Is the market striking?

Anyone who has read Ayn Rand’s epic novel Atlas Shrugged would remember the question people asked throughout the story, “Who is John Galt?” The question expressed the confusion and resignation people felt as the United States slowly deteriorated under the yoke of government controls and edicts. John Galt helps to accelerate this decline by recruiting the leaders of various industries to join him in a strike against the forces in government and society who supported confiscating and usurping the wealth they created. Along these lines a Human Events article by Dr. Arthur Robinson titled John Galt Effect proposes that the “men of the mind” (to borrow Ayn Rand’s term) are withdrawing their abilities and contributions in face of growing government intervention in the economy.

As the pendulum of politics now swings toward tyranny in the United States and dangers to those whom they love increase, these men and women partially turn their talents more toward their personal responsibilities. Part of their thoughts, efforts, and ingenuity are lost to society -- and this loss cannot be recovered by either negative or positive incentives.

Throughout our country today, the men of the mind (women, too) are watching the awful scene in Washington and its reflection in state and local capitals throughout the United States. They understand the consequences of the government oppression that has dogged their own footsteps for many years and that will grow much worse in the near future. So, they are taking actions to protect themselves and their families.

We have no way to measure the societal effects of this distraction of the men of the mind. There are immediate effects upon our well being and long term effects from the things that they are no longer working full time to create.

While I agree with the sentiment expressed by Robinson’s piece it is extremely difficult to prove his claims. However, this piece in Forbes DigitalRules, Stocks Hate Obeynomics, seems to provide some empirical support for Robinson’s case.

The results are clear. The market hates Obama’s stimulus package and just about everything related to Obamanomics. … Stocks are down 27% since the Nov. 4th election. Stocks have plummeted more than 40% since Obama sewed up the Democratic nomination in June.

Capital is on strike. And why wouldn’t it be? Private capital has no idea what the future holds in terms of taxes, regulation, trade, deficits and the value of the dollar. None whatsoever.

Capital has figured out one thing, however. The politicians in Washington most hostile to private investment are running the show.

…

Here’s a question. Why did President Obama let an economic fool and earmark liar like David Obey write the stimulus plan that is so disliked by a majority of Americans and positively hated by the stock market? This is the mystery, isn’t it?

… David Obey is its chief architect, after all. During Obey’s near 40-year career in the House, he has nearly always voted for more government subsidies and less trade, according to the libertarian think tank Cato Institute. Let me repeat: The most anti-libertarian Congressman is in charge of the legislative wing of Obama's economic plan.

If you voted for Obama, you might ask: Why? And where is Austan Goolsbee? Even George Will liked the University of Chicago economist and pro-market centrist who was held up as Obama’s economic brain during the presidential campaign.

Goolsbee is missing in action. His ideas are missing in action. They’ve been replaced by the socialist hack David Obey. And the market has noticed.

As I’ve mentioned before, Obama’s proposed solutions to the current economic mess consists of continuing to apply the same Keynesian policies that got us here. The electorate bought the message of change and (appropriately) rejected the legacy of the last eight years. However, the market has seen the future and doesn’t like it. It doesn’t believe the promised “change” is fundamentally different. We can only hope that the state of the country four or eight years from now will bear no resemblance to the dismal collapse depicted in Atlas Shrugged.