Apple vs. GM: Ayn Rand knew the difference. Do you?

Apple acts like a producer. GM acts like a looter. It’s a key distinction that Ayn Rand laid out in ‘Atlas Shrugged.’

The House Ways and Means Committee is now reviewing President Obama’s “Financial Crisis Responsibility Fee,” a bank tax that will fall on some institutions that never asked for money from the Troubled Asset Relief Program, never took TARP money, or already paid back TARP money. In promoting the measure, supporters have been invoking widespread anger over bank bailouts, brazenly ignoring the fact that this punitive tax would punish businesses that eagerly fed at the public trough in the wake of the crisis as well as those that did not.

Since the advent of capitalism, businessmen have been denounced for the corrupt actions of a few political profiteers. To help understand that there is a distinction, consider two characters in Ayn Rand’s 1957 novel “Atlas Shrugged.” In the book, Rand describes two opposite kinds of businessmen – those she calls the “producers” and those she calls the “looters.”

The producers, such as Hank Rearden, inventor of a new metal stronger and cheaper than steel, work tirelessly to create products that improve human life. The looters are basically pseudobusinessmen, like the incompetent steel executive Orren Boyle, who get unearned riches by getting special favors from politicians. Their business isn’t business, but political pull.

It is the producers who make life possible: who keep grocery shelves stocked; who discover new lifesaving drugs; who make computers faster, buildings taller, and airplanes safer.

The looters, on the other hand, leech off the wealth created by producers.

The novel rejects the widespread notion that both the producer Reardens and the looter Boyles are fundamentally united by a desire for profit. Only the Reardens, she argues, deserve to be called profit-seekers, because they earn rewards through productive effort; the Boyles are antieffort parasites seeking unearned loot.

But it’s not only unearned wealth the looters want. In “Atlas Shrugged,” Boyle uses his influence to throttle Rearden with progressively harsher government controls and regulations, because he can’t survive except by hindering the competition.

Producers, however, don’t need special favors, only freedom: the freedom to produce, to trade voluntarily, and, if they succeed, to keep the profits. As a country becomes less free, it creates and unleashes more and more Boyles, who succeed at the expense of the Reardens.

America, today, is still a land of producers. Our country is full of industrialists, managers, and financiers who display the ruthlessly high standards, exceptional intelligence, and extraordinary work ethic that are characteristic of a producer.

When Apple was nearly ready to release the first iPhone, for instance, CEO Steve Jobs looked at the enclosure design and announced to his team, “I just don’t love this. I can’t convince myself to fall in love with this.” Mr. Jobs was asking his team to toss out a year’s work and start over. “And you know what everybody said?” Jobs later noted. “Sign us up.” That is the mentality of a producer – the commitment to settle for nothing but one’s best. It’s a mentality you can still find in many sectors of the economy.

But the Boyles are on the rise, growing fat on bailouts, handouts, and other sundry opportunities for political profiteering. For every producer like BB&T bank’s John Allison, who opposed Washington’s bailouts and was forced to accept government money, there seem to be 10 like former General Motors CEO Rick Wagoner, demanding tax dollars to prop up their failing companies.

Meanwhile, today’s real-life Boyles constantly lobby for government restraints on their more able competitors. Remember when the überproductive Bill Gates started giving away free Web browsers to his customers, and Netscape ran to Washington demanding that Microsoft be shackled via antitrust laws?

Yes, it can sometimes be hard to tell the producers from the looters. As government becomes more entangled in our economic affairs, even the Reardens of the world are forced to lobby Washington – not to reap unearned rewards, but to protect themselves from the Boyles. (It’s no accident that before Microsoft came under antitrust fire, it spent virtually nothing on lobbyists, while today it spends many millions.) What’s more, many businessmen are mixed cases – part producer, part political profiteer.

However difficult it may be to classify individual businessmen, though, it’s crucial to keep the two categories separate when praising or condemning the businessmen who appear in the headlines and before congressional panels. If we don’t, it’s the Boyles who benefit and the Reardens who suffer.

Yaron Brook is president of the Ayn Rand Center for Individual Rights. Don Watkins is an analyst with the Ayn Rand Center for Individual Rights.


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