objectivism to the rescue?
BusinessWeek’s Debate Room, to which yours truly has submitted his share of essays, is asking readers whether in today’s economic turmoil we need to heed the doctrines of Ayn Rand and her philosophy of Objectivism. Upset that the government is now an ever present force in business, philosopher Onkar Ghate argues that Rand’s idea that selfishness is a virtue and we shouldn’t be taking orders from society and government, is just as relevant as ever. And in doing so, he manages to woefully misjudge the current situation or get a grip on exactly why government intervention in corporations is so common today.
The Ayn Rand Institute isn’t new to the Debate Room. It’s executive director, Yaron Book, wrote a number of essays over the last year in which he promoted Objectivist doctrines as a solution to whatever ails society and every time, he draws in fellow Objectivists to comment on just how right he is and debate with anyone who disagrees. Now Ghate has picked up the baton and tried to convince readers that the greed of lenders and banks who got carried away with making vast loan packages is not to blame for the current financial crisis. Apparently, it’s the government’s fault. If not for all the regulations in the financial industry, Ghate says, there’d be no problem. It was all Fannie May and Freddie Mac rather than Countrywide and Wall Street. I suppose it really does take a philosopher to justify such a backwards conclusion.
One upon a time there was a rule that organizations that gave loans wouldn’t be able to simply take their loan packages and turn them into investments in order to avoid a conflict of interest and encourage competition in the banking sector. That rule was defined by the Glass-Steagall Act which was repealed in 1999 and over the next decade, banks did exactly that. Only now, an alluring source of income were subprime loans made by lenders like Countrywide which relied on warehouse lending to issue mortgages, then packaged their loans and sold them to anyone who was interested. This list of buyers included Fannie and Freddie who were assured that what they were buying were good loans and the risk was perfectly managed. Yes, it’s true that under the initiative of former president Clinton both of the GSEs were encouraged to provide access to home loans for more borrowers but they were still supposed to take on loans with proof of income and other assurances. Subprime loans often didn’t even require that.
Now what happens next is really funny. Wall Street turns to these mortgages as the brand new, must have investment opportunity and uses virtual cash to create bonds. Under the regulation of the Glass-Steagall Act, they couldn’t do that unless they actually had funding for them but if you remember, that law was repealed. Suddenly, one day, the market begins to drop because a large number of these mortgages aren’t being paid. The bonds lose value. Banks panic and ask the government for help. And keep asking it for another billion or two or ten or twenty. And all this is the fault of government regulation? Banks being given leeway to do as they wish, making bad bets then running to Uncle Sam for a bailout is an example of collectivist smothering? Isn’t philosophy supposed to be about looking at the big picture to make logical conclusions rather than just plug the tomes of your favorite author?
Let’s be brutally honest here. Rand’s popularity was based on telling people that they’re special, important and that if they think they’re right, they are. It’s something that’s very nice to hear in college when you want praise and encouragement but that’s not the best approach to the world at large. You don’t always know best. You’re not always the smartest and when you bet against the world, you won’t run into some one-dimensional cardboard villains you can destroy with a three hour long monologue of hackneyed cliches about “rational self-interest” and large doses of self praise coupled with standard red-baiting that was woven into American culture over the decades of the Cold War and punctuated during Red Scares. There are a lot of very wise people out there who will disagree with you and you need to admit that you don’t have the gateway to the world just because you read a long and self-indulgent book by an author with the ability to turn any line of dialogue into ten pages of thick, bombastic indoctrination.
When it comes to her philosophy, Objectivism seems to be a very ironic name since I’ve yet to meet an objective Objectivist who didn’t tell me that the only reason I disagree is because I just don’t have what it takes to understand the works of his or her guru. No semantics or historical revisionism will change the fact that greed for the sake of greed leads people to make mistakes and that those same people will try to ask for bailouts after having spent years railing against a government that tries to prevent having to give another bailout by creating new rules.
“Ive yet to meet an objective Objectivist who didnt tell me that the only reason I disagree is because I just dont have what it takes to understand the works of his or her guru.”
This commentary pretty much proves they were all right, and you didn’t even understand that. There isn’t a single cogent argument in this that deals with validity of any idea, principle, or proof from Objectivism. People who understand the content of a philosophy as comprehensive as Rand’s are not naive enough to try to dismiss by streaming ad hominems and unsubstantiated characterizations dripping in emotional connotations.
There is nothing for an honest mind to glean from this piece other than your personal dogmatic edict that the whole thing is lousy. One of the most powerful lessons Rand taught us is that, in the long run, only ideas matter to the course of cultures. And apparently unknown to you, every idea she put forth was accompanied by a proof and the advice that one should not accept it until able to demonstrate its validity independently.
