OVER much of the last four decades, John A. Allison IV built BB&T from a local bank in North Carolina into a regional powerhouse that has weathered the economic crisis far better than many of its troubled rivals — largely by avoiding financial gimmickry.
And in his spare time, Mr. Allison travels the country making speeches about his bank’s distinctive philosophy.
Speaking at a recent convention in Boston to a group of like-minded business people and students, Mr. Allison tells a story: A boy is playing in a sandbox, only to have his truck taken by another child. A fight ensues, and the boy’s mother tells him to stop being selfish and to share.
“You learned in that sandbox at some really deep level that it’s bad to be selfish,” says Mr. Allison, adding that the mother has taught a horrible lesson. “To say man is bad because he is selfish is to say it’s bad because he’s alive.”
If Mr. Allison’s speech sounds vaguely familiar, it’s because it’s based on the philosophy of Ayn Rand, who celebrated the virtues of reason, self-interest and laissez-faire capitalism while maintaining that altruism is a destructive force. In Ms. Rand’s world, nothing is more heroic — and sexy — than a hard-working businessman free to pursue his wealth. And nothing is worse than a pesky bureaucrat trying to restrict business and redistribute wealth.
Or, as Mr. Allison explained, “put balls and chains on good people, and bad things happen.”
Ms. Rand, who died in 1982, has all sorts of admirers on Wall Street, in corporate boardrooms and in the entertainment industry, including the hedge fund manager Clifford Asness, the former baseball great Cal Ripken Jr. and the Whole Foods chief executive, John Mackey.
But Mr. Allison, who remains BB&T’s chairman after retiring as chief executive in December, has emerged as perhaps the most vocal proponent of Ms. Rand’s ideas and of the dangers of government meddling in the markets. For a dedicated Randian like him, the government’s headlong rush to try to rescue and fix the economy is a horrifying realization of his worst fears.
Indeed, so many bad things are happening that many followers of Ms. Rand, known as objectivists, believe that the ugly scenario in her 1957 novel “Atlas Shrugged” — in which the government takes over industry as the economy progressively collapses — is playing out in real life.
New regulations are being enacted by the day. The rich may be forced to pay for health care for the poor. The auto industry is a ward of the state. An activist administration occupies the White House. And, of course, the federal government has inserted itself into the nation’s banks, including BB&T, which accepted $3.1 billion in bailout money under the Troubled Asset Relief Program.
“Rand predicted what would happen 50 years ago,” says Mr. Allison, who notes that his bank was forced to take the money, which he labels “a rip-off.” “It’s a nightmare for anyone who supports individual rights.”
But as cringe-inducing as the government’s actions may be for objectivists like him, there is a silver lining: sales of “Atlas Shrugged,” which Ms. Rand considered her definitive work, are better than ever.
In the first six months of 2009, Penguin Books shipped more than 300,000 copies of the book, which opens with the famous question, “Who is John Galt?” That’s 25 percent more than in all of 2008.
“It’s just gone through the roof,” said Kara Welsh, publisher for the New American Library, a division of Penguin. There’s even a renewed effort to make a miniseries out of the book. The studio Lionsgate, along with the producers Howard and Karen Baldwin, hope to begin shooting as early as next spring.
“It is incredibly timely,” said Michael Burns, vice chairman of Lionsgate.
While book sales haven’t translated into a flood of new converts to objectivism, Yaron Brook, president of the Ayn Rand Institute, said attendance at this year’s Objectivist Summer Conference in Boston — where Mr. Allison delivered his speech — was the best yet for an East Coast event. (Attendance at conferences on the West Coast, where the institute is based, tends to be 25 percent higher, he says.)
Among the participants was Dr. Shira Miller, who became interested in Ms. Rand’s writing in college. She says objectivism continues to provide her with “a moral philosophy for how to live a good and happy life.”
Dr. Miller, who practices age-management medicine in Los Angeles, doesn’t accept Medicare or health insurance so there can be no third-party interference with her individual rights or those of her patients, she says. “Medicine is a product just like any other,” says Dr. Miller, likening it to toasters, computers or legal advice. “I should have the right to sell or trade it on my own terms, just like any other business owner.”
For his part, Mr. Brook is encouraged by the new interest in Ms. Rand’s work, but feels that it has yet to have much impact on the political debate. He’s also struggling to change a popular perception that the financial crisis was caused by deregulation and the fiscal policies of a top Rand disciple: Alan Greenspan, the former Federal Reserve chairman.
Mr. Brook argues that the problem wasn’t deregulation, but “misregulation.” He also says it’s unfortunate that Mr. Greenspan continues to be associated with Ms. Rand. While the two were close in the 1960s and ’70s, Mr. Greenspan abandoned objectivism decades ago, he says. Through a spokesman, Mr. Greenspan declined to comment.
