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FReeper Book Club: Atlas Shrugged, The Top and the Bottom
A Publius Essay | 31 January 2009 | Publius

Posted on 01/31/2009 11:38:31 AM PST by Publius

Part I: Non-Contradiction

Chapter III: The Top and the Bottom


The bar is the most expensive in New York. Located on the 60th floor of a skyscraper, it looks like a cellar, even forcing its patrons to stoop to get across the room. Orren Boyle of Associated Steel, James Taggart, Paul Larkin and Wesley Mouch, now identified as Hank Rearden’s lobbyist in DC, all meet to discuss the order of Rearden Metal from the railroad.

Boyle explains to Jim that the delay in supplying steel to the railroad is due to his inability to obtain iron ore, thanks to played out mines, worn out equipment and general transportation problems. Because of the interdependency of business, he wants others to help shoulder his burdens. “The only justification of private property is public service,” says Boyle. He believes that Rearden Metal is dangerous because of its lightness; the National Council of Metal Industries has created a commission to study it.

Jim states that when the people are agreed on something, how dare anyone dissent from the popular will? (This is to become a recurring theme.)

Boyle says that while monopolies are bad, so is unbridled, destructive competition. He is upset that Rearden can always get the material needed for his mills while others can’t. Rearden’s ability and success are destroying everyone else in the steel business; therefore, there should be a national industrial policy aimed at giving everybody a fair shot at iron ore. He wants Taggart’s help in DC.

But Jim wants something for himself. Is it fair at a time of transportation shortages and railroad bankruptcies that there is duplication of service and unbridled, destructive competition from newcomers in areas where the old established railroads have always held sway? Boyle agrees that his friends at the National Alliance of Railroads might weigh in on this.

Larkin, who apparently has some pull in DC, is uncomfortable about betraying his friend Hank Rearden, but in the face of historical necessity he sees he may have to.

Wesley Mouch says little to nothing the whole time except to agree with what everyone else has said. His disloyalty to his boss is not mentioned.

The deals are sealed.

Boyle says he has visited the San Sebastian mines in the People’s State of Mexico, the last piece of private property left in that benighted country. Taggart asks about the rumors of imminent nationalization and Boyle labels them as malicious slander.

Boyle is upset about the poor rail service to San Sebastian provided by Taggart Transcontinental, especially the fact that there is only one passenger train per day, using ancient coaches hauled by an even more ancient wood-burning steam locomotive. Taggart isn’t aware of this but makes excuses to sound as if he knows what is going on.

There is a flashback explaining the relationship between Dagny and Jim and her friendship with Francisco d’Anconia. Dagny made the railroad run, while Jim worked Washington for favors and influence. Jim had built the line to Francisco’s mines at San Sebastian, but the line had never shown a profit. Jim’s friends had purchased large blocks of stock in Francisco’s enterprise. Their rationale for building the line was to help the people of Mexico, not to mention currying favor with the communist government which they believed was the wave of the future. Profit was secondary.

This mis-allocation of resources is causing the more important Rio Norte Line to crumble, and because Taggart cannot service Ellis Wyatt’s oil fields in Colorado, Wyatt is moving his oil by the competing Phoenix-Durango Railroad.

The San Sebastian Line isn’t producing because the mines aren’t producing, but Francisco had explained that his mines were still in development. Dagny knows that Francisco had become utterly worthless over the past decade, but Jim still believes he can deliver. Dagny had been putting the worst assets of the railroad into service in Mexico because she believed the line was about to be nationalized, and Jim goes ballistic when she mentions this. He orders her to run better service in Mexico, but Dagny says she will have to reduce service on the rest of the network to accomplish it. Jim doesn’t want to make decisions or take responsibility, so Dagny resolves to continue providing service her way.

Leaving her office, Dagny stops at a cigarette stand in Taggart Terminal. The proprietor says that there are only a few brands of cigarettes available because most of the other brands have gone out of business. He notes that the people who rush through the train station seem to be haunted by fear. In his list of things wrong with the world, he ends by saying, “Who is John Galt?” Dagny is upset at hearing the phrase, and both of them dislike what people mean when they say it.

Eddie Willers eats in the company cafeteria with a nameless Rail Worker. He tells the Worker that the Rio Norte Line is the last hope for Taggart Transcontinental. There have been more accidents on the system; diesel locomotives are being lost, and United Locomotive Works is two years behind schedule in delivering new equipment. McNamara of Cleveland will lay the new rail on the Rio Norte Line once Rearden delivers. Eddie also tells the Worker of Dagny’s love for the music of Richard Halley. (The Worker is to play a critical role later, so let’s keep the discussion out of spoiler territory.)

