I am quite fond of happy endings – in books, movies, plays, short fiction, and virtually any other creative medium. It seems that the majority of consumers of these media share my taste. Why prefer happy endings even if in real life there is no poetic justice much of the time, the good people do not necessarily prevail, and absolutely nasty twists of circumstance can destroy an otherwise promising situation – or even a good life?

Happy endings to particular episodes are indeed possible – although they do not always happen. One of the functions of good art is to show people what can be and ought to be, to paraphrase Ayn Rand. Many people’s lives are frequently dominated by some kind of tragic flaw or misfortune, and they seek – even if they are unable to recognize this explicitly – some kind of alternative, some kind of vision of a world where this obstacle can be overcome. Happy endings inspire individuals to fight sources of suffering in their own lives, whereas tragic endings can often only lead to resignation to a miserable condition. (On the other hand, of course, some tragic endings can be useful in serving a didactic purpose – instructing the audience as to what not to do in order to avoid undesirable consequences. But only a certain proportion of stories needs to have this role.) Even if one’s own life is not dominated by happy endings, one can draw on fiction as a way of seeing and working toward some realistic possibilities for greater success, safety, and prosperity.

Sincerely,

Gennady Stolyarov II

Who says that the Internet has brought about the decline of the practice of poetry? Quite the contrary, the Internet has led to an impressive resurgence of poetry consumption and production, and the popularity of both well-established and new poets is on the rise. The Telegraph article “Internet ‘is causing poetry boom’” gives the details on this amazing development. Because the Internet and a series of related technologies permits voice recordings of poetry to be made and easily distributed for free, this has brought about a revival of interest in and unprecedented accessibility of spoken poetry, which captures many of the qualities of good poetry which might elude silent reading.

As one who has published numerous poems on the Internet, I can safely say that this new medium’s existence was a necessary condition for my own creation of poetry. I would likely not expend nearly as much time or energy on creating poems if I could not find a reliable audience for them, as I presently do online. When one can seek out appreciative readers and listeners from anywhere in the world, one has much greater chances of success than when one is limited to one’s immediate geographic proximity.

Sincerely,
Gennady Stolyarov II

In Part 3, Chapter X of Gulliver’s Travels, Jonathan Swift describes a subpopulation of immortal humans – the Struldbrugs – which live forever but upon reaching the age of eighty lose the soundness of their mental faculties, their memory, and many human virtues. The Struldbrugs, moreover, continue to senesce and become increasingly decrepit as they become older. Swift makes the argument that this kind of immortality is to be pitied, not desired.

Fortunately, this kind of immortality can only exist in Swift’s fictional world. Living forever while becoming increasingly senesced and losing ever more of one’s faculties is practically a contradiction in terms – considering that it is the accumulation of damage due to senescence that eventually kills people. Any sustainable immortality for real-world humans would have to come through the reversal of senescence by either periodically removing the damage and revitalizing the body or by delaying the process long enough for further, more efficacious treatments to be developed.

So immortal humans will also be forever young – or, more precisely, any biological age they want to be. I suspect that most people will choose to look like today’s 25-year-olds – fully physically and mentally mature but without any signs of bodily decay setting in. This kind of indefinite longevity is precisely what Aubrey de Grey refers to as engineered negligible senescence and outlines in his approach, Strategies for Engineered Negligible Senescence (SENS). Swift himself recognizes, through the words of Gulliver, that such a kind of immortality would be highly desirable. Non-senescing immortals would, according to Swift, “have their minds free and disengaged, without the weight and depression of spirits caused by the continual apprehensions of death!” Gulliver proceeds to describe how he would accumulate wealth, knowledge, and virtue beyond the limits of mortal humans’ abilities if he could have indefinite life. With a healthy body and a functioning mind, everything in Swift’s description and more could be quite attainable.  

Sincerely,

Gennady Stolyarov II

I was recently informed by a fellow friend of liberty and admirer of the ideas of Ayn Rand that a large number of adherents to Ayn Rand’s philosophy – Objectivism – are planning to purchase the Plume edition of Atlas Shrugged on February 2, 2009 – the 104^th anniversary of Ayn Rand’s birthday. The book is currently ranked 92^nd on Amazon.com, and the aim of the book bomb participants is to raise the book’s rank to first. Then, the hope is that a large number of people who have previously not been introduced to Ayn Rand’s work will begin to pay attention to it and will refer to it for solid counterarguments against the disastrous political and economic course pursued by the U. S. government during the past several years and decades.

