactly what the role of government should be.
As libertarians, we would suggest that the over-arching responsibility of government is to protect its people. We can debate things like the provision of a standing army for the defence of the realm, or of street lighting, which the private sector either cannot or will not provide under its own steam, but the provision of national security is surely the basis on which we accept legitimate government.
The Romans had a phrase for it:
Salus rei publicae suprema lex.
The safety of the ‘rei publicae’ is the supreme law.
The coinage ‘res publica’ is intriguing, however. How should it translate ? For many, it translates as “the State”. Our preference is to call it “the people”. Or “republic”. Or “commonwealth”.
To the likes of the FT’s Martin Wolf and his Davos cronies, the Big State must be protected at all costs. To us, ‘res publica’ is people – like the small business owners being pushed into bankruptcy by the government’s insane lockdown policies in response to what is basically a bad flu outbreak.
“Who is John Galt ?”
John Galt is a business owner. Consider this letter from Mr. Aron Miodownik of New York to the Financial Times of 7th November 2020:
Hand-wringing social pundits readily attack the ethics of modern businesses, yet so few of them have ever bothered to take the plunge and set up their own companies.
Merryn Somerset Webb’s excellent op-ed (“Covid has put ‘stakeholder capitalism’ on steroids”, FT Weekend, October 31) lays out the miraculous thinking that permeates our society.
Like the White Queen in Alice’s Adventures in Wonderland, armchair critics believe as many as six impossible things before breakfast. According to these Mad Hatters, entrepreneurs need to save the planet, close the gender pay gap, solve child poverty, provide fair access to healthcare, pay their taxes, repay their debts, offer competitive salaries, provide meaningful careers and (somehow) reward their investors (if there is any money left).
Many businesses operate on razor-thin margins. Owners and investors get paid last. It only takes a small change to drive them into bankruptcy. Talk to any retail operator, restaurant owner, yoga studio manager or pub landlord to understand these risks, especially during the Covid-19 crisis. Businesses are the lifeblood of our communities. They pay their taxes to solve these broader social issues..
Coronavirus is not the crisis. Government is.
If there are any of them left once Government has finished blindly flailing around in the dark, entrepreneurs are, and will be, the solution.
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: email@example.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and specialist managed funds.
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