You, to the contrary, attack Objectivists for agreeing with her with no indication that you can differentiate agreement earned by reason from agreement accepted on faith. You attack the quest for wealth as greed without differentiating a quest for unearned wealth from a quest for the earned. There is no indication whatsoever that such distinctions have been integrated into your opinions.
Small wonder you can’t distinguish substantive debate from empty assertions.
“There is nothing for an honest mind to glean from this piece other than your personal dogmatic edict that the whole thing is lousy.”
So the whole third of the post which talked about companies using a new loophole in the regulations to make overzealous bad bets and the current crisis was not in fact the fault of the government, just disappeared?
You keep talking about “honest minds” and how “comprehensive” Rand’s doctrines are, yet you’ve provided no substance and keep using weasel words that call into question my honesty and mental faculties. Essentially, you’re doing exactly what I said many Objectivists do: rush to defend Rand because they’re defending her from the infidel.
Objectivism is not the most complex and difficult philosophy in the world and there may be valid reasons to disagree other than “just not getting it.”
There is nothing for an honest mind to glean from this piece other than your personal dogmatic edict that the whole thing is lousy.
So the whole third of the post which talked about companies using a new loophole in the regulations to make overzealous bad bets and the current crisis was not in fact the fault of the government, just disappeared?
You keep talking about honest minds and how comprehensive Rands doctrines are, yet youve provided no substance and keep using weasel words that call into question my honesty and mental faculties. Essentially, youre doing exactly what I said many Objectivists do: rush to defend Rand because theyre defending her from the infidel.
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“So the whole third of the post which talked about companies using a new loophole in the regulations to make overzealous bad bets and the current crisis was not in fact the fault of the government, just disappeared?
It did not disappear, and nothing I have said condones nor enables such behavior. It is rather irrelevant to Ayn Rand and her Objectivist politics of radical laissez-faire capitalism. By relying so much on the hearsay around you, and without any knowledge of Rand’s politics, you have equated it with “deregulation” as if that was all there is to it. But during her life Rand repeatedly warned that although laissez-faire was the only moral and viable form of government, deregulation in combination with Government established coercive monopolies like the Fed, Fannie Mae, and Freddie Mac is a recipe for disaster.
If you had read some of “Capitalism the Unknown Ideal” (Rand et al) or just the “Government” chapter in “Objectivism:The Philosophy of Ayn Rand” (Peikoff) or if you had just gone to ObjectivismOnline.net and asked, you would have found out that Rand’s capitalism rests on a single fundamental principle that can be condensed to this:
No person may initiate the use of physical force to take, withhold, or destroy any tangible or intangible value created by or acquired in a voluntary exchange by any other person.
That principle applies to all humans, including those who operate the government. Thus government has but one task: to remove physical force from human interactions. To assure therefore that all exchanges of values among men shall be voluntary.
Among many other things, that would preclude the existence of the Fed, Fannie, Freddie and bailouts with other people’s involuntarily acquired money. The direct consequence of implementing such a principle is that there is no way possible to acquire wealth without getting it from someone voluntarily — by enticing them to give it up in order to get what you have produced for them. There simply isn’t any wiggle room left in that for the evil greedy crony capitalists who have been colluding with the government to prosper. Fraud (withholding by force a value owed) would still be a criminal act and the government would be free to focus all their efforts on that and other violations of our human rights.
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yet youve provided no substance and keep using weasel words that call into question my honesty and mental faculties.
Note the dishonesty of the “weasel words” accusation without naming any that results in a blanket assertion covering everything I said indiscriminately. And I did not question your faculties, but rather the sloppy way you put them to use. As a perfect example, I clearly pointed out that for Objectivists, only ideas matter. You didn’t even try to understand the implications of that, one of which is that it gives the lie to your attempt to smear me and the rest of Objectivists with the accusation you dream of being applicable: dogmatic allegiance to Rand the person when actually we admire her with gratitude for the efficacy of her ideas in radically improving the quality of our lives.
Why is it so important to you to have Objectivism viewed as a religion that you would fabricate the charge? Could it be that you know if you could make it stick, the right will condemn Rand for competing with their Christian God, and the left will condemn it for the same reason? Don’t waste your time, it won’t stick. And the proof is your own inability to cite any identification or principle in the philosophy that could even come close to validating your insinuations. It is in fact, the antithesis of a religion.
I don’t find characterizations of your reliance on such a tactic as dishonesty or ignorance to be out of line at all. I find the accusations to be facts and facts are not insults. And against them, your indignation is no rebuttal.
