Jon,
I've never read Atlas Shrugged either. Partially because of the things you mention and partially because the premise seems to depend on the idea that everything hinges on the efforts of a handful of super-competent people who are qualitatively different from the rest of us. That doesn't match the reality I see around me. (Would it be accurate to call these people "slans"? I confess I've never read Slan either.)
As an aside, I am currently reading David Brin's Earth. I am currently about half-way through, and it is going very slowly because, like Rand (although he is a better writer than Rand is reputed to be), he has so far devoted most of his time to scenes that support his ideological views rather than to the fundamental story. There is a story, however, and I have reason to believe that the book picks up later.
As far as people "going Galt," I'm not sure what to say. There could be some kernel of truth. But why today? The top income tax rate is no more than half what it was when I was a kid, or when Rand wrote her best-known book. if it didn't happen then, why now? And those two articles you have cited don't really make the case. The second talks about the sharp drop in federal income tax receipts, but much of that is because stocks have been a source of losses rather than of income. Likewise, people whose income was based largely on commissions and bonuses have seen major income drops. That doesn't mean they're working less. Likewise, hourly workers have less income because they aren't getting the overtime they're used to. That doesn't mean they have decided to "go Galt."
Incidentally, I don't know whether you would view it as relevant, but I have recently achieved my goal of cutting back from full-time work to 60% effort (three days a week if the work flow allowed anything that regular). You might say that I am "going Galt," but the only tax remotely relevant is the 15.4% "self-employment" (Social Security/Medicare) tax. Which, of course, never gets relevant because it's not levied on income over about $100,000.
The main reason I welcome this development is that at my age I no longer really have the physical stamina to maintain a full-time schedule. And thanks to my retirement income, I don't really need the income. Of course, that retirement income is all government-sponsored programs -- Social Security and an IRA (I've taken the opportunity to skip the otherwise mandated payment from my 403(b) this year). That may be part of what people mean when you hear people talking about the government encouraging people to "go Galt."
Or the handful of geeks who invented the Internet?
The internet was a government funded project and it took far more than a handful of geeks to invent it. It took decades and thousands of geeks pounding away at it like monkeys trying to type out Shakespeare and making lots of mistakes. I knew of those geeks and he had some interesting stories to tell about how stupidly they went about making the internet. For example, it took to several attempts to figure out a solution to the auto mail reply problem. This is the one where you put out an auto-reply to an email that you are out of the office and it hits someone who also has the same auto-reply set. Someone thought auto-reply was a great idea and implemented it without ever thinking out the consequences until it blew up the internet. They actually went through several iterations before figuring out a workable solution.
The internet is actually an example of why government is needed for many projects. It is the only agency that is not concerned with profits and can afford to spend large amounts of money for long periods of time on a venture that may not work at all. Another such example is Columbus. He was turned down by all the private money sources he contacted. It was the government of Spain in the form of Queen Isabelle who took the chance and financed Columbus' trip. A mixed model is the building of the trancontinental railroad. The work was done by private companies but the government came up with the idea and subsidized the work with land grants.
Basically history is full of examples where private initiative and private money were not willing to take the risk but government was, contrary to the libertarian belief that private efforts can do it all.
Well, would we have the same world today if we hadn't had Bill Gates and Steve Jobs?
Yes because none of these men did anything original. Gates took advantage of Digital Research's refusal to provide IBM with an OS for their PC. Gates did not even write DOS. He bought the code from another company. If Gates had not done it, someone else would have done it. Jobs did not invent the Apple. Woz did. What Jobs did was sell the Apple. Jobs did not invent the Mac. Xerox Park did. What Jobs did was to sell what Xerox Park developed. I would not be surprised to find that the iPod and iPhone were also created by someone else and Jobs took the idea and sold it. Jobs is a charismatic leader and astute businessman but nothing I know about him says he is a techie.
Gates and Jobs did change our society but they did it by selling something that was created by someone else. That takes a certain audacity but that audacity exists in millions of people who start new businesses every year. Which means that if you took a time machine back and kill Gates and Jobs, someone else would have taken their place and we would basically have the same changes in our society today. Killing Woz would also have not worked as there were hundreds of geeks in Silicon Valley alone who were making their own homebrew pc. So an Apple of some sort would have eventually been invented by someone else. Blowing up Xerox Park might have been effective. Their ideas were original to their research team and may not have been thought up by anyone else if they die for a long time if ever.
