Ayn Rand world: regulation revisited

Statue of Atlas, that became the cover illustration for Atlas Shrugged. Is the Third Option a variation on this theme?
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In the Ayn Rand world, businesses self-regulate. That makes the world safer, not less safe, when people compete on safety.

The Ayn Rand theory of value

Ayn Rand described value simply. In Atlas Shrugged, her anti-villain-in-chief says:

Value is what one acts to gain or keep. Virtue is the act by which one gains and keeps it.

So anything can be valuable. Nor do you always have to see and touch a thing before it can have value. Ironically, a “Progressive” understands that, though he often pretends not to. “Progressives” say that they value safety above all else, and that the rest of us do not.

Of course, Benjamin Franklin said much, in few words, about trying to “balance” safety with liberty:

Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.

And very often he will get neither liberty nor safety. But a free person will use the methods of free people to make himself safer. He will not expect others to keep him safe. Why not? Because anyone who can “keep him safe” can as easily threaten him, and he knows it.

Why regulating safety falls short.

Alan Greenspan, former member of the Ayn Rand "collective"

Alan Greenspan. Photo: US Federal Reserve.

An earlier article in this series showed how free people can make themselves safer, and pay others to make them safer, without relying on government. But government cannot guarantee safety and often takes away from it.

Alan Greenspan showed how. (Hat tip: Tom Dale Keever.) Gary Weiss made this scathing reply:

When Alan Greenspan spoke out against building codes, he knew perfectly well what a lack of adequate building and fire codes would mean. Fifteen years before his birth, 146 people, mostly young women, were burned alive or leaped to their death from the fire at the Triangle Waist Factory just east of Washington Square Park in New York City. There was no requirement for employers to provide a safe workplace, so none was provided. Triangle’s owners crammed their employees into crowded workspaces without proper exits, and inadequate fire codes meant that the fire stairways were insufficient. The result was that dozens of workers’ corpses piled on the sidewalk on March 25, 1911. Anywhere in the world where building codes are inadequate or absent, the result is always the same: Dead people.

Excuse me, Mr. Weiss, but did you truly read the article? Greenspan clearly showed what building and fire codes have brought us. He didn’t even talk about the building that an inspector wouldn’t let someone build, because that building, while it might be safe enough, wasn’t “up to code.” Instead, Greenspan talked about the developer, the architect, and the contractor who cares only about “building to code” and cares nothing about building better than “to code.”

Here is how the Ayn Rand world works—and indeed how the real world works. Any business operator, or professional, must build a reputation to get clients. That is how he makes people trust him. What developer would hire an architect who designed a building that would burn up under an electric load that the people in the building might put on it? Who would live, work, or shop in such a building? Building that kind of trust takes time. And once someone has that trust, he can lose it with one mistake. In the Ayn Rand world, that kind of trust would be all that architect (or that developer) had. Lose that, and you cannot excuse yourself by saying, “But I built it up to code!” What code? The best code in the world is: your word is your bond. That includes words that go without saying. Like, “My buildings don’t burn.” And a fully free market would simply not forgive someone who said that a building would not burn, when it did.

But in the world where governments regulate everything, the same rules that governments make and enforce become crutches. People work barely well enough to satisfy the rules. But what if the rules aren’t enough? Too bad. The hapless person who suffered bad burns in the fire, or more likely those who survive him, have no case. As long as the architect and the contractors worked “up to code,” the law often can’t touch them.

Things get worse when the people whom the government sends to inspect a new project, take bribes to sign off on a project when it isn’t “up to code.” If those who work for Underwriters’ Laboratories took bribes like that, UL wouldn’t stay in business for very long. Private inspectors also have their reputations to build and keep. Government inspectors don’t. Indeed, government inspectors already have a reputation for taking bribes, or simply “shaking down” developers whose buildings are up to code after all. So who can really tell how safe anything is?

Hypotheticals

Novels and motion pictures are great ways to show people how things work out in practice. Ayn Rand understood that. That is why she wrote Atlas Shrugged. Ayn Rand wanted to show what would happen “if all the creative people of the world went on strike.”

But in one memorable sequence, she showed what often happens when politics trumps all the high-minded words about “civic virtue.” A politician demands that the staff of a railroad take him through an eight-mile-long tunnel, though the railroad has no engine that can pull the train through without choking everyone on its fumes. The right thing to do is to tell him to wait for a safe engine to roll in from the other side. But he “leans on” the president of the railroad. That person “leans on” the Operating Vice-President (pro tem), who “leans on” the division superintendent, who then sets up several men under him with orders that they all know will lead to disaster. Those orders are to send the train through with a coal-burning steam locomotive to pull it. At every step, a man has a harsh choice: balk the politician and lose everything, or follow orders. He follows orders. With two tragic results:

  1. The politician, his hangers-on, and three hundred other people on the train choke to death about a mile or so into the tunnel.
  2. An Army freight special crashes into the rear of the stalled train. Its cargo of ammunition blows up and seals the tunnel. Now, nobody will get through.

Sweet. So how did that government regulation thing work out for those three hundred people? Or the Army? Or the people who now can’t get there from here? And why didn’t it work out? Because the same government that pretends to guarantee safety, can set that aside to please a Big Name With Pull. That’s what happened in that sequence.

