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Detroit Asks: Who Is John Galt?

In the seminal novel Atlas Shrugged, Ayn Rand paints a picture of an economy where some people use their talents and hard work to produce valuable goods and services, thereby enriching themselves and the economy as a whole, while others use the political system to eliminate competition, enriching themselves at the expense of the economy as a whole.

The protagonist in Rand’s story, John Galt, foresees the rise and inevitable collapse of the “Takers” group and decides to speed up the process by convincing the “Producers” to abandon the world so that there would be nothing left from which to mooch. The phrase “Going Galt” has entered the modern lexicon as the term for when government manipulation of free enterprise drives out productivity and restricts economic growth. There are numerous real-life examples of this principle, one major one being the bankruptcy of the city of Detroit.

Detroit once had the highest per-capita income of any city in the world. Yet today it stands bankrupt and abandoned. What happened to the once-great city? While there were many factors in its decline, some of the major influences are ripped straight from the pages of Rand’s novel.

You have federal regulators requiring the city to update its Water and Sewer Department, and the city politicians using that mandate to funnel city funds to their own business interests, enriching themselves via government mandate at the expense of the populace.

Then you have the union contracts, which caused cars built in Detroit to cost an extra $3,000 each compared with vehicles produced in auto plants in other parts of the country. Because of this, plants moved to Detroit’s suburbs, and when foreign manufacturers opened plants in the U.S., they did so far from the reaches of Detroit.

As productive industry moved away, the people followed. Detroit’s government found itself short on cash, so it raised taxes to the highest levels in the state, while at the same time providing fewer and fewer services in return. Those with the ability moved away rather than be subjected to such rule, and Detroit was left to its corruption and greed.

But all is not lost. Detroit’s bankruptcy will allow it to restructure its debt, and the emergency manager appointed to fix their problems has proposed a revision of the city’s tax code so as to lure new business there. As productive activity returns to Detroit, people and tax revenue will return, allowing it to pay for necessary services and finally putting the city back on solid financial ground. Hopefully they will have learned John Galt’s lesson.

Dig Deeper:

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Emergency Manager Findings: Proposal for Creditors

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Wall Street Journal: Atlas Shrugged

Blog Post: Atlas Shrugged Review

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