September 23, 2008
Unrestrained Free Market Capitalism is Dead and so is Ayn Rand
Once free market capitalism was let loose in the United States without all the protections put in place during the Franklin Delano Roosevelt administration to keep things in check, our financial system quite naturally repeated the same disastrous mistakes that led to 1929. The result we are seeing today was probably inevitable once the Republicans and Democrats gutted most of the Roosevelt programs designed to protect the public. Two examples are the repeal of the Glass-Steagall Act and, most recently, the repeal of the Utility Company Holdings Protection Act.
Even trickle-down economics was an attempt to mock the Roosevelt era theory that the way to build a strong national foundational pyramid was to build the strongest support at the base by supporting working men and women. The Republicans turned this on its head and said the strongest blocks on the pyramid were those at the top and money should be trickled down from the uppermost blocks of the pyramid. Then the bottom supporting blocks of the pyramid would magically become strong enough to hold the whole structure up and support it.
The policies of Alan Greenspan, an Ayn Rand True Believer if there ever was one, have been thoroughly discredited since the mortgage crisis, and still the Bush Administration wants to install the Treasury Secretary as our ďMoney Czar,Ē with unfettered control of the nationís economy. That kind of power vested in one person seems to have come straight out of one of Ayn Randís books. It is probably the most insane policy that one could think of.
I’d suggest that a bipartisan committee be installed to manage the nationís finances, particularly in regards to a mortgage bailout. My reasons are many and I offer the ones I find most compelling below:
1. A bipartisan committee will help insure that relief is not given to select favored friends in one party or the other. It is not a perfect solution, and so the members of this committee will need to be chosen with extreme care.
2. Letting one person have complete and unfettered control over all of a nationís finances is a recipe for a disaster. All one has to do is to look at all the ruined economies caused by one man or one party. Stalinís Russia (mass starvation), Hitler’s reign of terror (a world engulfed in murder on a previously unimaginable scale); Pinochet’s Chile, Mao’s Cultural Revolution.
I could go on and on into current history and even name names here in the U.S., but I think that point has been made. Henry Paulson may be a nice man and nonpartisan in everything he does, but he does have a bias towards Wall Street, which is exactly what we donít need right now. Balanced planning is the only way to treat everyone fairly.
3. The taxpayers deserve better than a one-sided plan that mainly benefits Wall Street. We can’t let that happen.
I haven't even begun to touch upon the many problems that a money czar might cause, as there is not enough room for such a discussion on a blog post, nor do I have the ability at this time to fully concentrate on this one problem, nor do I have the hundreds of hours it would take to give this subject the coverage it deserves. The New York Times has a good op-ed on this subject in today’s paper, and whether your political persuasion is of the right or the left, there are good discussions on this subject and much skepticism from both parties regarding the bailout as currently proposed. I urge everyone to get to know about as much about this subject as possible, since the debt about to be created will not only fall on all of us, but it will fall on the generation after us and possibly beyond.
Posted by Buck Batard at September 23, 2008 07:40 AM
A "Money Czar"? No. A "Master of Desaster".
Since it is patently obvious that trickle-down economics is a failure - well, it failed as an economic system while succeeding as larceny - we should try trickle-up economics.
Let's bail out the homeowners who have been foreclosed or are about to be foreclosed. Let's bail out the manufacturing workers whose jobs were shipped overseas to boost speculator profits and CEO compensation. Let's stimulate the economy by enacting universal single-payer health care to lift the burden of health benefits off the backs of American employers. Let's strengthen the U.S. economy by rebuilding our infrastructure. I could go on and on, but you get the idea.
Since capitalism is designed to funnel money from the poor to the rich, I think trickle-up economics will work wonders.
Charles, good thinking!
And we should always remember: money doesn't just vanish into thin air. It sticks somewhere.
You're kidding, right?
Greenspan abandoned Rand's ideas long ago.
The entire crisis is not a function of Capitalism at all. Its more immediate consequence is from policies begun by Carter in 1977 and massively increased by Clinton and the present Democratic Congress.
The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities. Read the whole thing*.