Again, you gave me absolutely nothing. You’ve went on a little rant about how the Fed and “evil greedy crony capitalists” and plugged Rand’s books and a website but missed the fact that Fannie and Freddie were GSEs enabled by the government to give lenders a place to sell their loans. Coercive monopolies? Come on. They’re a loan storehouse.
The Fed doesn’t take anyone’s money. It’s on a budget, like any government agency. And the government doesn’t use physical force to get money from you. It uses legal threats. So if physical force is the benchmark, the Fed is well within its rights. Unless the Fed agents come beat you up at night and steal your wallet, they’re living up to Rand’s ideals.
So again, a lot of sophistry, a good deal of plugging but the fundamental facts of the matter are just plain wrong. But I’m sure you will reply with something about me not being smart enough to understand the Randian principles, another set of plugs for her pop psych tomes as well as some out-of-left-field statements about the way our economy works… I’ve done this all before.
And yes, I know, I’m dishonest, I’m ignorant, I’m naive, I’m evil and so on and so forth. Somehow I manage to live with myself though.
“And the government doesnt use physical force to get money from you. It uses legal threats.
A legal threat of what? Force. There are only two ways to get money from someone. Voluntarily and involuntarily. You cannot get it involuntarily without the threat of force.
The Fed has a coercive monopoly over legal tender in this country.
States and local governments coerce childless persons to fulfill in part the responsibility of those who have children to educate them.
etc., etc., etc. …
“A legal threat of what? Force… The Fed has a coercive monopoly over legal tender in this country…”
I like how just because you say it, it suddenly becomes fact. The threat is of fines and jail time. It’s not force but it is coercion. However, if you want to live in a country, you have to pay taxes, just like you would pay rent if you lived in an apartment. You may not want to to pay for my police or my kids’ schooling but I don’t mind paying for yours.
I’m a fan of Ayn Rand’s writing and a proponent of both Objectivism and Secular Humanism (may seem strange but at their cores they aren’t at all incompatible). I have read almost every piece of writing of Rand’s and feel comfortable stating that what you’re arguing against here is NOT objectivism. This philosophy is being co-opted by those who have no understanding of it as a way to justify their own greed and ignorance of what ‘rational self interest’ even means. Any depth of study in objectivism would show (and quite clearly) that these fools who drove our economy into the ground are as far from practicing rational self interest as one can get.
“I have read almost every piece of writing of Rands and feel comfortable stating that what youre arguing against here is NOT objectivism.”
See, this is the exact issue I’m pointing out. Objectivists just say that no one but them is smart enough to understand Rand and therefore, any and all examples of the factual errors of her fans are invalid, and the philosophy still stands.
This is very much like theists arguing that religious people who commit crimes aren’t really theists because no “real theist” would ever do that. The standard Objectivist defense seems to be a slightly modified No True Scotsman fallacy.
Umm…. you really misunderstood what I meant gfish, I was making the point that those who are taking the actions which are being criticized here (criticism which i agree with) are not following the premises of objectivism. They call it that and take pieces of it to attempt to justify their actions but when taken in the full scope of the writing and the premises therein their actions do not logically follow.
Like it or not there is a difference between just crying out that they’re ‘not true objectivists’ and noticing that their conclusions do not logically follow from the premises of the philosophy.
Your argument also loses weight in light of the fact that i am not a strict objectivist, i draw my philosophy from many schools as I believe that the Janes make the VERY apt point that no one approach can see everything. My argument is that in light of my knowledge of the writings of this philosophy (and i honestly haven’t followed any that have come after the death of Ayn Rand) by its founder, the actions decried here do not logically follow from the premises of the philosophy.
Feel free to keep up your ad hominem that I’m just some douche running around calling other people idiots, but if someone took Aristotelian philosophy or Secular Humanism to a conclusion that did not logically follow from its premises would not criticism of that conclusion be justified?
Let’s back up. Nobody is calling Wall Street bankers Objectivists. The problem here is that the Ayn Rand Institute is rushing to defend their actions and blame all the negligent mistakes they made on nonexistent government regulation. After that, they try to plug Rand’s books as a cure for whatever ails us.
Are you basically saying that the organization which claims to be the go to source of all things Ayn Rand doesn’t understand Objectivism? The bankers didn’t create the subprime meltdown because they thought Atlas Shrugged made it sound like a good idea. But the Institute goes out of its way to justify all their errors and tries to make Wall Street look like the Atlases of Galt’s Gulch.
“Like it or not there is a difference between just crying out that theyre not true objectivists and noticing that their conclusions do not logically follow from the premises of the philosophy.”
It seems that the Objectivist philosophy is whatever it needs to be for the sake of the argument in which the Objectivist is engaging.
