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What would Ayn Rand say?

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  • | 3:13 p.m. May 6, 2011
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Ayn Rand's novel Atlas Shrugged seems to be on everyone's reading list now, spurred by the recent release of the movie version of her most famous work.

Although Atlas Shrugged was published in 1957, we all see government encroachment smothering our entrepreneurial efforts today, says Yaron Brook, president and executive director of the Ayn Rand Institute, who recently spoke in Naples.

Worse, politicians and bureaucrats believe they can spark the economic recovery with wasteful spending. Three recent examples on the Gulf Coast: promoters of high-speed rail from Tampa to Orlando, subsidies for Jackson Laboratory in Sarasota County and a new taxpayer-funded spring-training stadium in Fort Myers for the hedge-fund billionaire owner of the Boston Red Sox.

“It all comes from the fallacy that government creates jobs,” Brook says. “All it can do is redistribute jobs.”

So what should the government do to boost the recovery in Florida and elsewhere? “The only thing that government can do is get out of the way,” Brook says. “Business will come.” Government, he argues, should be limited to providing basic needs, such as public safety and fire protection.

Don't tell Brook big government projects will save Florida's economy. The latest fallacy making the rounds: There wouldn't be any commerce if the government hadn't spent huge sums building the interstate highway system. “The reason we needed the interstate system is because we destroyed the railroad system” with government regulation and price controls, he says.

It boils down to this: “Government has no money; it's taking it from you. Politicians get to decide how to spend your money. They do it because they can get away with it,” Brook says.

In this environment, why would entrepreneurs venture into areas full of government restrictions? For example, if high-speed rail were profitable, entrepreneurs would be eager to fund the project today. “One of the problems we have is we want to be more like Europe,” Brook says.

That doesn't mean savvy investors can't profit from government overreaching. For example, Brook heads a fund that invests in banks, arguably one of the most highly regulated businesses. He's particularly keen on community banks, which he thinks will be sold to larger banks because the regulatory burdens will be too much for the smaller institutions.

Brook looks for “smart consolidator” banks, such as Stonegate Bank of Fort Lauderdale, which recently acquired three banks in Naples and Fort Myers. The stock has already doubled since he started buying shares and may double again before it's eventually sold to a much larger bank, he says. “I'm not in the banks for any purpose except to make money,” he says.

Brook gets standing ovations from business-friendly speaking engagements, but he says entrepreneurs rarely challenge the government. “They lack the audacity and courage,” he says.

In banking, for example, “you don't want to piss off the regulators because they own you,” he says. That's why banks didn't challenge Congress over the recently passed Dodd-Frank legislation.

Of course, Brook says there are a few brave free-market proponents who do stand up to government, such as the retired chairman and CEO of BB&T Bank, John Allison. “That's very rare,” Brook says.

A big reason for this lack of courage to stand up to government is that entrepreneurs are made to feel guilty about the fortunes they make. For example, why is Microsoft founder Bill Gates revered for giving his fortune to charity and reviled for creating it? “More lives were saved by the creation of Microsoft,” Brook argues.

But Brook says entrepreneurs and business owners must take a stand because government spending will soon bankrupt the country. Politicians of all stripes aren't reducing the size of government quickly enough to stave off disaster. “Do we have enough time?” Brook wonders.


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