The French Version of Atlas Shrugged

Ayn Rand’s famous novel, Atlas Shrugged, tells the story of what happens when society’s most productive people go on strike because they don’t want to subsidize the looters and moochers.

I won’t give away the plot, but one interesting twist in the story is when government officials realize that they need some people to produce. Otherwise, as the former President of Brazil acknowledged in real life, there’s nothing to redistribute.

Well, some people in France don’t understand the risks of driving away the geese that lay the golden eggs. Here are some excerpts from a Christian Science Monitor story.

“au revoir, looters and moochers”

As French President François Hollande outlined new taxes and spending cuts while promoting reforms to turn the economy around – word leaked out that France’s wealthiest man, Bernard Arnault, was heading for Belgium in a rumored tax dodge. At first, the timing could not appear to have been worse for the national morale and Mr. Hollande. …he will hit those with direct salaries over 1 million euros ($1.3 million) with a 75 percent tax. The French have not forgotten the national shame when British Prime Minister David Cameron told the world from Mexico in early summer that London was “rolling out the red carpet” for wealthy French seeking tax havens.  Yet, instead, in a national spasm of pique, France spent all day making accusations of “traitor” and “ingrate” at the rich guy – Mr. Arnault, worth $41 billion. …The anti-Arnault frenzy spurred far-left guru Jean-Luc Mélenchon to call him a “parasite,” and far-right darling Marianne Le Pen to proclaim “scandalous” what appears to be a financial exile. A screaming headline in Libération – “Get Lost You Rich Idiot”… Hollande yesterday said the fashion tycoon, who also left France for the US during the last Socialist government of François Mitterand, “should have measured what it means to apply for citizenship to another country. In this period, we need to appeal to patriotism.”

I’ve already posted about productive people escaping France, so that’s not exactly a new development.

What is remarkable, though, is the way French politicians, journalists, and ordinary citizens (presumably of the moocher variety) have viciously attacked Mr. Arnault.

Sort of like thieves who want moral sanction from their victims. Hmmm…seems that somebody wrote a book with that theme – and it didn’t end well for the looter class. Which is exactly why I’m predicting that France will soon face a Greek-style fiscal crisis.

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An Invaluable Economic History Lesson from Thomas Sowell: Politicians Should Only “Do Something” If that Means Doing Less

The great Ronald Reagan famously said (and I am paraphrasing, since I do not remember the exact phrase) that the most dangerous words in the English language were “I am from Washington and I am here to help you.”

Those are very wise words, especially when we think of the damage politicians have done because of their impulse to “do something” when the economy stumbles. The problem is not that there is nothing that needs to be fixed. The problem is that the crowd in Washington is far more likely to make things worse rather than better.

And who better to explain this than Thomas Sowell.

Sowell starts his most recent column by explaining that politicians who want to “do something” almost always want to expand the burden of government spending, but he notes that this approach has meant deeper recessions and more economic suffering. And he cites Warren Harding as an example of a President who rejected the notion that bigger government was some sort of economic elixir.

…you might think that the economy requires government intervention to revive and create jobs. It is Beltway dogma that the government has to “do something.” History tells a different story. For the first 150 years of this country’s existence, the federal government felt no great need to “do something” when the economy turned down. Over that long span of time, the economic downturns were neither as deep nor as long lasting as they have been since the federal government decided that it had to “do something” in the wake of the stock market crash of 1929, which set a new precedent. One of the last of the “do nothing” presidents was Warren G. Harding. In 1921, under President Harding, unemployment hit 11.7 percent — higher than it has been under President Obama. Harding did nothing to get the economy stimulated. Far from spending more money to try to “jump start” the economy, President Harding actually reduced government spending.

Can we learn any lessons from Harding’s anti-Keynesian approach? Assuming we want more growth and less unemployment, the answer is yes (and we can also learn the lesson that Hoover was a moronic statist from the very beginning).

President Harding deliberately rejected the urging of his own Secretary of Commerce, Herbert Hoover, to intervene. The 11.7 percent unemployment rate in 1921 fell to 6.7 percent in 1922, and then to 2.4 percent in 1923. It is hard to think of any government intervention in the economy that produced such a sharp and swift reduction in unemployment as was produced by just staying out of the way and letting the economy rebound on its own. Bill Clinton loudly proclaimed to the delegates to the Democratic National Convention that no president could have gotten us out of the recession in just one term. But history shows that the economy rebounded out of a worse unemployment situation in just two years under Harding, who simply let the market revive on its own, as it had done before, time and time again for more than a century.

Allow me to actually quibble with what Sowell wrote. Harding didn’t “let the market revive on its own.” He helped the economy grow faster by shrinking the federal budget. As Jim Powell explained in National Review, “Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922.”

That’s a stunning statistic, akin to cutting more than $1.5 trillion from today’s bloated federal budget.

Sowell  also cites the achievements of the Gipper. Since I’ve posted some powerful comparisons of Reaganomics and Obamanomics, this is music to my ears.

Something similar happened under Ronald Reagan. Unemployment peaked at 9.7 percent early in the Reagan administration. Like Harding and earlier presidents, Reagan did nothing, despite outraged outcries in the media. The economy once again revived on its own. Three years later, unemployment was down to 7.2 percent — and it kept on falling, as the country experienced twenty years of economic growth with low inflation and low unemployment. The Obama party line is that all the bad things are due to what he inherited from Bush, and the few signs of recovery are due to Obama’s policies beginning to pay off. But, if the economy has been rebounding on its own for more than 150 years, the question is why it has been so slow to recover under the Obama administration.

By the way, Sowell also could have mentioned what happened in the United States immediately after World War II. The Keynesians were predicting a return to depression because of big reductions in government spending and the demobilization of millions of troops. But as Richard Vedder and Jason Taylor explained for the Cato Institute, the economy quickly adjusted and rebounded precisely because politicians didn’t revive the New Deal (and, as you can see from this video, President Reagan understood this bit of economic history).

Sowell also explains how FDR made a bad situation worse in the 1930s.

A great myth has grown up that President Franklin D. Roosevelt saved the American economy with his interventions during the Great Depression of the 1930s. But a 2004 economic study concluded that government interventions had prolonged the Great Depression by several years. Obama is repeating policies that failed under FDR.

In previous posts, I have cited both Sowell and the Wall Street Journal to make this very point, but I also call your attention to this post referencing the seminal work of Robert Higgs, as well as this video on the pernicious role of government intervention in the 1930s.

Last but not least, check out this video to understand more about FDR and his malignant views.

P.S. Fans of Professor Sowell can read more of his work here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, here, and here. And you can see him in action here.

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