Instead of running the country's economy in accordance with the principles that most of us learned in college economics courses, our leaders have been basing public policy on the teachings of a morally challenged fiction writer. Ayn Rand. In Rand's warped view, especially as expounded in her magnum opus, Atlas Shrugged, business tycoons are superheroes and everyone else is worthless. Ordinary working people are beneath her contempt and government is inherently evil. Most noteworthy among her disciples is long-time chairman of the Federal Reserve Alan Greenspan, who assiduously promoted the most extreme forms of Randian anti-government free market capitalism throughout his long career in public service.
He was not alone, of course, having the support of such luminaries as former Treasury Secretary Robert Rubin and Larry Summers, holder of a series of high-level federal economic policy positions. These three were hailed by Time magazine in 1999 as the ultimate authorities on modern economics and their views were taken as gospel. While claiming to be beyond ideology, they promoted economic and financial practices that drove the country to the edge of disaster in 2008, created income inequality unseen in generations, and is close to destroying the middle class in America, as well as in those countries around the world that bought into their supposedly unassailable free market dogma.
What on earth did this misanthropic woman write that was so appealing to her disciples and how could we have allowed them to use her warped creed to further their own political ends and enrich their cronies? First of all, her nonsense served to pump up the already over-inflated self-regard of the financial and political elites, assuring them that they were the salt of the earth and deserved all of their wealth and power, on account of their god-like qualities. This is, apparently, an irresistible elixir in corporate suites, on private yachts, and among the Beltway's movers and shakers.
Add to that Rand's so-called "objectivism" -- which instructs her followers that their reality is the only authentic one, that all others are false, and that allowing oneself to be seduced into sympathy for anyone or any viewpoint other than one's own reveals an unforgiveable weakness of character -- and you have a perfect recipe for the unalloyed self-regard and unbridled selfishness that her followers demonstrate, promote and benefit from. Top this off with an anti-government, anti-tax and completely unfettered free market ideology -- way beyond what Adam Smith, the authentic source of laissez-faire economic theory, would ever have countenanced -- and you provide the ideal justification for the policies that led to the present calamity.
In addition to relentlessly promoting deregulation, privatization and free markets, Greenspan also assiduously promoted himself -- with the media, the cocktail party crowd, and Washington insiders -- developing a reputation for unusual financial acumen. While the record shows that he was more often wrong than not, the latest pronouncements of the "maestro" were awaited with bated breath and his message was invariably the same -- the market would always correct itself, if left completely free of government interference.
This continued to be his position even as the housing bubble burst. As Matt Taibbi recounts in Griftopia:
It wasn't until October 2008, after the collapse of Bear Sterns and Lehman Brothers and AIG, after the massive federal bailouts were implemented to stave off total panic, that Greenspan budged -- sort of.Testifying before a congressional committee,
he admitted, sort of, that his Randian faith in the eternal efficacy of self-regulating markets had been off, a little.
Is Greenspan the only villain in this sad story? Certainly not. His allies were legion and, among them were countless university-based economists, most notably those at the University of Chicago, who legitimized key elements of the self-serving and destructive Randian creed. These folks not only promulgated virtually the same deregulated free market ideology here and abroad, they came to dominate their profession to the point where anyone opposing their views was considered a hopeless Luddite.
Some Chicago economists began to have second thoughts about these theories, in light of the events of 2008. For example, Richard Posner, in A Failure of Capitalism, states frankly that the crash was caused by
innate limitations of the free market -- limitations rooted in individuals' incentives, in irresponsible monetary policy adopted and executed by conservative officials inspired by conservative economists... and in excessive, ideologically motivated deregulation of banking and finance, compounded by lax enforcement of the remaining regulations.
Is anyone, aside from Posner, repentant about the damage they have done and taking action to set the record straight, hold the perpetrators accountable, and get the country on the right track once more? Regrettably, nothing close to this has happened. As Thomas Frank notes in Pity the Billionaire,
If ever a financial order deserved a thirties-style repudiation, this one did. Its gods were false. ... All of it should by rights have met its end. ... Instead, it got a bailout.For example, immediately after receiving massive injections of government funding to rescue them from the consequences of the disaster they created, the architects of the mess walked away with huge bonuses. This included derivatives traders of bailed-out AIG who collected $165 million in bonuses. As Frank puts it,
It was an inconceivable ripoff. The people who had nearly succeeded in shoving the world off a cliff, were now going to walk away rich.