Atlas Shrugged: Truth or Fiction?

atlas shrugged

Ayn Rand's Atlas Shrugged: Was It Prophesy or Fiction?

Awhile back we wrote an article titled the sovereign citizen versus the welfare state, which in reality can be considered as a modern day David versus Goliath story.  What we were trying to say or identify in that article was the idea that there is, and will continue to be, a coming conflict between those individual citizens who value personal freedom (plus personal responsibility, which assuredly goes hand in hand with freedom) and political state actors bent on micromanaging just about every aspect of the individuals life, and in conjunction with, taxing the same individuals to death as well in an attempt to sustain a failed and bankrupt financial situation.  In other words, a show down if you prefer to call it that, between those bankrupt or barely solvent governments and the individual citizens they hope to fleece to stem the sinking tide.  And ironically enough, this is the very theme or idea portrayed in Ayn Rand's Atlas Shrugged novel published over 60 years ago, which unfortunately is being played out today in real time to some extent.

To highlight some of these points about personal liberty and micromanagement by state bureaucrats, one need look no further than laws or regulations pertaining to the types of locks one must have on their backyard entrance gate when the homeowner happens to have a swimming pool (in some US municipalities), or dictates by the state as to how many employees you need to have working in your company when the current number of workers are earning overtime pay (in some European countries), or requirements that citizens enroll and pay into what are in essence government sponsored Ponzi scheme insurance programs that will never be solvent in terms of the ways they are operated (both the United States and many European countries in terms of so-called social welfare insurances).  And of course we now have had this recent proposal for a 75 percent income tax in France, which while put off due to public pressure, we think such initiatives by politicians are more likely going to be the norm rather than the exception for other similarly situated democratic social welfare states going forward.

To be sure, we are not implying that there is no role for government in terms of maintaining an orderly structure for society.  After all, laws are in theory meant to exist to frame conduct and orderly function of the society, with the government entity as a theoretical disinterested and independent third party charged with fair and equitable management.  And with that said, there certainly are many laws or regulations that are beneficial to the overall society.  Murder, for example, is outlawed in every secular penal code on the planet, and it should be.  But is there a limit to what government can and should regulate, outlaw or otherwise said, be responsible for in terms of it's own overall role?  This indeed is a philosophical question that will be answered differently by each individual citizen.  However, even so, we find it hard to imagine that people who otherwise favor more, and not less, government control or intervention would voluntarily prefer to live under a totalitarian system, as one extreme example, whereby one cannot even travel or live where one wishes without state approval.  Or a society whereby citizens are spied upon by their own governments, with the supposed intention of protecting the very freedoms the governments themselves are violating?  Or a type of circumstance whereby a government is taking 50, 60, 80 percent of income in the form of taxation - and to what end or purpose?
The Socialist Experiment Run Amok

Ironically, the so-called freedom loving democracies of both North America and Western Europe started out with the ideals of a fair and equitable society, but is that ideal what we currently have in terms of the current reality?  Indeed Ayn Rand, author of Atlas Shrugged, was attempting to warn us against an ever encroaching welfare state, that in essence would be the downfall of a society originally built upon the ideals of liberty, self-reliance, entrepreneurship, fairness, honesty and above all, the rule of law objectively applied equally to all.  She also offered a sort of play book that very eerily is being put into practice today by many politicians, in terms of how the collective welfare state would evolve and attempt to maintain it's grip amid massive failures of such policies (if something does not work, why not do more of the same thing on a bigger scale - surely that will work - right?).

Speaking of Ayn Rand, in her we have the personal case of a woman that witnessed the loss of her father's business, their home and all hopes of prosperity through hard work and education (the typical blueprint one would expect any parent to instill in their children) due to the whims and atrocities inflicted by a socialist-totalitarian regime (I do not use the word communist because honestly there is no nation that ever came close to the true vision of communism that Karl Marx envisioned, as impractical as even that was – instead we got socialist dictatorships calling themselves communists that were not true democracies as Marx outlined).  In other words, it took a person that lived through something like that to clearly see it being developed in a another country, and writing about it in the format of a novel to awaken people to what was (and is) happening.  Of course, at the time it was written, the reviews about Atlas Shrugged were scathingly negative, as if the book was an affront to what many considered to be almost sacrilege at the time.  And indeed Atlas Shrugged was considered to be utterly foolish and impossible in terms of such a thing ever actually happening in a country such as as the US (even though it was presented as a work of fiction, it still received scathing reviews).