Seventeen years later, producer Irwin Allen also showed what happens when “good enough for government work” becomes the maximum standard. In The Towering Inferno, an architect designs a 135-story mixed-use building. He knows that a mixture of residential and commercial tenants, in such a tall building, will put much greater electric loads than the building code allows for. So he orders wiring several grades above “code.” Then he discovers, to his horror, that someone has not put in the extra-safe wiring he called for. Someone close to the developer has overridden him, and installed wiring that was “up to code,” but not able to carry the load, to save money. The architect roars at the other executive: “Code is not enough for this building!” The executive dismisses his concern and tells the architect that he is living in a dream world. Of course, those who remember the movie know that it lives up to its title. A stress test of the electrical system does start a fire. Almost two hundred people will burn, choke, or fall to death before the fire department can put the fire out. That includes the unscrupulous executive. The developer will lose his reputation along with the lives of so many tenants and friends.

That hypothetical executive had the code as an excuse not to follow the plan that the architect laid out. And to be fair, the architect himself put too much trust in his client and his client’s senior staff. Ironically, the architect himself had an office in that building. In the Ayn Rand world, he would watch like a hawk to make sure that every contractor and subcontractor followed his orders to the letter. And the developer would support him at every step. Without the minimum government standard to excuse anyone, everyone at every step would follow the plan, if only to protect his own reputation.

The as-likely result of the regulation model is that the government will let no one build a 135-story mixed-use building. That’s arguably better than building one that burns down as soon as the developer turns on all the lights to show his building off to the world. But without the government around, either to excuse or to forbid everything, someone might build that 135-story skyscraper so that it wouldn’t burn.

Conclusion

True enough, in the Ayn Rand world, businesses regulate themselves. But that doesn’t make the world less safe on that account. Ayn Rand and Alan Greenspan showed that governments often excuse doing things poorly. Worse, no one gains anything by doing things better than average. Even worse, dishonest people will offer bribes, and equally dishonest government workers will take them. Free markets naturally root out corruption; governments naturally let it stand. And the results can be far more dangerous than a hundred Triangle Shirtwaist Fires.

This article is part of the Ayn Rand series.

Editor-in-chief at | + posts

Terry A. Hurlbut has been a student of politics, philosophy, and science for more than 35 years. He is a graduate of Yale College and has served as a physician-level laboratory administrator in a 250-bed community hospital. He also is a serious student of the Bible, is conversant in its two primary original languages, and has followed the creation-science movement closely since 1993.

8 Responses to Ayn Rand world: regulation revisited

  1. DinsdaleP says:

    First off, don’t take anything that follows to mean that I’m a fan of excess or burdensome regulation, because that’s the furthest thing from the truth.

    The principle that regulation itself is bad, or that there’s no place for a sensible level of regulation to be applied is just wrong.

    Here are just a few basic flaws with the line of thinking in this essay:

    – It assumes that all business entities are run with a long-term view, where reputation and profits over time matter. This ignores the reality of shady operators that run fly-by-night operations, grab the cash while they can, and then dissolve & vanish to move on to the next racket. They have as much concern about quality, truth-in-advertising, or long-term client satisfaction as one would expect from someone looking to make money by any means they’re able to get away with.

    – It assumes that there’s no benefit to a minimum level of regulation in most cases. Your Towering Inferno example uses a fictional movie to try make a real-life point. In contrast, I’ll offer you the benefit of building to earthquake codes in places where this is a factor, and how much safer buildings in the high-risk parts of California are when they have events. Then look at places like Mexico City and Turkey where thousands of buildings are put up with no code (or at least no code enforcement), and you have thousands dying in simple, one and two-family homes where the floors collapse easily.

    – It assumes that there’s no need for regulation to provide a level playing field in a global market.

    – It assumes that independent inspectors and auditors are immune to influence and conflict of interest. Arthur Anderson was supposed to serve that role for Enron, but they made money from other service with Enron, and that compromised their independence. All fine and good to say that the market would favor truly independent auditors, but it didn’t then, and an incredible amount of wealth was lost, much of it by employees who did nothing wrong but had their pensions tied to the stock.

    – It assumes that there’s no adverse harm to others when individuals perform unregulated activities. My farm is next to another, whose owner decides to lease to a fracker. Now the roads we share are tied up with traffic and wear they were never designed for, there’s industrial-level noise next door 24×7, my kids breathe diesel fumes from the equipment day and night, and my property value’s plummeted. Then to kick it up a notch, there’s a fluid leak from a broken pipe into the groundwater, making my wells unusable for human consumption or irrigation. Too bad for me, I guess, since there’s on regulation that they broke, and if they dissolve the company there’s no one left to be liable.

  2. DinsdaleP says:

    And on a completely different line, I find it incredibly hypocritical that conservative pro-lifers are increasingly using the strategy of regulating family-planning clinics out of business, since there’s no other legal way to stop them from providing this legal set of services.

    These laws are deliberately focused to target just these entities, applying constraints that regular clinics do not need to adhere to, and the goal is quite proudly to put them out of business since the end justifies the means.

    Imagine if people wanted to target places of worship by zoning away adequate parking and making them install expensive equipment to meet fire and handicap-access codes that no comparable entity was required to. This wouldn’t be tolerated by you or me, but when it’s for something you disapprove of, you’re all for it.

    If you have any ethical integrity, you should attack the use of regulations as a means to stop family planning clinic operations Otherwise it’s just plain hypocrisy.

    • Terry A. Hurlbut says:

      I don’t know what you’re talking about. And as I strongly suspect, neither do you.

      Some years ago, a RTL organization took over the physical plant of an abortuary by buying the place from the landlord and simply not renewing the lease. Then after the abortuary moved out, they went in to inspect their new property.

      What they found ought to shock any honest man. Blood-soaked carpet; a garbage dispose-all clogged with human fetal remains; do I really need to go on?

      In fact, abortuaries are commonly exempt from regulations that regular “Docs-in-the-Box” must adhere to. Nice try to deceive me and my other readers, but it won’t wash.

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