Imagine my surprise, when flicking through the website of The (Melbourne) Age to find the weekend’s footy scores, to discover that it was Ayn Rand who caused the world’s financial collapse.
“Not bad for a woman who died in 1982,” I thought to myself. “I wonder how they’re going to sell this one.”
The journalist, Matt Taibi of The Guardian, sells it by little more than the insistent drum beat that since Goldman Sachs are the ultimate Objectivist heroes, and it was Goldman Sachs who pulled down the temple, therefore it was Ayn Rand who’s ultimately to blame.
An interesting, if not fantastic, thesis—but hardly one that has as much explanatory value as one that dwells on the facts instead of an under-qualified alleged journalist’s over-heated juvenile fantasies.
The best, quick, response to the charge was posted at the NZ Sharetrader forum by a chap who calls himself Enumerate, who I’m sure won’t mind me posting it here:
“This MATT TAIBBI clearly hasn't got the first idea of anything Rand had say. The clearest example of this is the ridicule he heaps upon her without even remotely approaching any of her arguments. Classic fallacy of argumentum ad hominum.
“He then latched on a derivative point: that somehow the Goldman Sachs "masters of the universe" are somehow Objectivist heros. This could not be further from the truth. Goldman Sachs are the ultimate collectivists -- their stock in trade is government influence. Witness the recent coining of the phrase GS = Government Sachs: http://www.nytimes.com/2008/10/19/business/19gold.html
“The notion that the General Financial Collapse (GFC) happened ‘because markets are free’ is absurd on two counts:
- The existing market is not free. The crisis started in subprime lending which was efficiently driven by the collectivist ‘Fanny Mae’ and ‘Freddy Mac.; These government’mandated organisations were set up to make mortgage finance easier for people to obtain who cannot afford it. A plain and simple market distortion for political benefit. They just got too good at doing their jobs ...
- Subsequent phases of the GFC meltdown were driven by unknown asset values of complex synthetic financial instruments (synthetic CDO's, CLO's etc.) The markets lost sight of the objective value of the underlying financial instruments (lead astray by ratings companies, wall street banks, all down the line). If the markets were free - in an objective sense - there would be no losing sight of the objective value of things (currency - gold standard, loans - corporate assets, mortgages - specific property assets).
“If you are in the market for entertaining drivel ... uninformed, abusive, but entertaining in a chaotic way ... then Matt Taibbi serves up a heaping helping of this dross.
“If you looking for insight ... look somewhere else.”
3 comments:
Enumerate is spot on with his second explanation. The current banking crisis has its origins in Basle I and II - the previous global attempts to regulate bank's liquidity. Banks invented synthetic instruments to skirt Basle I regulations because real assets were caught by the regulations and synthetics weren't. Another great example of regulation achieving the exact opposite of what it intended.
The General Financial Collapse is not bad for a man who died in 1946.
Over the years, I've met many people who have read Ayn Rand and agree with her to varying degrees, but I've never met one who's the wheeler-dealer type Taibi talks about.
Similarly, I've met many wheeler-dealer types, but I've never met one who's indicated any interest in Ayn Rand.
It's possible there's financial conmen out there, who try to use a (flawed) understanding of Rand to justify their behaviour, but it's a safe bet they didn't cause the global financial crisis.
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