In Atlas Shrugged, a Dr. Robert Stadler taught physics at Patrick Henry University. He was the pre-eminent theoretical physicist of the day. The State Science Institute was formed with the blessing of Dr. Stadler. His esteemed name gave it an importance that it never earned in reality.
As society worsened morally and the government increased its control over all commercial and intellectual life, the government decided it needed a potent weapon to control the increasingly unruly population. Dr. Stadler thought politics a dirty business and so did not question nor protest the Institute's activities. While observing the new weapon in a test, Dr. Stadler saw the horror of what had been created in his name. Alas, he was trapped. He became an apologist for the Institute's illogical and inhumane activities. Ultimately he was killed by a drunken bureaucrat at the controls of the machine.
In current day America, a Mr. Alan Greenspan was an esteemed intellectual businessman. His name glowed on Wall Street. In 1987 he was appointed head of the Federal Reserve Bank and managed to lower inflation at a time when it threatened to run away, throwing society into chaos. His name, his intellect, his measured manner and his results gave the Federal Reserve Bank a new importance which it had not earned prior.
As the society worsened morally and the government increased its control over all commercial and intellectual life, the government decreed the lending of money to unworthy borrowers. Being quiet and measured, Mr. Greenspan did not enter the fray of politics. Although he commented on the exuberance of the market, he took no action to counter the growing bubble. His non-action provided certainty that all was well.
This year the bubble burst. The assets and prosperity collapsed. Before the House Oversight Committee he admitted that he had erred in his predictions and even worse, erred in his philosophy.
His philosophy had always been that it was morally right for men to freely trade their values. Finding an error in his philosophy without specifying his meaning, he completely capitulated. He was unable to use his last platform to stand for the morality of capitalism nor offer moral support to the millions tested by the current crisis. Rather, like the Titanic, he slipped to the depths of history with his last sound being a soft "bloop."
The goblins of October began dancing on freedom's grave.
So much for the power of living a contradiction.
Thanks to my friend, Terry, for noticing the likeness between these two characters.
Saturday, October 25, 2008
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3 comments:
Steve, this post is great! I wish Alan Greenspan could read it. Or at least I hope that somebody else will show him the similarity if he doesn't see it already. I have always thought that the worst betrayal one can do is to betray oneself. If I am correct about that, Alan Greenspan has already punished himself more than anyone else could punish him.
Elena C.
Steve, this is from Greenspan's book, The Age of Turbulence. On page 242, we read:
"The administration also took the Fed's advice on policies we thought were essential for the health of the financial markets. Most important was the effort that began in 2003 to curb excesses at Fannie Mae and Freddie Mac, the companies chartered by Congress to help underwrite home mortgages. They were granted a de facto subsidy by financial markets in the form of interest rates with very low credit-risk premiums on their debt--markets presume Uncle Sam will bail them out in the event of default. Fannie and Freddie had been using this subsidy to pad their profits and grow. But their dealings had begun to distort and endanger the markets and seemed likely to become a bigger and bigger problem. The companies employed skillful lobbyists and had powerful advocates in Congress. President Bush had very little to gain politically by supporting a crackdown. Yet he backed the Fed through a two-year struggle that resulted in crucial reform."
You have to ask, what is he talking about? What crucial reform and how crucial was that reform if, in retrospect, the problem was not really fixed? He also appears to be taking credit for fixing this problem that was not fixed. Is his memory bad? We know he testified in Congress and warned about the problems of Fannie and Freddie but I'm baffled by the reforms that he says were put in place.
Notice he does not even question the propriety of even having organizations like Fannie and Freddie.
Here's a quote from Greenspan years before he capitulated.
"Government regulation is not an alternative means of protecting the consumer. It does not build quality into goods, or accuracy into information. Its sole 'contribution' is to substitute force and fear for incentive as the 'protector' of the consumer. The euphemisms of government press releases to the contrary notwithstanding, the basis of regulation is armed force. At the bottom of the endless pile of paperwork which characterises all regulation lies a gun."
"The Assault on Integrity," Capitalism the Unknown Ideal, 1962, hb, p.113.
Earlier in the article he states, "Reputation, in an unregulated (my emphasis) economy, is thus a major competitive tool." So what does a regulated economy do for being concerned about one's reputation? This is the issue he should have addressed. Once he became a regulator, I assert he lost that distinction which had been present for him before or he didn't account for how regulation changes the businessman's concerns. Blaming the businessman rather than the government as primary cause for this debacle is his egregious error.
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