Understanding John Galt

The beauty of symbols is they can be appropriated for your ends.  That's the power of John Galt.  There are a lot of fools on the left and right who don't understand the symbol of John Galt. When they hear us at the tea party protests, they go back to the Cliff Notes of Atlas Shrugged and laugh at the idea of creating a Galt's Gulch, where the productive go to escape the confiscation of their labor.  They dare us to withdraw our talents.  They have the luxury of doing so because they've never had to carry the weight of a small business on their back.

ABC News is writing about some people talking about cutting back on their work to get below $250K.  Some professionals, like doctors and others may do so, crimping supply of critical talents.  Some business owners may take longer vacations.  Those are just news stories, fun but probably not impactful enough.

The real damage is done when those who run small and microbusinesses shut down their companies and layoff their employees to take a more relaxed lifestyle.  Being in business is dangerous (bankruptcy is always around the corner), but it is also rewarding.  That's a work ethic few people have the stomach for. Once you've built a successful company, you have enough money to live comfortably.  Staying in business is a choice - one society needs to reward.  Off the top of my head, I can give you 8 names of business owners who sold their business and now live off consulting fees and their capital.  They "net" the same amount as when running the business, with a lot less work.  I can name another dozen who have layed off in the economy and are only keeping vital employees.  That's normal policy in a recession, but understand something - the decision to lay someone is not an easy one.  Business owners, especially small business owners, understand that it's real families we are impacting here. Layoffs are about protecting the company, but there is usually room for average and suboptimal performers.  When we lay someone off, we have to weigh the health of their family against our own.  Most owners are willing to work with less than perfect workers - it's the right thing to do.  But when our business is threatened by too many outside forces, charity is a another word for turning off the lights one bulb at a time.  

The problem is not just current employment regulations, higher expected taxes, and a soft business climate.  Those are irritants, but they can be dealt with.  Add those burdens to a culture and a president who look down on wealth creators as evil rich businessman, and you have a real problem. 

If you sink $100,000 into your business, that capital is gone.  There might be fancy ways to protect it, but few people who start have the time, the knowledge, or the resources to follow those fancy ways.  You work hard for three or four years, and you can get to a break-even point.  To make back $100,000 - the owner must profit $181,000.  Get that?  To break even, an owner needs to make $181,000 above and beyond yearly expenses.  It depends on your business, but that's not chump change.  While you're at it, figure out how much equipment costs.  Add in investment in employees.  Add in bank loan interest and the loss in income the owner experiences when cash flow is tight.

And keep in mind that 90% of businesses fail in the first four years.

What does that mean? It means that it's tough to make a grow a small business.  Most fail.  Failure means a loss of personal credit, a loss of retirement, and a loss of lifestyle for years.  Failure means your wife may leave you - your children may go without health insurance or even just toys at Christmas. Failure means your health and your body and the time that you sacrificed all were wasted.  You should have kept your cushy corporate job, and none of this would have happened.

And what does success look like?  Success means a man who has never run a business - a man who has lived off government loans and government subsidies and government salaries, is going to lecture you on what you owe society. That man is our president,  Barack Obama, but he's not the only villian here.  Standing next to him are the Democrats in Congress - Barney Frank and Chris Dodd and Ted Kennedy and Joe Biden and Nancy Pelosi and Claire McCaskill and Charlie Rangel and all the rest who look at your income and can't wait to redistribute it.  They all want to spread the wealth around, but not until they get their taste  First, to their friends and campaign donors.  Paying them off keeps them in power, and ensures that when they leave, they'll be well taken care of.  That's why Terry McAuliffe, Tom Daschle, Franklin Raines, and Jamie Gorelick are all multi-millionaires.  Don't know who they are?  Look them up, but take your blood pressure medicine first. After paying themselves, the politicians pass on a few bucks to voters (legal and otherwise), who in large part get more in federal benefits than they pay.  That's up to what, 40%- heading towards 50%?

If it really were roads and bridges, and quality education - healthcare for the poor and the elderly, it could be stomached.  If government at the federal and state level were lean and efficient, managing our money in a way that showed the slightest concern about who created it for them, it would be tolerable.

 But it's not.  Roads and Bridges and Police and Fireman and even the military are threats they make to justify taking our money and using it to make themselves rich and powerful.  Democrat and Republican - they're mostly the same.  For every Tom Daschle there's a Trent Lott.  For every William Jefferson, there's a Duke Cunningham.  For every Jack Abrahamoff, there's a Madoff, a Hsu, or a PMA giving money for favors.  And let's not forget the SEIU, ACORN, and their ilk.  These are not producers. They are parasites, grown rich on big government.

