Monday, November 2, 2009

A Randian Reading of the Merchant of Venice

Given the uproar over the bonuses doled out to bank executives at firms the government bailed out with taxpayer money, there has perhaps never been a more appropriate time to discuss Shakespeare’s The Merchant of Venice. In the play Shylock is ridiculed because he lends money with the explicit intention of turning a profit on the transaction. For this apparent transgression, Antonio implies that Shylock is “a villain with a smiling cheek,“ and that he intends to “spit on thee again, to spurn thee too” (I.iii.100, I.ii.131).

But Shylock’s plan to charge interest on his loans makes solid business sense in the long run: some of his loans will inevitably default and he must be compensated for the risk, or his business will fail. It is not surprising that such logic escapes Antonio, because he himself is an awful businessman, failing to diversify his assets or have a contingency plan in case his ships wreck. His case is reminiscent of the investment bankers of modern times who lost oodles of money on exotic investments, only to be quickly and quietly bailed out, except with Hank Paulson playing the role of Portia.

Paradoxically, the prudent investor Shylock is the sole loser at the end of the play. Likewise, the prudent investor today who was not the recipient of government intervention is likely to get the short end of the stick once the government is forced to repay its vast accumulated debts. The world may never understand that the risk of failure in any loan or investment is real and taking steps to hedge against it is not amoral, but wise.

A Randian reading might also view Shylock's decision to turn down the extra ducats in the trial scene as evidence that due to his frustration with the "looters" he has decided to "go Galt," and teach the town a lesson once and for all.