IN DEFENSE OF ECONOMIC ‘BIGNESS” FROM THE DEEP WOODS

IN DEFENSE OF ECONOMIC BIGNESS FROM THE DEEP WOODS Image on the Atlasphere
In his latest piece, “Be Afraid of Economic ‘Bigness.’ Be Very Afraid,” Tim Wu, a law professor at Columbia University, makes the argument that monopoly and excessive corporate concentration can lead to what Supreme Court Justice Louis Brandeis once called the “curse of bigness.” Jim Woods doesn’t quite view Professor Wu’s argument in such simplistic terms.

By Jim Woods

There’s an op-ed in the New York Times that has been getting some buzz over the past few days. It is written by Tim Wu, a law professor at Columbia University, one of the most outspoken advocates for harsher and more intrusive antitrust laws.

In his latest piece, “Be Afraid of Economic ‘Bigness.’ Be Very Afraid,” Wu makes the argument that monopoly and excessive corporate concentration can lead to what Supreme Court Justice Louis Brandeis once called the “curse of bigness.” Wu also argues that this “bigness” was a key component that led to the rise of Hitler, and that it was part of the economic origins of fascism.

What is that they say about an argument… if you have to resort to a Hitler reference, well, you’ve already lost?

Now, I don’t quite view Professor Wu’s argument in such simplistic terms. I do, however, think it ironic that fascism — which is just another form of big-government collectivism where the state is in control of the economy — is somehow the result of big business.

To be fair, Wu says it was the German economic structure, which was dominated by monopolies and cartels, that was essential to Hitler’s consolidation of power. And while it’s true that dictators throughout history nationalized industries and businesses under the threat of violence for their own nefarious purposes, it seems to me that blaming “big” industries for those nefarious purposes is a woefully misguided case of putting the cart before the horse.

But Wu doesn’t stop with just a look back at Nazi Germany. Instead, he applies the fear of bigness to what’s going on in the economy now, and particularly in places such as Silicon Valley, to argue that we need more invasive government and more antitrust law enforcement to rein in the bigness.

Here’s Wu’s basic thesis, in his own words:

“There are many differences between the situation in 1930s and our predicament today. But given what we know, it is hard to avoid the conclusion that we are conducting a dangerous economic and political experiment: We have chosen to weaken the laws — the antitrust laws — that are meant to resist the concentration of economic power in the United States and around the world.”

But are antitrust laws really designed to resist economic concentration of power, or are they more like legal means to give the government more power over a free society?

According to novelist/philosopher and free-market champion Ayn Rand, antitrust laws were “allegedly created to protect competition.” Yet Rand argued that these laws were based on the “socialistic fallacy” that a free market will inevitably lead to the establishment of coercive monopolies. She further argued that it was government that was the cause of monopolies, not free markets.

As Rand writes, “Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action… The antitrust laws were the classic example of a moral inversion prevalent in the history of capitalism: an example of the victims, the businessmen, taking the blame for the evils caused by the government, and the government using its own guilt as a justification for acquiring wider powers, on the pretext of ‘correcting’ the evils.”

Well, Wu certainly wants to correct what he sees as these evils, and he wants the government to do so much more than it has been doing.

“In recent years, we have allowed unhealthy consolidations of hospitals and the pharmaceutical industry; accepted an extraordinarily concentrated banking industry, despite its repeated misfeasance; failed to prevent firms like Facebook from buying up their most effective competitors; allowed AT&T to reconsolidate after a well-deserved breakup in the 1980s; and the list goes on,” writes Wu.

Note the term “we have allowed,” as if government was the moral arbiter of one group of individuals and the free exchange of ideas, capital and cooperation with another group.

Wu even doubled down on the Facebook (FB) and Silicon Valley consolidation trends in an interview Tuesday with CNBC, saying, “I think it could be very important, for example, to take action against Facebook to break-up some of their illegal mergers, especially Instagram and WhatsApp, to kind of recharge the innovation environment.”

Recharge the innovation environment, really?

I don’t know if Mr. Wu has visited Silicon Valley lately, but I can assure him that there is no shortage of innovation among tech startups. And, in fact, many are those startups would love to be acquired by the likes of Facebook or Alphabet (GOOGL) or Apple (AAPL) or any number of bigger suiters.