Hank and Dagny’s Enemies

The previous two chapters defined Dagny Taggart and Hank Rearden, and now we meet the villains, all friends of Jim Taggart and a scurvy lot indeed. Orren Boyle was just a name earlier, but now he has a face and an ideology. We’ve heard that Hank employs a lobbyist in DC and now we meet him, or we would if he had anything worthwhile to say.

Concerning the ever quiet and discreet Wesley Mouch, is his last name pronounced “ouch” prefixed by an “M”, “mouk”, “mooch”, or the French “moosh”?

Railroads and Government Transportation Policy

A Canadian rail magnate once told me, “Railroads are a tool of government transportation policy.” From the earliest days of railroading, government at all levels got involved.

Early in the railroad age, the state of Pennsylvania launched the Main Line of Public Works, a plan to build a railroad that would pierce the Alleghenies and join the two halves of the state. After years of pouring money down a rathole and having little to show for it, the state sold the project to a group of financiers in Philadelphia who created the Pennsylvania Railroad, the “standard railroad of the world”.

States would grant corporate charters to one group of people for building a railroad in order to prevent another group of people favored by competing interests from building a different railroad. Favoritism and influence peddling were part of the game from the very beginning.

Abraham Lincoln, a railroad lawyer by trade, gave away vast tracts of the American West to railroads to raise the capital necessary to build across the continent and link the country together. This was a product of grand vision and even grander influence peddling.

Because railroads are so capital intensive, most rail entrepreneurs were financiers first, people who built their rail lines with equal parts BS and other people’s money. It was a rare man, like the real life Jim Hill and the fictional Nat Taggart, who did it the hard way, raising money outside of Wall Street. Most rail entrepreneurs had some facet of government policy on their side.

It had started almost at the very beginning of the United States.

After the War of 1812, the federal government decided it needed a transportation policy, and it concentrated that policy upon canals and roads, classified under the term “internal improvements”. The burning issue of that era was who was going to pay for them. One side took the position of private financing and the other favored the application of government largesse. The two-party system as we know it today coalesced around this issue.

With the arrival of railroad technology in the years before the War Between the States, government policy shifted again, both at the state and federal level. This was the great era of railroad building in America.

With the invention of the internal combustion engine at the beginning of the 20th Century, transportation policy shifted back to roads. This began the great era of highway building, culminating in Eisenhower’s Interstate Highway System, the greatest and most successful application of practical socialism in American history.

Today, with the highways saturated with trucks, there are signs that government transportation policy is poised to shift back to railroads again.

While Rand’s image of the lone entrepreneur building a railroad is certainly noble, it is also rare. Government was always a key player.

Hank Rearden, Bill Gates and Industrial Policy

James Madison built a constitutional prison for the federal government. By keeping taxation powers limited, there would not be much money to spend, thus keeping the government out of trouble. One thing the Framers feared was that an entire class of people would come to the seat of government to lobby for their share of federal largesse; the term used at the time was “rent seeking”. But the implementation of government transportation policy started an inexorable process.

During the Seventies, there was serious discussion of government allocation of resources to “sunrise” industries, as opposed to “sunset” industries. Financiers like Felix Rohatyn and industrialists like Max Palevsky pushed this idea within the Democratic Party. Jimmy Carter ran for president in 1976 touting government resource allocation under the title “industrial policy”.

In the book, it was mentioned that Jim Taggart was picked as railroad president by the board because of his pull in DC, thus making him a professional rent seeker for his company. The meeting in this chapter was aimed at using the federal government as a weapon against Hank Rearden because he was a success. Rearden’s own friend and paid lobbyist were in on it. The weapon itself was industrial policy, designed not to protect the people, but to protect other industrialists.

When the Microsoft antitrust suit was filed by the government, the current wisdom was not that Bill Gates had done anything wrong, but that he had failed to hire the right lobbyists in DC and pay off the right politicians and regulators. Gates’ crime, like Hank Rearden’s, was simply to be successful.