A considerable debate has been taking place among Objectivists regarding the merits of the book bomb as a way to increase exposure to Ayn Rand’s work. You can see many of the discussions on the Objectivism Online forum.

I will personally not be participating in the book bomb, as I already own two different editions of Atlas Shrugged, and I am running out of space to hold my extensive library of books!

However, if you do not yet own a copy of this book, I certainly encourage you to participate and purchase this edition. I own it already, and I find it conveniently portable. You might as well purchase it on February 2 – which is only two days away – and thereby help the book bomb effort as a side effect of your own purchase. Atlas Shrugged is an excellent read, and I believe it to be a necessary prerequisite for being philosophically and economically well-rounded – even if you end up disagreeing with some or all of the ideas in it.

Many Objectivists have argued that the book bomb is not the best way to spend money to advance rational ideas and have also claimed that the book bomb’s intention will fail even if it raises Atlas Shrugged to the first sales rank. This argument states in mild form that if enough people find out that the book bomb was a deliberate effort, then it will simply be seen as a propaganda push by devoted Objectivists and not a genuine spontaneous flowering of interest. Worse yet, Objectivists might be compared by their detractors to advocates of the wildly irrational cult of Scientology – which has used book bombs in the past.

I will not go so far as dissuading book bomb advocates – because I think that they ought to try their idea and see what happens. It is sometimes possible to predict the outcome of future events through rational deliberation, but it is also useful to have direct empirical evidence in order to see how much weight each causal factor has in determining the outcome of an event. The kind of backlash that book bomb skeptics foresee may happen, but the question is, to what degree? If 50,000 people are turned away from Objectivism by mistakenly likening it to Scientology but 500,000 are simply convinced to read Atlas Shrugged because they find out about it for the first time, then there would be a net gain of 450,000 people who are now at least aware of Ayn Rand’s ideas. That would be progress. Let the experiment take place and see what happens. I am also strongly inclined to think that the manner in which the book bomb is conducted may have an effect on its outcome. If each Objectivist participant purchases 50 copies of the book, then many will suspect foul play. On the other hand, if each person purchases one or two books, then it is entirely possible that other reasons besides the book bomb are involved – say, giving a copy of the book to a friend, a relative, or a library. This is the de facto equivalent of that friend, relative, or library purchasing the book, and there is nothing dishonest about this. Each book so purchased will genuinely introduce a new person or multiple people to Ayn Rand’s ideas.\

Sincerely,

Gennady Stolyarov II

What is considered “great literature” or “high philosophy” in any given time period is based on the preponderance of derivative literature written on the works in question. If enough people have analyzed a particular author in writing, then everybody else begins to think that this author’s works must be extraordinary and remarkably valuable in some sense, because so many intelligent people have devoted so much effort to thinking and writing about them.

Note that this can be done with any work of one’s choosing. For about three millennia, this has been done with various components of the Old and New Testaments, even though neither would pass muster as great literature or coherent philosophy if they had been written today. But enough intelligent people have analyzed these works for enough time as to build up a formidable corpus of derivative literature and philosophical interpretation and application of their content. Much that is of value about Biblical texts is not actually in the texts themselves, but in the analysis of the texts by subsequent writers!

So find an essay or book that you like and write a literary or philosophical analysis thereof. The work in question could address issues such as free markets, individualism, reason, and even the prospect of future improvements to human life through technology. The author and the work do not have to be well-known. You will help make them well-known by writing and publishing an essay about it. Often, even one essay helps introduce a work into the realm of serious academic discussion, and the derivative literature builds up from there.

Sincerely,
Gennady Stolyarov II

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The Vast Left-Wing Conspiracy

Alan Caruba

Issue CLXXII - September 1, 2008

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As a dues-paying member of Hillary Clinton’s Vast Right Wing Conspiracy, it came as a revelation of sorts to learn about the parallel universe in which a Vast Left Wing Conspiracy exists. Within it, liberals do endless battle with one another for control of the Democrat Party.

Ron Arnold’s book, Freezing in the Dark: Money, Power, Politics and The Vast Left Wing Conspiracy, is not light reading. This heavily researched and documented narrative reveals all the major players of the liberal universe and how these renamed “progressives” interact through networks of wealthy foundations, advocacy groups, think tanks, and leftist media.

