Twilight Of The Gods

It's amazing how much I forget about the past.

McArdle has always said about the 2008 financial crash that there were no villains and the fault was systemic, which was unavoidable because of American values and demographics (or some similar load of crap). She wrote many words explaining why she and her friends had to be right and liberals had to be wrong but as always, the truth is right out in the open. I found this quote in an old post of mine.

Then there are the derivatives. There, Clinton pleads guilty. Alan Greenspan, the Federal Reserve chairman, opposed regulation of derivatives as they came to the fore in the 1990s, and Clinton agreed. “They argued that nobody’s going to buy these derivatives, we’ll do it without transparency, they’ll get the information they need,” he recalled. “And it turned out to be just wrong; it just wasn’t true.” He said others share blame, including credit-rating agencies that underestimated the risk. But he accepts responsibility as well.

Alisa Rosenbaum wrote a Mary Sue fanfic about a rich, beautiful, brilliant engineer and her many boyfriends, and Alan Greenspan read it and was thrilled and enthralled.* Fifty Shades of Gray was originally Twilight fan fiction. American economic policy under Greenspan was Atlas Shrugged fan fiction.

In The Age of Turbulence, Alan Greenspan describes the influence that Ayn Rand had on his intellectual development.

Ayn Rand became a stabilizing force in my life. It hadn't taken long for us to have a meeting of the minds -- mostly my mind meeting hers -- and in the fifties and early sixties I became a regular at the weekly gatherings at her apartment. She was a wholly original thinker, sharply analytical, strong-willed, highly principled, and very insistent on rationality as the highest value. In that regard, our values were congruent -- we agreed on the importance of mathematics and intellectual rigor.

As we see in Flint, intellectual rigor and mathematics are sometimes justification for ideology, which often is merely the justification for some's emotional needs and the crimes they commit against others to satisfy them.

But she had gone far beyond that, thinking more broadly than I had ever dared. She was a devoted Aristotelian -- the central idea being that there exists an objective reality that is separate from consciousness and capable of being known. Thus she called her philosophy objectivism. And she applied key tenets of Aristotelian ethics -- namely, that individuals have innate nobility and that the highest duty of every individual is to flourish by realizing that potential. Exploring ideas with her was a remarkable course in logic and epistemology. I was able to keep up with her most of the time.

First comes the emotion, then comes the rationalization. The sacred nature of mankind demands that I "flourish" by satisfying my greed for more. It is my sacred duty to realize my potential, so anything that gets in the way of my personal success is profane, a crime against humanity.

Rand's Collective became my first social circle outside the university and the economics profession. I engaged in the all-night debates and wrote spirited commentary for her newsletter with the fervor of a young acolyte drawn to a whole new set of ideas. Like any new convert, I tended to frame the concepts in their starkest, simplest terms. Most everyone sees the simple outline of an idea before complexity and qualification set in. If we didn't, there would be nothing to qualify, nothing to learn. It was only as contradictions inherent in my new notions began to emerge that the fervor receded.  

One contradiction I found particularly enlightening. According to objectivist precepts, taxation was immoral because it allowed for government appropriation of private property by force. Yet if taxation was wrong, how could you reliably finance the essential functions of government, including the protection of individuals' rights through police power? The Randian answer, that those who rationally saw the need for government would contribute voluntarily, was inadequate. People have free will; suppose they refused?.

 In Randian theory everyone would act out of perfectly balanced self-interest. It would not be in anyone's self-interest to refuse to contribute to protection for everyone. Greenspan recognizes that Rand's theories collapse under the weight of their irrational premises and rejects any part, no matter how fundamental, that doesn't satisfy his emotional needs. And he keeps the parts that do.

I still found the broader philosophy of unfettered market competition compelling, as I do to this day, but I reluctantly began to realize that if there were qualifications to my intellectual edifice, I couldn't argue that others should readily accept it. [...]  