“If you look at every aspect of the political world, things are going against us, from health care to cap-and-trade,” Mr. Brook says. “And it’s accepted wisdom that the financial crisis was caused by capitalism.”
“In the narrow sense of objectivism, things have never been so good,” he adds. “When you look at the larger world, it’s pretty depressing.”
THE enduring popularity of Ms. Rand bewilders her many detractors, who complain that her writing is melodramatic, heavy-handed and intellectually bereft.
“To describe her as a minor figure in the history of philosophical thinking about knowledge and reality would be a wild overstatement,” says Brian Leiter, director of the Center for Law, Philosophy and Human Values at the University of Chicago. “She’s irrelevant.”
Professor Leiter conducted an informal poll in March on his philosophy blog, asking, “Which person do you most wish the media would stop referring to as a ‘philosopher’?” The choices were Jacques Derrida, Ms. Rand and Leo Strauss. Ms. Rand won by a landslide, with 75 percent of the roughly 1,500 votes cast.
Professor Leiter says Ms. Rand’s views on moral philosophy and objective reality are “simple-minded in the extreme.”
“She doesn’t understand the historical positions of thinkers on these issues, such as Hume and Kant,” he says. “Even the minority of philosophers with some sympathy for her celebration of the virtues of selfishness usually find her general philosophical system embarrassing.”
Others contend that a lack of constraints on self-interested and greedy business people set the financial crisis in motion — a view that tends to undermine Ms. Rand’s theories on the value and social benefits of unfettered ambition and limited government.
“It takes a great leap of ideological blindness to look at the past few years and think that the main problem was too much government involvement,” said Robert B. Reich, a public policy professor at the University of California, Berkeley, who was a labor secretary in the Clinton administration.
Mark A. Thoma, an economist at the University of Oregon, says the financial crisis would have been worse if the government hadn’t rapidly intervened.
“I completely disagree with the idea that letting the markets heal themselves is the best idea,” he says. “We tried that in the ’30s, and it didn’t work out so well.”
Fiscal conservatives take an opposite tack, arguing that the government has intervened in overly aggressive and risky ways. They find much to praise in Ms. Rand’s economic views. Yet even for that crowd, her social views are a tougher sell.
Ms. Rand was an ardent atheist who considered the cross a symbol of how “a man of perfect virtue” sacrificed himself for a bunch of losers. “It is in the name of that symbol that men are asked to sacrifice themselves for their inferiors,” she said.
She had little time for women who stay home to raise children. Ms. Rand, who wrote sex scenes that one critic recently described as “dark, kinky and weird, but not in a good way,” in which normally tough businesswomen melt under the steely gaze and rough hand of übercapitalists.
Even so, Ms. Rand’s books have sold briskly without the sanction of academics and book critics since they were published.
Her black-and-white views were shaped by her upbringing in Russia, where her father’s pharmacy was taken over by Communists, who also suppressed free thought at her university. In 1926, she came to the United States, which she had idealized as a free nation that valued human achievement.
A short, chain-smoking woman with a severe haircut and heavy Russian accent, she once worked as a screenwriter in Hollywood and fashioned herself as “a radical for capitalism.” As her reputation grew, she was interviewed by Johnny Carson, Phil Donahue and Playboy magazine.
A member of her New York salon was the young economist Mr. Greenspan. Ms. Rand called him “the Undertaker” for his dark clothing and dour manner.
Mr. Greenspan, who wrote an article for one of Ms. Rand’s nonfiction books advocating a gold standard, was among those who listened to and praised early drafts of “Atlas Shrugged,” which Ms. Rand started writing in 1946.
It tells the story of Dagny Taggart, a brilliant and leggy railroad executive who steamrolls the “looters” and “moochers” who populate a deteriorating America to keep her trains running on time.
She is part of a loose collection of can-do industrialists who struggle against a rising tide of government intervention that seeks to lessen competition and redistribute wealth “for the common good.”
As conditions worsen, the most talented people flee society to an idyllic mountain retreat overseen by an ingenious inventor, John Galt, who wants to deprive a corrupt nation of its greatest minds and to facilitate its demise. He warns that the best thing the bureaucrats could do is “get the hell out of my way.”
Mr. Brook, of the Ayn Rand Institute, says Ms. Rand understood then, in 1957, an emerging trend toward more government influence, where “somebody’s need is a claim against our wealth.”
The problem with this, he says, is all too real.
“The last 50 years have been an orgy of placing need above wealth creation, above personal pursuit of happiness,” Mr. Brook says. “I think we are seeing the consequences of that today.”
MR. ALLISON of BB&T has the tall, lean frame, copper-colored hair and confident demeanor of many of Ms. Rand’s fictional heroes, including John Galt — a look “which would not seek forgiveness or grant it.”
He also has a résumé befitting a Rand prophet. He started at BB&T, once known as the Branch Banking and Trust Company, in 1971 and became chief executive in 1989, when the bank had $4.7 billion in assets.
