Yesterday, Paul Krugman made the connection between the subprime lending crisis and Ayn Rand cultism.
“Fed shrugged as subprime crisis spread,†was the headline on a New York Times report on the failure of regulators to regulate. This may have been a discreet dig at Mr. Greenspan’s history as a disciple of Ayn Rand, the high priestess of unfettered capitalism known for her novel “Atlas Shrugged.â€
In a 1963 essay for Ms. Rand’s newsletter, Mr. Greenspan dismissed as a “collectivist†myth the idea that businessmen, left to their own devices, “would attempt to sell unsafe food and drugs, fraudulent securities, and shoddy buildings.†On the contrary, he declared, “it is in the self-interest of every businessman to have a reputation for honest dealings and a quality product.â€
It’s no wonder, then, that he brushed off warnings about deceptive lending practices, including those of Edward M. Gramlich, a member of the Federal Reserve board. In Mr. Greenspan’s world, predatory lending — like attempts to sell consumers poison toys and tainted seafood — just doesn’t happen.
Randians have a remarkable capacity not to notice that we human beings very often do things contrary to our own self-interest. It would be to our own self-interest, for example, not to commit crimes of any sort, as we’re likely to get caught eventually. It would be to our own self-interest not to smoke or use drugs or eat too much trans fats. The fact is, if we all acted according to our own self-interest the world would be a paradise. Alas, the number of human beings on the planet today who truly and only act in their own self-interest is probably in the dozens. The rest of us are busily self-destructing, one way or another. This is what’s called “human nature.”
Krugman continues,
But Mr. Greenspan wasn’t the only top official who put ideology above public protection. Consider the press conference held on June 3, 2003 — just about the time subprime lending was starting to go wild — to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw.
Also in attendance were representatives of financial industry trade associations, which had been lobbying for deregulation. As far as I can tell from press reports, there were no representatives of consumer interests on the scene.
Two months after that event the Office of the Comptroller of the Currency, one of the tree-shears-wielding agencies, moved to exempt national banks from state regulations that protect consumers against predatory lending. If, say, New York State wanted to protect its own residents — well, sorry, that wasn’t allowed.
Generations of real-world experience says that securities and markets need some kind of regulation to keep them honest or the forces of greed will take over and tear them apart. We saw this in the late 19th century during the age of the Robber Barons. We saw this in the Coolidge Administration. We saw it during the Savings and Loan crisis of the 1980s.
Yet Rand culties and other wingnuts simply will not learn from real-world experience. They cling to their ideologies come hell or high water. The Narrative is their only truth.
For example, Michael Barone writes,
… the preference for smaller rather than larger government is not as ample as it used to be. The strongest case against big government has been its failures in the 1970s, typified by gas lines and stagflation. But the median-age voter in 2008 was born around 1964, so he or she never sat in those gas lines or struggled to pay rising bills with a paycheck eroded by inflation. That demographic factor helps explain why Democrats today are promising big-government programs, unlike Bill Clinton in 1992, when the median-age voter remembered the 1970s very well. …
… Republicans, facing an electorate half of which doesn’t remember the 1970s and most of which has not appreciated the generally good economy we’ve had since 2001, have yet to muster persuasive arguments for their policies.
Barone’s thinking is so sloppy one wonders if he can tie his own shoes. He blithely connects “big government” to 1970s gas lines and “stagflation,” but OPEC caused the gas lines and I see no consensus that “big government” — whatever that means — caused stagflation.
On the other hand, all those median-age voters probably do remember the country was a lot better off before the wingnuts took over.
I find myself speculating if right-wing polemicists like Barone are deliberately being deceptive, or if they are functioning on autopilot and never honestly stop to think through, say, what the connection between “big government” and 1970s gas lines might have been. If the latter is true, shouldn’t we be rounding these people up for further study? How exactly does the wingnut brain work? How can a man be bright enough to graduate from law school and still be utterly unable to think?
“How exactly does the wingnut brain work?”
Maha,
“Ay, there’s the rub…”
I think the wingnut brain works like a Tivo. It selects and records what it likes, has been told to like, and repeats what’s been recorded. And no amount of logic can trump that recorded belief.
