naked capitalism

Anonymous says:

“Now that Greenspan has thrown in the towel, the free market ideologues have lost one of their most loyal advocates.”

Balderdash. When Ron Paul (who grilled Greenspan day in and day out for years for his lax policies) starts singing hosannas for central banking and Keynesian stimuli, then let me know.

Starting at least since he was named Fed Chairman, Greenspan has never been an ally of the free markets. As Ayn Rand suspected, he was a social climber, through and through.

Rad says:

Greenspan a free market ideologue? You must be kidding!

Steve says:

Always good to hear from the man who gave the banks enough rope.

doc holiday says:

FYI: Shortly after “Atlas Shrugged” was published in 1957, Mr. Greenspan wrote a letter to The New York Times to counter a critic’s comment that “the book was written out of hate.” Mr. Greenspan wrote: “ ‘Atlas Shrugged’ is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should.”

Also see parasitic behavior: Alan Greenspan, the former chairman of the US Federal Reserve, is to become an adviser to Paulson & Co, the $28bn New York-based hedge fund company that achieved spectacular investment returns at the height of the credit squeeze last year.

Mr Greenspan already holds separate advisory roles with Deutsche Bank and Pimco, the asset management firm. The financial terms of the arrangement were not disclosed.

John Paulson, president of the hedge fund, said: “Few people, if any in the world, have the experience with, and depth of understanding of, global financial markets [of Mr] Greenspan.”

Jojo says:

The End of Libertarianism
By jacob.weisberg
Created 10/20/2008 – 9:48am

A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument [1] casts as villain the Community Reinvestment Act, which prevents banks from “redlining” minority neighborhoods as not creditworthy. Another theory [2] blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue.

There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.

To which the rest of us can only respond, Haven’t you people done enough harm already?

…

Full article

==========================

Anonymous says:

Thanks for the link, JoJo. I *still* hear this from my communist friends all the time. They tell me that I am co-opted by “capitalist ideology” and that their communist principles have never been given a fair shake in the real world. When they are presented with the idea that real world implementation always will lead to totalitarian dictatorships, either by the difficult process of change in a reluctant portion of the populace or the power vacuum created thereafter, they quickly change the subject. Anarcho-capitalist libertarians are just as utopian, counterfactual and delusional as these communists. I can’t believe we don’t all openly scoff at them every day. Ron Paul is probably a good man, but his ideas are, to put it nicely, fringe (and wholly without much evidential support). It should not surprise me that the anarcho-capitalists have reacted in the same way…”our ideas have never been tried.” Cognitive dissonance. Powerful delusion. Hayek always made a point, in discussing Germany’s dissent into Naziism, that ideas are powerful. Just be vigilant that the ideas of the anarcho-capitalist fringe don’t continue to infect the general population.

BeerdedOne says:

Libertarianism may be flawed, but it is NOT to blame.

Lets be intellectually honest with ourselves and admit that Libertarians are a misunderstood, heterogeneous and largely marginal (in Washington, atleast) political group. The idea that the Bob Barrs’ of the world speak for all libertarians is as ridiculous as the idea that the Bush administration has somehow implemented Libertarian policies since 2000! I’m very unclear what motivation people have to obscure the agenda of the neoconservative / neoliberal corporatists behind a smokescreen of libertarian bashing.

The question shouldn’t be couched in the regulation/deregulation framework, but in terms of regulation for and by whom?

Corporatism has invaded our government on both sides of the aisle. Lobbyists hired by corporate interests write the laws that then are masqueraded as the ‘regulation’ or ‘deregulation’ that is needed, depending on the political climate and which party is in power.

The revolving door of high level industry/government/industry employment assures that the policy implementation is carried out with a high degree of loyalty to big banking. Watch as it happens again in the wake of this crisis.

ruetheday says:

Libertarianism (at least the natural rights variant) is based on the unjustified assumption that the right to private property and the right of contract somehow are absolute and must trump all other considerations. Furthermore, there is the additional unjustified assumption that externalities either do not exist or are so insignificant as to be safely ignored.

None of these premises are able to withstand a moment’s scrutiny, which is why serious political philosophers don’t spend much time responding to libertarians.