Oh, and who wins from such mergers? Well, it’s usually customers who get convenient access to better products, and shareholders of firms that are monetizing these acquisitions.

Facebook, for example, has seen its share price surge some 200% over the past five years. And while it’s not always the case that consumers or shareholders win when an industry consolidates, it usually always is the case that consumers lose when big government comes in and dictates the winners and losers.

Now, this is The Deep Woods, and in this publication, we dig into the deeper principles of an issue. Here, the principle involved is the proper jurisdiction over free peoples.

By what right, I ask you, does the government claim to legislate the free actions of individuals that make up corporations and companies?

These entities are freely associating with others, and using capital to make sound business decisions such as acquisitions, mergers, etc. We must assume here that these individuals are acting in what they consider to be their own mutual best interests, even if those choices ultimately turn out to be wrong.

The answer, of course, is the government has no right, and these companies are violating no laws. So, the government had to make up a new right, and that’s what they call antitrust laws.

Finally, the only real danger in the history of humanity from “bigness” is the rise of big government, i.e. the rise to power of those who wield the swords, guns and missiles — and, of course, the big laws they have restricting the freedom of citizens.

INVESTMENT AUTHOR JIM WOODS DISCUSSES WEALTH AND ACHIEVEMENT FROM THE ATLASPHERE EPISODE 01

By Heather Wagenhals

We have a special treat here at The Atlasphere; the inaugural podcast show kicks off with host Heather Wagenhals financial colleague, Jim Woods.

Jim and I have backgrounds in the investment industries. We’ve had similar and diverse investment experiences and sharing the same philosophical beliefs learned through the characters of The Fountainhead and Atlas Shrugged. Join us as we have a conversation about wealth, achievement, and the premise that wealth is more than money.

Who’s On:

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.  His books include co-authoring, Billion Dollar Green: Profit from the Eco Revolution, and The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse. He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s most prominent luminaries. Read more about Jim Woods here.

Learn More with Guest Links:

JimWoodsInvesting.com      WayoftheRenaissanceMan.com

This Week’s Lesson From the Lexicon:

poverty
Find today’s lesson on page 376 of the lexicon.
It references two separate essays from two different books, one from Capitalism: The Unknown Ideal as well as The Objectivist.
Follow along with our journey into Objectivism with the Ayn Rand Lexicon Objectivism From A to Z volume IV edited by Harry Binswanger with an introduction by Leonard Peikoff. Get your copy now!
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THALES DAY: THE BIRTHDAY OF REASON

THALES DAY THE BIRTHDAY OF REASON image on The Atlasphere
The story of how the scientist-philosopher Thales came to predict a solar eclipse in 585 B.C. is an inspiring lesson in the triumph of rational, independent thinking. Lovers of reason should celebrate accordingly!

By FREDERICK COOKINHAM

On May 28, 585 B.C.E., there was a solar eclipse visible in Asia Minor. Aristotle tells us that this eclipse had been predicted a year before by Thales of Miletus, a scientist, a philosopher, and a hard-headed businessman.

The unusual thing about this prediction is that Thales made it on the basis of observation and reasoning, rather than by consulting omens such as the entrails of an owl.

How did he do it? Well, unfortunately, he did not have any insights into astronomy, or into the building of astronomical instruments. If he had, then he would have been able to predict the day of the eclipse and not just the year.

Thales of Miletus (c. 624 BCE – c. 546 BCE)

What he did instead was travel to Babylonia. There he found the records kept of eclipses and other events by Babylonian astronomers and astrologers (at that time they made no distinction between the two) for hundreds of years.

Thales realized that by studying this raw data he could find patterns. That is how our brains work; we look for patterns in the data provided by our senses. That’s why we humans love music and puzzles of all kinds. Thales could see that there was an eclipse every N years, and 585 would be an N year, ergo, there would be an eclipse.

Thales lived from about 624 B.C. E. to about 546 B.C.E. He was involved in politics, and ancient sources also tell us he once predicted a bumper crop of olives, and bought up all the presses he could find — which he then sold to the farmers when his crop prediction came true.