Yes, that article is eight years old, and the things it describes have become much worse since! America is tanking, not because of Ayn Rand, but because people refuse to look properly at the principles involved. Now taxpayers are funding the catastrophe caused by the government's policies. Capitalism brings money to the poor. America's poor have apartments, TV's, Cars and even, gasp, jobs. Now look at socialized &/or totalitarian nations, for Pete's sake. The evidence is overwhelming. How do you think America became a haven for the World's poor, Charles, Buck?.
* and enough of Rand to understand her fully, or you've no moral right to an opinion.
This just in, from Senator Jim DeMint, and further to my above points:
"This plan fails to oversee or regulate the government failures that led to this crisis. Instead it greatly increases the role for Secretary Paulson whose market predictions have been consistently wrong in the last year, and provides corporate welfare for investment firms on Wall Street [many of whom must also act on Paulson and the government's misguided regulations] that don't want to disclose their assets and sell them to private investors for market rates. Most Americans are paying their bills on time and investing responsibly and should not be forced to pay for the reckless actions of some on Wall Street, especially when no one can guarantee this will solve our current problems."
"This plan will not only cause our nation to fall off the debt cliff, it could send the value of the dollar into a free-fall as investors around the world question our ability to repay our debts. It's also very likely that this plan will extend the cycle of bailouts, encouraging other companies to behave in reckless ways that create the need for even more bailouts, triggering an endless run on our treasury."
(My italics and bolding.)
Paraphrasing Ben Franklin: America's government is [was?] "a Republic, if you can [understand enough] to keep it."
That understanding is YOUR responsibility guys (I'm a Canadian arguing to save it; what on Earth are you?)
Rn, You're quoting Jim DeMint as an authority on what, exactly?
RnBram said: America's poor have apartments, TV's, Cars and even, gasp, jobs.
Rn, you obviously don't get out much. If I thought I could handle a long drive in a car with you and your ideology, I'd take you on a tour of the rural south where there ain't no jobs and ain't no money. Not that there aren't some places like that all across the country. And right now there are places where there's a job 30 miles away, but it won't pay the cost of the gas to get to and fro. That's not a job, that's a handout to the oil industry. And of course, a huge number of our people don't have health care. There's an old folk song from old England that goes "If living were a thing that money could by, you know the rich would live and the poor would die". At the time those words were written, money wouldn't do you much good if you got sick. But the song is literally true today. So in some ways the poorest among us, those who the great one said will always be with us, are living worse than they did in the 1400's when money couldn't save you if you got sick.
And Joe Bageant's book "Deer Hunting with Jesus" should really be a required read for those of a certain ideology. I don't agree with Joe on a few things, he's a socialist and I believe in limited capitalism and limited socialism, but his book refutes many of your points. But I do believe capitalism makes for a healthy society and agree with you on that one point. We've just being doing it wrong in so many ways. Our war machine is one of if not the main reason we have so many poor folks who can't make it these days.
And both parties have been part of those doings.
"Unrestrained free market capitalism"? Where do you see such a thing? Certainly not in the current financial crisis, which was caused not by Alan Greenspan (who, incidentally, hasn't acted like an Objectivist since the '60's) or anything resembling a free market, but rather by government intervention.
Familiar with Fannie Mae and Freddie Mac? If not, here's a hint: both are government-sponsored entities (GSE's), meaning they're the embodiment of government intervention. Perhaps a quick review will help you spot how their activities spurred the housing market and precipitated the hundreds of thousands of subprime mortgages that have caused this whole mess.
Certainly, let's not spend hundreds of billions of dollars of taxpayer's money buying up those bad loans. I say, let the pain begin--the sooner it begins, the sooner it will end. So, we're in agreement on that much.
But, don't blame the free market, because the free market had nothing to do with this. In a free market, $500 billion in bad loans would be impossible to fathom--it would take a whole TON of really, really bad decisions to bring about such a thing, over a long period of time. Bad decisions, by the way, whose cost, in a free market, would be borne directly by the lender.