Freezing will particularly please policy wonks, but it is also a brilliant romp through the jungle of leftist politics. If you have the stamina to get into and through it, you will understand what drives the Left. To get you started, I will quote Winston Churchill who defined Socialism as “a philosophy of failure, the creed of ignorance, and the gospel of envy; its inherent virtue is the equal sharing of misery.”

As I reached the end of Freezing, I had a random thought about the 2008 election and its outcome. Simply put, Democrats who have been driven insane by the very existence of George W. Bush cannot run against him. In the funhouse of modern politics, the Republican they must defeat is more like them than not. John McCain is Democrat Light. One of his best pals is Joe Lieberman, who ran as the vice president nominee with Al Gore!

Emerging swiftly from the text is the way the McCain-Feingold Campaign Finance Act transformed how politics was to be funded. Little wonder that Sen. Obama abandoned his pledge to work within the constraints of federal campaign funding in favor of raising gobs of money from the Internet and the traditional supporters of anything and anyone labeled liberal, progressive. Never mind that the Communist Party USA also supports Obama. It must surely just be a coincidence.

McCain-Feingold banned “soft money” donations, the large and unlimited contributions from individuals, unions, and corporations to political parties. This “reform” required Democrats to create a networking restructure with the many satellite groups competing to use the party to get the only reform they ever wanted, the trashing of the U.S. Constitution.

It’s useful to remember that the Constitution exists to limit the power of the federal government and, via the Bill of Rights, those of the States to the extent that individual liberties are protected. This is why the liberalism discredited by Ronald Reagan in the 1980s has returned as a Halloween mask labeled “progressive.”

Progressives, however, come in many colors of red. There are, as Arnold notes, social, labor, anti-globalization, anti-corporate, anti-capitalist, environmental, post-national who like Sen. Obama see themselves as citizens of the world, and campaign finance reform progressives who think that the current electoral system is a threat to democracy, mostly one suspects because it keeps defeating progressives.

As Arnold reveals, one can hardly call liberals or progressives a movement. “It was more like a mental hospital without doctors or nurses.” They don’t have a cohesive culture, have no coherent ideology, but are “just quarrelsome factions with loads of issues.”

What they all seemed to have, however, was gobs and gobs of money from leftist foundations and millionaires who wanted to change the world by supporting one or more of the myriad of issues they embrace as their penance for being successful, thanks to capitalism.

The ultimate symbol of this is the billionaire George Soros. As Arnold points out, “The Soros mishmash of leftist causes at home ranged from financing the anti-gun lobby to abolishing capital punishment; from anti-Israel activism to promoting abortion rights; from feminism, population control, and gay liberation to anti-corporate campaigns, radical theories of education, and replacing national sovereignty with global institutions.”

Essential to the compact that the American government makes with citizens is the understanding that if you work hard and stay out of trouble with the law, it will leave you alone!

The Vast Left Wing Conspiracy believes that your life must be guided from birth to death by the government, its prohibitions, and its demands, a society in which everything not mandated by law is prohibited.

To achieve this, progressives come at voters from all directions, conjuring up hoaxes like global warming, promises of often imaginary “clean” energy, the demand to end “urban sprawl”, support for the United Nations, and endless charges of racism, among other charades to gain control of the federal government and its judiciary system in order to implement a top-down control of your life.

“Freezing in the Dark” is a roadmap to understand why we are assailed daily with the insanity of liberalism, an utterly failed system that depends on coercion while seeking to devalue the central principles of our constitutional system, from private property to individual merit and, yes, the promotion of wealth as a good thing.

­­___________

Alan Caruba writes a weekly column posted on the Internet site of The National Anxiety Center, www.anxietycenter.com. He blogs daily at http://factsnotfantasy.blogspot.com.

© Alan Caruba, August 2008

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A Nudge in the Wrong Direction

Gary M. Galles

Issue CLXVIII - July 21, 2008

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Libertarian Paternalism. It would appear to be a contradiction in terms. But Richard Thaler and Cass Sunstein argue for just such a thing in Nudge (Yale University Press, 2008). They try to combine the two by arguing that a nudge — “any aspect of the choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives” — can benefit those nudged, while staying consistent with liberty because it does not force anyone to do anything.

The prototype nudge Thaler and Sunstein propose is changing default options. For instance, rather than requiring an employee to choose to participate in an employer’s 401(k) retirement plan (where the default option is to not participate), they would make participation automatic. They assert that while that would change the default option, increasing retirement savings, it would not be coercive since employees could opt out if they chose.