By the time he retired as C.E.O. in December, he had overseen 60 bank and savings-institution acquisitions and turned BB&T into the 11th-largest bank in the nation, with $152 billion in assets, according to the bank.
A 60-year-old who speaks in a rapid-fire Southern accent, Mr. Allison says the current financial crisis is primarily the government’s fault. He criticizes the Fed as trying to manipulate normal business cycles and Fannie Mae and Freddie Mac as facilitating mortgages to people who couldn’t afford them.
The government’s remedies have made matters only worse, he says: “Almost everything that has been done since this crisis started is going to reduce our long-term standard of living.”
Mr. Allison says the government forced BB&T and some other healthy banks to accept TARP money to obscure that they were simply trying to save several large banks like Citigroup.
“Everyone thinks we got some kind of subsidy,” he says, noting that his company paid the money back in June, with interest. “It’s going to cost us about $250 million for money we didn’t want.”
He suggests that government get out of the way and let businesses start making money again. An example of how to make money? Look no further than BB&T, which, he says, has a proven formula for success that centers on “an uncompromising commitment to reason.”
Under Mr. Allison, new executives were handed a copy of “Atlas Shrugged.” All employees get a 30-page pamphlet describing BB&T’s philosophy and values: reason, independent thinking and decisions based on facts.
“Wishing something is so does not make it so,” Mr. Allison says. “I guarantee that long before the rest of us knew, those geniuses at Lehman Brothers knew that something was wrong, but they evaded it.”
Mr. Allison was introduced to Ms. Rand’s work in college, when he read her book “Capitalism: The Unknown Ideal.” He describes egalitarianism as the “most destructive principle in our society” and believes that the best employees should receive the most rewards.
“It’s not true that everybody is equal,” he says. “A lot of business people don’t want to deal with nonperformance.”
Mr. Allison cites two examples in which the bank’s philosophy guided its real-world decisions.
After the Supreme Court upheld the right of local governments in 2005 to condemn private property and hand it to someone else for commercial development, he says, BB&T refused to make loans to developers who obtained property that way.
He also says BB&T decided not to offer the controversial “pick a payment” mortgages that got so many of its competitors into trouble. Such loans, also known as “option A.R.M.’s” or “negative amortization loans,” allow borrowers to make payments that don’t even cover the interest on the loans, which causes the amount they owe to grow.
“While we did not foresee the decline in the real estate market, we knew home prices would not continue to appreciate at 15 percent per year forever,” he says, adding that his bank knew that pick-a-payment loans would be trouble for many homeowners.
“We believe Rand’s concept of the ‘trader principle,’ where life is about trading value for value, where both parties benefit from the transaction,” he says.
MR. ALLISON says that only a small fraction of the bank’s employees are objectivists. Among the many who are not is his successor as chief executive, Kelly S. King.
Bob Denham, a bank spokesman, says that “most employees don’t equate our values as being tied to John’s objectivist philosophy,” adding that “they just think of them as practical values, which they are.”
Christopher Marinac, an analyst at the research firm Fig Partners, says the culture at BB&T is definitely different from that of most other banks, attracting employees who “have their heart and soul in their job.”
He recalled attending his first analysts’ meeting at the bank a decade ago and being surprised when Mr. Allison launched into an hour-and-a-half lecture on philosophy.
“I think those of us who are a little more open-minded got something out of it,” Mr. Marinac says. “Their employees drink the Kool-Aid. If they don’t drink the Kool-Aid, they don’t work at the bank.”
Although BB&T has had problems during the financial crisis, it has outperformed its peers and remained profitable. After the government stress-tested major banks’ balance sheets in May, BB&T wasn’t required to raise additional capital.
“The philosophy has clearly been a competitive advantage,” Mr. Allison says.
Besides making speeches, Mr. Allison is also trying to spread Ms. Rand’s ideas to the nation’s colleges and universities. BB&T spends about $5 million a year to finance teaching positions and research on “the moral foundations of capitalism.”
Mr. Allison, who is now teaching at Wake Forest University, says the money isn’t specifically slated for objectivism but rather to support the work of “free-market professors, especially those that have a serious interest in Rand’s philosophy.”
Despite the current bleak state of capitalism, he’s also optimistic about the future.
“In some ways, Ayn Rand filled in the ideas of Aristotle. It’s a whopping competitive advantage,” he says. “I personally believe objectivism will be the dominant philosophy in this country in 25 years.”
Sunday, August 2, 2009
Using Ayn Rand to Justify Selfishness and Greed
In the August 2, 2009 New York Times article "Give BB&T Liberty, but Not a Bailout," Andrew Martin explains that some people use the writings of Ayn Rand to justify selfishness and greed. Others consider her views misguided and offensive, especially her ridicule of Christians as "losers":