However, on this theme of people knowing what something is when they see it, or at least, having lived through the experience and not wanting to relive the same thing – I am somewhat reminded of many of the emerging or developing markets today and their North American – European counterparts.  Which is to say the so-called modern day democratic welfare states seemed to have forgotten themselves, while many other smaller developing markets, which are democracies today, seem to be developing in the opposite direction.  Meaning, such countries that experienced dictatorships or some degree of fascism – totalitarianism in the past recent decades still have this fresh in the minds of the populace.  As such, we have the tendency to believe that there will be more likely a chance that elements of classical liberalism (which are ideals more linked to Thomas Jefferson and have nothing to do with the modern day term of leftist political ideology that employs the term liberal today) will live on in the emerging or developing nations, especially if their economies continue to grow and prosper.  In contrast, I think the current day social welfare democracies are in severe decline (economically, politically and morally), and aside from the economic side of things, the term democracy in some of these nations is a misnomer as many of these states are becoming more fascist in nature currently (fascism meaning a merger of political and business interests, with the rest of the populace secondary – and not necessarily totalitarianism per say).  Nothing more proves the point than the recent government bailouts of the banking and financial sector, the public be damned, the debts moved over to the public or socialized while the profits remain privatized.  Clearly corporate welfare at its best, which all feeds upon itself as a loop back effect occurs via political campaign donations by these same businesses, to the same politicians granting favoritism.  Round and round it goes, with the individual working citizen left without a chair when the music stops.

In any event, getting back to Atlas Shrugged, one of the main themes of the book was the idea of a strike envisioned by Ayn Rand, but not the typical worker's strike one thinks about when they hear the term.  Rather, a strike of the middle class, the solvent, and small to medium sized business owners who decide enough is enough, and decide to leave.  Ayn Rand posited the question: What if the only people left behind were the tax collectors and those taking social welfare benefits?  Who will pay the bills?  Indeed, this is the main idea to be understood when one see all sorts of restrictions on transfer of funds and issues surrounding immigration as well.  In other words, even though the argument is to crack down on evil anarchists who want to enforce their own agenda via collateral damage, to borrow a military term, or drug dealers and illicit earnings, we would suggest the real reason is to stop the flow of money leaving.  As a percentage of banking transactions on any given day, are there really that many illicit activities taking place?  Surely it exists, but is it so predominant that the average person trying to open a bank account or conduct a wire transfer must be considered guilty until proven innocent?  Have people working in the financial services industries lost their own minds and sound judgment that they cannot tell the difference between a simple retired business owner, and something or someone much more nefarious?

Regardless of whether or not common sense will prevail among people servicing private banking transactions, we have the tendency to believe that the battle lines will drawn over the movement of money and people.  The restriction of money especially is an acute way to stop the flow of people as the first step, because let's face it – if you are prohibited from taking your own money with you, then setting up someplace else becomes that much more difficult.  And if that fails, then there are various ways to stifle the physical movements of persons as well, via bureaucracy.  But, despite any efforts to the contrary, we do see expatriation from the previously termed wealthy social welfare state democracies to the developing or emerging market nations as a continuing trend.  And some proof of that can be seen with the citizenship renouncement statistics involving US citizens over the past decade. Whereas the yearly number of persons renouncing US citizenship totaled about 250 per year a few years ago, the more recent numbers for 2015 indicate another new record of 4,279 people that resigned their citizenship.  And of course that is only the people that actually formally have renounced on paper.  How many have simply gone on vacation, never to return?