He may have been the first scientist to study electricity and may have written books on astronomy, but none survive. He may have been the first to propose the spherical shape of the earth, but no one is sure. We do know he did original work in geometry.

The unusual thing about this prediction is that Thales made it on the basis of observation and reasoning, rather than by consulting omens such as the entrails of an owl.

What Thales did with the Babylonian astronomical raw data was a tour de force of complete thinking: he used induction, followed by deduction. First, he induced from the data the generalization that eclipses occur at certain intervals, then he deduced that 585 would be the next year in that pattern.

People tend to become overly fond of one of those two operations at the expense of the other, and that does not work. The “intellectual,” especially, tends to be too deductive and not sufficiently inductive.

He creates a theory and then, like Pygmalion, he falls in love with his own creation. He starts predicting future events all over the place, based on his pet theory. Eventually something happens that his theory does not account for, and he gets all upset, because he is unwilling to amend his theory.

Thales’s successful prediction caused a wave of enthusiasm for science in Greece, just as Newton’s explanation of celestial motion caused a wave of excitement for science and reason in the western world of his day.

These triumphs for reason and science raised man’s hope for a philosophy that would likewise be based on reason — a philosophy that anyone could arrive at independently.

Thales’s successful prediction caused a wave of enthusiasm for science in Greece.

With such a philosophy, mankind would be liberated from the purveyors of religious revelations of truths that only they can know and the rest of us must take on faith.

Thales’s eclipse meant that every man could be his own scientist and philosopher. A distinction started to be made between religion, which tells you what to think, and philosophy, which teaches you how to think.

May 28 should, therefore, be celebrated as the birthday of reason by all mankind.

Remember crayoning and cutting out pictures in elementary school? If you are old enough, you might remember Captain Kangaroo on TV and his construction paper and safety scissors. Turkeys and pilgrims for Thanksgiving, and three ships for Columbus Day.

Imagine the child of the future, in every land and tongue, learning about Thales in first grade, and drawing pictures of solar eclipses. Then, in middle or high school, he will learn about induction and deduction, and about the deeper implications of Thales’s feat: the fact that anyone could make the same prediction, that we live in a universe of objective facts open to the understanding of all, and that no priesthood has an exclusive pipeline to truth.

  

HONOR IN THE CONCRETE

By KURT KEEFNER

On the surface, Locke writer-director Stephen Knight has given us a minimalist movie about a man, his car, and his mobile device. For 85 minutes we watch a man who pours concrete for a living, driving alone in his car and talking on the phone. On a deeper level, however, this is a movie about something subtle and important: The role of honor.

Steven Knight’s tidy film Locke has given me more to think about than any other recent movie.

It is the story of Ivan Locke, construction director for big buildings in the UK. It is the evening before millions of metric tons of concrete are to be poured in the foundation of a 53-story building, the biggest pour outside of nuclear reactors in European history.

Locke is in love with his buildings. He goes on at one point about how this one will be visible from twenty miles away and cast a shadow a mile long at sunset. He doesn’t work for his employer or for the money — he works for the building. He is a master of his profession. Give him a problem and he’ll solve it.

But now he faces a problem that’s a little harder to solve. It appears this quiet, organized man who loves his wife and sons has made a mistake and the consequences are going to be very painful. I’m not going to spoil the story by telling you what the mistake is. Let me assure you it’s nothing revolting like child molesting or even embezzlement. But it was a moral lapse.

He doesn’t work for his employer or for the money — he works for the building. He is a master of his profession. Give him a problem and he’ll solve it.

Locke means to put things right, to whatever extent possible. He gets in his car and drives to London in an effort to do so. The entire movie takes place in his car and Tom Hardy, with his sleek beard and sleeker Welsh accent, is the only actor we see. All the dialogue is on the car phone.

Locke abandons the building and leaves the pour to his assistant, who is good at his own job but not up to the task. He has to explain to his wife why he’s not coming home. He has to face the wrath of his boss. But he’s made his decision. He’s not going to let the bad situation he’s caused get worse.

So what is this movie actually about? Honor. Locke is going to do the right thing even if his life crashes around his head.

Now, I am very suspicious of honor. As a student of the Civil War era, I’ve seen a lot of Southern pseudo-aristocratic honor, which is the honor of arrogant hypocrites who like to rape women.

