DISSECTING RAND Part V: How Rand’s Followers Destroyed Our Economy


What if everything Ayn Rand ever uttered about economic theory was totally and completely wrong?  If so, and Alan Greenspan has based his entire career pushing her debacle upon us, we’re in for some troubling economic times in the US.  Let’s be honest here, her philosophy has destroyed our economy.  The real reason we are in such economic trouble is because of Rand, and her devoted followers putting her perverted ideas into play.

Austerity does not work.  It brings down governments, impoverishes people, and ruins lives, but it is good for those Rand, and her followers worship – the ultra wealthy.  The strange thing here is that anyone who dares complain about this is castigated as a socialist, for complaining that her principles or lack there of, are almost just that – socialistic.

Rand’s economic theory is destructive, deadly, and is destroying our country.  It is destroying the GOP.  It has made fools out of well meaning men like Paul Ryan.  My grandfather Froehlich’s abject distrust and disdain for Alan Greenspan has been well proven.  Grandy said fools like Greenspan would eventually destroy our country by destroying our economy.  He was right.

According to Charles Dumas, if European austerity, much the same of Randian, is put into play in Greece and maybe even Spain, it will cause such high unemployment that it will crash wages.  When wages crash, democracy is the loser.  Countries are then ripe for a take-over by someone not very nice.  There is a prime example for this – Germany in the 1930s.  We all know what happened after that.

This could say it all:

Raw Story

In other words, Rand’s economic theory is an abject disaster.

“…The economist dismissed the notion that the region would be able to turn itself around so as to make such support from its ‘core’ unnecessary. Citing the example of the persisting transfers from west to east Germany, he pointed out: ‘The ones that need the money to flow in carry on needing the money to flow in, or just stay poor.’

Dumas also warned that austerity was only worsening Greece’s budget deficit, and that it was ‘difficult to imagine’ the deeply indebted state receiving the four quarterly batches of financing it is due this year.

‘It’s almost impossible to imagine people continuing to stump up the money, because they simply have not actually gone into this thing with the intention of unrequited transfers to Greece ad infinitum,’ he said as the country resumed talks with its creditors over a planned debt swap.

Calling the one-off damage of splitting up the eurozone ‘seriously exaggerated’, Dumas warned that as the crisis deepens, he believes ‘Germany and the Netherlands will actually realise that they had better call it a day and jump out.’…”

UK Telegraph

All of this basically, completely disproves the GOP’s current economic path.

“...As Charles Dumas from Lombard Street Research argues, the EU doctrine of “internal devaluations” is based on a fallacy. Restoring competitiveness through wage cuts is not remotely equivalent to currency devaluation.

The mechanism of an internal devaluation is to push unemployment to excruciating levels until it breaks the back of labour resistance, opening the way for pay cuts. In fact, it tends to break societies before this theoretical outcome is achieved – if it can be achieved in a context of high debt loads, the Irving Fisher effect.

(Yes, yes, we all know about the Baltics. But Estonia had no public debt when it embarked on its internal devaluation. Chalk and Cheese. Latvia was middling, but it is a tiny open economy that can piggyback on Sweden. The context is entirely different.)

Actual devaluations have the opposite effect. They prevent unemployment from rocketing, instead forcing down demand for imported goods. Iceland’s jobless rate is 7.5pc, nota bene, and its economy grew 2.9pc last year (OECD data). Remember all those dire predictions about Iceland, all those tut-tuts that it was paying a terrible price for clinging to the illusion of a sovereign currency? Even the great Prof Barry Eichengreen fell for that one. His other work redeems him.

Like many journalists, I am bombarded with reports asserting that Greece would suffer near total collapse if forced out of EMU, with some claiming that GDP would fall by 50pc with inflation spiralling into the hyper-sphere.
These numbers are plucked out of thin air. None of the analysts know what they are talking about, and Europe’s political elites – the elites that created this impasse – know even less.

We were told almost religiously that Britain could not safely leave the Gold Standard in 1931 or the ERM in 1992, or that such moves would set off dangerous inflation, and were told much else besides by the shroud-waving hysterics and defenders of the status quo.

We know what actually happened. The UK had its best decade ever relative to other major powers in the 1930s, at least in modern times. Its democracy remained rock solid through the late Depression as others crumbled one by one, or ended in paralysis as in France….”

I know, Ayn Rand is to be worshiped. At the very least, we are to fall at her feet, in awe, and be thankful that we are living in a world where her financial visions are being put into grand use. Now that the GOP is among those who worship her very essence, we have become objects of scorn, and rightly so.

“…In the liberal blogosphere, which I frequent, there has been for a number of years now a good deal of focus on the new, ersatz Republican followers of Ayn Rand’s writings. Alan Greenspan himself, the maestro of our current financial debacle, was one of Rand’s most devoted followers — he actually sat at her feet as a college student and was editor of one of her Objectivist publications. As a result, to this day he so objects to any government regulation of any business or financial activity that he once told Brooksley Born that he was not even in favor of prosecuting financial firms that committed fraud because that would only interfere in the market’s ability to punish such firms itself. (He, Larry Summers and Bob Rubin were also instrumental in crushing Born’s attempt to impose derivative regulations while she was with the CFTC; of course, given that unregulated derivatives trading is a large part – if not the largest part – of how the financial industry got into the mess it did, that decision seems in retrospect very, very stupid).

In Congress, of course, we have Rep. Paul Ryan and his plan to wage war against almost everyone in America for the benefit of his small number of rich paymasters, and we have newly elected Senator Rand Paul who makes no bones about the fact that he is an Ayn Rand devotee (although it is not true that he was named after Rand; my understanding is that his name is short for ‘Randal’).

And this constant reference to Ayn Rand’s writings by our new Republican Overlords — who, despite controlling only one chamber of Congress, somehow manage to decide what issues must be taken up by the government (abortion and the deficit, but not jobs or the economy) and how those issues must be framed — and by bloviating Conservative pundits and TeeVee talking heads, has had an affect on the people who listen to such folk….”

Alan Greenspan used his philosophy, based on Rand – and destroyed our economy.  Oh, wait, the rich are getting richer, the rest of us are struggling to survive, so Rand does work.  It’s all about the glittering rich, stomping over we, the little people.  Thank to Greenspan and a few others, we’re now living in an Ayn Rand world.

God Help Us All…

Wait, Rand was an atheist.

Ayn Rand Nation - Gary Weiss

What gets me is the GOP, which has sold its sole to the Randian plutocrats, doesn’t really care about any of this.

Ayn Rand Nation?

“...“Globalization, technological advances, a drop in unionized work, and a deregulated labour market have contributed to stagnant real incomes for most in Canada and the US since the 1980s,” he said.

Osberg said that income disparity “has accelerated” in both Canada and the United States.

“This combination of stagnant real incomes for most people and a rapid rise of the incomes of the richest one percent in the United States and Canada has produced steadily increasing income inequality — to a level that hasn’t been seen since the 1920s,” he said.

“Increasing inequality is not a sustainable trend,” Osberg warned. “When those at the top keep amassing income, their growing savings have to go somewhere.”

“When the rising savings of the rich are parked in the financial markets, but everyone else falls deeper into debt, a house of cards is created, producing the kind of economic instability that led to the 1929 financial sector crash and the market meltdown of 2008.”…”