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Jewish World Review Sept. 27, 2002 / 21 Tishrei, 5763

Robert W. Tracinski

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Enron vs. Atlas Shrugged | The hysteria over "corporate crime" is finally beginning to lead a few people back to the one source that puts this scandal frenzy in its proper perspective: Ayn Rand's epic novel "Atlas Shrugged," which was recently profiled in The New York Times and just this week on the cover of USA Today.

It is no mystery why businessmen would look to Ayn Rand's novel today. Written in 1957, "Atlas Shrugged" is set in the world of business, industry and high finance. What is even more rare, it presents its steel makers, railroad tycoons and bankers as heroes. These capitalists and entrepreneurs, Ayn Rand points out, are the ones who build railroads, drill oil wells and develop new processes for making steel -- or, to update to the 21st century, they build telecommunications networks, design software and develop new processes for making microchips. They are the thinkers, problem-solvers and producers who create the wealth on which our prosperity depends.

The businessman is the "Atlas" of the book's title, the giant who holds the world on his shoulders. The novel shows the importance of these producers by projecting what would happen if they chose to quit -- that is, if Atlas shrugged.

But there is a specific element of the novel's plot that is particularly relevant to today's events. Ayn Rand shows us two kinds of businessmen, exemplified by two of her characters, a brother and sister who are heirs to a railroad empire. The sister is the novel's heroine, the operating vice president who literally keeps the trains running on time. Her brother, James Taggart, is only good at running to Washington.

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James is the kind of CEO who plunges his firm into disastrous new ventures as a favor to his cronies and then evades every new problem as it springs up. His only skills are lobbying Washington for bailouts and making cozy deals with corrupt foreign governments. He is also a whining advocate of "progressive" government intervention, from which he usually hopes to wheedle some undeserved advantage.

Both The New York Times and USA Today fault Ayn Rand for basing her positive view of capitalism on the failure to "anticipate CEOs who would loot their firms." But James Taggart sounds a lot like the folks at Enron, who thrived on questionable Third World energy deals, advocated massive new environmentalist regulations (while hoping to cash in on the subsequent spike in natural gas prices), and ran to the Treasury Department for a bailout when their schemes came crashing down.

What is important is not that Ayn Rand recognized the existence of corporate frauds. It is that she grasped the difference between them and the real producers. The basic method of today's commentators is to make us forget that difference.

Consider the recent flap over Jack Welch's supposedly "excessive" retirement benefits. In his 20 years as chief executive officer of General Electric, Welch increased his company's stock value by almost 3,000 percent, creating hundreds of billions of dollars in wealth. Yet commentators denounced as "arrogant" and "imperial" the few million in benefits he negotiated in return, lumping him in the same category with the leaders of Enron and WorldCom.

This smear tactic would not have surprised Ayn Rand. She saw that the Marxist intellectuals of her day -- alas, they have not changed much since then -- refused to admit the existence of the productive businessman, acting as if all of our wealth sprung spontaneously from "the lap of social labor," in Karl Marx's words.

More deeply, though, she realized that this was a flaw in the conventional moral outlook, which promotes self-sacrifice as the ultimate virtue. This altruist outlook presents us with only two alternatives: You can be the "selfish" Attila the Hun, an unscrupulous brute who sacrifices others to obtain unearned wealth, or you can be the selfless Mother Theresa, who sacrifices every personal value or ambition. There is no room in this outlook for Jack Welch, Martha Stewart, Bill Gates or anyone who lives on his own efforts and gains wealth by creating it. So to protect the conventional wisdom, it is necessary to ignore these people -- or find an excuse to pretend that they are just Attilas.

These producers not only exist; they are the ones who run a free economy. The frauds, by their nature, can only survive as parasites, draining the wealth created by the giants around them. No wonder people are turning to "Atlas Shrugged." It is a desperately needed reminder of the existence and value of these producers.

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