In the same vein, the “shortage” of organ donations could be addressed by making people donors unless they choose to opt out rather than nondonors unless they choose to opt in. Paternalistic nudges could also be used in other areas, such as reducing unhealthy choices.

Given the authors’ connections to Barack Obama, Nudge and earlier work by its authors have gotten more attention than they otherwise would, and several positive reviews (though, tellingly, not from libertarians). On the other hand, those who consider issues of liberty more carefully have been less kind to their arguments, notably David Gordon, “Libertarian Paternalism,” Gregory Mitchell, “Libertarian Paternalism is an Oxymoron,” and Richard Epstein, Skepticism and Freedom.

While those interested in liberty should read those and other careful considerations of the theory behind Nudge, there is another fatal but overlooked flaw in the book’s argument. They begin by assuming that people’s current choices reflect the results when they are left alone to make them (i.e., reflecting self-ownership and voluntary market choices). That is why any shortcomings must be the fault of irrational individuals, who need paternalistic nudges to improve things. However, our current savings, organ-donation, and health choices are not those of free individuals; they are the choices made in large part because current government policies — taxes, regulations, mandates, etc. — impair incentives. They are government failures presented as market failures.

Consider Americans’ famously low rate of saving, the most important “market failure” a nudge is supposed to help offset. The real problem is that government policies do so much to discourage saving.

People have been led to substitute Social Security’s vastly underfunded promise of retirement benefits for funds they would have saved for their retirement. And since promised benefits are far higher than current rates of taxation can sustain, they anticipate being richer in retirement than they will actually be, reducing saving even more. Those who save enough to provide well for their retirement also face paying income taxes on up to 85% of their Social Security benefits as a result.

Taxes on capital also reduce saving, by reducing the after-tax return on saving and investment. These include property taxes that, while relatively small percentages of the capital invested, are sizable fractions of the annual income generated. Then state and federal (and sometimes local) corporate taxes take further bites from that income, further reducing the after-tax return. The implicit tax imposed by regulatory burdens must also be borne before earnings can go to investors.

Personal income taxes reduce saving even more. Investment income left after other taxes is taxed again if paid out as dividends. Further, earnings from saving and investment can trigger additional tax burdens by triggering phase-outs of deductions and exemptions that are allowed. If investment earnings are retained and reinvested, increasing asset values, they are taxed as capital gains upon sale. And even increases in asset values that only reflect inflation are taxed as if they were real increases in wealth.

Other government policies also reduce saving. Medicare coverage reduces a major reason to save. Further, current earners, who must cover three quarters of its cost, are left with less to save. The fact that Medicaid covers nursing-home costs only after one’s assets are virtually exhausted reduces another motive to save. Unemployment benefits, along with food stamps and other means-tested benefits, reduce the need to set aside a nest egg “just in case.” Estate taxes (which will be phased out by 2010, but reinstated in full force in 2011) also reduce successful savers’ ability to pass on assets as bequests, undermining another major motive to save.

Each of these government policies acts as a disincentive to save. Together, they punish saving heavily, reducing it to the point that many do not have any appreciable savings. But fixing that saving problem doesn’t require ever more government programs to help us, force us, or nudge us to save more; it only requires that the government stop undermining our incentives to save in all the ways it does now.

Consider also the “shortage” of organ donations. The root cause is not a market failure, to be fixed by making donation automatic unless one opts out. The root cause is that government has already taken away potential donors’ ownership of their own body parts. Unlike everyone else involved in the big business of transplants — doctors, nurses, hospitals, drug makers, etc. — all of whom are paid — organ donors (or their heirs) are not allowed to be paid. When potential donors of very valuable organs cannot be compensated, the result is like every other government price ceiling imposed on sellers — a shortage. One needs no assumption of individual irrationality to explain the problem. And the solution to problems arising because government doesn’t allow donors to benefit from markets in organs is not a government nudge in the opposite direction; it is to stop hindering the market.

Health-related issues (diet, smoking, etc.) suffer from similar problems. The costs of health problems that result once one becomes eligible for Medicare coverage are not borne by the individual (as they would be with true private insurance) as presently all are charged the same premiums, regardless of weight, smoking history, or any other factor. Similar results arise from premiums that do not vary with such circumstances in employer-provided group health insurance (which exists largely because it is not subject to income taxation). The possibilities of declaring bankruptcy, of using emergency rooms without having to be able to pay, or of becoming a Medicaid recipient if medical bills become large enough are further ways government has made it possible to impose many of the health-care costs of individuals’ own choices on others. When government makes the price of health problems artificially low to those individuals making the choices, it is no wonder those choices are not as good as we would like.

