RIP John Galt
Sun Oct 26, 2008 at 03:06:15 PM PDT
In 1966, Ayn Rand collected a series of essays into the book, Capitalism: The Unknown Ideal. Twenty of the essays in the were written by Rand. The rest came from a trio of Rand's acolytes, followers who had already been writing the newsletter of her "Objectivist" cult for more than a decade. Among these were three essays from a member of Rand's inner circle; an economic advisor and dropout from the graduate economics program at Columbia -- Alan Greenspan.
Greenspan was such a close friend of Rand's, that she passed him manuscript pages of Atlas Shrugged while the book was being written. He paid rapt attention to her tale of mysterious genius John Galt -- brilliant engineer, physicist, philosopher, and organizer. Galt, who shows the world who is really in charge by leading a rebellion of industrialists against laws that interfere with their companies, was in perfect agreement with the essays that Greenspan was writing at the time. In those essays, Greenspan rails against the "statists" and their desire to blame failures leading to the Great Depression on greed and unsafe lending practices. Instead, says Greenspan, the economy was experiencing a "mild contraction" which would have amounted to nothing, had the government not overreacted. Greenspan also attacks the "welfare state" and its schemes to "confiscate the wealth of the productive members of society."
When John Galt leads his his own inner circle of polymath geniuses to abandon the working classes and form a objectivist paradise, Greenspan must have cheered.
The essays Greenspan contributed to the 1966 collection, like the rest of the book, praised the idea of unfettered, unrestricted, unregulated, laissez-faire capitalism. Sure, there were problems in the system as it existed at the time, but those problems were not the fault of capitalism. Real capitalism, pure capitalism, had never been tried. Under pure capitalism, there would be a complete "separation of capitalism and state," and the resulting markets would be self-governing and self-correcting. It was only the intrusion of regulations into the system that brought on instability and immorality. Kick government out, and the system would not only flourish, but express the innate reasoning and positive force of selfishness.
Chief Disciple Greenspan carried this torch for the next half-century and beyond. Pro-business conservatives (not surprisingly) found great comfort in a philosophy that said squeezing every dime out of the system was not only fair, but the only moral solution. Not long after the publication of his essays in Rand's book, Greenspan was invited to become an advisor to the Nixon administration. When Ford replaced Nixon, Greenspan became the chair of the Council of Economic Advisors. And when Reagan took power, Greenspan was no longer the voice crying in the wilderness, he was the very center of the establishment. Objectivism and Conservatism had united in Market Fundamentalism, and that force was on a jihad against regulation of any kind.
For the next thirty years, Greenspan would cheer the deregulation of the S&Ls and join John McCain in trying to protect Charles Keating from regulators. He would praise the deregulation of energy trading, and assure everyone that companies like Enron were pointing the way to greater efficiency and lower consumer prices -- and collect the 2000 "Enron Prize" in exchange. He would urge not only the creation of credit default swaps, but applaud their lack of regulation and invisibility in the system. He would argue against oversight, against limits on CEO pay, and for the increasingly complex systems by which banks generated new instruments of credit.
No one person did more to spread Rand's message of unregulated markets, unconstrained free trade, and unlimited power for corporate officers than Alan Greenspan.
Then just this past week, his absolute faith slipped just a little.
Former Federal Reserve Chairman Alan Greenspan said a "once-in-a-century credit tsunami" has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed.
"Yes, I found a flaw," Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. "That is precisely the reason I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well."
For years, other economists had been predicting that the hands-off approach Greenspan advocated and the derivatives he praised would have disastrous long term consequences exactly because they encouraged short term risks no matter what the damage to the system.
Greenspan said he was "partially wrong" in opposing regulation of derivatives and acknowledged that financial institutions didn't protect shareholders and investments as well as he expected.
For Alan Greenspan to admit to being "partially wrong" about market regulation, is like the Pope announcing that the church is based on a little white lie.
A casual observer might be forgiven for thinking that discovering that the desires of corporate officers didn't always run parallel to those of investors as being so obvious a dead parrot might notice. But then, a casual observer doesn't have a lifetime invested in a philosophy that says otherwise. With the financial industry handing out over $120 billion in bonuses over a span of just five years, Greenspan seems never to have sensed that executives might act for personal gain, despite damage to the companies they control. He apparently never noticed that the desires of individuals, the security of corporations, or the needs of societies in which those companies were embedded don't always lie side by side. He never saw that the incentives built into his more pure system, were aimed at tearing the system apart.
Rather than reveal some ultimate truth of Objectivism, Greenspan's new revelations show only that for forty years, his indecipherable proclamations -- those Palinesque chains of detached verbs and adjectives -- haven't been the carefully-parsed parables of a financial oracle. They've been the nonsensical mumblings of a blind believer. Alan Greenspan may admit to being "partially" wrong, but he's wholly guilty of spreading a creed for which the hard evidence was always wanting. Far too many -- on the left as well as the right -- are guilty of believing it.
Why was Greenspan able to spread his message so easily? Because it's a message that people like to hear. It's the same message McCain is now preaching on the campaign trail. Rather than advocating a tax policy that strengthens the faltering middle class, McCain continues the decades old policy of rewarding the rich, and tells people simply:
We want you to get wealthy.
Don't protect the middle class, McCain is saying, climb over them. It's an appeal that says, yes, you're a hard worker with tons of potential and in any rational system you'd be wealthy, but somewhere out there some unspecified other is holding you back. Only by kicking away the clawing hands of the horde of undeserving people who don't work as hard or deserve riches as much as you, can you really be free. Don't do anything that might be good for your society -- good for your country -- because if you do, those undeserving lazy others will benefit.
Rather than offering to protect the investments you already have, or see that workers receive fair pay, or worry about Social Security, McCain and Greenspan want you to be convinced that Social Security will not be fixed. They've been remarkably successful in convincing people that a system with easily remedied problems won't be there when they need it, while simultaneously exhorting people to invest their hopes in a system with a track record of instability. Don't for a moment consider universal health care, because the price of saving those uninsured kids and elderly might be inconvenience for you. To be doubly sure you get the message, McCain is now waving the plague flag of "socialism," warning that any roll back to Bush's tax laws spells the end of freedom.
Greenspan may pretend to rationalism and McCain to patriotism, but they are both simply continuing the jihad of the market fundamentalists. There's not not a lick of difference between what they to offer and the railing of prosperity gospel preachers. It's an appeal to greed. It's a diminishment of the human spirit. It's that elevation of selfishness not just as a virtue, but as the only virtue.
In his testimony, Greenspan said he was "shocked" by the collapse of the markets. He shouldn't be. All fairy tales come to an end, and this one has gone on far too long, hurting far too many in the process.
There's something in Ayn Rand's works that appeals to everyone at some point in their lives. Everyone wants to identify with the specialness of Dagny Taggart or Howard Roark or John Galt. Everyone feels, at some point in their lives, as if they are the true hub of the universe.
Then rational people grow the hell up and get over it. There's no more substance to Rand's objectivist view than there is in a child fantasizing about being a fairy princess, and even less to admire.
John Galt is dead. We can only hope he stays buried.