Danny
Well, would we have the same world today if we hadn't had Bill Gates and Steve Jobs? Or the handful of geeks who invented the Internet?
I'm with Danny on this. "When it's steam engine time, it will steam engine." In your reply to Danny you not only say that salesmen drive civilization, but that supersalesmen are a breed apart -- slans, if you will. I find both points difficult to believe.
I wonder if perhaps the answer lies in the all-enveloping monstrosity that the federal government has become. We may have lower marginal tax rates than we did fifty years ago, but we also have many more laws, many more regulations, and many more federal payouts and subsidies.
There were major, major complaints about government regulations in the 1950s and 1960s. Those complaints faded significantly in the 1970s, when people my age -- people who had grown up with the regulations -- reached the top rungs of the major corporations. And regulations were actually loosened a bit in the 1980s and 1990s. In some respects it is clear that they were loosened too far: Repeal of Glass-Steagal was a major reason Bush considered it impossible to simply let incompetently run investment banks go down the drain.
There's been a spate of news stories over the last two days about Wall Street brokers and financial wizards quitting en masse from the companies affected by Treasury's new salary caps.
That seems strange, since the rules only affect the top 25 people at a handful of companies that have been poorly run in recent years. It's easy to paint with an over-broad brush, but maybe some of those people should leave and make way for somebody who can do a better job.
I've seen polls that suggest as many as a third of US doctors will stop practicing if the health-care takeover bill passes in the form that's currently being discussed, because they don't think they'll be able to make a living at it anymore.
That seems even stranger, since their incomes should in general go up. Under healthcare reform they will get paid for every patient they see, rather than having to treat a significant number without charge because they simply can't pay the bill. Often patients who are very sick because they haven't been treated in a timely manner.
The contributions of people like Jobs and Gates was not in any single invention. It was in their attitudes and their personalities.
Oh you mean like Jobs' attitude that the GUI idea he took from Xerox Park was Apple's proprietary idea and so he tried to sue everyone who came up with their own version?
Or the monopolistic business practices of Microsoft that got them sued by the Justice Department and the EU? There is a reason that Microsoft is called the Evil Empire by the open source community.
Their success is as much due to stiffling their competitors as anything positive they did. Apple is built on proprietary technology that locks out competitors. When the Palm Pre was released using iTunes, Apple changed the ITunes code to prevent the Pre from working with it. Apple controls whose software runs on the Mac. That is why there is a smaller software selection for the Mac than for the PC and Mac software costs more . Microsoft tried to do the same but failed. Ironically that is what made MSDOS and Windows more successful.
The reality of actual markets, as opposed to Rand's fantasies, is you can be just as energetic and successful by destroying your competitors as being better than your competitors. Intel is a perfect example of a company that is wildly successful through a deft combination of true innovation and predatory marketing practices. Intel gives priority to companies that sign exclusive deals with them which makes it very hard for rivals such as AMD to break into top tier accounts such as HP and IBM (now Lenovo). It tooks some Justice Department anti-trust questions to end that practice.
The Dark Side of libertarianism is predatory practices that skirt the edge of legality and go over the ethical line. Apple, Microsoft, Intel and many other companies do it all the time. Once your innovations become the standard, defending the standard by preventing other people's innovations from replacing your standard becomes the practice. IOW the energizers eventually become the stifflers.
I was talking about entrepreneurs and how they drive technology -- which, in turn, drives economic expansion. ...But no one can learn how to be a Gates-style entrepreneur. You have to be born with it. Take away the entrepreneurs, and innovation and advancement will stop.
So you're talking about super-entrepreneurs rather than super-salesmen. But you explicitly say that they are qualitatively different from the rest of us folks. (Remember than I am technically an entrepreneur.) And your choice of Gates and Jobs rather than Kindall and Wozniak suggests that salesmanship is an important part of what you're referring to. Perhaps along with a lack of ethics. The main reason Microsoft rather than Digital Research got the IBM contract was that Gates was willing to lie about how far along in development DOS really was.
First of all, from the POV of business insiders, most of those companies have been very well run.
So this is why those seven companies today survive only on government handouts that their competitors don't need? Although I suppose you could argue that figuring out how to get to the government trough is an aspect of good management.