The problem with any logical argument is that if one starts from false premises, even airtight logic does not guarantee correct results. Nudge’s argument is far from airtight. But even more devastating is its reliance on a false premise. The “market failure” examples it promises to improve are actually government failures. And the solution to government failure is to reduce the disincentives that government causes, not to intervene further, however mild its authors find the additional intervention.

Nudge’s blaming of “irrational” individuals and markets for the results of government-caused distortions is not even new. For instance, it parallels the Keynesian attribution of the business climate in the Depression to the (irrational) “animal spirits of investors,” when, in fact, Hoover and FDR’s massive interventions (e.g., the Smoot-Hawley tariff, the National Industrial Recovery Act, tax increases, mandatory wage increases, FDR’s attacks on businessmen who resisted his plans as “economic royalists”, etc.) were among the irrational government causes that would deter any rational investor. Going even further back, as David Gordon observed, any claim that Nudge has to being a kinder, gentler form of paternalism that is compatible with liberty is dashed by Alexis de Tocqueville. In Democracy in America, he described the consequences of that approach:

“Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild… The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”

Thaler and Sunstein claim to be trying “to influence choices in a way that will make choosers better off, as judged by themselves.” But in their reasoning, they ignore how much those choices are actually currently caused by existing government interventions — both paternalistic and predatory (to pay for the paternalism), making their prescriptions little more than distractions, directing attention away from the real source — government — and real solution: expanding liberty.

What undermines their attractive-sounding sales pitch that “if incentives and nudges replace requirements and bans, government will be both smaller and more modest,” is that they are not in fact proposing less intrusive government nudges to replace more intrusive government coercion, but yet still more government on top of what we have today.

­­___________

Gary M. Galles is a professor of economics at Pepperdine University. Send him mail. See his archive.

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“Who is Henry M. Galt?”:

A Review of Garet Garrett’s The Driver

Edward W. Younkins

Issue CLXIII - June 18, 2008

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The Driver (1922) is a prime example of the literature of achievement. The author, Garet Garrett (1878-1954), had the ability to make economic, financial, and management processes come alive in novel form. Not only is The Driver a novel of high finance and Wall Street methods, it also paints a portrait of an efficacious and visionary man who uses reason to focus his enthusiasm on reality in his efforts to attain his goals.

As a financial journalist for several prominent papers, Garrett knew Wall Street well and wrote a series of novels portraying the morality of capitalism, production, and business activities. For many years, he exhibited his talents as a political commentator and essayist at the Saturday Evening Post. In fact, The Driver first appeared as a six-part series in the Saturday Evening Post.

The novel captures the essence of the progressive era of America that spanned the late 19th and early 20th centuries. During this period, industrialization and a wave of immigrants altered the fabric of American life which became increasingly urban, industrial, and specialized. This was a time of great social and economic development. During this formative period, America’s agrarian society of farmers and small producers was transformed into an urban society in which the corporation became the dominant form of business organization. Steel and oil were in great demand and national transportation and communications networks were being developed. This was a period of seemingly boundless expansion that presented unprecedented opportunities to entrepreneurs and speculators. Wall Street was beginning to develop and railroads boomed as trains moved products from the resource-rich West to the East.

This was also a period of instability characterized by periods of boom and bust and the fact that not all citizens shared in the new wealth and optimism. Mark Twain called this period the “Gilded Age” – a period that was glittering on the surface but that was tarnished and corrupt underneath. This age saw the rise of populist reformers who blamed greedy Robber Barons and speculators for society’s ills. Many people in society, especially those in government, were anti-business and anti-Wall Street and called for government intervention to cure the problems that had developed during the great industrial growth spurt of the late 19th century.

