I Am John Galt

by Donald Luskin

  Rodgers, like Francisco d’Anconia, does everything to the max—and brilliantly. His fermenters are radio-controlled and monitored. He visits France to learn from masters like Aubert de Villaine, the owner of the Domaine de la Romanee-Conti. He grafts a variety of vines to rootstocks, matching them to meticulously documented growing conditions and micro climates on his slopes. Results are then recorded and analyzed to improve his growing methods even further. His French oak barrels are custom ordered from Francois Freres Tonnellerie, which according to T.J. is “the best Burgundy barrel maker. . . . I pay $1,000 for a barrel. You can buy an American barrel for $280.”

  He personally designed a new type of tractor, perfect for navigating narrow vine rows on exceedingly steep slopes while remaining level in three dimensions through the use of hydraulically telescoping wheeled supports. The tractor is computer controlled and driven by a joystick like a video game. The invention won a gold medal from the European Intervitis Wine Fair for the most innovative new piece of farm equipment in 2001.

  T.J. also created and patented a new grape press technology that is efficient and gentle, leaving the grape seeds uncracked to reduce unwanted tannins. The result approximates the ancient art of foot crushing using twenty-first-century technological efficiencies.

  Even his failures are technological tours de force. He learned through extensive research that grapes exposed to partial sunlight produce superior wine due to a chemical they produce called quercetin, which acts like a natural sunscreen. But the heat of the sun negates the effect so that, typically, only the small portions of vines exposed to cool morning sun produce the vaunted grapes. T.J. set out to solve the problem by conducting an experiment he called “air-conditioning” a vineyard. He installed custom water misters on a control section of grapes and fitted individual clusters with thermistors to read the real-time temperatures of his subjects. He then linked up a wireless control system using his Cypress PSoC chip, which he custom programmed to monitor and cool the grapes with a series of radio-controlled water valves. In the end, the experiment was a technological marvel—but it didn’t make a better grape, or a better wine.

  The labels of Rodgers’s wine bottles are the joint product of political meddling and technological breakthrough. “Very Burgundian,” he says proudly of the label. Of the stylish black and white 1940s portrait on it, Rodgers explains, “That’s my mother. That picture was taken in 1946; she’s actually holding a cigarette and I had to edit it out.” It seems that even in the wine business, Rodgers is bound to run into idiotic governmental regulations and obtuse bureaucracies. “It’s illegal to have a cigarette on a wine bottle,” Rodgers explains disgustedly. “Some genius passed a law that actually governs that.”

  Embedded in a red wax seal above the cigarette-free mother rests a silvery mirrorlike square, smaller than a postage stamp. The back label explains, “The silicon chip on the crest of the bottle is a billion-transistor, 144-megabit Static Random Access Memory that can store and retrieve 100 books with 1,000 pages each in onethousandth of a second.”

  His hassles with the Bureau of Alcohol, Tobacco, and Firearms (ATF) make him shake his head in frustration almost as much as the California town commissions and zoning boards. “They’re such a fucked-up organization that you never can deal with them; they don’t answer phones,” he says of the ATF when confronting the rolls of red tape standing between his wine and the commercial market. “You’re sitting in there trying to sell your wines and it’s going to take like nine months. They told us the last time we called them that they were very busy. The time from when they received our letter until they opened it was five months.”

  Rodgers concludes, “Real people haven’t got time for some bullshit government job. It’s only the clowns that—you know, you check them out—they were the high school class president; that was their little bit of fame in high school and now they’re on the planning commission for some county in California.”

  A Normal Man

  We began our interview with Rodgers hoping to discover the recipe for how he became a success—how he could do so many things so well. After generously giving us more than four hours with him, it was clear that—like Francisco d’Anconia, and in fact like all Ayn Rand’s heroes—he simply likes “living on this earth.” This means he wants to spend every minute of his life making as much of his life as he can—without wasting a moment on any form of self-deception, and without expecting anyone else to do his living for him.