Second, Treasury's "pay czar" is claiming the power to set salaries and total compensation for all employees at any company that took TARP money.
"Took"? Or are still taking? Most of the rims that initially received TARP money have now returned it. Only the Seven Sob Sisters are still dependent on government largesse. And unless you have a citation to the contrary, I believe it is only those seven that remain subject to government pay rules.
Fed chief Ben Bernanke wants to go even farther than that, and have the power to set compensation for all employees at all federally regulated banking firms.
I have no firm idea what will come of this. One possibility that has been floated is to make bonuses (representing the majority of total compensation) dependent on long-term rather than short-term results. For example, by making them payable in stock that can't be sold for two years. Since a failure to look ahead was a major source of the derivatives frenzy, this -- along with increased capital requirements -- may be a way to deal with the fact that the commercial banks we all depend on are now allowed to engage in risky behaviors.
Third, even if you're right about this particular initiative, a great many people are scared spitless by the thought of what might be in the next round of such policy initiatives.
Reminds me of all those people who, back in 2002, were convinced that Bush was going to get the term limits amendment repealed and make himself President for Life. I myself had my antennae up for any such move. But by 2003 I could see that nothing of the sort was happening and dismissed the idea as unfounded paranoia. People who think the way you describe should likewise pay attention to what is going on and dismiss their unfounded paranoia.
They believe that under the "reform" plan, they will be forced to work longer hours, seeing patients on an assembly line with no chance for personalized care.
This, of course, is exactly what physicians have been complaining about for the past 15 years or so. Healthcare reform won't change that one way or another. Even if you argue that there will be more patients seeking care, individual physicians will have the same option to refuse new patents that they had, and exercised, during the doctor shortage of the 1970s.
They believe that they will be compelled to ration care and eventually refuse care to critically ill and terminal patients.
A lot of the horror stories you hear about private insurance companies relate to their refusal to approve any and every procedure a doctor may dream up, regardless of whether it makes good sense for the patent. That's what's meant by "rationing care." And since the government is not going to tell these companies otherwise, that's exactly what will continue to happen.
Many of my friends think that people who sign up for the public option (assuming there is one) will get everything their doctor can dream up, but that's just not going to happen. The government, I feel confident, will take the same sort of common-sense approach as the private companies.
They believe that their costs will go up
In fact, their costs will be down. Back-office automation, encouraged and subsidized by the government, will make their record-keeping more efficient. And the requirement that all insurance companies use the same claim form will cut through the confusion of having to learn 20 different forms and 20 different sets of definitions.
while their own pay is fixed at whatever the government chooses to pay them
Pardon me?? As you know very well, in the overwhelming majority of cases, it will be the private insurance companies that are paying them. Granted that many physicians don't believe the insurance companies pay enough. There will be (maybe) a relatively small number of patients on the public option. But if physicians believe public option payments are inadequate, they can simply refuse to accept such patients. As they can, and do, refuse to accept Medicare patients.
Did you know that right now, today, this minute, there is a shortage of primary-care physicians in the USA?
Yes. Mostly because too high a proportion of medical graduates are going into higher-paying specialties. Physicians are saying something needs to be done to address the pay imbalance, although it's not clear what.
Another factor on the horizon is that the age structure of the physician population means that the retirement rate will soon be climbing. The medical schools need to ratchet up their enrollment to something resembling that of the 1970s.
Did you ever wonder what will happen when that already understaffed, overworked corps of primary-care doctors are required to add forty million new patients to their workloads?
The bottom line is that this is another reason the medical schools need to let more people in. But it seems strange that you italicize "required" when you know very well that there is and can be no such requirement.
The creative ones, the entrepreneurs, the venture capitalists, the small businessmen and -women who create most of the jobs in this country, the type-A personalities, the risk-takers ... simply stop doing any of those things.
Well, I invite you to consider the fact that I am myself a small-business owner. An entrepreneur. And in a way I find that less risky than working for someone else. Anyone who doesn't see this has a confidence in their employer that my experience -- not to mention recent headlines -- suggests is unjustified.
I highly doubt that the PC industry would be where it is today had either man followed a different career path.
My judgement is the industry would be more or less where it is now without them. It was the right time and the right place and any entrepeneur would have seen the possibilitites. If Jobs and Gates had taken different career paths, someone else would have stepped in and done what they did.