Unlimited prosperity and human happiness

After the Panic of 1893, America suffered a severe economic depression resulting in mass unemployment. In response to this economic adversity, in the winter of 1893-94, Jacob S. Coxey, an American social reformer and populist leader from Massillon, Ohio, proposed a recovery program that included Congressional enactment of a large increase in the amount of legal tender in circulation that could be spent on public works thus providing jobs for the unemployed. In other words, he advocated public works financed by fiat money. Coxey formed an organization called the Commonwealth of Christ and assembled an army of unemployed men. On Easter Sunday, March 25, 1894, he led an army of 100 unemployed men on a march scheduled to arrive in Washington, D.C. on May 1 for a huge demonstration petitioning Congress for measures to alleviate distress and unemployment. Coxey’s Army wanted to demand from Congress a law by which unlimited prosperity and human happiness might be established on earth. They thought that people would work and be prosperous if Congress created an abundant amount of fiat or “democratic” money. Coxey’s Army grew to only 500 participants who arrived in D.C. where the leaders were arrested and the army was quickly disbanded.

According to Garrett, naïve trust is the power of words to command reality is found in all mass delusions. For example, in 1894, populists pressured Congress to enact a bi-metallic system of money by declaring that gold and silver are equal in dollar value and that gold and silver dollars be interchangeable. The problem was that gold remained more valuable to people prompting them to hoard gold or to sell it in Europe. As a result, the Treasury’s gold fund was continually depleted.

The nameless first-person narrator of The Driver is a reporter for an undisclosed newspaper who follows Coxey’s Army to Washington, D.C. This correspondent-narrator is selected by a group of 43 reporters to send accurate reports regarding the march of Coxey’s Army to Mr. Valentine, President of the Great Midwestern Railroad headquartered in New York City. The narrator, who acquires the nickname of “Coxey,” gains a position as personal secretary to Valentine and meets Henry M. Galt, a Wall Street speculator who has an intense interest in the Great Midwestern. After meeting Galt, “Coxey” becomes Galt’s friend and a constant presence in Galt’s business and personal life. It is through the eyes of this reporter-narrator that readers understand the career, struggles, and evolution of a little-known Wall Street speculator and risk-taker to king of Wall Street and to a potential economic dictator of the United States. Unfortunately, Garrett also includes a disappointing, confusing, frustrating, and mostly irrelevant subplot dealing with Galt’s family.

Galt, an eccentric and brilliant broker, floor trader, and member of the stock exchange believes in the future of the Great Midwestern Railroad, continually buys stock in it with his and his family’s money, and becomes one of its largest stockholders. He knows more about the Great Midwestern than anyone else including its President, Mr. Valentine, a weak, inefficient, and non-confident man who runs the business into bankruptcy.

Although Valentine is appointed as receiver, Galt intelligently and diligently studies records, data, and statistics to develop a strategic plan of reorganization to save and rebuild the Great Midwestern. His creative plan encompassed finance, physical resources, and business policy, reflected his great knowledge of the railroad and its properties, and was embraced by the Board. He thereby exhibited how invaluable he was to the railroad.

Galt knew that after the reorganization he would be one of ten men in the boardroom and that “everything else follows from that.” Not only does he become a member of the Board of Directors, he also manages to get himself elected as its Chairman using his influence with several men who were indebted to him. The Great Midwestern Railroad Company thus lives on and progresses under the new name of the Great Midwestern Railway Company. In time, Galt would overthrow Valentine, thereby also becoming the company’s President.

Committed to reality and action

Galt overcame obstacles by driving ahead with aggressive insensitivity and fanatic intentness, all the time keeping focused on his goal and taking practical rational steps in its pursuit. He harshly dismissed employees who hindered the company and rewarded employees who advanced it. Carefully calculating his every action, Galt continually persisted to improve the railroad. He made huge investments in assets, including new tracks, engines, cars, rails, land, road improvements, and equipment. He carefully considered the relative merits of different kinds of equipment, operational problems, the cost of capital, upkeep, and so on. Galt employed an innovative profile map identifying bad grades. As a consequence, he developed better routes by cutting steep grades and by reducing or eliminating curves. Galt ultimately rebuilds the railroad from end to end. Through his intelligence, hard work, and determination, he was able to take a failing company and revitalize it. One of his key moves was to issue new securities using the proceeds to invest in the reconstruction of the Great Midwestern. He later used the company’s profits to buy large interests in other companies. Through the reinvestment of profits, he was able to make his railroad stronger.

Unlike many other businessmen, Galt did not begin by asking how his company can be made to earn a certain rate of profit. Rather, he asked how the Great Midwestern can be built into the greatest transportation company in the world. He knew that if that were done, then the profit would take care of itself.

