Monday, January 11, 2010

The Coming-to-Jesus of Alan Greenspan

As a brilliant young man in his twenties, Alan Greenspan came under the influence of an intense, charismatic, and flamboyantly self-centered woman by the name of Ayn Rand. A talented intellectual, Rand freely manipulated her adoring acolytes, mixing sensuality and sexuality with pseudo-philosophical claptrap that was really rationalization of feelings she experienced as a child in communist Russia.

Convinced of the essential truth of the basic Randian premise—namely, that a free and unbridled economic market will always do the “right” thing—Greenspan spent his long and illustrious career turning idea into practice. Appointed chairman of the Federal Reserve in 1987 by President Ronald Reagan—a post he held until 2006—Greenspan did everything in his power (and his power was considerable) to promote the interests of business and minimize any type of government oversight.

As a result of his work and that of many other advocates of “Reagonomics,” America experienced a period of apparent prosperity in which the rich got immeasurably richer, cheap credit flowed like tap water, and Americans and America quickly became indebted up to their proverbial eyebrows. Meanwhile, money-lending institutions played roulette with investments. The whole house of cards came crashing down in the fall of 2008—a fact that a great many Americans seem to have already forgotten.

Historically, at least since the Industrial Revolution, politics has largely been about struggles between the interests of business and government. Each needs the other to provide balance. But since the Reagan era, the interests of business have so dominated other concerns—from food safety to public health to the waging of war—that the true functions of government have hardly been acknowledged or discussed. Business interests have used powerful organs of communication—most notably, extremist right-wing media such as Fox News and the editorial pages of the Wall Street Journal—to obsessively promote the interests of business over government.

These media—together with lobbyists, right-wing “think tanks,” and pro-business organizations like the national Chamber of Commerce—have been waging war on the American government ever since Republicans lost control of it in the last election. They’ve been working hard to persuade a gullible American pubic that the President is un-American and that citizens of a free and democratic nation shouldn’t have to pay taxes to enjoy its benefits. The remarkable success of the “tea-party” movement—which is much more anti-government than anti-Democratic or pro-Republican—is a measure of their success. (This is not to discount the role of the politically independent libertarian movement—which, by the way, was also greatly inspired by the redoubtable Ayn Rand.)

Here’s the thing: the philosophies that inspire public decision making reside in the minds of real, flesh-and-blood human beings. Human beings are motivated, consciously and unconsciously, by both emotion and reason. They come to conclusions that are sometimes wrong.

Alan Greenspan’s early influence was a bitter woman who never got over her profound resentment of the Russian state for, among other things, taking over her father’s business and turning her family out in the street. She thought with her emotions and rationalized her feelings, coming up with a cockamamie philosophy about the all-mighty dollar that she managed to sell to a great many people.

Greenspan was wrong to put so much faith in that philosophy. Himself a highly influential teacher and persuasive leader, he spent his long career enthusiastically leading America in the wrong direction. To his credit, he’s admitted his mistakes—at least some of them.

Everyone has a philosophy. As individuals and as citizens, it’s our responsibility to review our premises from time to time—to have the humility to consider other points of view, and to admit it when we’re wrong. Public figures need to be wary of being swayed by their own influence over others. Populism is no substitute for critical thinking.


clay barham said...

From her works, it is apparent Ayn Rand admired the courageous pebble-droppers, the nails standing above the boardwalk that ruling elite might trip over, who challenged the established and accepted way things were done. It was the creative, imaginative individuals who followed a dream, a vision of some better way of living that she wrote about, not the socialist taker who envied the creative few even when enjoying the benefits of the pebble-dropper’s efforts. This was her focus. All other ingredients haters add to the interpretation of Ayn Rand’s ideas are simply mud to cloud the water. Whether she was atheist or Jewish, anti-Christian or self-centered means nothing. She believed she was OK and others, as individuals, were potentially OK as well, but herds were led by the few who would limit individuals and take from those who have to share with those who have not, and they and their leaders were not OK. Those who violently oppose Rand are the ones who want to retain the Old World ideals of a few elite ruling the many, as is being reintroduced to America by the Obama forces.

Six said...

It's interesting that on the one hand you slam Greenspan for being associated with Rand (whom I suspect you have never actually read yourself), when his actions as Fed Chairman that partially led to the current crisis were/are in direct conflict to what Ayn Rand would have suggested the role should have been (actually her position was that no such office should even exist in the first place!!). It was specically Greenspan as the Fed Chairman attempts to control the economy and manipulate the market by artificially flooding the money supply that played a significant role in leading to the bubble.

Intervention in the market is what failed - not the market. We didn't have an unregulated market... in fact quite the opposite. I believe that I read someplace that there were over 50,000 new regulations over the financial markets introduced during Greenspans tenure. Working in the banking industry myself, I can attest that banking is hands down the MOST regulated industry in our economy - closely followed by my wifes industry, healthcare. We both will tell you that it is no coincidence that those are the two most broken industries as well - these are failures of regulation. While Greenspan may have been a disciple of Rand in his youth, he certainly did not practice those beliefs while chairman.

Equating him as an example of Ayn Rand would be like equating Jesus to that of Judas.

Idna said...

You make some excellent points, Six. In addition to banking and healthcare, that you point out as two of the most broken industries and the most regulated, I'd like to add education. Public education is controlled by local, state and federal beaurocracies AND the Teachers' Union. Talk about a mess of regulations! The education system will never improve until this straglehold is broken.

While, as you say, increased money supply may have played a role in the recent economic meltdown, it was the government regulations that forced banks and other lenders to grant mortgages to unqualified people. Then Fannie Mae and Freddy Mac's guarantees encouraged the securitization of these toxic loans. Many in Congress refused to heed the warnings and in the famous words of Barney Frank, "If it ain't broke, don't fix it."

Ayn Rand would NEVER have been OK with the existance of Fannie & Freddy, or with government telling lenders that they HAD to make those toxic loans.

Citizen Jane said...

Six said...

Alan Greenspan vs. Ayn Rand by Harry Binswanger

Anonymous said...


Citizen Jane said...

Thanks for this link, Six. I read it with interest.

I think it's really about time we had these discussions about Ayn Rand, her followers, her influence, and what I see as her perverted secular religion, which is gaining influence as the years go by. (The fact that Rand Paul renamed himself for her makes me want to gag.)

I'll say this about Rand: she was bright enough to construct a philosophy that tends to attract intelligent, well-educated people. The on-going discussion may be fruitful.

Idna said...

The guy's name is Randal Paul. So he goes by Rand .... what's the big deal. Makes you want to gag???

And what is this visceral hatred for Ayn Rand all about? I don't get it.

Citizen Jane said...

You're right, Idna! I had read more than once that the younger Paul changed his name out of deference to Ayn Rand. However, I found a video in which he says, as you indicated, that it's just short for "Randall." Thanks for setting me straight!

As for my aversion to Ayn Rand's philosophy, I'll have more to say about that in weeks to come, as time allows. Stay tuned!