At long last, after several months, I have finished reading Atlas Shrugged by Ayn Rand. While reading The Fountainhead back in high school, I fell in love with Rand's school of philosophical thought, Objectivism. I always meant to follow up by reading Atlas Shrugged but between college, startups, and the myriad other distractions in my life I just never quite made time for the 1,000+ page novel. Finally, at long last, I have accomplished this task and it was interesting to read it 14 years after I read The Fountainhead - my perspective has changed a lot since then!
The Good
Rand's advocacy of free market capitalism certainly resonates very strongly with me. I'm not anti-government but I do believe that the government has a pretty focused role to play in the maintenance and advancement of society. Capitalism is an efficient system for fostering innovation, advancing ideas that are worthwhile and discarding those that aren't. The capital and where it flows provides an intrinsic metric of success, incenting businesses to evolve, streamline, and innovate.
When the government gets too involved not only does it lead to wonky results due to decision-making by people with little business experience, it also mucks up the entire capitalist system, blurring the incentives and obfuscating the metrics of success - further compounding the wonky results (I have blogged before about such wonky results.). I'm glad to have read this book now, after 11 years as an entrepreneur and business executive, as the government meddling in business affairs (e.g. the Anti-Dog-Eat-Dog Rule and Directive 10-289) evoked much more significant responses in me than they would have back when I was a student!
That said, in this book Rand argues for an extremely laissez-faire, almost anarchist, form of capitalism, which I do not support. The government does have a role to play in business and that is to set the rules of the system in which the market operates. These rules include fair laws and equitable taxes with frequent review and update. After that, businesses should be left free to optimize their operations around those rules.
I also bought into Rand's theme of Sanction of the Victim, the willingness of the successful to suffer at the hands of the "evil" (In this novel, "evil" is done by mooches and looters who have no capacity to achieve in and of their own right.), feeling guilty for the "sin" of their achievement. This corresponds with Transactional Analysis, specifically with the playing of games. It is easy to blame the "evil" person/company/country/organization but it takes two or more actors to play a game and they all are equally complicit in the result.
Rand's "rational egoism" or "ethical selfishness" still resonates with me in many ways but not nearly as much as it did in high school. If "self" is extended to represent collective units such as "family" or "company," I think this position is a good operating principle. However it must not be followed myopically and it must not be considered absolute. Part of what makes us human is that we have the capacity for love and human empathy, not just for maximizing self interest 24/7/365.
The Bad
Rand's philosophy really falls apart, though, on her premise that rationality is every human being's highest virtue. Here I disagree completely. Human beings are inherently irrational creatures although we spend an enormous amount of time and energy rationalizing irrational decisions we have already made - consciously or subconsciously. Several times in the novel characters are derided for sharing their feelings or instincts. This is flat-out wrong. We can either ignore / suppress our emotions or we can embrace them, even capitalize on them.
Again, our capacity to feel is a critical element of the human experience and, without it, life is less rich, less meaningful. This shows in Rand's characters who never seem to know joy. She writes that they are joyful when they achieve something great but it isn't very convincing. The moments of greatest joy in my life have been almost entirely irrational and they have involved people, not achievements. By condemning irrationality, Rand really misses the boat.
The Ugly
Because of the dogged focus on rationality, the characters in Atlas Shrugged simply aren't believable. Or, even if one believes that humans like them might exist, it is hard to identify with them. There is some dialogue, of course, but the book feels like one preachy monologue after another. Because of this inability to write "human" characters and because of her insistent commitment to rationality, I wonder what Ayn Rand was like - and I suspect that she repressed a significant amount of her own feelings.
More practically, Atlas Shrugged is too long. The story could have been told in 1/3 the pages and without sacrificing any character development (since, as described above, the characters weren't really developed). A prime example is Galt's radio address, which really is the expression of Rand's philosophy packaged up into one monologue - and what a monologue! After three hours of reading, of Galt repeating himself over and over again, of rhetorical questions and allegories, I finally finished his address. There was a lot of great stuff in there but it was way too long - if it had been a real radio address, he would have bored his audience to tears and no one would have followed. In Atlas Shrugged, however, people around the country are inspired by this message - once again exhibiting Rand's inability to grasp how humans really work.
Conclusion
I'm really glad to have read the book and I would recommend it for others as well. My reaction is very mixed: the businessman in me loves it while the human in me rolls his eyes at it. The fact that it evokes such strong and mixed reactions is a good thing and I'm sure I will have many lively conversations about the book. I just wish that Rand would have understood the latter reaction and found a way to reconcile her philosophy with it.
Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts
2011-06-10
2011-03-25
The Most Pressing Question: How To Price Food, Energy, and Health?
I was recently invited to throw my hat in for participation in the conference on "Ecosystem Services" hosted by the National Academies Keck Futures Initiative. It is a "think tank" style event at which people from all disciplines, sectors, and backgrounds come together to address weighty topics. One question on the application was, "Which one question or topic related to 'Ecosystem Services' is most pressing and most deserving to be addressed by [conference attendees]?" Following is my response, which was required to be fewer than 250 words. What do YOU think?
How to price food, energy, and health
Capitalism is an extremely efficient system for organizing resources to produce a desired outcome. However, as with all systems, garbage in results in garbage out. Subsidies, protectionist economic policies, and the externalization of costs result in prices for food, energy, and health that do not reflect reality and that are completely misaligned with desired outcomes.
