In a frankly embarrassing Naomi Klein/J. Edgar Hoover-like wishful ideological free association, Brian Leiter Gerald Dworkin, a professional philosopher, suggests we pin the financial crisis on Ayn Rand because (1) Alan Greenspan used to be head of the Fed, (2) had a bit of an anti-regulatory bent relative to Alan Blinder, and (3) was once a confederate of Ayn Rand, who was a principled advocate of laissez faire capitalism. The funny thing is, the Greenspan essay I recall reading in Capitalism: The Unknown Ideal was about how we should have a gold standard! It’s like a pacifist running the DOD! (After, say, the first ten years, you might start doubting the pacifism.)
Naturally, Greenspan’s taste for devil-take-the-hindmost capitalist ideology explains why the GSEs were created by the government, given crucial regulatory advantages over more conservative traditional lenders, more or less made the market for mortgage backed securities, etc., etc. No doubt the ghost of Ayn Rand whispering in Greenspan’s ear at night explains why in 2005 he didn’t warn that Fannie and Freddie were undercapitalized and holding too many risky mortgages. And Bill Clinton defends the repeal of Glass-Steagall to this day because, yes, he too is a died-in-the-wool Randroid.
The other funny thing is that Leiter Dworkin thinks it’s clever to quotes Keynes here:
Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.
That this is true is, of course, the fantasy of academic scribblers. Sadly, Keynes, of all defunct economists, never saw this fantasy come true, and the actually-existing consensus view of the role of the Federal Reserve and the Treasury in managing the economy from Washington has nothing at all to do with Keynes, and nothing at all to do with what has recently transpired in the financial markets. Surely the problem is that we didn’t Keynes it up enough! But Ayn Rand… Now there’s the intellectual force behind the status quo structure of American monetary and regulatory policy!
In times like these the hackery abounds.
[Added: See correction post above.]
Will Wilkinson 