From time to time, I can't help bumping into posts from the Ludwig von Mises Institute. It has a blog here.
It also has this post, which presents a capsule overview of the "Austrian school" of economics and how it believes a free market should work versus the manic and depressive cycles we periodically experience: Economic Depressions: Their Cause and Cure
Ayn Rand and her ilk were supporters of the Austrian school.
I was never convinced.
I'm still not convinced.
Earlier today I posted excerpts from Jack London's The People of the Abyss.
I keep seeing that nightmarish vision of a poverty-filled and coldly uncharitable society as the natural consequence of Austrian economics.
What else can I be expected to conclude when in this post -- "Neanderthal" Economics -- I see this:
In one of his most important books, America's Great Depression, Murray lists six ways government could delay market adjustment, which he says would create the "favorite 'anti-depression' arsenal of government policy." These include the following:
1. Prevent or delay liquidation
2. Inflate further
3. Keep wage rates up
4. Keep prices up
5. Stimulate consumption and discourage saving
6. Subsidize unemployment
Emphasis added by me.
The People of the Abyss is a document clearly showing the effects of not "subsidizing" unemployment. (And notice the Nazi-like sneer implied by the use of that term, subsidy, instead of the neutral insurance!) The People of the Abyss is a testament to people being reduced to being beggars and even to committing suicide because there is no safety net.
There is something inhumanly callous about any system of economics that ignores what Jack London terms "the thing happening."
Ayn Rand's acolytes imagined a broad sweeping vision of a world drenched in liberty due to economic freedom. I think that's a delusional view of life. Not everyone is motivated by money. There is no syllogism in life where money = X behavior. People are not like computers, with output equaling input.
Alan Greenspan -- a member of Ayn Rand's core "Collective," who read Atlas Shrugged as it was being written! -- discovered that aspect of human reality -- too late:
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.
Who other than bankers and financiers should have been motivated by money and to its preservation? That's their line of work, for god's sake!
And yet the Austrians would have us fed to them -- as trustworthy defenders of capital and its preservation?
Don't tell me about gold-backed currency. Or gold itself. Is gold limitless? Unlike oil, there isn't an abiotic hypothesis that would explain an expanding supply of it. That means growth is limited to the amount of available gold. That's a worse prospect than the Peak Oil hypothesis!
How many Jews in Nazi Germany tried to buy their freedom? Shouldn't that money have granted them that? Very often, all it got them was murdered and their wealth stolen.
So much for the overriding motivation of Dollar Uber Alles!
Of course, the Austrians, being good little bean counters and true-believing ideology-huggers, would probably argue that their system depends on a rational world.
Tell me: On what fucking planet does that exist? It's not this one!
So, no. I couldn't swallow von Mises and Company back in the early 1980s -- and today I can't tolerate its nonsense at all.
2 comments:
This crisis was neither a failure of laissez-faire capitalism nor Ayn Rand's ideas, it was a failure of intensive regulation —with Greenspan's hypocritical contributions. From The American Competitive Enterprise Institute:
“While the Dow collapses, we have a bull market in government regulations. The 50-plus departments, agencies and commissions are now at work on 3,882 rules; 757 will affect small businesses. More than 51,000 final rules were issued from 1995 to 2007.”
That’s nearly 54,000 NEW regulations, added to what was there before, in only 12 years!
That is hardly Rand's laissez-faire capitalism; that’s massive socialist/fascist government interference! At root, those are the very ideologies Rand spent her lifetime hoping to save Americans and America from. Now, when the effects of those destructive ideologies from Washington hit the fan, everyone is blaming laissez-faire capitalism instead. They are ridiculous, uninformed, or dishonest.
Greenspan dropped any pretense of understanding Rand's arguments well before he became head of the Fed., and he then became a major part of the problem. His monetary policy and suppression of interest rates (1%!!), when Rand would have said “let the market decide”, were an appalling government intervention. Add in the HUD, CRA, CDS, Fannie Mae, Freddie Mac and the recipe for a catastrophically distorted market, including the trading of derivatives, was complete.
Edward Cline wrote, "Reason and rationality flee when force becomes a factor in men’s decisions, to be replaced with the pragmatism of punishment-avoidance or a risk-free shot at easy money."
So imagine YOU are the CEO of a large financial organization. Your competitors are complying with the regulations and appear to be making good for their shareholders, while things are getting tight for your firm. What do you do?
You want to buy a house, and the government directly or indirectly tells your lender they will protect him from default so long as he keeps the mortgage interest low. What do you do?
You do the pragmatic thing, join in, and trusting in the state's easy money guarantee. As a CEO, if you are able to understand the fraud in the government’s game, you build yourself some protection for when the government's house of cards collapses. Most people believe the "government is here to help" (say by regulation), so they don't protect themselves.
You would not have dared to engage in the risky lending or buying that lead to the crisis, were it not for the handful of people in the US government who believed they were smarter than the free market and installed legislation to distort it. Without those people, lending rates would have adjusted themselves years ago, paper money would not have been printed like it grew on trees (e.g. “helicopter Bernanke”) and the present crisis would never have materialized.
Capitalism is the only *moral* system because it let's a man keep what he produces; it was the American system. An historical and geopolitical look at nations shows that those which are more free have citizens who prosper more by their own effort, and live more peacefully. Free markets made America great, from 1776 to the late 1800's, and then serious regulations began. Even America's poor were wealthy compared with the middle class of other nations. Ayn Rand was right, and should not be blamed for a protegé's failures.
Sure there are irrationalities in the world that do tremendous amounts of damage to human life and happiness. Does that mean one should abandon reason all together?
As for your view of money, perhaps you should (re-)read Francisco d'Anconia's "money speech", then "Capitalism: the Unknown ideal" to find out what money really is. And, you might find Greenspan's article on the Gold Standard rather amazing for how completely he betrayed his own arguments. Gold finite? Nor for any real intent or purpose. Mankind has barely knicked the surface of that billiard ball called Earth.
Good Luck
"Not everyone is motivated by money. There is no syllogism in life where money = X behavior. People are not like computers, with output equaling input."
Greetings from an ilk.
The people you claim are "not movitvated by money?" I've met them. They are sutured-in to other people who are so motivated by creating value that they have an excess which the unmotivated glom onto by deploying those motivated by power.
Those un-mots? Every day they attempt to prove your quaint saying by inputing the output of others.
John Donohue
Pasadena, CA
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