Alan Greenspan, Coward and Traitor

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.

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.)
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:
Gold and economic freedom are inseparable, . . . the gold standard is an instrument of laissez-faire and . . . each implies and requires the other.


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]
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:
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.

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]
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:
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.

"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]
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.

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!

-- CAV


: Corrected typos.


Anonymous said...

A friend of mine mused the other day: although unlikely, wouldn't it be incredible if Greenspan is like an Atlas Shrugged character, purposely trying to stop the motor of the world, and cause this crash, blaming self-interest and the free market?

Anonymous said...

And it is not just Greenspan. No less than JOHN GALT HIMSELF is now an official financial contributor to the Obama campaign!! See:

Andrew Dalton said...


My frustration with Alan Greenspan has been growing this week, due to all of the misleading news stories painting him as an arch-capitalist despite his past words and deeds. My anger is directed at him, because I cannot help but think that Greenspan allows this public misunderstanding regarding his association with Objectivism to persist. He must think that he can play it to his advantage depending on the circumstances.

John Donohue said...

Agree, his betrayal is complete. Having no more use for hiding behind her skirts, he now attempts to deliver Ayn Rand to the executioner naked.

Or would 'throw her under the train' be more apt.

Like you, I also saw his accepting the job as de facto resignation from his Objectivist credentials. However, I was a little thrown off over the years by the photo of Miss Rand smiling, by his side, as he was sworn in. What was up with that, I wonder.

His actions while in office left no ambiguity whatsoever. While he is today being excoriated for artificially keeping the price of money/credit too low, thereby letting loose dogs on the world economy, it bears remembering that Greenspan once clobbered the US/World economy by falsely jacking up interest rates in order to rein in the exuberant dot comers, not all of whom deserved the fate Mr. Greenspan administered, and never mind the collateral damage to the rest of the economy. That was the beginning of Greenspan's folly in the name of controlling 'inflation'; he famously turned the definition of that term on its head. I wrote about both, if I may link, at the time, eight years ago.

John Donohue
Pasadena, CA

Gus Van Horn said...

This one sure seems to have struck a nerve!

Just a couple of quick comments....

z, I don't think AG did this on purpose, but he otherwise does resemble an Atlas character -- a villain to be precise.

John, I am sure that there might have been some hope at first that AG would have done something like advocate for a gold standard or act as a sort of "mole" when he took office.

Judging people is very hard, can take years, and even great minds can make mistakes.

SN said...

"...but he otherwise does resemble an Atlas character..."

Let me guess... Robert Stadler, the man who wanted to have his cake and eat it.

I imagine Greenspan weeping into his pillow at night as the minions who once admored the maestro now curse him at every turn: "What could I do?" he whimpers, "How else could I have dealt with them, the politicians were all so irrational? They would let me run the Fed if I had stood up for my principles... how could I have known it would come to this?"

Gus Van Horn said...

I think you meant, "wouldn't", but otherwise I like it!

Darren said...


His quote about "considerable evidence" of how capitalism worked really jumped out at me. Unlike most "pro-capitalist" individuals, he's a man who knows how to validate capitalism based more on just pointing at its history and saying, "See?" Certainly he's read and considered how Ayn Rand was able to answer "Why?" by tracing capitalism down to the nature of man. But then he turns around and gives that type of response?

I was flabbergasted when I heard what he said. To a certain extent, I still have trouble believing it and I want to check the full transcript to get the entire context. There's no context I can imagine that would make his statements make sense, unless he finished them by saying, "Just kidding!" I know he hasn't been an Objectivist in a long, long time, but... I don't know, those types of words are not used by people who know better. He does.

Maybe coward and traitor are too good of words to use for him. It's like he's trading the truth for the approval of those politicians... it's just such a horrible thing to do, and I don't understand.

Kyle Haight said...

I think John Donohue is confusing Greenspan's appointment to President Ford's Council of Economic Advisors in 1974 with Greenspan's appointment to the Federal Reserve by President Reagan in 1986. Rand knew of and approved of the former. Since she died in 1982, she could not have known of or approved of the latter, and I very much doubt she was present at his swearing-in.

Gus Van Horn said...

It is evil, and it is flying right over most people's heads.

John Donohue said...