I also think of honor killings in the Middle East. Cultures of honor are often cultures of collective shame and violent retribution. I know not all honor is like this, but let’s say honor has left a really bad taste in my mouth. (For a different view of honor, see Kirsti Minsaas’s review of the movie Rob Roy, for the Atlasphere.)

This film redeems the concept of honor for me. It redeems it for me because there is no pomp in Locke’s honor. He is just a rational man taking responsibility for his deeds. He’s basically an Objectivist with some emotional baggage. He speaks in terms of solving problems.

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If he has a tragic blindness, it’s one perhaps some Objectivists would share with him: He believes every problem can be solved if you just “draw a circle around it.” The movie teaches him some powerful lessons on that subject. But he does not swerve from his course.

This film redeems the concept of honor for me, because there is no pomp in Locke’s honor. He is just a rational man taking responsibility for his deeds.

This is a thinking person’s movie. Look at the pun of the protagonist’s name: Ivan Locke. Ivan is Russian for John. Ivan Locke pours concrete. John Locke believed only concretes exist. And Ivan Locke is trying to hold up something like an implied social contract when he goes to right his wrong, echoing John Locke’s political concept.

The film came at a serendipitous time in my writing. I’m working on a book called Killing Cool: Fantasy vs. Reality in American Life. During the last two or three days I have been writing about the nature of adult wonder, which I define as the virtue of choosing to be open to the world and not taking it for granted.

One of the examples I give is how I feel wonder at the operation of conscience in a man. (Think Oskar Schindler.) Ivan Locke gives us an impressive example of a man of conscience to wonder at, a man as solid as concrete, a demonstration that a tragic hero is still a hero.


Kurt Keefner is a teacher and writer. He is author of the forthcoming non-fiction book Killing Cool: Fantasy vs. Reality in American Life. You can visit his blog at kurtkeefner.com and browse his past Atlasphere columns through his directory profile.

THE UNEXPECTED AYN RAND

You’ve read Atlas Shrugged, right? Okay, what color is Dagny’s hair?

When I first read the book, I thought Dagny was a blonde. Then I looked again and saw, when Dagny is first introduced, that Rand calls Dagny’s hair “brown.” Not even “light brown,” just brown.

I was surprised. Others have had the same experience. I guess we’ve all seen too many Clairol commercials.

The problem here is not any failure on Rand’s part to put in the subtle touches; it’s just that we don’t notice the subtleties amid all the thunder — Rand’s own thunder, that is, followed by the thunder of the world’s reaction to Rand.

Read the scene between Dagny and Cherryl, just before Cherryl’s death (Chapter 4 of Part 3, hardcover and Centennial paperback page 888). Dagny reminds Cherryl that they are sisters. Cherryl replies, “No! Not through Jim!” And Dagny says, “No, through our own choice.”

That new and deeper meaning Dagny gives to her relationship to her sister-in-law shows the genius of Ayn Rand — it’s what makes this author famous and a never-to-be-forgotten experience for millions of young readers.

We don’t notice the subtleties amid all the thunder.

Dagny then expresses care and concern and tenderness to the abused and frightened Cherryl — all those qualities you have heard about Rand not possessing.

Here’s another moment in Atlas I’ll bet you don’t remember: Eddie, in one of his dialogues with the worker in the cafeteria (page 218), says that he was working at Dagny’s desk one day when she walked in and said, “Mr. Willers, I’m looking for a job. Would you give me a chance?”

And she laughed. Then she sat on the edge of her desk, telling Eddie to stay seated.

Grant Bowler as Hank Rearden and Taylor Schilling as Dagny Taggart in Atlas Shrugged: Part I
Pretty easy-going boss. Not a tyrant. Dagny is intense, in intense scenes, but there is one of those humanizing touches that Rand isn’t supposed to have in her books.

How many readers of Atlas remember Galt’s breakfast-making scene? If that scene makes it into Part III of the Atlas movies, you might notice it and see the humanizing touch. Galt makes breakfast for Dagny after she crashes in the valley.

He heroically fries eggs! He makes toast! With a single bound! You want humanizing touches? — there they are.