I know that Jobs was not the only one who built a computer based on the Xerox Park concepts as I work on a project at HP that also did the same. It was an engineering workstation that was not as successful due to the smaller specialized market and a bad choice in hardware technology. OTOH the Lisa was also not successful either. The difference was HP decided to cut its losses while Jobs decided to try one more time to get it right. I also know from talking with the engineers who worked on the first Mac that many of the features that made it successful were snuck in behind Jobs' back because he thought they were not needed. Which means that Jobs was not as brilliant as the popular history made him out to be. Technically Jobs has made as many mistakes as he has made correct choices.
I could also go on about Gates' many mistakes such as OS/2 but will only state that evrything these men did that, others could do and did do. They were just not as successful and in many cases it was due to actions by Jobs and Gates to stiffle their competition.
The main reason Microsoft rather than Digital Research got the IBM contract was that Gates was willing to lie about how far along in development DOS really was.
This is incorrect history. The correct history is IBM first went to DR and DR rejected IBM's offer. When Gates heard about this, he went to IBM and offered to create PCDOS for them which he did by modifying QDOS, an existing OS from Seattle Computer Products. So IBM knew quite well that Gates had no product but decided that Gates could meet their deadline for delivering PCDOS.
Danny,
This is incorrect history. The correct history is IBM first went to DR and DR rejected IBM's offer.
I'm relying on a secondary source who claimed to himself be correcting incorrect history. According to this source, the main reason the IBM folks kept their appointment in Richmond (which had been set up before the DR visit) was that DR told them frankly that there was no way CP/M-16 could be ready to load on a prototype PC before the month was out. I'm not sure that constituted rejecting IBM's offer, which was contingent on that timeline. So the IBM people went up to Richmond, where Gates showed them what he claimed was a beta version of DOS (as you note, at that point essentially QDOS under another name) but was in fact not even quite a fully functional alpha version. But IBM believed him, so he got the contract.
The irony, according to my source, is that IBM's timeline slipped and it was in fact 3 months before a prototype PC was ready to have an operating system loaded. By then, CP/M-16 was ready.
An even bigger irony, in the context of the present discussion, is that the guy who pushed IBM's PC project in the face of intense skepticism from the higher-ups -- a guy whose name few of us have even heard -- probably had more to do with the PC revolution than either Gates of Kindall. But I agree with you: The "great man" theory of history, and especially of scientific and technological history, is simply wrong. When it is personal computer time it will personal computer.
Are you really? As I recall from things you've said over the years, ... Right?
Essentially correct.
Then you aren't an entrepreneur; you're a contractor -- a temporary employee of your client. Nothing more.
The part after the dash is flatly wrong. An independent contractor, whether a writer, a lawyer, a plumber, or a home builder, is not an employee. If this were not true, you would have to withhold income and social security taxes from what you pay the plumber who fixes your sink or the lawyer who represents you in court. But they are not your employees, so you don't.
I suspect you are implicitly defining entrepreneurship on the basis of the money laid out up front. But where do you draw the line? Even in 1978, when I first went into business for myself, I had to lay out money for a typewriter and for postage and phone calls to the magazines I wanted to write for.
Bill
There are many versions of what happened between IBM and DR but they all come down to DR and IBM decided to not work together. The version that seems most accurate to me is DR rejected IBM's conditions. This was back when IBM was at its most powerful and most arrogant. Its usual contract with small companies such as DR was "IBM owns everything you have now and will develop in the future." As DR was the dominant OS in the entire pc market, it seem sensible to reject such an offer. What no one could foresee was that the entry of IBM into the pc market with its PC was an inflection point that would totally changed the market. What was sensible turned out to be wrong, at least if your goal was to make a lot of money.
The part about Microsoft and the lack of a working OS is generally correct. Gates saw an opportunity in DR's rejection of IBM. As Microsoft had zero market share in the OS market for pc, he had nothing to lose and everything to gain by signing away everything to IBM. He made a pitch based on vaporware and IBM accepted it as they really had no alternative. In an interview many years later, Gates said that they expected IBM to eventually buy them out and they were prepared to take the money and run. However when Gates approached IBM about buying them out, IBM said that they were not interested in ever buying out Microsoft. At that point, Gates realized that he had to make Microsoft successful independent of IBM.
