Friday, October 24, 2008
Yesterday, I got wind through several people, including a commenter here, of some testimony by Alan Greenspan, who once, decades ago, was an Objectivist, but has long since demonstrated through his words and deeds that he is not now and has not been for quite some time.
Regarding his status as an alleged advocate for capitalism: Most glaringly, the very acceptance of a job with the Federal Reserve years ago would cast doubt on the firmness of his grasp of the nature of capitalism or of his sincerity as an "advocate" of capitalism or Ayn Rand's ideas.
Consider what Ayn Rand herself said about capitalism:
Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.And now consider what Greenspan himself said of the importance of having a gold standard -- rather than the fiat money, the value of which he took charge of manipulating. As you read this, recall that he never advocated for a return to the gold standard while he was in office:
The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control. ("What Is Capitalism?" Capitalism: The Unknown Ideal, 19.)
Gold and economic freedom are inseparable, . . . the gold standard is an instrument of laissez-faire and . . . each implies and requires the other.And yet, the news media portray Greenspan as an advocate of capitalism and a "disciple" of Rand every chance it gets, as the San Francisco Chronicle, for example, did yesterday even as Greenspan removed all doubt that he is anything but a capitalist:
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold . . . .
The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. (Alan Greenspan, "Gold and Economic Freedom," Capitalism: The Unknown Ideal, 96.) [bold added]
Fed watchers said they were stunned by Greenspan's mea culpa. For his whole adult life, the former Fed chairman has been a devotee of the philosophy of Ayn Rand, who celebrated free-market capitalism as the world's most moral economic order and advocated a strict laissez-faire approach to government regulation of the marketplace.This is completely wrong. Let's rephrase it:
Fed watchers claimed to be stunned by Greenspan's mea culpa. For his whole adult life, the former central banker and one-time advocate of the gold standard has been regarded, largely due to his former association with Ayn Rand, as an advocate of capitalism. Although he never publicly broke with Rand, his career has benefited from the association even though it has required him to do things greatly at odds with his earlier published views from that period.Or, not to put too fine a point on this: "Greenspan is a pragmatist coward who hides behind Ayn Rand's skirt when it suits his purposes, and sells her out when it suits his purposes." Obviously, he would rather the United States continue racing towards statism than admit that he played a big part, through keeping interest rates very low for many years, in precipitating the current financial crisis.
And the fact that he is getting away with it so easily -- where are the bloodhounds? -- was explained very eloquently by a remarkable J'accuse recently written against the media's coverage of the financial crisis by one of their own, Orson Scott Card (HT: Dismuke):
This [crisis] was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.Incredibly, Card notes that Greenspan was among those who warned against the loose lending practices that helped cause the crisis. And yet now, he has changed his tune:
Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It's as if the Pentagon were allowed to contribute to the political campaigns of congressmen who support increasing their budget.) [bold added]
Asked by committee Chairman Henry Waxman, D-Los Angeles, whether his free-market convictions pushed him to make wrong decisions, especially his failure to rein in unsafe mortgage lending practices, Greenspan replied that indeed he had found a flaw in his ideology, one that left him very distressed. "In other words, you found that your view of the world, your ideology was not right?" Waxman asked.Perhaps Greenspan needs to be reminded of the title of the book in which his defense of the gold standard appeared: Capitalism: The Unknown Ideal. Or perhaps Greenspan, realizing that most people are unaware that a central bank is incompatible with capitalism, took advantage of the convenient fact named by that title, while betraying the inconvenient one.
"Absolutely, precisely," replied Greenspan, who stepped down as Fed chief in 2006 after more than 18 years as chairman. "That's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence it was working exceptionally well." [bold added]
Re-read that last excerpt, and remember it the next time the media calls Greenspan a capitalist. He is not. And he has finally admitted it himself!
Today: Corrected typos.