  Hugh Akston, Rand’s great philosopher of reason from Atlas Shrugged, says it best. He says not to make the mistake of thinking that people like Francisco d’Anconia—and Rodgers—are “some sort of superhuman creatures. They’re something much greater and more astounding than that: they’re normal men—a thing the world has never seen—and their feat is that they managed to survive as such. It does take an exceptional mind, and a still more exceptional integrity, to remain untouched by the brain-destroying influences of the world’s doctrines, the accumulated evil of centuries—to remain human, since the human is the rational.”

  Chapter 8

  The Sellout

  Alan Greenspan as Robert Stadler, the libertarian who became an economic czar

  “Of any one person, of any single guilt for the evil which is now destroying the world—his was the heaviest guilt. He had the mind to know better. His was the only name of honor and achievement, used to sanction the rule of the looters. He was the man who delivered science into the service of the looters’ guns.”

  —Atlas Shrugged

  Who is Robert Stadler?

  In Atlas Shrugged, Dr. Robert Stadler is a brilliant scientist who sells out to collectivism—and ends up destroying himself.

  As a professor of physics at Patrick Henry University, he is mentor to John Galt and two of Atlas Shrugged’s other primary heroes, Francisco d’Anconia and Ragnar Danneskjöld. But in his single-minded quest to pursue pure science, he becomes head of the State Science Institute, a government-funded think tank.

  Galt abandons his studies with Stadler the moment he endorses the Institute. Galt says, “He’s the man who sold his soul. We don’t intend to reclaim him.”

  Throughout Atlas Shrugged, the power of the Institute and the prestige of Stadler’s name are used to exploit and expropriate the industrialists struggling to keep the economy afloat. Ultimately, scientific theories that Stadler thought were mere abstractions are used by the Institute to create a weapon of mass destruction designed to control the increasingly restive public. At the book’s climax, Stadler seizes control of the weapon and inadvertently detonates it, resulting both in widespread destruction of what’s left of America’s industrial infrastructure, and in Stadler’s own agonizing death.

  Courtroom scenes figure prominently in two of Ayn Rand’s greatest novels, The Fountainhead and Atlas Shrugged. They are where great men and great ideas are publicly vindicated. It’s ironic that the most spectacularly successful of Rand’s inner circle, Alan Greenspan, widely hailed as the greatest central banker who ever lived, would be put on trial along with Rand’s ideas—and neither would be vindicated.

  The trial was a hearing of the House Committee on Oversight and Government Reform, convened in October 2008 to investigate the banking crisis that swept the world in the wake of Lehman Brothers’ collapse. The prosecutor was committee chair Henry Waxman, the crusading ultraliberal representative from Beverly Hills. Looking down at Greenspan from an elevated rostrum designed to intimidate witnesses, with his buckteeth, flaring nostrils, jug-handle ears, and bald head, Waxman looked like a cross between Lon Chaney’s Phantom of the Opera and Mortimer Snerd.

  Waxman pounded Greenspan with pointed questions about the apparent failure of the Federal Reserve under Greenspan’s tenure to regulate the banks that collapsed. This was a dangerous matter for Greenspan, for whom there had always been serious tension between the demands of his role as Fed chairman—the most powerful regulator in the world—and his history as an intimate of Ayn Rand, who was
so opposed to business regulation that, in Atlas Shrugged, she describes a wise judge drafting a constitutional amendment to prohibit it outright.

  The toughest moment for Greenspan was surely when Waxman said, “Dr. Greenspan, Paul Krugman, the Princeton professor of economics who just won a Nobel Prize”—and whom we met in Chapter 2, “The Mad Collectivist”—“wrote a column in 2006 as the subprime mortgage crisis started to emerge. He said, ‘If anyone is to blame for the current situation, it’s Mr. Greenspan. . . .’ So do you have any personal responsibility for the financial crisis?”1

  Looking up at Waxman from the witness table, his enormous, wet, soulful eyes peering through his trademark goggles, looking for all the world like an aging Woody Allen miscast in some great tragic drama, Greenspan said a lot of words but didn’t exactly come out and answer “yes.” No surprise that. He’d become famous over nearly two decades as Fed chair for his inscrutable oracular comments.

  So Waxman just kept at him: “You feel that your ideology pushed you to make decisions that you wish you had not made?” “Do you think that was a mistake on your part?” “My question for you is simple—were you wrong?”