Some Discussion Topics

  1. Orren Boyle started his company with $100 thousand of his own money – plus a $200 million government loan. Contrast this with how Hank Rearden started and what that implies, both in terms of personal character and government policy.
  2. “The only justification of private property is public service.” This sounds rather inflammatory coming from Orren Boyle, but it is very close to a quote from Theodore Roosevelt in his 1912 presidential campaign on the Progressive (“Bull Moose”) ticket. On occasion TR would work himself into a state of high dudgeon and say things he regretted in more sober moments, but this statement was never retracted by the ex-president. Its roots are in Karl Marx. Explore this statement and what it implies, not only on the part of the speaker, but the listeners at the meeting.
  3. The twin fuels of capitalism are greed and envy. Every attempt to come up with a “better” economic system underestimates these basic facets of human nature. Jim and his friends bought into Francisco’s mines because of greed, a desire for profit. Jim says he built the rail line out of altruism to help the people of Mexico, not to mention a potentially hostile Mexican government, but he doesn’t connect it to a desire to make money in Francisco’s mines. Greed is the silent presence at the meeting. There is something here that goes much deeper than simple hypocrisy. What perversions of basic human nature are at work and why?
  4. Shortages have become so endemic that there is now a stark choice between running the Rio Norte Line and running the San Sebastian Line. This implies major failures, not just in the supply chain, but in the financial system itself. What happened before Chapter 1 opened?
  5. The cigarette man says, “Who is John Galt?” He is now the fifth person to say it; he even analyzes it. Compare him to the previous four who have said it.
  6. The most expensive bar in New York is on the upper floor of a skyscraper and is designed to look like a cellar, not taking advantage of the view from its height. Is this a sign of stupidity, decadence, or something more pernicious?

Next Saturday: The Immovable Movers

TOPICS: Constitution/Conservatism; Culture/Society; Free Republic; Philosophy
KEYWORDS: bookreview; freeperbookclub
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To: Iron Munro
A longish one, but worth the read.:

All government, in its essence, is a conspiracy against the superior man: its one permanent object is to oppress him and cripple him.

If it be aristocratic in organization, then it seeks to protect the man who is superior only in law against the man who is superior in fact; if it be democratic, then it seeks to protect the man who is inferior in every way against both.

One of its primary functions is to regiment men by force, to make them as much alike as possible . . . to search out and combat originality among them.
All it can see in an original idea is potential change, and hence an invasion of its prerogatives.

The most dangerous man, to any government, is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos.
Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it.
And even if he is not romantic personally he is very apt to spread discontent among those who are. . . .

The ideal government of all reflective men, from Aristotle onward, is one which lets the individual alone—one which barely escapes being no government at all.

This ideal, I believe, will be realized in the world twenty or thirty centuries after I have taken up my public duties in Hell.

- H.L. Mencken,

21 posted on 01/31/2009 12:47:46 PM PST by bill1952 (McCain and the GOP were worthless)
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To: Tublecane
Man, she came up with some weird character names.

Wait until you meet Balph, Cuffy and Tinky.

22 posted on 01/31/2009 12:49:00 PM PST by Publius (The problem with socialism is that you eventually run out of other peoples money.)
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To: Publius

Daughter :)

23 posted on 01/31/2009 12:51:07 PM PST by Explorer89 (I believe in the politics of Personal Responsibility)
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To: Explorer89

When I read this book the first time more than 30 years ago it crystalized my budding political views.

Rereading it now, it seems prophetic.

24 posted on 01/31/2009 12:53:40 PM PST by TASMANIANRED (TAZ:Untamed, Unpredictable, Uninhibited.)
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Other folks hitching their wagons to someone else’s team of horses without actually knowing what was going on screamed “Maddoff".

And have you noticed that Bernie is in the pocess of taking down liberal foundations, universities and left-wing celebrities? It reminds me of Dickens' Mr. Merdle, whose railroad funding collapse took down the City and great fortunes.

It's almost as if it were planned.

25 posted on 01/31/2009 12:53:47 PM PST by Publius (The problem with socialism is that you eventually run out of other peoples money.)
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To: Explorer89

Sorry. I was making assumptions.

26 posted on 01/31/2009 12:55:24 PM PST by Publius (The problem with socialism is that you eventually run out of other peoples money.)
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To: Publius

Daschele and the other grifter in the cabinet not paying their taxes.

27 posted on 01/31/2009 12:57:56 PM PST by TASMANIANRED (TAZ:Untamed, Unpredictable, Uninhibited.)
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To: Publius


28 posted on 01/31/2009 12:59:32 PM PST by JDoutrider
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To: Publius

In my work I am in constant contact with the public.

I had a client the other day with the name of ABCDE pronounced ab ci dy.

Cross my heart , hope to die and spit..It’s the truth.

29 posted on 01/31/2009 1:01:56 PM PST by TASMANIANRED (TAZ:Untamed, Unpredictable, Uninhibited.)
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To: Publius

There is a huge amount of humor in the Maddoff ponzi scheme.

Like a huge enema to the system he has flushed out a lot of parasites.