Their proof that they’re right? It’s recorded – it’s on/in the record.
The fact is, if we all acted according to our own self-interest the world would be a paradise.
Not really, even in theory. Rape, for example, is an exercise in one party’s self-interest over the self-interest of another. And I won’t be the first to notice that all the sex scenes in Rand’s supremely crappy novels involved rape.
I don’t see Randism as a conflict between theory and practice, but rather a theory that is pure self-deception.
Not really, even in theory. Rape, for example, is an exercise in one party’s self-interest over the self-interest of another. p
Ah, but the beauty of Randian thinking is one wouldn’t do anything to harm others because that would spoil one’s own long-term well being. For example, a businessman wouldn’t cheat because if he gets a reputation for being a cheater, it would harm his business. And, logically, that’s true. But the real world doesn’t work that way.
I’ve said this a number of times in the comments section, but read Naomi Kline’s “The Shock Doctrine”. She connects the dots between Rynd, Milton Friedman and Republican ideology. I would love for you, Maha, to have an open thread to discuss this book. If there were enough people who had read it. The only conclusion I can make from her book, in answer to the last question, is that these people know what they are doing and are doing it simply for greed. To either enable corporations to make millions on the laissez faire policy, or to get money or privelage from these companies second hand. I would call Barone the latter.
Whatever else it is, the Wingnut brain is trashy. How conveniently they forget what’s happened (because of them) over the past 7 years. They’re busily spinning away from the consequences of what they’ve done.
That’s funny. The 1973 oil crisis was the period where I first became really familiar with the word “cartel”, having been protected from such anti-competitive things by growing up in a country with ‘big government’ anti-trust regulations.
OPEC and the gas crisis illustrate the way a small number of economic actors in essentially unregulated control of the market could have dramatic negative effects on the lives of ordinary people, and why Randian and other “free market” ideologies are, to be frank, a bunch of hooey. (I can only imagine how much worse the crisis would have been if it had been Standard Oil, and not the Seven Sisters it was broken into, bringing us whatever oil OPEC was shipping.)
Greenspan’s Randian theory would have it that the rational interest of the Arab nations was to continue shipping oil. The Arabs decided their rational interest involved using the “oil weapon” against the supporters of Israel. Oops.
Barone may blame “big government” because of Nixon’s Emergency Petroleum Allocation Act, but that was a response, not a cause of the crisis, and at best I’d say that just shows why one shouldn’t put Republicans in charge.
More likely though, Barone is fixated on Carter’s response to the 1979 crisis, which again was not caused by ‘big government’ but the Iranian Revolution. One could reasonably argue that, had ‘big government’ sufficiently promoted energy-efficient technologies post-1973, (and avoided being in bed with a cruel dictator who fell) that crisis might have been less serious.
The failure of government programs to efficiently lessen the shock of disruptions in supplies of a vital commodity controlled by a small number of powerful economic actors, hardly illustrates the failure of “big government” to me. I don’t understand why he thinks it should to voters who are younger.
Certainly enlightened self-interest can make the world a better place, but not all self-interest is enlightened.
Policy must involve enlightenment to deserve to work; and it must involve self-interest to be able to work.
As I keep saying “Someone actually thought business would regulate itself?”
Moyers had Ben Barber on last night and he has finally realized that capitalism is out of control worldwide- gee the think tanks are finally realizing that all this nonsense that has been preached since 1980 is nonsense? That we have been consumerized to death? Liberals blame right wing business and righties blame secularists for producing a ‘bad culture’ but it is really the boardroom and the advertising dept that has businees coming at us 24/7 telling us we cannot live without what they push. Whether it be bad loans or bad dog food or GPS gadgets on our underwear so we won’t ‘get lost’. ( Does anyone realize what a big brother device a GPS can be?) I get tired of subsidizing business( as opposed to government) like free labor when I pump my own gas, check myself out at walmart, loan money to stores with gift cards that expire, when I do quality control by checking websites to make sure the toy doesn’t kill the kid. And I do think everyone under the age of 40 is so used to this environment that they don’t see how much ‘convenience’ is really costing them. Politically they have been told that yea big government caused gas lines or some such crap and they have no way to evaluate the rhetoric. It is just accepted. The individual is paying the costs of everything that business has decided to externalize and the environment pays most of all.