  But it didn’t matter, really, because Greenspan had already confessed before the hearing even began. In a column for the Financial Times seven months earlier, he had written, “Those of us who look to the self-interest of lending institutions to protect shareholder equity have to be in a state of shocked disbelief.”2

  To Waxman, he added, “I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works. . . . That’s precisely the reason I was shocked, because I had been going for 40 years or more with very considerable evidence that it was working exceptionally well.”3

  For Greenspan, just as for Rand, self-interest was indeed “the critical functioning structure that defines how the world works,” or at least how it ought to work. For Rand, it was embodied in her controversial slogan, “the virtue of selfishness.” Greenspan said it decades ago in his own words, in 1963, in an essay for Rand’s Objectivist Newsletter:4

  It is precisely the “greed” of the businessman, or, more appropriately, his profit-seeking, which is the unexcelled protector of the consumer.

  For Greenspan to repudiate self-interest is tantamount to repudiating Rand—after having been her close friend, colleague, and partner in arms for 22 years, right up until the day she died on Greenspan’s birthday in 1982.

  To some it seemed that he had repudiated her already, in 1975, when he became chairman of the White House Council of Economic Advisers, betraying her vision of strictly limited government, joining the ranks of the bureaucrats, central planners, and regulators. In that same 1963 essay he had written:5

  There is nothing to guarantee the superior judgment, knowledge, and integrity of an inspector or a bureaucrat—and the deadly consequences of trusting him with arbitrary power are obvious.

  Those consequences became painfully obvious to Greenspan himself, after years at the very pinnacle of bureaucratic power as chairman of the Federal Reserve, blamed by Waxman and many others for failing to prevent—or perhaps even for causing—a world-historical global banking meltdown.

  But Rand didn’t feel betrayed when Greenspan went to the White House in 1975. In fact, she went with him, as a photo of Greenspan being sworn in by President Gerald Ford at the White House attests (see Figure 8.1). The little lady with Ford’s arm around her is Greenspan’s mother, Rose. The little lady next to Greenspan is Ayn Rand.

  Figure 8.1 Alan Greenspan Is Sworn In as Chairman of the Counsel of Economic Advisers, 1975. (Left to right) Rose Greenspan, President Gerald R. Ford, Alan Greenspan, Ayn Rand, Frank O’Connor

  Source: Gerald R. Ford Presidential Library and Museum

  So apparently Rand, said to be quick to excommunicate acolytes who deviated from her philosophy, didn’t object to Greenspan’s new role. In fact, she was proud—for Greenspan, and for herself. For the press, she described Greenspan as “my disciple,” and “my man in Washington.”6

  So it’s difficult for us to say that Greenspan is a Randian villain (Rand didn’t think so herself), though it’s tempting simply because as Fed chair he became the most prominent and powerful regulator in the world. Perhaps in reality he was a Randian hero, a double agent, covertly promoting the ethic of self-interest and its political corollary, laissez-faire capitalism, from within the very center of government power.

  If Alan Greenspan were a Randian villain, though, he would be Dr. Robert Stadler from Atlas Shrugged. Stadler was a great physicist, and one of the two mentors of Rand’s greatest hero, John Galt. He betrays Galt by doing just what Greenspan did: leaving the private sector and going to work for the government.

  Galt calls Stadler “the man who sold his soul.” He says of him, and scientists like him who work for the government, that they “sell their intelligence into cynical servitude to force . . . they are the damned on this earth, theirs is the guilt beyond forgiveness.”

  At the climax of Atlas Shrugged, Stadler’s scientific research is co-opted by the government to create a weapon of mass destruction designed to control the civilian population. Amid the chaos of the collapse of the American economy, the weapon is triggered accidentally with Stadler present, and he is killed.

  Rand writes, “Nothing remained alive among the ruins—except, for some minutes longer, a huddle of torn flesh and screaming pain that had once been a great mind.”

  Getting publicly humiliated by Henry Waxman is bad, but it’s not that bad.

  Ayn Rand’s Adopted Son

  Alan Greenspan first met Ayn Rand in 1952. He was introduced through his new bride Joan Mitchell, who was connected to Rand through their mutual friend Barbara Branden.

