Friday, April 27, 2012

Atlas Didn't Shrug and Neither Will You

I don't have a whole lot to say today, I just wanted to get something off of my chest that's been sort of bothering me. Whenever I see pictures like this one, I tend to just facepalm. 

I can't help it. Not to pick on this particular person, but the shirt is just awful, and brings up a deeper, much more annoying issue. But first, in case you didn't get the reference, it's from the book Atlas Shrugged by Ayn Rand. Here's a snarky recap of what John Galt does in the book:
"John Galt is the copper-haired, white-boy protagonist in Ayn Rand’s Atlas Shrugged. Galt leads a revolutionary movement in which all the top leaders of the banks and corporations forsake their corporate jets and perks to work in diners or as subway repair guys. No they weren’t fired by Galt. Rather, Galt urged them to go on strike and withdraw their expertise from an increasingly socialist world. Deprived of the genius of their genius, the world economy collapses."
That's basically what the book is about. Anyways, I frequently hear that the case against slightly higher tax rates, in particular on top earners, would be punitive and would fall on the job creators of the economy. As such, they would, as John Boehner says, go on strike. Paul Ryan called Obama's economic policies, “something right out of an Ayn Rand novel,” and calls Rand “the reason I got involved in public service.” So, is there any truth to what they assert?

As I've said before, the relationship between taxes and overall economic prosperity is muddled, to say the least. We had relatively slow growth in the Bush years despite a tax cut, while we had faster growth under Clinton with across-the-board tax hikes. In the postwar period, top tax rates were upwards of 70% and yet we were still quite prosperous. Even under Reagan, tax hikes didn't lead to disaster (and he did raise them several times.) If you don't believe me, economists Emmanuel Saez and Peter Diamond have done extensive research and come to similar conclusions.

In any case, my ultimate point is this: don't try to attack economic policies on the basis of what you read in a work of fiction! Ayn Rand wasn't an economist, and Atlas Shrugged wasn't based upon careful study of behavioral elasticity and tax rates. In case that didn't drive home my point enough, this will:
"There are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."