Alan Greenspan

[Gus Van Horn blog]

By Gus Van Horn from Gus Van Horn,cross-posted by MetaBlog

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

Updates

Today: Corrected typos.

Cross-posted from Metablog

[adrock3215]

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."

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

I heard this part on CSPAN. By the tone of Greenspan's voice, I felt like he was saying something different. In my estimation, what he said is true, but not in the manner Waxman wanted. I took it as Greenspan coming to the following conclusion (I am restating what he said and adding the words he left unsaid in front of this committee): "That's precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that central banking can work, and indeed it was working exceptionally well."

Just my take on it from the tone of his voice and knowing how smug he is.

Edited October 26, 2008 by adrock3215

[Thought Police]

*** Mod's note: Merged topics. - sN ***

What do you guys think about Alan Greenspan? Any theories to explain how he goes from writing that essay on Gold and Economic Freedom to personally cranking up the printing press at the Federal Reserve?

I made that youtube video by the way, thought you guys would appreciate.

Edited December 22, 2010 by softwareNerd

[softwareNerd]

He's definitely not an "Objectivist behind enemy lines". Some people drift away from Objectivism.

An ARI op-ed on Greenspan: http://forum.objecti...showtopic=14414

Edited December 22, 2010 by softwareNerd
Removed link to topics merged with this one

[Jake_Ellison]

We don't have any agents behind enemy lines. We don't even have any on this side of the line. I didn't even know the US government was the enemy. If anyone in the government is reading this, don't shoot. That's me behind those boxes:

[BRG253]

I think he abandoned any hope of the US retuning to lessaiz-faire capitalism during his lifetime and became a pragmatic social climber in the political and international financial worlds. He might have simply decided that he lives in a dog-eat-dog world and that he's better off on the stronger side. I'm sure he still has the same understanding of economics that he did when he was an Objectivist, even if he doesn't admit it.

[agrippa1]

He can't be working actively to bring about the downfall of the Fed. That would go against everything Ayn Rand wrote about.

Unless you count Atlas Shrugged.

Anyways, if he was working behind enemy lines, Rand would have given some sign, like, showing up when he got sworn in to his first big government job, or giving him a nickname, like, "The Gravedigger," or "the Grim Reaper."

Anyways, using fraud to bring about the fall of the statist economy would be against what Rand believed. She wrote once that the best economist in Atlas Shrugged was Ragnar Danneskjold. He used force, not fraud.

[James Bond]

this is from Ron Paul's book "The Revolution"

"I spoke with Greenspan at a special event that took place just before he was to speak in front of the House Banking Committee. At this even congressmen had a chance to meet and have their pictures taken with the Fed chairman. I decided to bring along my original copy of his 1966 article from the Ojbectivist Newsletter called "Gold and Economic Freedom," an outstanding piece in which he laid out the economic and moral case for a commidity-based monetary system as against a fiat paper system. He graciously agreed to sign it for me. As he was doing so, I asked if he wanted to write a disclaimer on the article. He replied good-naturedly that he had recently reread the piece and that he would not change a word of it. I found that fascinating: could it be that, in his heart of hearts, Greenspan still believed in the bulletproof logic of that classic article?"

Yep, he's a saboteur.

[Grames]

Greenspan was naive in thinking that the Wall St. crowd would be too rational to milk the system for short term gains. People just kept their heads down and kept passing around those collective debt instruments made of bad mortgages as long there was money to be made and no one looked into them too closely. Lemmings off a cliff.

Edited October 31, 2010 by Grames

[determinist]

*** Mod's note: Merged with an existing topic. - sN ***

With all that's going on in the Federal Reserve, do you think Alan Greenspan has become an embarrassment to the names associated with the objectivist movement? Do you think Ayn Rand would disapprove of the Federal Reserve's activities or Alan Greenspan's activities if she was alive today?

Edited December 22, 2010 by softwareNerd
Merged topics

[prescient]

This discussion once seemed to be the philosophical difference of statism versus the free market. The whole conversation seems now to have fermented into unholy mating of statism and the free market. I think in some respects, these former objectivists have been beaten having worked in a decades old system which has extolled the tyranny of altruism. A system which has made a virtue of good intentions rather than substantive outcomes.

