For those of you who wonder how our country will play out after November 4, look no further than Ayn Rand's 1957 novel Atlas Shrugged. In that book, anti-business policies in the form of higher taxes and more regulation caused the major captains of industry to go on strike, shutting down wealth-creation as we know it. That's the essence of Atlas Shrugged, and that is – at least directionally – what we may face if such policies are enacted in coming months and years.
Actually, "shutting down" isn't the only option for investors and businesspeople anymore. Back in the 1950s, when Ayn Rand authored Atlas Shrugged, the US constituted an extremely large share of the world economy. In 1951, the average American ate 50 percent more than the average European. Americans controlled two-thirds of the world's production, owned 80 percent of the world's electrical goods, and produced more than 40 percent of its electricity, 60 percent of its oil and 66 percent of its steel. America's 5 percent of the world's population had more wealth than the other 95 percent, and Americans made almost all of what they consumed: Over 99.9% of new cars sold in the U.S. in 1954 were U.S. brands. By the end of the 1950s, GM was a bigger economic entity than Belgium, and Los Angeles had more cars than did Asia.
There were very few other advanced, functioning economies. The US captains of industry had no ships to sail, no destinations to go. In this respect, the world has changed radically not only over the last 50 years, but perhaps the most dramatically in the last 15: The rise of the Asian economies from India to China, Eastern Europe and Russia, as well as Dubai as the Hong-Kong of The Middle East. Over 3 billion people now have cell phones – half the world's population. Cell phone penetration is Moscow is 176% -- the average Moscowite has 1.76 cell phones.
For this reason, unlike the industrial shutdown in Atlas Shrugged, we could simply see a giant emigration of capital, businesses and eventually people. This has started already, with individual investors and investment funds winding down US-domiciled investments in preparation for international transfers if the US becomes filled with anti-business, anti-rich and anti-Wall Street policies. Most Silicon Valley companies have already been locating an increasing percentage of their workforces abroad.
16 years later, Ross Perot would have called this "The Giant Sucking Sound." In Western Europe in the 1950s, they called it "The Brain Drain." People from all over the world, looking to get ahead, were moving their money, their businesses, and themselves, to The Shining City On A Hill – the place where the business climate was better. We saw it in our universities, we saw it in Silicon Valley, and we saw it on Wall Street. Well, I hope you captured those memories on your home video camera, because the new anti-business climate in America will make them only a memory.
Some Republicans used to make a big deal as late as 2007 about our immigration problem. Now they will have to focus on describing our emigration problem. In 2008, the emigration of our capital started, and it belonged to John Galt.