Darren, if you think Greenspan 'would not say such things because he knows better' you should consider that in '99-'00 he justified his massive, crushing interest rate increases on the grounds that a too-productive (he would call it overheated) economy 'threatened' to send inflation soaring because unemployment was so low the price of labor was sure to rise. He said that; he called it 'inflation.' He followed it up by personally putting a dagger into the heart of the tremendous boom of that time.

Unless, as speculated with irony, AR sent AG in as a mole with instructions to destroy the US economy, you should consider taking it with full awareness: Greenspan abandoned his principles in office and now is allowing "his ideology", the one all the world knows he brushed up against, to take the blame. He is the shocked observer that it 'had a flaw'.

"It had a flaw" is code for "Ayn Rand lied to me. Blame this on her."

John Donohue
Pasadena, CA

John Donohue said...

Greenspan's 'youra culpa' on Ayn Rand reminds me of the supposed confessions of Robert McNamara. Just read his book and watch the documentary on him and Viet Nam "The Fog of War". He blamed Plato!

John Donohue
Pasadena, CA

Gus Van Horn said...

"Unless, as speculated with irony, AR sent AG in as a mole with instructions to destroy the US economy."

Hmmm. That's so beyond the realm of rational speculation that it sounds like the plot of the next Michael Moore "documentary" to me!

Dave said...

Nice juxtaposition of quotes to reveal the enormity of Alan Greenspan. My following letter to the editor on him is being published in the Atlanta Journal Constitution on Monday or Tuesday.
"Dear editor,
Alan Greenspan was the midwife to our economic collapse. He was the free-market trophy wife of Congress.
And now he has been properly slapped by Adam Smith’s invisible hand for violating Smith’s tenets and those of Greenspan’s alleged mentor, Ayn Rand, who herself would’ve been appalled at Greenspan’s big-government matriculation.
Greenspan’s own admission that a good regulator can only be successful 60% of the time should undermine any utilitarian argument for regulators, but his pathetic figure will soon be forgotten, and Congress will return to tinker, tailor, soldier, pry.
What is needed in this perfect storm is a perfect philosophical girding and moral solution: A reading of Rand’s “Capitalism: The Unknown Ideal” by all members of Congress and all businesspeople and then the backbone to implement a complete an utterly free market, wherein the invisible hand KO’s the irrational and high-fives the rational.
Carpe diem."

David Elmore, Roswell, GA

Gus Van Horn said...

Thanks, David, and congratulations on getting that LTE published!

Unknown said...

Seriously, it's like The Twilight Zone or something.

Thanks for writing about this.

An adaption from the 2006 edition of the Random House Unabridged dictionary ( states that the greedy can be described as:

1. excessively or inordinately desirous of wealth, profit, etc.; avaricious: the greedy owners of the company.
2. having a strong or great desire for food or drink.
3. keenly desirous; eager (often fol. by of or for): greedy for praise.

We continue to hear that greed of bankers caused the problem, yet how much is too much? What about the greed of those who wanted homes they ordinarily couldn't afford? What about the greed of politicians anxious for votes? What about the "excessive desire" for power of some community groups? What about that? Lol, I'm rambling.

Sometimes I feel that if so many people are willing to be convinced that free markets are the problem, then the country should just collapse. Let them enjoy the results of their policies.

mtnrunner2 said...

The nakedly anti-capitalist and anti-egoist nature of his statements shocked me. Here is someone who should know better. He is indeed a traitor.

It would be hard to find a worse story (from an Objectivist perspective) to feed to the media, who have no capability whatsoever in the area of philosophical detection. They will simply play along with the gloat fest, parroting the false message that the Great Capitalist has "repented", allegedly confirming both capitalism's falsehood and its role in current economic problems. Neither premise is true.

He should at least have the decency to say, "I no longer advocate Objectivism and disagree with Ayn Rand. And that's why I helped screw up the economy." Well OK, the last sentence is wishful thinking. :)

Ryan said...

I remember seeing Greenspan briefly on the Daily Show after his last book and Stewart asked him whether we should have a free market in banking. I saw him shake his head and say no before I changed to channel.

Yet now it's Greenspan's "devotion" to the free market that is being attacked.

Chuck said...