For example, fast “food” is an incredibly cheap source of calories in the US but its costs do not reflect market reality. Its ingredients have low costs due to agriculture subsidies. The economies of scale used by the industry require massive infrastructure and energy use. The cost of infrastructure is externalized as overhead. The cost of energy is undervalued because the energy industry receives high tax breaks and externalizes the costs of environmental damage and health risks. Overconsumption of fast food drives up nation-wide health costs to cope with rising diabetes and obesity. The health costs themselves are inflated under the burden of overhead for an incredibly complex multi-payer system and prices are based on services rendered rather than on outcomes achieved.
This brief, US-focused example illustrates not only what dire situations food, energy, and health are in but also how complex and interrelated they all are. These issues must be addressed at the system level and the primary parameter for the capitalist system is pricing. Addressing pricing will require an interdisciplinary and inter-professional approach, which is why the NAKFI conference is a perfect venue for its discussion.
For example, fast “food” is an incredibly cheap source of calories in the US but its costs do not reflect market reality. Its ingredients have low costs due to agriculture subsidies. The economies of scale used by the industry require massive infrastructure and energy use. The cost of infrastructure is externalized as overhead. The cost of energy is undervalued because the energy industry receives high tax breaks and externalizes the costs of environmental damage and health risks. Overconsumption of fast food drives up nation-wide health costs to cope with rising diabetes and obesity. The health costs themselves are inflated under the burden of overhead for an incredibly complex multi-payer system and prices are based on services rendered rather than on outcomes achieved.
This brief, US-focused example illustrates not only what dire situations food, energy, and health are in but also how complex and interrelated they all are. These issues must be addressed at the system level and the primary parameter for the capitalist system is pricing. Addressing pricing will require an interdisciplinary and inter-professional approach, which is why the NAKFI conference is a perfect venue for its discussion.
2011-02-11
Green Job Creation is the Wrong Argument
A friend of mine asked for my response to an article titled The False Promise of Green Jobs. The article contends that "green" governmental policies will not result in net creation of jobs because
A. these new green jobs will be offset by job losses in the "conventional" energy sector and
B. green energy is more expensive than conventional energy so its increased costs will cut overall productivity and spending.
In response to A, all I can do is wonder if anyone really bemoans the rise of the IT sector (and IT jobs) at the expense of, say, the typewriter industry. Clinging desperately to obsolete industries may prop up employment in the short-term, but it ensures a decline in competitiveness in the long term.
In response to B, I can't disagree more with the notion that "green" energy is more expensive than "conventional" energy. We currently externalize the environmental, health, and social costs of producing energy "conventionally," such that the price the consumer sees is much lower than reality. Our governments also provide significant tax breaks and incentives to conventional energy companies, which allow them to sell energy so cheaply while still generating record-breaking profits. This is all part of an implicit contract we have that guarantees citizens access to limitless, incredibly subsidized energy. Capture the true costs of conventional energy and take away all of the big corporate incentives, and I think you will see a very different cost comparison result.
Furthermore, this author is very narrowly only considering green energy generation when making claims about costs. However, he neglects the companies making great advances in greener energy distribution, storage, and efficiency, all of which make energy - regardless of its source - much less expensive. My company, for example, reduces a business's energy costs 25%, freeing up capital that can be used for, say, employment.
The biggest fallacy of all in this article, though, is the focus on job creation. If a government is pursuing a policy in the name of creating jobs simply for the sake of creating jobs, well, that's socialism. This isn't a big surprise coming from a Scandinavian (where governments are generally relatively socialist) author. In the US, though, where we claim to be capitalists, green businesses should be supported not because they charitably create jobs, rather because they make sound economic sense, increase energy security, and help us operate as a much more robust, independent, efficient society.
My green business has created only two green jobs so far and we plan to create many more. However, policy arguments focused on green job creation alone are totally missing the point.
A. these new green jobs will be offset by job losses in the "conventional" energy sector and
B. green energy is more expensive than conventional energy so its increased costs will cut overall productivity and spending.
In response to A, all I can do is wonder if anyone really bemoans the rise of the IT sector (and IT jobs) at the expense of, say, the typewriter industry. Clinging desperately to obsolete industries may prop up employment in the short-term, but it ensures a decline in competitiveness in the long term.
In response to B, I can't disagree more with the notion that "green" energy is more expensive than "conventional" energy. We currently externalize the environmental, health, and social costs of producing energy "conventionally," such that the price the consumer sees is much lower than reality. Our governments also provide significant tax breaks and incentives to conventional energy companies, which allow them to sell energy so cheaply while still generating record-breaking profits. This is all part of an implicit contract we have that guarantees citizens access to limitless, incredibly subsidized energy. Capture the true costs of conventional energy and take away all of the big corporate incentives, and I think you will see a very different cost comparison result.
Furthermore, this author is very narrowly only considering green energy generation when making claims about costs. However, he neglects the companies making great advances in greener energy distribution, storage, and efficiency, all of which make energy - regardless of its source - much less expensive. My company, for example, reduces a business's energy costs 25%, freeing up capital that can be used for, say, employment.
The biggest fallacy of all in this article, though, is the focus on job creation. If a government is pursuing a policy in the name of creating jobs simply for the sake of creating jobs, well, that's socialism. This isn't a big surprise coming from a Scandinavian (where governments are generally relatively socialist) author. In the US, though, where we claim to be capitalists, green businesses should be supported not because they charitably create jobs, rather because they make sound economic sense, increase energy security, and help us operate as a much more robust, independent, efficient society.
My green business has created only two green jobs so far and we plan to create many more. However, policy arguments focused on green job creation alone are totally missing the point.
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