With regard to private property, if one follows an entitlement theory of justice, ala Nozick, one always ends up with the question of how to justify the initial acquisition of land and other unproduced natural resources. There is no solution to this problem, despite libertarians’ attempts to fudge it with counterfactual, post-hoc rationalizations like labor-mixing and homesteading.

With regard to contracts, any attempt at developing a moral system based on voluntary contract has to not only answer the question of why contracts should be ENFORCED (i.e., why individuals shouldn’t be permitted to exit agreements as easily as they enter them when either circumstances or their opinions change) but also must consider 1) the bargaining power of each party entering into the contract and 2) the information available to each party upon entry. Libertarians’ excepting of “force” and “fraud” from all agreements is just a simple-minded attempt at punting on the issue of bargaining power and information.

With regard to externalities, libertarianism relies on the unjustified assumption that all human activities can be divided into voluntary action and force (false dichotomy fallacy) and thus rules out the fact that the actions of individuals can indirectly but significantly affect other individuals without their consent. Every man is an island in libertopia. Outside of libertopia, the daily actions of individuals living in society do, in many cases, affect others.

Libertarianism debunked in three easy steps.

Hirsch V Gupta says:

Anon of 7:12a.m.

Thanks for posting the text of Ron Paul’s comments from the 1999 act.

His ideas in 1999 were undenaibly better and more organized than he was able to present it during the campaign or during his questing of the Ben Bernanke atthe hearing where he went off on a tangent and just stayed there.

Thanks again.

Sincerely

Hirsch V Gupta

Anonymous says:

Greenspan, a man who truly kneeled at the altar of Market Fundamentalism in 3 out of its 4 ugly incarnations.

Greenspan: the man who called himself a Libertarian, worshiped an Objectivist, and ran his central bank like a Neoliberal.

The 4 ugly pillars of Market Fundamentalism (don’t forget the ugliest one, Anarcho-Capitalism!) need to have happen to them exactly what happned to Communism: be consigned to the trash heap of history.

Anonymous says:

Yves, this is really unfair. Free market “ideologues”, as you call them, were the ones warning about this crisis. Folks like Mish, who subscribe to Austrian economics, know the pernicious role of the Federal Reserve, and have been calling out Greenspan as an ENEMY for a long time – take a look at Fleckenstein’s book for instance, or Grant’s interest rate observer.

I think you do a big disservice to yourself by conflating those who actually believe in free market capitalism, vs those who believe in crony corporatism and a socialized money supply. To me, it’s akin to trying to confuse Obama as a muslim. It’s distasteful and dishonest.

David says:

Greenspan was truly an acolyte of Ayn Rand and hardly a socialist so why are all the Libertarians claiming their theories weren’t influential to this mess.

Obama’s connection to High Finance like McCain’s is suspicious but at least he’s objective to Stimulus and Keynesian economics that could get us out of this mess. I suppose just letting the Market work at this point will just be the right thing to make double digit unemployment, lowering of life spans and other maladies of Unregulated 1840’s styles of Classical Liberalism (or Libertarianism).

Tell me that Scrooge was anything else but a Libertarian?

HC says:

The man in charge of the largest counterfeiting operation in the world, enforced by gun point, who willingly intervened in the money markets to distort interest rates is some how a free market ideologue? I am glad politics isn’t your specialty Yves… I mean how is setting price ‘targets’ on interest rates any different than pegging a currency or price ‘targeting’ gasoline or food? Isn’t that the whole point of a command economy? To command the prices and thereby the flow of goods? Owell would be ‘proud’ Yves…

Yves Smith says:

ruetheday,

Nicely done.

Doug,

Thanks for the book referral.

Anon of 4:35 PM,

Just because someone saw the crisis coming and attributed it to his ideology does not make the ideology valid. I have an astrologer friend who has predicted global economic and political upheaval, end of the economic order as we know it. occurring around this time a full decade ago. I tend to tune that sort of thing out, but he has been proven correct. Does that mean we should all go worship at the temple of astrology?

Plenty of people of various persuasions saw this coming, albeit all in the minority. Libertarians did not have a monopoly on foresight.