Archive for September 14th, 2011

Matt Taibbi on Greenspan, Rand and the Crisis

Rolling Stones reporter Matt Taibbi’s book Griftopia: Bubble Machines, Vampire Squids and the Long Con that is Breaking America is not only a must read book, but his writing style makes it immensely fun to read.  His argument is essentially that thanks to de-regulation and out of control capitalism, a small elite has been profiting handsomely by rigging the game in their favor.  This not only has led to a massive shift of relative wealth to those at the top, but has undercut the very foundation of American strength and productivity.   The result is a real threat that America’s best days may be behind us, unless we can reassert the capacity of the state to regulate the market so that it functions for everyone, and can’t be hijacked by the moneyed elite.

The book itself is worth reading, even if you disagree with it (in fact, those who are skeptical of his argument should read it — we all should read books from a perspective we disagree with).     My favorite chapter is the second, entitled “The Biggest Asshole in the Universe,” which is about Alan Greenspan.   A taste of his writing style, starting on page 38 as he describes Greenspan’s flirt with the pseudo-religion ‘objectivism.’:

“It is important to spend some time on the seriously demented early history of objectivism, because this lunatic religion that should have choked to death in its sleep decades ago would go on, thanks in large part to Greenspan, to provide virtually the entire intellectual context for the financial disasters of the early twenty-first century…

“One of the defining characteristics of Rand’s clique was its absolutist ideas about good and evil, expressed in a wildly off-putting uncompromising bombastic rhetoric that almost certainly bled downward to the group ranks from its Russian emigre leader who might have been one of the most humor deprived people to ever walk the earth…”  (p.38-39)

After mocking Atlas Shrugged he goes on, page 41: “According to objectivists, the belief in ‘objective reality’ means that ‘facts are facts’ and ‘wishing’ won’t make facts change.   What it actually means is ‘When I’m right, I’m right’ and ‘My facts are facts and your facts are not facts.

“This belief in ‘objective reality’ is what gives objectivists their characteristic dickish attitude: since they do not really believe that facts look different from different points of view, they don’t feel the need to question themselves or look at things through the eyes of others. ..the real meat of Randian thought (and why this all comes back to Greenspan) comes in their belief in self-interest as an ethical ideal and pure capitalism as the model for society’s political structure.  Regarding the latter, Randians believe government has absolutely no role in economic affairs; in principle government should never use ‘force’ except against such people as criminals and foreign invaders.  This means no taxes and no regulation.

“To sum it all up the Rand belief system looks like this: 1. Facts are facts, things can be absolutely right or absolutely wrong, determined by reason.  2.  According to my reasoning, I am absolutely right.  3.  Charity is immoral.  4.  Pay for your own fucking schools.

“Rand, like  all great con artists was exceedingly clever in the way she treated the question of how her ideas would be employed.  She used a strategic vagueness that allowed her to paper over certain uncomfortable contradictions.”  (Taibbi goes through and tears Rand apparent by pointing out clear contradictions in how her ‘theory’ could be applied)

Page 42: “A conspicuous feature of Rand’s politics is that they make absolutely perfect sense to someone whose needs are limited to keeping burglars and foreign communists from trespassing on their Newport manses, but none at all to people who might want different returns for their tax dollar.  Obviously it’s true that a Randian self-made millionaire can spend money on private guards to protect his mansion from B and E artists.  But exactly where do the rest of us look in the Yellow Pages to hire private protection against insider trading?  Against price-fixing in the corn and gasoline markets?  Is each individual family supposed to hire Pinkertons to keep the local factory from dumping dioxin in the county reservoir?

“Rand’s answer to all these questions was to ignore them.  There were no two headed thalidomide flipper-babies in Rand’s novels, no Madoff scandals, no oil bubbles.  There were, however, a lot of lazy-ass poor people demanding welfare checks and school taxes.  It was belief in this simplistic black and white world of pure commerce and blood sucking parasites that allowed Rand’s adherents to present themselves as absolutists, against all taxes, all regulation and all government interference in private affairs — despite the fact that all of these ideological absolutes quietly collapsed whenever pragmatic necessity required it.  In other words, it was incoherent and entirely subjective.  Its rhetoric flattered its followers as Atlases with bottomless integrity, but the fine print allowed them to do whatever they wanted.   This slippery self-serving idea ended up being enormously influential in mainstream American politics later on.”

He also recounts how Rand used Stalinist like methods with her group, showing her to probably be one of the most depraved “thinkers” of the 20th Century.   To this day so-called “objectivists” even try to pay philosophy professors to use Rand in their courses, even though her thinking has no philosophical weight.

The sad thing is that this kind of anti-government attitude led to a weakening of the structures of the state meant to protect us from the dangers of unrestrained greed, and caused even the working poor to somehow think the brokers earning multi-million dollar bonuses selling worthless mortgage backed securities shouldn’t pay taxes or have their work scrutinized.   The current financial collapse is an indictment of de-regulation and a belief that somehow capitalism can work without a strong state.   It’s one reason why America lacks true conservatives — conservatism sees the community and its health as important.   American conservatives have strayed from that ideal.

Taibbi investigates this through the mortgage scams, the run up of oil prices due to commodity speculation (controlled by a few big financial institutions), the health care reform act (which he says helps the insiders) and the economic “bubble machine.”    Does he overstate the extent of the problem?   Probably.  But his facts are eye openers, his real life examples show how average people suffered thanks to de-regulation and insider abuse, and even the skeptical will come away from this book realizing that “business good, government bad” view (reminiscent of Orwell’s “four legs good, two legs bad”) is insanely simplistic.  Moreover, when government is essentially controlled by big money, we all pay the price.  Both left and right should be able to agree on that!