So what are we to do?  I told you what the real producers are doing. The successes who made enough to hold onto their resources? Those folks are buying gold and municipal bonds and cheap land.  When those folks sit out in large numbers, it has a big impact on new companies.  Those business owners are the John Galts, and they're riding out the economy, waiting for sense and the right time.  What do you do when a future Steve Jobs or Bill Gates or Conrad Hilton decide they've worked hard enough, and quit when they're 35 or 40?  What do you do when the best doctors all quit their practices to take up golf or go into high paying specialities because OB-GYN insurance is too high, General Practice spends too much time on Medicare Bills, and the only way to pay off student loans is to take cash?  What do you do when business owners don't spend time marketing or hiring, but instead just work with a staff of one or two, making enough to get by, but leaving the stress of building behind?

The term, is Epic Fail.  That's John Galt. 

As for the rest of us - what lessons are being learned? That playing by the rules is for suckers? If I have the ability to pay my mortage, but can refinance my house on Obama's mortgage plan, why not take the free ride?  If I can dump off my $1000 a month insurance on to S-Chip (and buy a Mercedes instead), even though I can afford my premium, why shouldn't I? If I can lay myself off from my company and take unemployment (which I've been paying for), all to take a well-deserved vacation, whose to say I'm wrong?  I've been to Italy.  I know what that's like.  Average people go off the tax grid in a fun game called only the stupid pay in full. What about business? If I have debt on my books, why pay it?  Why work late every night when I can shut down my business and bankrupt it with no personal liability?  I can always start a new one in the future.  Two to three years of good cash flow and the banks will lend to the new company, or I can buy someone else's company and get credit on that firm.  I know how it works now.  Taking personal responsibility is for suckers, right?  I'm a victim, too!      

Going John Galt isn't some fat cat working less.  It's the complete breakdown of trust and ambition in the small business sector.  It's the death of employment and creativity.  I can add people to my staff this year, or I can head off to Rome for a month.  I'm not the one hurting if I'm not working.  It's my suppliers, my employees, my vendors, and of course the extra taxes I pay for each transaction.  Taxes I actually pay.

Once you make it clear that working for yourself and paying your taxes is for suckers - once you load up government salaries and anti-capitalist working groups with stimulus funds, you've shown that the best bet thing to do is hide your money and lay low until the storm passes.  I know folks with funds offshore should they need it.  Sure you might get called a traitor for not giving your money to Tim Geithner, but he's a tax cheat himself.  Sort of takes the sting out of it.   

The detractors don't understand because they don't have the courage to run small business.  Going John Galt isn't some Objectivist fantasy. The Tea Parties aren't some Republican Revolution.  The real drivers of this country are taking a stand and making sure their voices are heard. The country better hope the politicians hear us.  Protesting shows we're still engaged.  When we're no longer engaged, there is no economy left to suckle on.

I ask you - who is John Galt? 

Comments

[Josh Link]

I have already cut my business back to one employee from 14 last year. I am a masonry contractor in KC, I have been in business for 5 years, and I know damn well how much money my company has generated for the government and they will get as little from me as I can possibly send them. Fuel tax, tax on every single item on the job, then the home owners pay more taxes, out of every 100 dollars I pay an employee, I pay 15 dollars for liability insurance and work comp, never had a claim in 5 years. OSHA can fine you for anything........ my employees were making between 20 and 32 dollars per hour. I will keep one employee and do the work myself, I have no problem working this way and I can make the same money with less stress. We are currently being audited for our second year in a row, not a big worry as I have a great accountant. I am getting sick of these people for certain, and Claire girl is on my shit list, and I see her answering machine is full :-)

[Jim Durbin]

Josh,

You're exactly the kind of person politicians should be worried about. Without cultural support of small business owners, folks like you eventually learn it's a lot easier to take care of yourself than it is to fight and struggle and risk it all for ungrateful employees and a president who calls you greedy.

All I can hope is you take some of your time and use it to throw these bums out.

[amcgregormc2@aol.com]

As a small business owner myself, I agree with Mort Zuckerman's comment on Meet the Press yesterday when he said that anyone who gets bent out of shape from the marginal tax rate going from 36% to 39% needs to get a grip. Its the price we're paying for the Republican failed policies. So you all should think about where this came from.

[-Jim Durbin]

If you think that your taxes are only going up 3%, I have a bridge to nowhere I'd like to sell you.

We're looking at a radical transformation of the US economy and a significant change in the baseline federal budget.

Take a look at the new deficits - they make the failed Republican management policies look like fiscal responsibility. How bad do you have to be to make the Republican Congress of 2002-2006 look responsible?

[Dmarie]

You may be a John Galt, and there will probably be many more to come who simply shrug, but there are also a lot of Dagny Taggerts out there--the efficient managers of businesses who cannot give up until the bitter end, those who cannot bring themselves to shrug. I suppose I am one of them, though a small business owner like yourself rather than the railroad executive of Ayn Rand's novel. I create a product and a venue that few others provide and that my customers truly appreciate. I just can't give it up, my customers will have no place else to turn to buy what my company provides.