“Who is John Galt?” To those unfamiliar with Ayn Rand’s best-selling novel Atlas Shrugged, it’s the repeated question everyone asks out of futility as they consider the declining state of the world. Whole industries are collapsing, fortunes and savings disappearing, and unprecedented government regulations and mandates seem unable to stop the bleeding. The only man capable of turning things around is John Galt himself, the genius inventor capable of lifting the world to new heights. John Galt may be Ayn Rand’s fictional creation, but his struggles are relevant to the world today. As the President and Congress seek ways to overcome the malaise of a struggling economy, they must ensure that new and existing policies allow innovators and job creators to succeed.
Obama responded to the most recent economic crisis with a series of liberal legislation and nominees that Democrats have been dreaming of for decades. The majority of Americans may have disagreed with his policies, but he was at least proposing ideas. Two years later, the U.S. had nil net job growth in August, unemployment still above 9 percent and a President lecturing Congress to repeat his past, failed policies, expecting better results. Breaking down Obama’s speech on September 8th, it’s obvious that the President has run out of ideas about what else government could do to help. Instead, he should consider the alternative: stopping what government is doing to hurt job creation.
“Everyone knows that small businesses are where most new jobs begin,” Obama correctly stated during the speech. A recent survey of 1409 small business owners in the U.S. asked them to name the top challenges to their business. The top five results: economic uncertainty, America’s growing debt and deficit, the 2010 healthcare bill, over-regulation and high taxes. At least four of these are promoted by the Obama administration. His Patient Protection and Affordable Care Act raises the effective marginal tax rate on small businesses that hire more than 25 employees and places a $2,000 penalty on businesses with 50 or more employees that do not provide health insurance. Simply put, Obama wants small businesses to provide jobs, but not too many. If you’re the next Mark Zuckerberg, hiring only your best friends is probably too few, but expanding to Silicon Valley is right out. As former Congressional Budget Office Director Douglas J. Holtz-Eakin testified, “There is no theory or empirical research on job creation that suggests that large tax increases will spur employment. Taken at face value, one should be skeptical that PPACA will not harm the pace of overall economic recovery.”
Obama insisted in his speech that “these men and women grew up in an America where hard work and responsibility paid off.” Unless, of course, you are a large corporation. Boeing, America’s largest exporter of manufactured products, has loyally kept its large manufacturing presence in America as other companies have sought cheaper labor abroad. The company currently has 827 Dreamliner aircrafts on order, worth $162 billion and critical to its future. Well behind its schedule of production, Boeing decided to build a $750 million facility in South Carolina and create 5,000 new jobs. At least that was the plan, until the National Labor Relations Board, backed by the Obama Administration, decided to file a complaint and force Boeing to abandon its South Carolina plant and 5,000 new employees. NLRB claims that was retaliating against its union workforce in Washington, despite the fact that Boeing had also hired 3,000 union workers in Washington since constructing the plant in South Carolina. The suit is unprecedented, without legal standing and, worst of all, absolutely destructive. A government agency has decided to change the rules without warning and filled the economy with greater uncertainty, making it increasingly riskier for businesses to hire and succeed.
John Galt decided to abandon his plans to succeed because of increasingly hostile attitudes and policies towards innovation and competition. If many of Obama’s policies continue, businesses large and small may soon find themselves in his shoes. Government exists to promote prosperity and create a free market where rights are protected and reasonable regulations allow businesses to compete with limited negative externalities. It exists to enforce the rules consistently. When it changes the rules arbitrarily and creates unlevel playing fields, the result is crony capitalism, corrupt government and economic disaster.
So, who is John Galt? He’s the small businessman drowning in the red tape of regulation. He’s the business owner afraid to hire because he doesn’t know what government will throw at him next. He’s the individual who, when asked by government how to fix the economy, had but one thing to say: “Get the hell out of my way!” That’s an idea worth trying.
Derek J. Bekebrede ’13 is an economics concentrator in Winthrop House. His column appears on alternate Tuesdays.