But Rand also integrates that little scene with the story and with Galt’s characterization: Dagny asks him whether he learned those kitchen skills from Dr. Akston. She met Akston in his diner, remember? Galt replies, “That, among other things.”

Here’s another one for Dagny: On page 81, Ellis Wyatt comes bursting uninvited into Dagny’s office. An unforgivable breach of office etiquette. Reading this at thirteen, I thought, Yeah, that’s the stereotyped so-called individualist — someone with passion but no manners. Stock character.

That’s the stereotyped so-called individualist — someone with passion but no manners.

But on page 440, Dagny is in the opposite situation. She is desperate to see Ken Danagger, but she waits nervously in his waiting room for hours. She will not barge into his office. He has a right to decide when to see her, and she will not violate that right.

That’s when I got it. Rand is deliberately setting up the same situation in order to say, See? That was the old idea of an “individualist,” and now here is my new idea of an individualist: Someone who sees the deeper meaning in individualism, someone who respects individual rights. Another new and deeper meaning.

Some more surprises in Rand:

Rand’s villains are supposed to be government employees, but the fact is the villains are as often businessmen — crony capitalists — as politicians and bureaucrats. The politics of the Atlas Shrugged villains is fascism or mercantilism, not socialism.

And they are old-money, Ivy-league types; you can tell from their nicknames, like Tinky Holloway (a bureaucrat and stooge of Orren Boyle, head of Associated Steel — read: US Steel in real life).

Galt’s Gulch is not supposed to be read as a model for all society. The people of the Gulch — no more than a thousand, Rand guessed, and more likely one or two hundred — are there by individual invitation and only for one month a year, so it’s more like a big party.

Renting out a car rather than lending it for free, Galt explains, is a custom that helps them rest from the things they came there to rest from. It’s not meant to be a rule for all people at all times.

Did you know that Galt mentions, in his speech, generosity as one of the virtues? And so does Dagny, on page 276.

Galt says people are taken advantage of because of their generosity and prodigality. Some people don’t seem to get the point that that means anyone — not just ambitious captains of industry.

Even people with little prodigality to give sometimes give what they can and are taken advantage of by their personal parasites. (That’s why Prof. Muhammed Yunnus’s Grameen Bank loans money only to women: Men in Bangladesh, he found, will spend the loan on booze and gambling while the wife does the work.)

Rand hated children, we are told, and we know this because there are no children in her novels. But there are. Did you know that Dominique is only nineteen when we first meet her in The Fountainhead? No wonder she’s screwed up — she’s still a brainy, neurotic college freshman not yet out of her teens. There are two kids in Galt’s Gulch, aged seven and four — and more in We the Living.

Rand’s novels have just a few children, but they have no elephants at all! That’s because she didn’t happen to be writing about elephants.

There are personal references in Galt’s speech that you will miss if you skip it, as some do. “Do you hear me, Dr. Robert Stadler?” “Do you hear me, my love?”

Rand’s heroes have no inner conflicts. That’s why she’s a bad writer! — you’ve heard.

Inner conflict is what the whole novel is about — the inner conflict of deciding to go on strike. Hank and Dagny are seen agonizing over this decision, and Francisco, and even Galt too.

Inner conflict is what the whole novel is about.
The conflict had to be between each hero and the others and between each hero and himself because the villains are not, and cannot be, strong enough to threaten the heroes that deeply.

Especially Jim Taggart, whose evil is so profound, his evasions so reckless, that he couldn’t pour piss out of a boot if there were instructions on the heel.

That’s because of how Rand had by that time decided to define evil. That point needs a whole article, so … to be continued.

Rand’s heroes are a sign of bad writing because they are godlike and not human.

You’ve heard that one. But as Dr. Akston tells Dagny in the valley (page 791): “Every man builds his world in his own image.”

Rand is not making gods of her characters or of herself. She is making a god … of you.


Frederick Cookinham gives New York City walking tours, available through In Depth Walking Tours — including five on the subject of Ayn Rand and six on Revolutionary War sites. He was interviewed at the Atlasphere in 2005. He is the author of the book The Age of Rand: Imagining an Objectivist Future World and has also written articles for The New Individualist, Nomos, Full Context, and The Pragmatist.