The other night on pbs there was a show on Nader and it showed him testifying to Congress in the 60’s. It was really quaint to see that back then politicians were genuinely shocked to hear that a product was deliberately unsafe. To me it showed what a relic Nader is because his whole organization still believes that someone cares. The corporations are so past that selling us endless gadgets and bottled water while letting millions starve or die for lack of a clean water product. The economic system is not about meeting real needs at all and not even real wants and there is no playing field at all. The money and the power are a mountain against the individual and they really want it that way so they can make a buck this week and to hell with next week, they’ll figure out a way to gip you next week. There is no planning past the end of this weeks sales or todays market swing and the media is telling you it’s all good and not mentioning it is all on borrowed money. The last 7 years have all been on borrowed money but ‘psss.. don’t say it too loud”.
Ah, but the beauty of Randian thinking is one wouldn’t do anything to harm others because that would spoil one’s own long-term well being.
I think, in a way, that answers the closing questions of this post. Randian thinking is self-deceptive in that it denies human nature, both bad (self-destructive urges) and good (altruistic urges). I think there’s a clue in that strenuous self-deception as to the mental landscape of the average wingnut. What I can’t answer is, why do they still bother?
imo, Jesus had a far better idea than Ayn Rand for creating true paradise: we should behave toward others as we’d have them behave toward us. It’s the opposite of Randism, and yet so many Randians (since the 1980s at least) claim to be Christian. Gotta respect that kind of delusion. I try to give it a wide berth.
If Barone had checked Figure 1 of this 2002 CBO brief, he would have realized that gov’t was much bigger in the late 80s than under Carter. (I’d love to see that chart updated past 2001. Junior had even figured out where to sign yet.)
So wingnuts continually fight & deny their own humanity? If so, that would explain their ability to hold two opposing ideas at the same time.
Wingnuts really do believe that stuff. They will believe anything, as long as they perceive it gives them some kind of advantage. This is why they believe anything the rich and powerful say – because in so doing, they think they’re going to be safe.
Where you and I first and foremost are concerned about whether something is true or not, as we both believe the truth exists outside whatever you or I think – wingnuts have no concept of an independent truth. If they believe it, then it must be true. “Truth” is one of those things they really don’t understand, it’s a word that is bandied about, much the way that Bush bandied about “strategy” – it was obvious he had no idea what it meant.
Many wingnuts never had the experience of standing up to an authority by defending an unpopular position. They never had to figure out, completely on their own, what the truth is about a particular situation, much less defend this independent conclusion before a hostile authority. And so truth is simply something they accept from somebody else, without having a firsthand, gut-level experience of what “truth” really means.
They then go through elaborate contortions to distort the data (or deny it) to fit whatever conclusions they’ve already decided on. Rush Limbaugh does this every day, and gets paid big bucks for it. This is why “reasoning” from the right is so cock-eyed, they are not open minded at all, and twist the whole playing field to suit their conclusions.
If big government is a priori evil, then of course those awful gas lines in the 70s are proof of it.
Wow!
Great post and comments, I especially liked what K said.
I shop at the Home Depot often, but am really pissed that they are pushing the self check out thing. (Winn Dixie also)When asked if I want to check out my own stuff I ask what the discount is, and have asked the manager if Home Depot feels that they have an obligation to the community to provide jobs. Of course I’m given the “stink eye”, but damn it, if the people don’t stand up and tell it like it is, we will all be nothing but wage slaves, or as my UPS upper management neighbor says “bargaining units”.
The real eye-popper for me was “Confessions of an Economic Hit Man” By John Perkins. After reading that I realized how F’ed up things really are. These people at the top are pure reptiles, they don’t give a flyin fudgsicle about anything but profit.
Oh, don’t shop at Wal-mart, they are making us into a third world country….REALLY! WE’ll know for sure when Wal-Med opens and self check-out takes on a whole new meaning…..