Ayn Rand and I remained close until she died in 1982, and I'm grateful for the influence she had on my life. I was intellectually limited until I met her. All of my work had been empirical and numbers-based, never values-oriented. I was a talented technician, but that was all. My logical positivism had discounted history and literature -- if you'd asked me whether Chaucer was worth reading, I'd have said, "Don't bother." Rand persuaded me to look at human beings, their values, how they work, what they do and why they do it, and how they think and why they think. This broadened my horizons far beyond the models of economics I'd learned. I began to study how societies form and how cultures behave, and to realize that economics and forecasting depend on such knowledge -- different cultures grow and create material wealth in profoundly different ways. All of this started for me with Ayn Rand. She introduced me to a vast realm from which I'd shut myself off.

Ayn Rand introduced him to a vast realm of smart-sounding excuses for greed and villainy. Greenspan's remarks are similar to the remarks of Michigan Governor Snyder's former senior advisor:

Dennis Schornack, who retired after serving more than three years as a senior adviser on transportation issues to Snyder during his first term, is the first current or former Snyder official to directly criticize the governor and his management style for contributing to the public health crisis.  

Schornack said he still believes Snyder is an intelligent leader and "basically a good guy." But, he said, decisions about Flint’s drinking water should have been dictated by science instead of finances and the bottom line.  

"It's sort of a single dimension for decision making; thinking that if it can't be solved on a spreadsheet, it can't be solved," Schornack said in a telephone interview from Florida. He earlier served 12 years as a senior policy adviser to Republican Gov. John Engler and in between served six years on the International Joint Commission.  

“Government is not a business ... and it cannot be run like one,” Schornack said. “The people of Flint got stuck on the losing end of decisions driven by spreadsheets instead of water quality and public health. Having been a Snyder staffer, luckily in a spreadsheet-rich area like transportation, I lived the culture amidst its faults.”

The strange thing is that Greenspan's ideology before his epiphany was no different from his ideology after the epiphany.

In 1977, Greenspan obtained a Ph.D. in economics from New York University. His dissertation is not available from the university[16] since it was removed at Greenspan's request in 1987, when he became Chairman of the Federal Reserve Board. In April 2008, however, Barron's obtained a copy and notes that it includes "a discussion of soaring housing prices and their effect on consumer spending; it even anticipates a bursting housing bubble".[17]

These poor technocrats were only doing their job and to their amazement they discovered that people will be affected by their decisions and those people might get mad. They were just "living the culture." They're "basically" good guys. They weren't making conscious decisions to poison people or blow up the economy with successive bubbles to get complicit politicians elected to office and/or enrich themselves.

There are no villains. So why are there so many dead or dying villagers?



*The two had a lot in common. Both were very intelligent but plain, were Jewish, and had gone from moderately wealthy to poor while young. Rand's parents were Russian; Greenspan's Romanian and Hungarian.  Both hero-worshipped their fathers; Greenspan's was a stockbroker who abandoned the family, Rand's ran businesses. Both were praised and shown off in public for their brains. And both were emotionally needy.

Wesley and Marianne Halpert, the children of Rose's sister, Mary, lived half a block away from Alan. Alan spent a great deal of time with his cousins, and they grew as close as siblings. Wesley was older, Marianne younger. Their father, Jacob Halpert, became almost like a second father to Alan. An insurance broker by trade, Jacob managed to enjoy a fair amount of success during the Great Depression. Wesley recalls an aching and almost boundless neediness on the part of his cousin.

    "Here was my father," says Wesley. "He was one father with two hands. But there were three kids: Alan, Marianne, and myself. We'd be walking down the street and Alan would kind of worm his way between me and my father and grab my father's hand."     

  Wesley also remembers that Alan would periodically pipe up and sing "Brother Can You Spare a Dime?" Little Alan's mournful rendition of the popular tune and unofficial anthem of depression-era America was guaranteed to tug at Jacob Halpert's heartstrings. Invariably, he'd dig into his pocket and toss Alan a dime.       

As a young child, Alan showed a precocious intelligence. By the age of five, he was able to add up three-digit numbers in his head. His mother often trotted him out to do this trick to impress guests and neighbors.