30 posted on 01/31/2009 1:03:47 PM PST by TASMANIANRED (TAZ:Untamed, Unpredictable, Uninhibited.)
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To: Publius
"The cigarette man says, “Who is John Galt?” He is now the fifth person to say it; he even analyzes it. Compare him to the previous four who have said it."

The others all said it in resignation of hopelessness and loss of spirit. The old cig guy is the first to show a spark of defiance.

31 posted on 01/31/2009 2:06:07 PM PST by shove_it (and have a nice day)
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To: Publius

Just finished reading Atlas Shrugged...what a great book...I feel like Dagny...

32 posted on 01/31/2009 2:10:13 PM PST by demsux
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To: Publius

The bar at the top of the skyscraper but designed to look like a cellar seems to be typical of the self-delusion these people carry - they are sitting in a setting that looks like that of the common man so they can feel good about themselves. Yet a common man would not have access to that particular bar at the top of the skyscraper. Like celebrities that brag about giving up plastic shopping bags. I remember reading about some actress who bragged that she didn’t even own a car - of course she hired a driving service so the limo wasn’t technically hers.

33 posted on 01/31/2009 2:19:15 PM PST by meowmeow (In Loving Memory of Our Dear Viking Kitty (1987-2006))
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To: Explorer89
"Jim states that when the people are agreed on something, how dare anyone dissent from the popular will? (This is to become a recurring theme.)"

Can anyone say "Global Warming is real: we have a consensus"?

Or that the masses want socialism, since Obama and the Dems have control of DC.
34 posted on 01/31/2009 2:49:12 PM PST by CottonBall
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To: IronJack
Just as in the simulated cellar at the top of a penthouse, the world is upside down. The weak thrive on the labors of the strong, while mediocrity flourishes.

Good analysis - I didn't catch that.
35 posted on 01/31/2009 2:50:50 PM PST by CottonBall
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To: Explorer89
Another parallel: that stupid Ashton Kuchner "I pledge" video. Those people are living a much more extravagant, selfish life than I am, yet deem it necessary to preach to me on how to live a good life in service of "the greater good".
I really think all of these people who are truly greedy (Al Gore making money on his crusade) have to convince themselves that they are working for good.
It isn't just self-delusion, it is rationalization.

When I think of those that have really lived simple lives - like Thoreau - they never have told others that they have to do the same. Or put them down because they didn't. Those that truly lead by example don't just mouth the rhetoric - they live it and let others chose without pressure or guilt.
36 posted on 01/31/2009 2:53:46 PM PST by CottonBall
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To: Publius


37 posted on 01/31/2009 2:56:29 PM PST by lonestar
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To: Publius

It is Keats’ “widening gyre” — all symbol and no substance. The center does not hold. This is obviously a society in the last stages of terminal decadence, where “mere chaos” is loosed and mediocrity has become the new aspiration.

38 posted on 01/31/2009 2:57:59 PM PST by IronJack (=)
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To: meowmeow
"...they are sitting in a setting that looks like that of the common man so they can feel good about themselves. "

Brings to mind news reports the other day about "stealth wealth". Wealthy people dressing "down" or sneaking new luxury purchases out of shops on Rodeo Drive in plain unlabeled bags so as not to look ostentatious in a time of recession.

Maybe it won't be long before NBA players start driving Honda Civics and not wearing $25K bling for the same reasons.
Wait!.... Hell will freeze over before that happens. They are part of a downtrodden disenfranchised class.

39 posted on 01/31/2009 3:59:50 PM PST by SuperLuminal (Where is another agitator for republicanism like Sam Adams when we need him?)
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To: SoftballMominVA

I may be way off base, but I believed that Rand makes the statement that when one uses logic one can’t use feelings. That’s why I thought she makes the heroes characterized as unfeeling or “ruthless” and the jagoffs so into the feelings and guilt. It just seems illogical that people could continually tick off the producers for the sake of the looters and not expect them to take their businesses and go home, eventually. When doing business and making decisions, the feelings should not be the determining factor.

It is impossible to make everyone happy, but in business you can do what is right for the company. Buying a new machine may replace a couple of guys, but it could also make it more efficient so that the business could take on more work which could pay different benefits, give raises or buy more machines which could lead to more hires.

Totally off topic, I read that Atlas Shrugged was the only great novel that wasn’t made into a movie. As I read it again, I was wondering who could play the characters. John Lithgow was who I pictured as Jim Taggert. Unfortunatly, I could never get past thinking that Paul Newman would have made a great Hank.

40 posted on 01/31/2009 4:37:54 PM PST by WV Mountain Mama ("Give me control of a nation's money and I care not who makes its laws." - Mayer Rothschild)
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