  Greenspan attended a meeting of “The Collective,” the intellectual salon that gathered at Rand’s New York apartment to discuss philosophy, politics, and—most important—the ideas of Ayn Rand. Greenspan, who philosophically styled himself a logical positivist, postulated to Rand that there are no moral absolutes. Here’s how Greenspan recalls the ensuing debate in his memoirs:7

  Ayn Rand pounced. “How can that be?” she asked.

  “Because to be truly rational, you can’t hold a position without significant empirical evidence,” I explained.

  “How can that be,” she repeated. “Don’t you exist?”

  “I . . . can’t be sure,” I admitted.

  “Would you be willing to say you don’t exist?”

  “I might . . .”

  “And by the way, who exactly is making that statement?”

  Checkmate! For the young Greenspan, this kind of intellectual jousting was extremely exciting. But at first Rand wasn’t sure about Greenspan. She nicknamed him “the undertaker,” because of his dark suits and somber demeanor. She asked her protégé Nathaniel Branden, the husband of Joan Mitchell’s friend, “How can you stand talking to him? . . . A logical positivist? I’m not even certain it’s moral to deal with him at all.”8

  Months later, after relentlessly chipping away at Greenspan’s logical positivism, Branden convinced Greenspan that he did, indeed, exist. He told Rand, “Guess who exists. . . . You’ll have to stop calling Alan ‘the undertaker’ now.”9

  Branden and his wife Barbara took it upon themselves to see to Greenspan’s “conversion” to Rand’s philosophy. The first step in the conversion would prove to be a fateful one. One day Barbara reported to Branden, “Guess what. I got him to admit that banks should be operated entirely privately. . . . I sold him on the merits of a completely unregulated banking system.”10

  Greenspan became a regular member of Rand’s salon, and was granted the privilege of reading Atlas Shrugged right as it came off of Rand’s typewriter. He was enthralled, finding Rand’s arguments “radiantly exact.”11

  The Collective was in some ways a difficult group, full of interpersonal drama, with all members subject from time to time to harsh judgment by Rand for any perceived infractio
n of her philosophy. Greenspan came in for his share of criticism. Observing Greenspan’s relentless networking (which would one day serve him so well in Washington), she asked, “Do you think Alan might basically be a social climber?”12 She was skeptical of his involvement in the business world, once saying “A.G. is too ‘worldly,’ too impressed by success. The trouble with A.G. is, he thinks Henry Luce is important.”13

  But Greenspan had a special status in Rand’s salon. One member recalls, “He kept somewhat aloof from everybody. He was older and smarter.”14 Another says Greenspan was Rand’s “special pet.”15 Contradicting her worries about his being too “worldly,” Rand herself said, “What I like about A.G. is basically that he has his feet on the ground. I love his love for life on earth.”16

  After Atlas Shrugged was published, Ayn Rand became a full-fledged literary celebrity. Branden franchised Rand and her ideas into a lecture series and a newsletter, and Greenspan participated in both. At what became known as the Nathaniel Branden Institute (NBI), Greenspan taught a course called “The Economics of a Free Society.”17 He contributed to The Objectivist Newsletter, and its successor publication, The Objectivist, on topics such as business regulation, antitrust, and the gold standard. Some of these writings were eventually republished in a series of anthologies designed to ride on the coattails of Rand’s literary popularity, alongside essays by Rand, Branden, and other members of The Collective.

  Beyond The Collective

  At the same time, Greenspan was becoming a considerable business success. When he first met Rand he was working at the National Industrial Conference Board. Bond trader William Townsend invited Greenspan to join him in forming an independent economics consulting firm. According to Branden, Greenspan hesitated to take the plunge. Branden urged him on, saying, “Take the leap. You can do it. . . . You just don’t appreciate how good you are.” Townsend Greenspan & Company hit the big time quickly, signing up a glittering constellation of Fortune 500 companies as clients. Several years on, Townsend died, leaving Greenspan in control of the company, and a wealthy man. Again according to Branden, Greenspan later thanked him, saying, “You believed in me.”18 For all that, Greenspan mentions Branden only once in his autobiography, and then only in passing.19