That is, there is a resignation in the Alan Greenspan’s of the world that the statist interference in the free market capitalism is here to stay, fact of life, and cannot be turned back or even contained. The laissez-faire model relies on all participants being educated in that they understand their rights and responsibilities in such a system. In reality, we have a population of individuals who are both uneducated and ignorant of their roles or reject their role as willing participants out of laziness. As such, statists have seen an opportunity to take advantage of this schism where in exchange for power and votes, they will confiscate and extort money from the taxpaying producers and give some portion of that to those who have opted to take the easy way out of their responsibilities as citizens in this republic. Where our system of government treats people equally, our politics does not. A dumbed down populace has accepted the contrived class-warfare argument of the statists to the point where they are willingly compliant to a system in which they can gain fifty-cents for tacit support rather than working for a dollar. This dishonest outlook promotes the attitude it is better to let statists confiscate the income of the producer on one’s behalf rather than work a bit harder or improve one’s skills to get that income through one’s individual actions.

In fairness though to some of these people of the state, their intentions are born of a sincere dedication to help and improve the lot of those whom they see as deserving of such efforts. However, these same altruists have so anchored their outlook in the perspective of the perceived deserving, they have formulated an unsympathetic and dismissive regard for the people who are assigned an opposing role in the conversation. This outlook on the “haves” from the position of the “have nots” has been the prime motivator on the long festering class-warfare engaged in by the social engineers who have rooted their agenda in the man made rights of the 2^nd bill rights. People dedicated to the proposition that other people have a right to that which they cannot earn honestly. Over the decades, these advocates of the down trodden and under-privileged who would have once found their home in charity, have instead made a home in the state. They view the state as the platform for their progressive politics which would be used not just help people, but instead transform a society so unfair it created the problems these progressives have set out to make producers atone for. A society so unfair, that the earned benefits of the successful are viewed as injustices worthy of some prosecution. Instead of individuals being permitted to act through charities, philanthropies and related benevolent organizations, these statists have instead decided they would act through their political allies, or in some cases as the politicians and bureaucrats, in the three branches to assign some punitive punishment either in the form taxation or statute to as they see it level the playing field. As more people are loaded into the wagon of the welfare state, the Alan Greenspans become nothing more than teamsters and wheelwrights. Once skilled people relegated to making sure the load can be carried. Alan Greenspan and his fellow travelers are now in a stage of their life where they have no stake in trying make a free market capitalist system work and can go before congress to engage in the intellectual treason they would have roundly condemned in past decades. They can now take comfort in benefiting from a system they allowed to fail and in this betrayal they are rewarded by the very statists they would have viewed as philosophical enemies. Alan Greenspan seems to have somewhere in his path adopted the “we can get along” approach in the context of the free market and the welfare state. These two systems are wholly incompatible and his surrender of his moral position is rather sad.

Edited December 22, 2010 by prescient

[determinist]

Is it strange that Milton Friedman talked Alan Greenspan up in 2006?

http://hnn.us/roundup/entries/21230.html

There's no reason to suspect is corrupt or dishonest, right?

Are you all sure that Greenspan is corrupt? I saw a video clip of him taking a lot of heat for resisting protectionism and defending the free market.

[softwareNerd]

Is it strange that Milton Friedman talked Alan Greenspan up in 2006?

I assume most mainstream neo-classical and monetarist economists would praise Greenspan. Monetarists, in particular, would feel intellectually close to him, and I assume he would feel close to them. Very roughly, Friedman's thinking can be seen as comprising of two streams. First there is his advocacy of the ideas of Adam Smith and other classical economists (don't be protectionist, let the invisible hand work for the common good, don't run up deficits. etc.). This is the kind of things he spoke about on his TV show, and the kinds of things he wrote about popularly. Second is his monetarism where there are a whole lot of detailed ideas, but the general non-economist public would take a simple message from all of it: don't print too much money.

I'm not sure how much Greenspan would agree with Friedman's own contributions to the details of economic theory; but, he would certainly agree with Friedman's support for the ideas of the classical economists like Adam Smith. Also, assuming that fiat money was here to stay, he would agree with Friedman that the government should not print too much. Friedman and Greenspan have a lot in common, intellectually. So one would expect a mutual admiration.

However, Friedman was never an Objectivist, and Greenspan stopped being one.