Allen Greenspan, former chair of the Federal Reserve, was a follower of the extreme right wing philosophy of Ayn Rand, and this certainly was major factor in how he ran the Fed. He was not just a follower from afar either, he was a member of the inner circle, as this Allen Greenspan / Any Rand timeline shows.
How right wing was Ayn Rand? She believed in the supremacy of self-interest and selfishness, thought altruism was evil and charitable giving despicable. Most of all, she wanted unfettered capitalism with absolutely no governmental oversight and twisted the ideas of Darwinism to mean that if the economically weak got crushed by the stronger, that this was for the good. That was her philosophy, and it’s been taken up by new generations of amoral greedheads to absolve them of any responsibility except to their net worth.
Allen Greenspan was and is a believer in this ultra conservative philosophy.
In 2001, Greenspan gave crucial support to Bush’s tax cuts for the rich, when virtually no one, except ultra-conservatives, endorsed the concept. Those tax cuts are responsible for today’s disastrous budget deficit.
In 2005, Greenspan is the lone economic voice urging Americans to adopt the program that George Bush desperately desires……Bush-style privatization of Social Security.
His “Irrational Exuberance” comment on the dot com stock market bubble came way too late in the game, and even with that the Fed did little if anything too slow it down. As for the current subprime mess, in 2000 a Fed governor approached Greenspan about investigating predatory mortgage lending and was flatly turned down.
“I would have liked the Fed to be a leader” in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.
“He was opposed to it, so I didn’t really pursue it,” says Mr. Gramlich, a Democrat who was one of seven Fed governors.
Greed is good, charity and altruism is bad. Let the strong prosper and let the weak die to enrich them. That is the philosophy of Allen Greenspan, and true to his guiding star, he did everything he could to funnel more money to the already wealthy at the expense of the rest of us. He presided over two speculative bubbles, dot com stocks, and real estate, bubbles which profited investment banks hugely while damaging the economy at large. Such selfish greed, benefiting a tiny few at the expense of everyone else, is consistent with a follower of Ayn Rand.
Let us be clear that “unfettered capitalism with absolutely no governmental oversight” is not capitalism at all. While Smith sought reprieve from tarriffs and other antiquated government interference, he also saw government as essential to (1) prevent monopolies, and (2) provide what the market could not, including education and infrastructure.
Smith also did not equate self-interest and selfishness, the latter interfering with people’s necessary relationship with society. Quoting Wikipedia:
“Some readers of The Wealth of Nations have assumed that when Smith speaks of “self-interest” he is referring to selfishness. Although in some contexts, such as buying and selling, sympathy generally need not be considered, Smith makes it clear that he regards selfishness as inappropriate, if not immoral, and that the self-interested actor has sympathy for others. In The Theory of Moral Sentiments Smith argues that the self-interest of any actor includes the interest of the rest of society, since the socially-defined notions of appropriate and inappropriate actions necessarily affect the interests of the individual as a member of society.”
So we might speak of Smithian capitalism in contrast to Randian capitalism. The former seeks to harness human character for the public good, while the latter sees greed as an end in itself, and society be damned.
One last quote, this one from Smith himself on the necessaity of progressive taxation:
“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. The expense of government to the individuals of a great nation is like the expense of management to the joint tenants of a great estate, who are all obliged to contribute in proportion to their respective interests in the estate. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation.”
So then, Randians aren’t really capitalist at all then? Interesting.
What I find truly interesting is this: taken to its extreme, Randian theory would result in something like feudalism (or warlordism), with the few strongest individuals holding all the power and capital, and the rest of us (presumably including Rand herself) in misery at the bottom– yet with no security for anyone, as a new strongman could remove an existing one and change the entire economic order.
Yet such an outcome is unlikely to be acceptable, even to the most dedicated Randian. Who would wish themselves into lifelong misery? And who could rationally believe that an intellectual without weapons or military training might become one of the warlords? (“Whoever said the pen is mightier than the sword never encountered automatic weapons.”)
So Randian thought is only safe in an environment that provides controls (i.e. government interference) against such an outcome. That makes Randian theory self-contradictory: It relies for its existence on the very thing it opposes.
[…] You knew Greenspan was an early acolyte of Ayn “Greed is Good” Rand, […]
Greenspan’s history as a cult member is hardly surprising. Rev. Moon has also been a key figure in sustaining the Reagan-Bush gang in power. Not to mention Pat Robertson, son of an obscure Virginia Senator, whose resemblance to a Christian minister is very limited.
The Reagan-Bush gang has never had any real agenda beyond their own self interest. Operatives like Mike Deaver and Karl Rove provided critical support on a cynical basis for the task of masking that self interest in terms that Americans could relate to, and of course television provided a great medium for them. But there are times when it really helps to have a truly fanatic true believer sticking out his neck for you, in a way that a Deaver or Rove never would.
Another factor here is that people like Reagan and the current Bush genuinely can believe in the qualifications of a Greenspan, Robertson, or Petraeus — because fundamentally they have no belief in genuine qualifications — just as they have no belief in the existence of objective reality, science, and fact. Whatever works for them is good. Greenspan has become an economic genius because he helps the Reagan-Bush agenda — also the agenda of the owners of the media, etc., who determine who is known as a genius.