I have seen some of David Copperfield’s shows, and I know he manipulates the scenes to deceive me. Ayn Rand has done nothing less, and I have enjoyed her books, though unlike a good magician, I can see where she has swapped truth for deceit.
The subprime meltdown and the S & L crises illustrate the biggest con in the Any Rand magic show. The banking industry can not regulate itself. That does not suggest that ALL bankers are crooked, but enough bankers are bad that for there to be a level playing field with the honest ones, the dishonest bankers can’t be alowed to play withour rules or referees.
The second example is how lead and asbestos tainted toys will ruin some children in the next few years. China has not implemented or enforced any standards in manufacturing. The US companies who designed and sell this crap don’t test. And the US govt does not test. Ultimately, we are being told we have to sue someone in China, because no one here is responsible. But this is the ideal in the Rand Magic Kingdom for business.
I got a spin newsletter from a Republican Congressman. Basically he said the subprime problem is being addressed; that people can call a phone number at HUD for help. And he indirectly said no additional regulation is needed. (The Titanic is unsinkable, and the water is warmer than that iceberg would make you think.)
I wrote my Congressman back and told him it’s too damn bad tar and feathers had gone out of fashion, and he needs to start representing the taxpayer instead of the crooks who designed the subprime meltdown.
You will never convert a true believer of Rand, but in a social situation you can let the non-convert see where the deception lies. The other big deception is the philosophy that society owes nothing to the elderly, or handicapped. A few questions on that subject expose the ‘bah-humbug’ just beneath the surface.
Early 1800s, there was a RI bank (unregulated, of course) that made some $800,000 in loans based on $48 dollars on deposit.
They didn’t last long. Thank goodness we teach such unalloyed, objective history to the next generation, or such a thing might actually happen again. Boy, that would be embarrassing.
Rand’s idaes might work in a “perfect” world, but we live in a “girls gone wild” time. Exploitation of the dumb is the rule of thumb.
Headlines in today’s Orlando Sentinel:
36 FSU players sidelined
(academic cheating, rules violation, and injuries sited)
Housing Slump may Ax Millions for Schools
When thew depth of the subprime mess is fully realized, it will be shocking.
“How can a man be bright enough to graduate from law school and still be utterly unable to think?” I wasn’t ‘bright’ enough to get past the first semester of law school, but I’m certainly bright enough to realize that business folk will do what is the immediately best and long term consequences be damned. Just look at the environment as one example.
And just how did Alberto Gonsalves graduate from Harvard Law ??
Please don’t take your understanding of Rand from a Paul Krugman column. She did not deny that people — including businessmen — can and do act against their self-interest. She defined and elaborated an entire new moral code just for the purpose of showing what is far from obvious: what things are in one’s interest and why you should act to obtain them. See Atlas Shrugged and The Virtue of Selfishness for more information.
And as for how to deal for cases where businessmen act against their self-interest and this results in fraud or any other violation of the rights of others, Rand was a strong proponent of government sanctions.
Mark Wickens — Please do not assume that I learned everything I know about Ayn Rand from a Paul Krugman column. And please don’t waste your time and mine trying to persuade me that Rand was a great thinker.
There are loads on interesting tidbits about how deeply conservative minds “think” in Altemeyer’s The Authoritarians, which you can find at http://home.cc.umanitoba.ca/~altemey/
Among other things Altemeyer seems to find in his research that autoritarian personalities find it extrememly easy to ignore a faulty argument, or the total lack of an argument, if they agree with the conclusions – and also that they tend to parrot “arguments” that they have heard from a source they trust, i.e. a legitimate authoritity.
Moreover, when researching the fundamentalist mind (which has a rather high correlation with autoritarism) he found out that they seem unable to perceive contradictions. When faced, for example, with the four very different description of the same episode in the Gospels, people with a low fundamentalism score will offer rationalizations (“it’s not a literal description”, “it’s a description only committed to the written page centuries after the fact”, “different people seeing the same scene remember it differently”), while people with a high score simply will go on maintaining that THERE IS NO CONTRADICTION.
It’s a very fun book, and plenty scary.
http://www.smirkingchimp.com/thread/11719