I Am John Galt (24 page)

He had seemingly capitulated to the collectivists. Or had he? Some might say his operational and mental departure from the company he founded was his own surreptitious strike of the mind. The high-profile charity would be a misdirection to distract the public from the most salient consequences of Gates's move—he was withdrawing his intellect from the parasites who had sucked value from him through the decades. He walked away in full public view, leaving his creation to stagnate under societal demands of fair play . . . and nobody even realized he did it.

It was nothing so dramatic as Henry Rearden vanishing by dark of night from his ruined steel mills to join John Galt's revolution. Nevertheless, Microsoft investors have already felt it where it counts: in the pocketbook. As
Figure 5.1
shows, a $100 investment in Microsoft would have turned into over $48,000 over the 15 years Gates was at the helm. From the day Gates accepted society's demands and became a generous philanthropist instead of a greedy monopolist, that same $48,000 would have shrunk to $33,600 by today.

Figure 5.1
Microsoft (MSFT) Stock Price

Bravo, Mr. Gates. Like Henry Rearden, you fought long and hard. Society will miss your contribution—whether or not it ever knows it.

Chapter 6

The Central Planner

Barney Frank as Wesley Mouch, the politician who meddled in the economy and almost destroyed it

“Fact is,” said Mr. Weatherby primly, in a statistical tone of voice, “that in the twelve-month period ending on the first of this year, the rate of business failures has doubled, as compared with the preceding twelve-month period. Since the first of this year, it has trebled.”

“Be sure they think it's their own fault,” said Dr. Ferris casually.

“Huh?” said Wesley Mouch, his eyes darting to Ferris.

“Whatever you do, don't apologize,” said Dr. Ferris. “Make them feel guilty.”

“I'm not apologizing!” snapped Mouch. “I'm not to blame. I need wider powers.”

—Atlas Shrugged

In a December 2006 article from the
Congressional Quarterly Weekly
entitled “A Roof over Every Head,” Congressman Barney Frank of the 4th District in Massachusetts is quoted proclaiming, “The problem is that the market is producing too much inequality.” The solution? Use government leverage to provide affordable housing as one way to bridge the widening gulf of U.S. income disparity. A new approach to housing policy can be a hallmark of the Democrats' efforts to redistribute wealth, he says.
1

And redistribute he would. By the time Frank was through, his lifetime quest for ever-increasing political power to promote social equality and universal home ownership would bring a nation to its knees, triggering a banking collapse unparalleled since the Great Depression and plunging millions of productive Americans into unemployment, foreclosure, and financial ruin.

A Czar Is Born

How does one get to have enough control over the economy in order to destroy it? Was Barney Frank smarter, harder working, more honest? No—in the moral universe of Ayn Rand, smart, hardworking, and honest people don't want to control the economy in the first place. They just want to control themselves.

Frank, like Wesley Mouch, the government central planner who destroys the economy in
Atlas Shrugged
, isn't stupid. But of all the not-stupid people in the world, the ones who become economic czars share other key traits. They are people who know they couldn't make it in the private sector, so they turn to politics. They are corrupt, in the sense that they are willing to bend and break even the tainted rules by which the game of politics is played. They are ruthless, willing to let the world go to ruin as long as they can be in control of it. And they are shameless and unapologetic, blaming everybody but themselves when it does.

Barney Frank was named chairman of the House Financial Services Committee in 2006 not through any special expertise or background in the banking sector, but due to the cockroach-like survivability of an entrenched lifelong government bureaucrat. With the exception of some half-stints in academia, Frank has spent his entire career on the government payroll. He has never created a job. He has never had to earn a living on the strength of his contribution to the economy. He has never been responsible for capital investment decisions where he bore personal financial risk. He's never worked on a trading desk or in a bank, brokerage, or corporate finance division. He's never even rung the register at a fast-food restaurant.

Several other congressmen were ahead of Frank in the political pecking order for the high-profile leadership position. But when then-Representative Chuck Schumer, the Democrat of New York, moved from the House to the Senate, Bruce Vento died of cancer, and John LaFalce didn't seek reelection, Frank suddenly found himself enthroned on the committee that oversees insurance, banking, the securities industry, and affordable housing. He said that the role made him “feel like a kid in a candy store,” and remarked that “I have more power than knowledge.”
2
If only that remark had represented self-awareness rather than a lame attempt at self-deprecating humor, perhaps Frank wouldn't have presided over the worst financial collapse in modern history.

Like Rand's Wesley Mouch, Frank crafted a lifelong career out of patronage and pull, using political power to distort the economy through endless rules and regulations while ignoring their real impact on the nation. Oblivious to the end, he would not only shift blame and shirk responsibility for the destruction he wrought, but would rationalize it as not doing enough—and then clamor for even more power.

Those who have encountered Frank throughout his life invariably come away with certain indelible impressions. The first is that he's smart and verbally acute—if not always intelligible in his fast-talking, marble-mouthed New Jersey accent. His comments are witty, acerbic, and sharp-tongued. He has been known to flay a hearing witness or election challenger with slashing verbal parries, dissect an argument with disarming tongue-in-cheek wordplay, and deflect criticism with blunt-edged insults. “On what planet do you spend most of your time?” Frank tersely cudgeled a constituent at a town hall meeting for the Obama-sponsored health care bill. “Trying to have a conversation with you would be like trying to argue with a dining room table. I have no interest in doing it.”
3

