The obituary page of The Massachusetts Spy
By Luke Reschuss
Obituary Editor
The best way to get eyeballs in front of an obituary of an old economist who was wrong about everything in the service of plutocracy is to ask whether in fact he shtupped Ayn Rand.
So let's start our obsequies for Alan Greenspan, dead at 100, with that burning question (the burning probably caused by the VD he caught from the old slag).
The New York Times was coy:
As he was building a professional reputation during the 1950s, Mr. Greenspan was also developing an intense free-market philosophy, one that was heavily influenced by Ms. Rand, whose novels espoused laissez-faire capitalism built around a “rational selfishness,” or the idea that society functions best when individuals pursue their self-interest....
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| Ayn and Alan cosplay remains popular |
Through his first wife, Mr. Greenspan met Ms. Rand in 1952 and soon became part of her inner circle, spending hours debating the relationships among individuals, governments and markets.
Eventually, Mr. Greenspan said, Ms. Rand taught him that capitalism was not only efficient and practical, but moral.
“What she did for me, which was an extraordinary experience, was to demonstrate — that is, aggressively backing me into a corner — that the positions I was holding were wrong, fundamentally contradictory,” Mr. Greenspan said .... “I was really fascinated and, over the years, as I got to know her better and read her materials and had conversations with her, she had a sort of effect similar to that of a favorite college professor.”
Maybe he like being aggressively backed into a corner, if you catch our drift. Others were less oblique:
The other thing to note about Rand is that she ran what was effectively a sex cult. Now, I don’t particularly care who has sex with who. It’s unclear whether Greenspan and Rand ever had sex.
So the young dork was a member of a sex cult run by an amoral predatory old hag, but they achieved orgasm only through arguing libertarian theory. Hoo-kay.
Certainly the fact that Greenspan met Ayn through his then-wife and then forthwith divorced said wife is absolutely irrelevant.
But we don't want to focus on the image of a leather-clad Ayn Rand whipping Alan Greenspan while he was on his hands and knees to take away from the real point here, which was Alan's lifelong and loving embrace of her s****y ideas:
Soon one of the leading Objectivists, Greenspan contributed essays to Rand’s books, including one supporting the gold standard, which should have permanently barred him from Washington circles, but of course did not. Greenspan became one of the leading prophets of Rand’s ideology, including offering a public ten-lecture course called “The Economics of a Free Society,” in the mid 1960s. All of this talked about the horrors of government intervention in the economy, how social programs destroyed freedom, and how any kind of collective economic response to crises simply made it worse. That one could have lived through the Great Depression and how the New Deal responded to it and think this is completely mindblowing to me. But then I guess I just don’t get the great thinker Rand.
In fairness to the delighter of superannuated Russian exiles, the conflation of economics and moral philosophy was a common intellectual error during Greenspan's life.
Greenspan was part of a generation of self-important gasbags with Ph.D.'s in Economics (Milton Friedman was another leading example) who claimed that they had discovered, like Casaubon, the Key to All Mythologies.
Economics is the quantitative study of markets and wealth. It's a real discipline, today mostly centered on complex models that try to shed light on what happens to x if y? It's worth knowing what happens to, say, the health of starving African refugees if a ketamine-demented Nazi is allowed to destroy U.S. Government aid programs. (Hint: the modeling shows they die by the millions).
But Greenspan and his generation claimed that their genius economic analysis proved Gordon Gekko's adage: Greed is Good.
Now aside from the proven falsity of the claim (we'll get back to that), there was a deeper problem. An empirical discipline can't make a moral judgment. It can provide a factual basis for a moral judgment, like it's evil to allow a ketamine-demented Nazi to bring suffering and death to millions, but it doesn't lead to a particular moral judgment.
Ayn Rand knew this, and concluded that all that morality stuff was just so much spilled lube.
But sentient people who have any acquaintance with the ethical foundations of any civilization on Earth know better. To Cain's question, “Am I my brother's keeper?” Ayn Rand would reply, “F*** no!” and if Cain was as hot as Alan, she'd repeat the first word followed by “me!”
That's not the answer most of us would embrace unless we are Republicans.
But the supposed wisdom of the Great Conservative Economists were fatally flawed in ways that now seem obvious to even the meanest intelligence.
We recall Greenspan's acolytes using their vast knowledge of Economics to assert that there was no such thing as a free lunch. The assertion was usually made by privileged white men whose entire lives had been a free lunch.
Even their economic theories were suspect to empirical falsification. Those of us who took Ec 10 in the previous century remember learning about Friedman's monetary theory, which alleged that the only thing that mattered to the economy was the money supply. And what was money, anyway? Was it cash, cash plus demand deposits, cash plus overnight repos, cash plus money market funds? Was it M1, M2, M2+, M3, and all the way to M11, which runs up Amsterdam Avenue by the way?
Of course money can be created by credit, as you did when you tapped your Visa card at Starbucks this morning. Its effect on the economy can also vary depending on how fast it circulates through the economy, known as velocity.
Which is why no one today gives a toss about the money supply or anything else Milton Friedman ever said.
In fact, the discipline of Economics provides no justification for Ayn Rand's predatory immoral libertarian views, although those views can lead to a good time once wifey goes home.
So Greenspan was full of s*** as a moral philosopher.
But that's not the end of his story. His predilection for free markets led him to f*** up the most important economic even of his lifetime: the near collapse of the world economy in 2008 due to failure to regulate Wall Street's lust for risk, which turned out to have far worse effects than lust for crazy old Eurotrash like Rand.
His enthusiastic embrace of deregulation and the unfailing wisdom of markets, dominated by greedy short-term finaglers on Wall Street, almost killed us all:
Mr. Greenspan argued that the financial markets, and investment firms themselves, would do a better job of policing excess risk than the government could ever do.
Nonetheless, the financial collapse of 2008 did little to alter his view that markets are better than governments at regulating risk, despite the damage done to entire economies when markets failed.
Greenspan may have been unable to learn from experience (possibly as a result of the tertiary syphilis he caught from Rand) but others drew the lesson:
That's former Secretary of Labor and Berkeley Professor Robert Reich, by the way.
The government's failure to regulate risk taking required that same government to bail out financial institutions in 2008, and going forward to in effect provide a government guarantee of debt issued by Wall Street colossi deemed “too big to fail.” If the government hadn't stepped in, civilization as we knew would have collapsed. If that seems apocalyptic to you, remember that during the financial crisis, perfectly solvent and profitable corporations worried that they would be unable to meet their payrolls due to the money market meltdown.
What Greenspan failed to understand is that the market is the result of actions by individuals. It is rational for traders to load up on as much risk as possible to juice their income. It's also rational for them to maximize their short-term gain on the theory that they'll be gone when the house of cards collapses. As happened in 2008.
It turned out that Randian excesses were more fun and less consequential in Riverside Drive bedrooms than on Wall Street trading floors. Unbridled greed, avarice, and (Ayn's favorite) lust were not only immoral; they were capable of nuking civilization as we have come to know it.
We know this now, although a new generation of finaglers is busy trying to undermine the regulations put in place to curb their excesses.
The 2008 economic cataclysm and bailout permanently wiped out Alan Greenspan's reputation as a serious thinker. He'll have to be remembered by posterity instead as an overachieving boy toy.