Somehow Greenspan's appearance reminds me of the scene in Tora! Tora! Tora! in which this happened:

Edwin T. Layton related that during the attack, 'Kimmel stood by the window of his office at the submarine base, his jaw set in stony anguish. As he watched the disaster across the harbor unfold with terrible fury, a spent .50 caliber machine gun bullet crashed through the glass. It brushed the admiral before it clanged to the floor. It cut his white jacket and raised a welt on his chest. ‘It would have been merciful had it killed me,’ Kimmel murmured to his communications officer, Commander Maurice ‘Germany’ Curts.” [From Wikipedia entry on Admiral Kimmel]

But, instead of admitting his anti-capitalist theories were wrong, Greenspan said he wasn't anti-capitalist enough. The man is a disgrace.

Gus Van Horn said...

One hand's washing the other here.

The whim-worshipping deadbeats and Obama's Useful Idiots in the media will use whatever Greenspan will give them. Here, it's a damnation of capitalism backed by his reputation as a pro-capitalist.

Notice that even now, Greenspan and his accomplices know the value of "backing". Otherwise, why would they need his wretched hide.

But they know it on the level of low cunning only, and fail to do anything better with it than to get away with the scam of the moment!

Yes. This is very much like the Twilight Zone!

Gus Van Horn said...


My apologies to Chuck, mtnrunner2, John, and Kyle Haight, whose comments showed up at the Blogger console, and NOT in GMail. I didn't know about them until this morning and so did not post them until now or, needless to say, comment on any of them.

Kyle's comment bears repeating here because it corrects a factual error I let slip by:

"I think John Donohue is confusing Greenspan's appointment to President Ford's Council of Economic Advisors in 1974 with Greenspan's appointment to the Federal Reserve by President Reagan in 1986. Rand knew of and approved of the former. Since she died in 1982, she could not have known of or approved of the latter, and I very much doubt she was present at his swearing-in."

Thank you, Kyle, for the catch.

Anonymous said...

You used the word traitor. I believe treacherous is more accurate. A dictionary definition of treacherous is a combination of: 1. Dangerous, 2. Traitorous. He is both of the above.
I also believe the accusations of "greed" (as opposed to normal desire) being to blame, to be true. My former boss was eaten alive by the emotion. He wanted everything, literally. I believe this mindset, to a significant degree, has gripped America and other nations. For example consider the internal governmental debt of $53 trillion dollars, (enslaving the young and unborn), and the $10 plus trillion external debt.

Gus Van Horn said...

I still prefer "traitor" for this article, because I am writing about a man of minuscule moral stature. To have called him "treacherous" is, strictly speaking, true, but it ascribes too much power to him. He is dangerous only because bad philosophers laid the groundwork for him, and other small men are helping him.

As for the term "greed", that term is ambiguous at best. (Rand used it poistively for one book chapter, for example.) I know what you're driving at here, but I prefer the term "avarice".

John Donohue said...

re: that picture of Ayn Rand at Greenspan's appointment....

Thanks for the factual clarification; it helps.

Does anyone have the facts about an argument between Rand and Greenspan that my (now shown to be faulty) remembrance says occurred at the Russian Tea Room? Like, when was that and what was the content of the dispute?

John Donohue
Pasadena, CA

John Donohue said...

Over the past few days my mood has changed. I see this as the collapse of the mixed economy, accelerated. It's happening faster than I could have believed.

We are about to elect the first person not of the American Revolution. He is not an American Revolutionary. He is a counter-Revolutionary. Moreover, his party is in control of the legislature and can bring strong influence to bear on the Supreme Court. Much of the rest of the world will greet this with a glow of happiness, believing all are better off with the death of our Revolution. They understand the dynamics better than the American people, who don't seem to pick out Obama from the non-American weeds.

So, more counter-Revolutionary collectivism will now be attempted. Good, I say. All the sooner it too will collapse.

I think Atlas is pulling the plug.

John Donohue
Pasadena, CA

Gus Van Horn said...

"Good, I say."

Correct me if I am wrong, but you sound almost as if you are cheering on a hastened economic collapse. If so, I must disagree. *Atlas Shrugged* is a work of fiction and, although it does concretize principles from a valid philosophy, the strike was a literary device.

A real economic collapse would be very, very ugly and would take civilization generations (at best) to recover from, if ever.

The est we can hope for is that the Left makes people miserable enough not to want more of the same, but does not cause an actual collapse or dictatorship.

Gus Van Horn said...

WRT your questions on a specific argument between Rand and Greenspan, I can't help you there, but Galileo does a good job outlining Greenspan's substantive philosophical departure from Rand.