This scandal was created by Democrats, exascerbated by Democrats, protected by Democrats; specifically Dodd and Frank. These two Democrats should immediately resign. It has nothing to do with a lack of regulations on the free economy. The fact is, the only unregulated people in this scheme were Democrats who wanted to encourage bad loans to people who could not pay. No private business would make such loans unless they were forced to do so by government. Bill Clinton created Fannie and Freddie. This is not a failure of capitalism it is a failure of socialism and has all the earmarks of government ownership, government control, businesses run by commissars and payoffs to government officials (Dodd and Frank and Obama) to protect and look the other way. Don't tell lies...accept the truth, this is a failure of socialism and central planning...pure and simple. Don't blame capitalism, blame yourself and others like you.
Joyful, I'm from South Carolina and I can tell you this for certain. Jim Dement is not an expert on anything, except perhaps on how God created the whole world in seven days and how the great apocalypse is nearly upon us.
And Rob, you really need to get a history book or at least go to Wikipedia and look up Fannie Mae and Freddie Mac. I don't think you should be lecturing anyone about telling lies until you can get your own facts straight.
And RnBram, you really need to stop reading only right wing books. Too many of the crop from the last twenty years are filled with lies. Do some balanced reading. There are some good ideas from the left and in the past the right had some really great thinkers. Albert Jay Nock's "Memoirs of a Superfluous Man" might be a good place to start. And HL Mencken is always a good old time right winger whose books and articles can be quite enjoyable.
I'm not even going to start on the Ayn Rand worshipers. "True Believer" by Eric Hoffer might be a good counter balancing person to believe in.
And it's really been enjoyable reading all these comments today. My great aunt used to make some spiked fruitcake and I always enjoyed getting a taste of it when I was a youngster. It feels good to relive those enjoyable precious moments from my youth from time to time.
Peter and Charles, you guys are just too sensible to make me think of my great aunt. But I appreciate your comments anyway.
What in king-hell is Paulson wearing? Looks like sofa-upholstery.
Chrisanthemama, I think that's what a nation's Treasury Secretary wears when he goes off to see his bankers in Beijing to get down on his knees to beg for a few more dollars and a lot more forbearance on the loans he's been taking out and still needs more of to continue funding a war that's broken the backs of his country and his countrymen.
The bank managers considered themselves The Masters of the Universe. No controls whatsoever (the US are special, aren't they? No controls needed here, contrary to any reasonably acting country in the world, except maybe the UK). But RnBram is right in one point: Clinton and the Democrats were no better in this respect than the current administration.
You just have to believe in capitalism, folks, like any other religion. Keep on spending (worshipping)! And pray ...
Peter, you may be right about that, although Clinton was constrained by a Republican Congress. But I take issue with RnBram that it's all the Democrats fault. And the book she recommended, or the review of it, is not sold by Amazon or Barnes & Noble and I couldn't even find it on Google shopping. And it sounds like a hit piece on Democrats that the big publishers wouldn't touch for some reason. Perhaps there is some content in it that had them worried about legal liabilities.
But really, this problem was created by both parties. Bush with Greenspan's help just put it on steroids and once the Roosevelt era protections were gone, the whole house of cards collapsed. Unrestrained capitalism is good at that. Unrestrained anything usually runs amok. Particularly unrestrained greed.
See Joe Conason's column today:
"Now, as the federal government prepares to take many or most of those bad loans off the books of the geniuses who bought them, what will prevent additional massive fraud? Only the threat of enormous fines and years of imprisonment can prevent these crimes from being repeated, at our expense. During the final decade of the last century, the nation spent well over $100 million on special prosecutors to investigate trivial and nonexistent offenses by public officials. We should be prepared to spend many times that amount in the years to come to get to the root of this gigantic scam, both to punish and to deter."
Henry Paulson is the perfected reincarnation of Donald Rumsfeld. Stone heart, straight-faced liar, and less bright than ruthless.
Brad DeLong has some good posts and discussions going on economics.
McCain has successfully, for the day, deflected attention from Palin's exposure to and by Katie Couric. But even his most Stepford wife spokesthing, Nicole Wallace is cracking under the pressure.