Friday, November 9, 2012

Election 2012 - Atlas Has Shrugged

The Naked Dollar Electoral Model correctly predicted that Barack Obama would secure re-election. It is now three-for-three.

This is of scant comfort. Sort of like the old joke, second prize is two weeks in Philadelphia. But this is why one creates dispassionate models, because they refuse to factor in emotion. I personally was wrong about the election, primarily because I underestimated turnout in Democrat precincts.

What I also overestimated was any determination on the part of the American people to choose liberty over dependence, and this is a very sad thing. The takers now outnumber the makers.

I tried to read Atlas Shrugged in high school. I think I got through about sixty pages. Atlas is not an easy book. About three years ago, I picked it up again and forced my self to get through it. It gets easier once you get past page sixty, as it turns out.

If you haven't read it, it about a United States in an advancing state of redistributive socialism. The redistribution is as much about crony capitalism as it's about transfer payments to the poor. One by one, the great capitalists - the ones who don't want to play a rigged game - start disappearing. No one knows why or to where. They have decided to go on "strike," having been getting milked dry by a corrupt system that at once despises them and yet needs them to survive. Government actions were justified under the banner of "fairness." After all, the rich didn't get their wealth by honest means. They must have taken it somehow. Others are more deserving.

Any of this sound familiar?

The capitalists decide they won't play the game anymore. The only solution is to withdraw from the very system that they were holding up. The inevitable collapse needed to be hastened, so the country could start anew from the ashes. The capitalist heroes walk away from their factories, implicitly saying to the socialists and bureaucrats, "Here, if you think it's so easy, you try it."

As Margaret Thatcher famously said, "Socialism works only until you run out of other people's money."

Let me tell you what I'm hearing. One very wealthy friend of mine - a truly successful capitalist - told me he is ceasing all venture investing as well as all charitable giving. He is also reorganizing his investments in the most defensive manner possible. Think things like non-dollar cash. Another friend is ceasing all giving to schools. He views - correctly - these gifts as feeding the problem, with schools indoctrinating our kids with the very ideology that makes a Barack Obama possible. (Indeed, a college acquaintance of mine who is now a professor informed me the day after the election, on Facebook, that wealth is not created, it is simply "aggregated." Translation: you didn't make that, you took it.) A charity I know had five six-figure donors last year. All bowed out after the election, fearing significant tax hikes. Hell, let the government solve that problem.

These people I'm talking about are fighters, too, but they seemed to now be resigned to our country's fate. That is profoundly sad and more than a little frightening.

Around 1790, a historian named Alexander Tyler listed the eight phases of democracy:

1. From Bondage to spiritual faith;
2. From spiritual faith to great courage;
3. From courage to liberty;
4. From liberty to abundance;
5. From abundance to complacency;
6. From complacency to apathy;
7. From apathy to dependence;
8. From dependence back into bondage.

Where do you think we are on this list? Arguably, seven. And while eight seems farfetched - come on, this is America! - there is nothing special about our country that makes us immune from the impartial hand of economics. In truth, we have been commiting slow-motion suicide since FDR. Ponder the growth of government spending relative to GDP:

Ignore the spike for wars, because those always scale back quickly. Focus on the baseline growth, because that's what's near impossible to stop as more and more people become addicted to the system. Under Obama, our suicide has hastened itself, the tipping point to insolvency now likely having been reached. (In his bid for re-election, Obama didn't even suggest a solution for any of this. Give the man points for being honest.)

What's so upsetting was that America seems to have collectively decided that this is all okay. The choice was quite a stark one, after all, and certainly no one was abused with the notion that our president was doing a bang-up job on the economy. But that's okay, as long as no one messes with my check. The culture of dependency has now been fully - and willingly - embraced. Gone is the America of rugged individualism. Gone is American exceptionalism, and we will now witness a more persistent decline in our personal liberties. I fear even if we wake up four years from now, there's no turning this ship around. Oh, there will be some sort of economic recovery, but it won't be a great one, and the downward cycle now seems written in stone.

Ironically, I am writing this from Colorado. I say ironically because it is to a small, hidden town in Colorado that all the industrial heroes in Atlas create their capitalist utopia.

Does anyone know where I can find it?


  1. What you have observed is that Americans do not suffer entirely from Stockholm Syndrome. They can be propagandized into submission but do still have a few working brain cells.

    Let your friends continue to withdraw from America. There are plenty of people to take their places.

    On a positive note, this was an election where you should have been rooting for the other side.

    Obama will deliver the cuts to entitlements that Romney wished to deliver but never could have. It will take an insurrection from the Dems for it not too happen and they are far more likely to walk the line and deliver to their leader his final piece to deliver to him the title of one of the greatest presidents in history by saving the financial system, giving healthcare to one and all, saving SS/Medicare and "keeping us safe" so we can all sleep soundly at beddy-bye knowing Fargo, North Dakota is safe for another day.

    Believe it or not, Republicans rejoiced in Bush's victory. They were celebrating their own destruction. Could be the Dems are doing the same.

  2. I think you are too Bearish. Republicans held the House, probably could have won the Senate if they didn't run so many religious freaks and would have won the White House with any kind of reasonable immigration policy. George Bush tried to implement immigration during his tenor, one of the few smart things he tried, but was shot down by his own party. Now we are paying for it during our years in the wilderness. Just because many of the people voting for Obama are immigrants, it doesn't mean they are all takers, the Republican party has turned them away.

  3. What this election result portends is truly ominous. On Nov 8th I had friends making the 10-years-to-Mad-Max pitch to me, which I don't buy, but I can't predict why not. One guy did forward this to me, as if to say, it's all part of the plan:

    The Cloward-Piven Strategy

    If you haven't heard of these two (I'll admit I hadn't), you need to.

    I will concur that I am completely re-evaluating the organizations to which I make donations, and have heard similar thoughts from others, a couple being voiced with great anger. Some groups have completely failed in their missions, and true to free market principles, their managers need to be separated from their capital sources.

  4. Great thoughts. You might be interested in a similar perspective that I wrote in my blog.

  5. I appreciated reading this.

    I've been trying to wrestle with the meaning of this election myself and your writing helped put many of my thoughts into the right light.

    I run my own small business. I'm pretty proud of that. I have no worries personally for money. Sure I want more, but really I have no worries. However I am really worried about the state of the country. Although I'm sure I'm no where near as wealthy as the folks you cite in your post, I have already decided to stop all charitable donations. I donated fast and big after Sandy hit NJ/NY and now I feel like I was a total sucker. I have a heart and I care but the people that got the charity sure don't seem to care about me or my country do they? I probably won't stop all charity, but I will be very careful to only donate to causes that I support.

    Anyway, my sense is I will personally continue to succeed regardless of the environment, but I sure feel for the country.

    Thanks again for the context. Please keep writing.

  6. If Romney had done a better job of getting his base out to vote (he got fewer votes than McCain) he would have won. I think the election is more about poor management on the part of the Romney campaign, than a fundamental referendum on the future of the country. It also demonstrates, once again, how hard it is to beat an incumbent President. There is no doubt that Obama and the Dems are going to keep trying to raise taxes to fund their spending agenda, but that has been the case for the past four years. In order to combat the Dems going forward, we do need to improve our grand game and expand the base wherever possible. I don't support cutting charitable contributions to schools etc., it is our own fault that we lost this election.