Blog

If only all the Goldman partners thought this way

Over at the Huffington Post, former Goldman Sachs partner Greg Zehner writes that Ayn Rand foresaw the economic crisis the United States now faces, as well as the disastrous consequences the various proposed bailouts will have.

“Ayn Rand warned us this would happen. In the classic, Atlas Shrugged, she wrote about governmental powers manipulating markets in order to advance political concerns. Like the book, we do not seem to have the political will to take the correct, but painful, road to recovery. By propping up the financial system with the band-aids of trading restrictions and an explosion of the government’s already untenable balance sheet, the necessary adjustments to the financial system are prevented from occurring.”

Though the collapse of the nation’s economy is not central to the theme of Atlas Shrugged (for more on that, see our post “The Value of Atlas Shrugged”), Mr. Zehner is quite correct that the novel demonstrates how all government intervention in the economy is destined for failure. Government’s only means of intervention, in the economy or otherwise, is through the threat of force. Thus any intervention–whether it be bailout, tax break, or welfare program–will ultimately serve to stunt, rather than promote, economic growth. (For more on the consequences of government’s involvement in economics, see Rand’s Capitalism: The Unknown Ideal)

If only Mr. Zehner’s former boss, Treasury Secretary Henry Paulson, was as clear on the pitfalls of government intervention.