Galt was committed to reality and action and the need to transform ideas into concrete form. He worked on the premise that once something happened, it becomes an irreversible fact and that every other fact in the universe must adjust itself to that one fact. In other words, a man must use his unique attribute, reason, to apprehend the natural order by which he is bound. It was evident that Galt had confidence in his capacity to deal with the world through the implementation of appropriate and efficacious ideas and measures.

Galt invested all of himself, as well as all of his savings, into the Great Midwestern. He had a tremendous work ethic, as evidenced by his passionate expenditure of time and mental and physical effort in the unwavering pursuit of his dream of building a great railroad. Galt had the power to move men’s minds, persuade them, command them, and reward them. He had the power to imagine what could be, to bring his vision into reality, and to create wealth. He was seen as an elemental force. Regarding Galt, the novel’s narrator says, “The sight of inspired craftsmanship is irresistible to men.”

After rebuilding the Great Midwestern, Galt led the company into other ventures, such as buying controlling interests in other railroads, as well as in investment and insurance companies. Two such companies were the Orient and Pacific Railroad and Security Life Insurance Company. As a result, he and his family became rich.

Galt wins, creates his empire, and makes enemies in the process. He was satiric and had the power to irritate people. In addition, he had no use for public opinion or government. He was contemptuous of politics. Galt knew nothing about society’s views and did not care about them. He had no time for the press and did not engage in public relations. Galt greatly underestimated the force of public opinion. As a result, his family faces social ostracism, Wall Street turns against him, and he is attacked under the antitrust act that had been enacted as special interest regulation to protect less-efficient firms.

Galt’s family gains some acceptance, and Galt is able to take actions to reverse the decline in the price of the Great Midwestern’s stock. An alarmed Congress resolves to investigate Galt and his business dealings and summons him to appear before a Committee of the House. Of course, as expected by now by the reader, Galt defends himself magnificently. He tells the Committee that he is a farmer who farms the country, fertilizes it with money, sows it with more money, reaps profits, and sows the profits back again.

Galt was then asked by the Committee if he, as chairman of the finance committee of Security Life Insurance Company, recommended that securities of the Great Midwestern be purchased. He answered yes and explained that he did not know of a better investment. He was then asked about the disgruntled minority shareholders of the Orient and Pacific who were upset with the Great Midwestern for exercising the power of a majority shareholder. Galt simply explained that he was willing to buy them out at any time.

A well-respected hero

Galt went on to explain that he built his empire by buying a bankrupt company and equipment, property, and stock in other companies when they were selling at low prices. He bought things that nobody else wanted, saw what others did not see, worked hard, managed well, and created great wealth. At this point he announces that in the next year he would be spending $500,000,000 (an amount equal to half the national debt at that time) for double tracking, grade reductions, new equipment, and larger terminals. Galt’s testimony turns public opinion overwhelmingly in his favor.

Galt suffers a stroke and collapses after his ordeal with the committee. His health deteriorates, and he becomes bed-ridden. Still, his mind was clear and he continued to build for the future. He even had his maps and charts drawn on the ceiling so that he could see them. His dream for a pan-American railroad connecting the North and South American continents survived him in the form of an idea. Galt dies a well-respected hero.

It is interesting to note that the character of Henry M. Galt was modeled on 19th century railroad czar and turnaround specialist, Edward H. Harriman (1848-1909). Harriman had bought a seat on the New York Stock Exchange at age 22. By 1883, he sat on the board of the Illinois Central and initiated its huge expansion program. In 1898 he took over and rescued the Union Pacific, a property in receivership and near collapse, and shortly thereafter purchased the Southern Pacific and Central Pacific and saved the Erie. It was Harriman who established standards for locomotives, cars, bridges, structures, signals, and so on.

Although The Driver is flawed by its sketchy characterization and its bewildering and extraneous subplot involving Galt’s family, it is still to be recommended for the portrait it paints of a hard-working, visionary, passionate, loyal, and competent businessman and for the sense of the “drive of the age” that it conveys. It is certainly not in the same class as Atlas Shrugged, but what is? It is a good book and a quick read and I recommend it to you, if you can find it. It is available for free from the Ludwig von Mises Institute.

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Dr. Edward W. Younkins is Professor of Accountancy at Wheeling Jesuit University. He is the author of Capitalism and Commerce: Conceptual Foundations of Free Enterprise [Lexington Books, 2002]. Many of Dr. Younkins’s essays can be found online at his personal web page at www.quebecoislibre.org. You can contact Dr. Younkins at younkins@wju.edu.

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