Emerging Markets To The Rescue

Why the emerging or developing markets as a preferred destination?  Well, for starters, we already indicated a tendency towards more democracy and transparency in general, and not AWAY from it, directly because of recent history in such countries (there might be exceptions, but we are speaking in generalities).  But aside from that, the other important issue surrounds taxation and social welfare.  Which is to explain, such emerging or developing markets do not have the capacity to implement such programs (as they exist in Europe or North America) simply because they do not have the resources (sort of like trying to cook the chicken before the egg is even hatched).  Such economies are growing and making an attempt to move up the ladder, so to speak.  They do not have the financial resources to pay out monies they do not have, and to drastically implement high draconian tax policies is unthinkable as well (one must walk before one can even consider running).  For this reason, any newly arrived immigrants that are coming to such emerging or developing market nations are doing so with their eyes wide open (no free housing, no food assistance, no free health-care, etc.) with the knowledge they must be solvent on their own accord.  In other words, such countries are NOT attracting the unemployed, the broke, the lazy - because there is no support offered for such persons.  Rather, the immigrants coming are small business owners, investors, and otherwise said persons with solvency.  Those that do come, who are unemployed and NOT solvent, do not last very long and end up high-tailing it back to the welfare state whence they came to apply for public assistance (because there certainly is none such assistance to be found in the emerging or developing markets, nor the high taxes to pay for such things either).  I know that sounds a bit harsh and crude, but it happens to be the brutal truth.

In contrast, what do we have in the supposedly wealthier western democratic counterparts?  Extensive government run social assistance, including health care, that is unsustainable and can no longer be afforded.  Even worse, newly arrived immigrants to such countries have the opportunity to game the system without having paid one cent into the government income tax system.  We are not going to say this is the only reason why such programs are going bankrupt, but certainly it does not help.  And besides, what kind of message and incentives are you giving newly arrived people, when you make it fairly easy to get them signed up for all the free stuff?  Are you encouraging hard work, entrepreneurship, or something else?  In many countries (France comes to mind), there are actually two and sometimes three generations on social assistance.  Can you imagine?  Three generations all living off the hard working tax paying citizenry, who have to fork over perhaps 50 to 70 percent of their income to pay for such things.

However, aside from trying squeeze more out of the existing turnips (the current employed citizenry that pay income taxes), the other fairly new aggressive trend is to chase down the solvent from other foreign countries as well.  Such economic citizenship or economic fast track residency programs of course have been utilized by the developing or emerging markets for quite some time now - only to have been highly criticized by those same OECD member countries who cried unfair competition and other such nonsense.  In addition, they attacked smaller countries attempting to offer lower taxation rates (or no income taxes in some cases), tax-free local banking and investments, and other such incentives as really one of the few things they could offer.  And yet now, quite ironically, we have nations such as Canada, the United States and even a few Europeans countries pushing or promoting very vigorously their own programs to encourage investors to come to those respective countries.  Is the shoe now on the other foot?  Are such so-called wealthy industrialized countries so desperate that they need to go begging?

While it is true that every country wants investors and new business, and every country has some kind of incentive (from one degree to another), we honestly have to wonder if such countries really are competitive where it counts.  I mean, surely a passport from those respective countries offer extensive visa free travel - but what else?  Sixty, Seventy percent combined income and social welfare tax payments?  Intrusive government regulations to do business? And what are the prospects for the next 10, 20 or 30 years?  Does someone really want to make a move knowing they will become a sacrificial lamb in terms of continued taxation to pay for all these social benefits that are on track to overwhelm all other government spending?  In this light, when we talk about competitiveness, this is what we mean.  What are the future prospects of a country?  What is the trajectory and where are they headed economically, socially and politically?  What are the demographics?  All these things should come into play when making a decision because these issues, much more so than a short term tax rebate or whatever other short term benefit, will determine the longer term situation.

In any event, it is very interesting to watch these trends play out, both in the emerging markets and the so-called wealthy industrialized nations (which are not so industrialized anymore as just about everything has been outsourced to China or some place else).  In addition, we think it very possible that despite some of positive spin being put upon manipulated economic statistics (the US government says unemployment has gone down and former CEO of General Electric, Jack Welch, says baloney), the negative taxation and restrictive flow of funds policies will continue.  We say this simply because NOTHING has been fixed.  The debt is still there, it was only transferred off the books of the banks and other private entities and onto the shoulders of government (and indirectly, the tax payers).  Considering that the taxpayers are really the only milk-able asset that most governments have, they are going to be more reluctant to let the cow out of the barn, so to speak.  Which brings us the the famous question asked in the Atlas Shrugged Novel: Who is John Galt?  John Galt might very well be you.

About The Author: This article was written by John Schroder of Ascot Advisory Services.  John's firm has been helping clients in the Dominican Republic for the last 17 years with residency application services, naturalized citizenship filing, banking assistance and legal services pertaining to real estate (title transfers, legal representation at closing, sales contract review).  You can contact him by telephone at 809-756-1917 or click the about the author link above to reach a contact page to send an email directly.

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