An Objective Meltdown


This piece originally ran on March 14th of this year. When I was doing some cleaning up I put it into the archives, thinking that maybe it was too harsh or opinionated. But in light of recent economic news, I decided to pull it out of the archives and re-run it. The original title was, "Greenspan's Green Mile." "The Green Mile" is a book by Stephen King, and refers to the walk to the execution chamber at Cold Mountain Penitentiary. I use it metaphorically to demonstrate the death of Greenspan's policies as Wall Street collapses.

Alan Greenspan, the former Fed Chief, had Ayn Rand beside him when he was sworn in as Chair of the Council of Economic Advisors, in 1974, because by that time he had begun to align himself with her philosophy, Objectivism. Today, as the economy sinks into the obvious greed and incompetence of the mortgage lenders, the objectivists are often distancing themselves from him. Their only criticism of Greenspan is that he wasn't a pure ideologue, and with age began to see the problems with the Objectivist theories of Rand.

I was mightily attracted to Rand's work when I was in my early twenties, because at that age there is a hunger for answers that are easy to grasp and which seem to provide an anchor, a protection against chaos. Rand certainly did that. For example, in her work, "The Cult of Moral Grayness," she argued that if you don't have black and white you can't make gray, and so there is a black and white, good and evil, right and wrong. There is no ambiguity, and thus none needed in, say, sentencing guidelines or immigration.

In her novels, especially the best known ones, "The Fountainhead," and, "Atlas Shrugged," there was a very clear distinction between the heroes and the villains. The heros were capitalists who were self motivated by what she called "rational self interest." The villains were collectivist in any form, especially labor unions and bureaucrats, whose value was based on their being all the same, while the brave and lonely capitalist reloads and repeats the mantra, "Kill the brain, kill the ghoul." One of the hallmarks of Greenspan's reign was the strengthening of the idea that having money confers moral authority, while being poor betrays a moral lassitude.

When Greenspan first sparred with Rand at a gathering of her inner circle, he reported advancing his position as being there are no moral absolutes, and she countered by asking if he existed. He said he didn't know and she asked who was saying this. So by a kind of Socratic method she quickly dissuaded him of his position, which he obviously didn't know how to defend.

She was based in Aristotle's concept of perfect forms which exist separately and a priori vis a vis material forms or abstract concepts. Following Aristotle's logic, which was that if "beauty" or "truth" does not exist in perfect form, we would not know what we are seeking, she deduced that such concepts as right and wrong exist and can be located, the way a tree can be located in a meadow. She derives directly from this when talking about moral grayness.

There is a good deal skepticism about the idea that there are perfect forms for concepts with no material corollary. The late Milton Erickson, who was considered the best medical hypnotist in the world, called words such as "good," "evil," "justice," and so on, "process words," and distinguished them from words which relate to something which has material reality. He said the meaning of such words comes from the individual using them. So one man's "justice" might be another man's execution, and thus "terror." Point of view is everything.

This is what sounds so breathtakingly ignorant to a lot of people when Bush talks about the Axis of Evil, and his generals (this has now spilled over into law enforcement) talk about the "good guys" and the "bad guys." They are presumably seeing the same inherent evil that used to be in the Japanese or the Germans but has been magically cured by alliance. It is a cheap propaganda ploy to use "Axis," as in "Axis powers," and apply it to the people who are camped on our oil.

As Greenspan developed he saw that the objectivist dogma was just that, and could not hold up in complex situations. There are no moral absolutes except to a moral absolutist, and that is not an enviable position because it advertises a limited intellect. There may be abundant rationality within any system so long as you don't venture outside it. There are plenty of people who live inside the compound of astrology, or of a religion or a political ideology. Objectivism is specific to the Cold War and the debate between capitalism and collectivism, as it derives from Rand's work, which was all focused on her idealization of capitalism from behind the Iron Curtain.

The world is not, however, contained inside those two ideas. There are other ideas, such as pragmatism, for example.

When I said earlier that moral absolutism advertises a limited intellect, it is because genius depends on the ability to hold two contradictory views simultaneously without feeling obliged to resolve in favor of either. Contradiction is acceptable and expected at the genius level. This would be dismissed by Rand as moral grayness.