Colleagues from both sides of the aisle give great deference to his debating skills. He can speak extemporaneously on wide-ranging subjects of law and complex bills without reference to notes. His remarks are peppered with clever quips, and his creative positioning of issues makes his arguments both devastating and funny. His aphorisms have made him a bit of a media go-to for irreverent commentary on the public record, like a modern-day legislative Yogi Berra. Even as a junior state rep from Massachusetts, the
New York Times
favored his quotes over more prominent but linguistically guarded figures. “This bill is the legislative equivalent of crack,” Frank said in a 1986 debate on a bill funding increased border protection from drug traffickers. “It yields a short-term high but does long-term damage to the system and it's expensive to boot.”
4

While winning verbal jousts and painting colorful metaphors may provide entertaining sound bites that make for great play on the evening news, for Frank it's a diversionary tactic to shunt discussions on substantive issues to a controlled version of reality intended to spare him the need to consider uncomfortable truths. When challenger Richard Jones opposed federal rent subsidies for housing and price controls on energy during a local candidate forum, Frank countered by labeling his position as “cruel” to the elderly.
5
When a Harvard law student asked a straightforward question of how much responsibility, if any, Frank took for the economic crisis as chair of the House Financial Services Committee, Barney struck back defensively. “This is the right-wing attack on liberals' attempt to stop regulation,” he spewed as part of an aggressive if not entirely sensible tirade that would have knocked the most seasoned political brawler off balance.
6
He never answered the question, and successfully evaded any hint of culpability by effectively trampling a forum of free speech with verbal jackboots.

Frank used his considerable brainpower and verbal acuity not to create and build, but rather to shift and maneuver. Instead of learning the business of construction and the economics of free-market incentives to create housing, he pushed government subsidies and rent control. Rather than learn about efficient production operations in the face of a globalizing economy to support local manufacturers, he introduced legislation calling for a boycott of products made by a nonunion textile plant that employed over 27,000 American workers across nearly 60 facilities.

Frank is known to read voraciously, often reserving his luggage space on trips for stacks of unread newspapers and legislative documents—even reading while standing at the House urinal. His appetite for words is superseded only by his physical hunger. He has often been seen ravenously gobbling down food at campaign events, and has been heard privately scoring the quality of his hosts by the quantity of their buffets.
7

At five foot 10 and weighing up to 270 pounds, Frank is frequently seen with food stains on his ill-fitting suits. Thaleia Schlesinger said Barney's shoes looked like “a dog ate them.” She later agreed to serve as press secretary for his first congressional campaign only after he agreed to buy three new suits.
8
A 1974 campaign poster promoting his reelection to the Massachusetts Statehouse depicts a rumpled Frank, unshaven and sporting Elvis Costello–style glasses with Coke-bottle lenses under the caption, “Neatness isn't everything.”

Born Barnett Frank in Bayonne, New Jersey, in 1940, Frank was reared on a fetid stew of socialistic New Deal politics and outright criminal corruption. His parents, Sam and Elsie, were committed liberals and devoted Roosevelt Democrats. A 1958 photograph shows Barney and his mother posing delightedly next to a seated Eleanor Roosevelt during an Israel Bond drive event in their hometown.

The adulation clearly rubbed off on the young Frank—and then some. In high school, Barney attended a conference at Columbia University for aspiring journalists. Instead of bringing copies of his school newspaper to distribute to his fellow attendees, Barney handed out issues of the Communist paper, the
Daily Worker
.
9

His myopia seems to have taken hold at an early age as well. One day Barney came home from school with a note that said he needed glasses. When his mother asked, “Why didn't you ever tell me that you couldn't see well?” he replied, “I thought everybody saw things that way.” Although Barney got glasses, they seem not to have much clarified his view of the world.
10

In one early incident while working as an unelected point man for Boston Mayor Kevin White, Barney assigned Colin Diver, who would later become president of Reed College in Portland, Oregon, to work on preparing a rent control proposal. “I had the benefit of some pretty good training in economics and I had the benefit of conversations with some economist friends of mine,” Diver said. He told Barney that rent control was bad economics and that it was not going to work, and he predicted that it would have a long-term disastrous impact on the housing market.”
11
Barney dismissed Diver's concerns and pushed the initiative forward anyway. The need for popular giveaways to a clamoring constituency, along with Barney's own growing sense of infallibility, outweighed objective economic reality.

When Barney was growing up, his father, Sam, owned a truck stop near the Holland Tunnel entrance in Jersey City called Tooley's. It was a unique full-service facility for its day, with diesel fuel, a weigh station, restaurant, and bunkhouse where weary drivers could spend some horizontal time enjoying a little JC hospitality. Sam also had ties to organized crime. The land behind the stop was a well-known dumping ground for dead bodies and was often searched by New York cops investigating murders and mob hits.
12

Sam's older brother, Harry, owned a local car dealership. In 1946, he was granted a city contract to supply municipal vehicles in return for kickbacks to members of Frank “Boss” Hague's Jersey City political machine with purported ties to the Mafia, as well as the teamsters and longshoremen's unions. Sam acted as an intermediary of some sort in the deal and spent a year in jail after refusing to testify before a grand jury as a material witness.
13
At the age of only 6, Barney would visit his dad behind bars and later expressed great admiration for his father's strict adherence to the Cosa Nostra's code of
omertà
, or refusal to cooperate with authorities against a known criminal conspiracy.
14

When Sam died at the age of 53, Barney took a year off from college to help resolve the family's affairs. He reports that members of the Mafia were very supportive during the ordeal. Frank “Funzi” Tieri, who later rose to head the Genovese crime family, attended brother David Frank's bar mitzvah when Barney was 23. It's among these formative influences of socialist-leaning politics and mob-centered criminal activities that Barney had a chance to learn early firsthand lessons on the power of an influential position, and extracting unearned value from it.
15