{"id":10121,"date":"2024-04-04T15:34:14","date_gmt":"2024-04-04T15:34:14","guid":{"rendered":"https:\/\/wifamily.news\/?p=10121"},"modified":"2024-04-12T06:40:24","modified_gmt":"2024-04-12T06:40:24","slug":"will-governments-heavy-hand-make-business-go-galt","status":"publish","type":"post","link":"https:\/\/wifamily.news\/?p=10121","title":{"rendered":"Will government\u2019s heavy hand make business \u201cGo Galt\u201d?"},"content":{"rendered":"

This post originally appeared at https:\/\/www.badgerinstitute.org\/will-governments-heavy-hand-make-business-go-galt\/<\/a><\/p>\n

Ayn Rand\u2019s fictitious solution to government overreach has new relevance<\/em><\/strong><\/h4>\n
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In Ayn Rand\u2019s classic novel \u201cAtlas Shrugged,\u201d <\/em>the government nationalizes industry after industry until the economy is on the brink of collapse. The story\u2019s protagonists, Dagny Taggart of Taggart Transcontinental and Hank Rearden of Rearden Steel, fight to defend their businesses from these \u201clooters.\u201d Meanwhile, their fellow \u201cproducers\u201d continue to disappear from society, taking their talents with them in a move known as \u201cGoing Galt\u201d in honor of movement leader John Galt.<\/p>\n

Sometimes it seems that no major development project occurs in Wisconsin without the visible hand of government steering it. The examples range from direct subsidies for pro sports franchises to a huge federal grant to build a streetcar project in Milwaukee<\/a>. A multitude of local construction projects are pushed ahead with tax incremental financing (TIF). We seem unable to accomplish any major project without government direction and subsidies.<\/p>\n

This trend in government central planning extends to the current mood in Washington. Industrial policy \u2014 the use of government plans to promote particular industries \u2014 is making a clear comeback as a part of Bidenomics. Fans of industrial policy point to successes from history such as the transcontinental railroad, the Apollo space program, and the interstate highway system.<\/p>\n

Industrial policy has fallen in and out of favor. The 1970s were a low point as profligate government spending received some of the blame for a stubborn inflation.\u00a0President Reagan captured the mood of disfavor for industrial policy in his 1981 inaugural address, saying, \u201cGovernment is not the solution to our problem; government is the problem.\u201d\u00a0<\/p>\n

Today, both major political parties have discovered a new fondness for old and largely discredited ideas that see government as better able to allocate resources than a market system.\u00a0President Biden seems interested in subsidizing any and every enterprise he favors:\u00a0electric vehicles and charging stations, renewable energy, semiconductors and computer chips, roads, bridges, public transportation, ports, airports, and more.\u00a0Many of these subsidy programs were passed with significant Republican support. At the same time, former President Trump proposes to achieve his central planning goals through massive new tariffs to protect certain American industries.<\/p>\n

These new versions of industrial policy are unlike previous successes, which solved technical and engineering problems (like the Apollo moon shots) and met established consumer preferences (like the transcontinental railroad and interstate highway system). Instead, they aim to counteract consumer preferences for things such as imported and gasoline-powered cars. Or they draft businesses to solve social problems such as childcare.<\/p>\n

Industrial policy has long had its opponents, but new critics include entrepreneurs resisting the lure of subsidies. In California, of all places, housing developers are turning their backs on government funding. One large developer is avoiding the rules and regulations tied to subsidies for low-income housing construction by opting out of the subsidies. And by avoiding extra government-imposed costs, the business is able to build low-income housing for hundreds of thousands of dollars less per unit than subsidized competitors. As California\u2019s homeless issue has become top of mind to many in the state, people are starting to notice the corrosive effects of government programs designed to \u201chelp\u201d with this problem.<\/p>\n

They are not the first to \u201cGo Galt.\u201d<\/p>\n

In the cleanup after the 2009 financial crisis, some insurance companies refused to take part in the federal government\u2019s rescue programs.<\/p>\n

At the national level, recent studies show that small businesses are not contracting with the federal government as frequently as in the past. And those that do are becoming more concentrated in a handful of congressional districts around Washington, where rent seeking is the norm.<\/p>\n

Firms are increasingly voicing complaints related to the costs imposed by the CHIPS and Inflation Reduction acts. Among the concerns: Chipmakers who receive funding are prohibited from expanding semiconductor manufacturing capacity in foreign countries for 10 years; recipients of government largesse have to develop a strategy for providing childcare for their workers. The \u201cBuild America, Buy America\u201d mandate is a morass of regulations that make it harder to build anything.<\/p>\n

As the central planners in Madison, Sacramento, and Washington persist in pushing industrial policies with massive subsidies, productive entrepreneurs and business leaders might dream about \u201cgoing Galt\u201d and withdrawing their services. In today\u2019s networked economy they may only be able to reject government subsidies, a sort of \u201cgoing Galt lite\u201d \u2014 but they are ready to make a statement with their actions.<\/p>\n

Scott Niederjohn is a professor of economics and director of the Free Enterprise Center at Concordia University Wisconsin in Mequon and a Badger Institute visiting fellow.<\/em><\/p>\n

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