It is the peculiarity of moral absolutism that it always turns into its opposite. By taking a one sided view of anything, you are guaranteed to get "blindsided." Although Greenspan saw that objectivism was limited, and that capitalists and collectivists are the same guys in different suits most of the time, he had tied himself to a philosophy and to an ideological power structure that believes that the markets are self-correcting, and ultimately, moral. The great sin in this circle is government interference in business.

When the economy is growing as a bubble the bubble is going to burst. There have to be fundamentals for the economy to work for everybody, and one of those fundamentals is usury laws. You cannot allow people with all the money to charge substantially more for it than they pay for it. The spread between what lenders charge for money and what they pay for it has to be regulated or they will end up with all the money, and you'll get the foreclosures you got in the Great Depression and a growing spread between rich and poor. The growth and prosperity after WWII rested on laws which enforced fairness in lending, and the growth of home ownership through FHA and VA loans. Anybody with a decent job could buy a house, and there were no trick shit mortgages. The spread between what the bank charged for money and what it paid was modest, maybe three or four percent if my memory serves me.

So Greenspan sat and watched with Randian eyes as the lenders set up loans which would give the economy under the Bush administration a replay of "trickle down" economics . Trick Shit mortgages were secured by nothing, and then they were bundled with good mortgages and sold. At the same time the laws allowing personal bankruptcy were changed to prevent any escape, credit card issuers were allowed to charge huge fees for late payments or to arbitrarily raise interest rates to double digit percentages, when interest rates being paid out were going progressively lower.

The Bush administration kept talking up how great the economy was doing. Sure ... just like the war was going swimmingly, and FEMA was on the job, and the FDA was on top of the food supply, and we couldn't import pharmaceuticals from Canada because we couldn't guarantee their safety, while we were letting American companies buy pig intestine scrapings from Chinese family operations with no oversight, and ... well, it would be a hell of a long list. Even the Republican Party's treasurer was stealing as fast as he could while emails that would implicate the President and Vice President in criminal behavior were being deleted by the millions.

And now Greenspan is sitting in retirement watching the Ayn Rand gospel of the good capitalists and the evil regulators and their rabble turn into a different novel, maybe Elmer Gantry, The Jungle , or The Grapes of Wrath. And at the highest levels, there is always the talk of why we can't regulate industry, and the dangers of interfering in the marketplace, as the old men who were schooled in the American versus Russian world of the past try to put it back together again, and make it make sense.

It is a tale told by an idiot once it is outside its historical context, and even inside its context, one of many tales which could have been told, and probably not the one which would have served most of us in America or in Russia. It served special interests and still serves special interests. Greenspan was a great numbers man. Too bad he didn't hang out with John Steinbeck or, if he had to be enamored of a Russian, he might have tried reading Dostoevsky, or better yet, struck an acquaintance with Andre Gide, in Paris, who could have given him some insight into the trap of social moralism.

But such was not the case, and so Greenspan and his notions on the sanctity of the free and unregulated markets found fertile soil in such people as George W. Bush, who now stands before the American people afraid to move as the entire economy shakes rather ominously. When he says that he cannot impose government regulations and restraints and measures, he is saying nothing different from what Herbert Hoover said during the Great Depression, and his cutting social services is a weird bastardization of Hoover's efficiency movement.

Nothing could really be less efficient than dismantling the infrastructure of government to save money, because in the long run it all his to be rebuilt. FEMA is certainly a good example, as are the regulatory agencies and public health care. In the view of Randists the only legitimate expenditure of government is defense. That is why the proponents dismantle the social network while spending ever increasing amounts of tax money on the Pentagon and defense contractors.

When Greenspan walks the green mile, it's not as the condemned man, but the man who got out before the shit hit the fan. The condemned person would be the average wage earner who doesn't know jack shit about some crazy old Russian woman and her young lover , Manhattan salons, or Objectivism. He doesn't know that the Fed Chairman and the President are actually Russian dissidents. All he knows is that when things go wrong, now, the President doesn't even have a plan B. What do you need with an alternate plan when you're on a mission from God?

Posted: Wed - September 24, 2008 at 11:16 AM