“Your argument also loses weight in light of the fact that i am not a strict objectivist, i draw my philosophy from many schools”
Funny enough, the debate is not just about you.
“if someone took Aristotelian philosophy or Secular Humanism to a conclusion that did not logically follow from its premises would not criticism of that conclusion be justified?”
Both of these philosophies were extremely well defined and very consistent. The doctrines of Ayn Rand were a collection of red-baiting and pop psych that made college kids in the 1930s feel empowered.
The real cause of the crises was not a lack of regulation, it was central control of the money supply by the fed. They created this crises by keeping the interest rate way too low after the dot-com bubble. The bankers where naturally reacting to a flaw in the system. The interest rate should be market signal to both savers/lenders and borrowers. When the fed tries to centrally control it, it creates these boom/bust cycles. They created too many borrowers and not enough real lenders (savers) and inflated the money supply. Thus, we have an orgy of mal-investment in the form of residential housing. The deregulation of the banks had very little to do with this. It all started with the government’s attempt at centrally controlling a vital market, the market between savers and borrowers. Countrywide and company only stepped in to provide a product that the government had created a demand for.
Just thought I’d point that out.
“The deregulation of the banks had very little to do with this.”
True, but it had everything to do with allowing subprime lenders to sell the bad loans they made as investments, something that’s wasn’t allowed by the regulation that was repealed in 1999 as pointed out in the article.
“Countrywide and company only stepped in to provide a product that the government had created a demand for.”
That’s true to an extent. The ultra low interest rates set by the Fed did boost the idea of subprime lending as a viable business. However, to encourage demand, the actual subprime lenders removed many of the safeguards against default. You could say that the Fed provided the kerosene and the lenders and banks poured it all over the house and lit it on fire.
As long as we’re blaming the government for low interest rates, let’s remember where much of that kerosene was really coming from: sovereign wealth funds.
Oil-producing companies were awash with cash from the oil bubble, and China was awash with cash from their balance of trade (much of that itself fueled by a circle of consumer debt).
Instead of investing more into their own infrastructure, they were seeking somewhere to invest (read: stash) their citizens’ money, and the Fed’s low interest rates made their favorite spot (US government debt) much less attractive than those fantastic new mortgage-backed securities.
Here’s the thing: an objectivist doesn’t care about economic climate. Not in the least. If people don’t want to lend funds to support the credit framework, oh well. An objectivist would say it’s the bank’s choice whether it wants to lend, and it’s the investor’s choice whether he wants to invest. The rationale being that their choice to abstain isn’t bad, as that would suggest the concept of “original sin.” What Onkar Ghate wants to do is absolve the “wall street fatcats” because they are essentially being crucified. People who didn’t know the risks of investment are crying to their mommies (government) to punish people they willingly gave their money to.
Although bank loans and bulk investors led us down to “economic hell”, it was facilitated by free choice and mutual consent. Those who didn’t participate in the risk did not lose any money. They didn’t lose any property. No one took anything; people just stopped giving things away, and it’s their choice to do so.
I can think of a myriad of better uses for the money lost and gained on wall street. I can think of better uses for others’ property. Problem is, it’s not mine, and I have no right to tell other people what to do with the things they own.
One of the things you will see over and over from Objectivists is something like that last statement… “it’s not mine, and I have no right to tell other people what to do with the things they own”…. The problem is, that is then interpreted as “You have no right to examine…or question…or judge…” which is completely wrong. Rand herself was specific about that, disclaiming the old adage “judge not, lest ye be judged” and saying that the correct attitude is “Judge, and be prepared to be judged” (from the Virtue of Selfishness by A. Rand).
In fact, for Rand’s system to be effective, there has to be transparency, we have to be able to see and judge the reasons why every businessman does everything, so that we can judge his rationality and decide for ourselves whether to support him, invest with him, buy his products or not. In that regard, Rand would laugh at people who invested in high-risk vehicles who now cry that they didn’t realize the risk could cause them to lose money. She would even be harsh with those who invested with Madoff, for they did not examine closely enough, choosing instead to be ‘unconscious’ about their investments (she hated people being ‘unconscious…). But, she also didn’t condone hidden back-room manipulation of the marketplace. Everyone in the system had to lay out their actions and their reasoning, so that it could be judged as ‘rational’ or ‘irrational’, and then the other ‘rational’ people in the system could decide to trade or not to trade with that person.
So, I believe the true Objectivist philosophy is “you have no right to legislate or otherwise force people to do anything with their property, so long as they are not using it to infringe directly on teh rights of others….but you have a rational obligation to examine the actions of all men with whom you interact, and to judge their actions as rational or irrational, and then to use that judgement in the determination of who to trade with, partner with, and invest with…”
Rand was a sociopath