An irreverent opinion piece on the over-idealism of Libertarianism.
I'm not fan of Libertarianism. Especially the extreme idealism of it. Often in direct contrast to perceived reality. In fact I see the same, or at least similar idealism as when Marxism was young. Both completely ignored obvious flaws in favor of the vision of the dream.
All of this is true, which is why neither of those movements are particularly significant today in America. Libertarians are fringe, Marxists are nonexistent. This article was just the usual preaching-to-the-choir junk that you get from (if you'll allow me the same fallacies that the author uses) people who are so smart that they can "see through Rand." Yeah, great, you've realized that Rand's followers are silly. Trumpeting it to everyone like you've had an epiphany quite possibly makes you even sillier. When I read Rand in junior high, I was on a sci-fi/fantasy kick. She fits into those labels somewhere or another. Atlas Shrugged is just a cool semi-apocalyptic novel that drags on a bit -- if you look at it from an apolitical perspective (I was 12). The Fountainhead is just a sad but triumphant underdog story that got me interested in architecture a for a couple of years. Objectivism is nuts but I don't think I knew what Objectivism was until long after I read Rand for pleasure.I'm not fan of Libertarianism. Especially the extreme idealism of it. Often in direct contrast to perceived reality. In fact I see the same, or at least similar idealism as when Marxism was young. Both completely ignored obvious flaws in favor of the vision of the dream.
Alan Greenspan on Ayn Rand I had an economics professor state that Alan Greenspan had had more influence on the Western world than George H Bush and Bill Clinton rolled together. To say that Libertarianism is "fringe" is to have slept through 2008.
In spite of my other posts, I'm pretty skeptical of the importance of monetary policy. For starters, it seems like a misnomer, since there's no particularly good reason to believe that the money multiplier is reliable. That is, it seems like monetary policy is based on an exogenous theory of money, while in reality it seems more likely that lending is driven by demand at a particular interest rate -- and while the Fed can set the interest rate, it can't set demand, and in that sense the causality of the money multiplier may very well go the other direction. But even if money is exogenous and monetary policy works, it's presumably even less relevant to asset bubbles, because the interest rate of a loan only matters if you plan on holding it. If the plan is to buy a house and flip it, thus extinguishing the loan quickly, then the rate of the loan doesn't matter. If there's any way in which Greenspan (or the Fed generally) was important, it was that it's supposed to be a regulator for the banking system, and it totally dropped the ball.
... You have a uselessly limited definition of 'monetary policy' if your definition doesn't include regulating the banking system.In spite of my other posts, I'm pretty skeptical of the importance of monetary policy
If there's any way in which Greenspan (or the Fed generally) was important, it was that it's supposed to be a regulator for the banking system
Monetary policy is (allegedly) controlling the size of the money supply as a matter of macroeconomic policy enforcement, but I can see how "..." is a solid refutation of the problems for that viewpoint posed by endogenous theories of money. It turns out, just because something is accepted wisdom, that doesn't make it true. Regarding your link, I'm immediately turned off by anyone who would use the phrase "the grand illusion called money." Money has value for a very good and very tangible reason. Though the fact that it has a testimonial from Ron Paul just makes it sound like even more of a joke.
But does flipping it really extinguish the loan if the purchaser took out a loan to buy it? If the purchaser was able to get a larger loan based on the lower rates, then the low rate helped create the sale (i.e. the house was now worth more than the original owner payed for it, because someone with an equal income can now get a larger mortgage). Now the original owner has more money, and he goes out and gets a larger mortage too, buying a more-expensive home, whose owner, etc. etc.But even if money is exogenous and monetary policy works, it's presumably even less relevant to asset bubbles, because the interest rate of a loan only matters if you plan on holding it. If the plan is to buy a house and flip it, thus extinguishing the loan quickly, then the rate of the loan doesn't matter.
Well, mortgage bubbles in particular tend to be accompanied by mortgage fraud. One of the biggest factors in the global financial crisis was so-called accounting control fraud: executive compensation was (is) based on quarterly revenue, and executives could fraudulently increase quarterly income by issuing a ton of loans with negative expected returns. The bank might go under in five years, but why does the executive care? Then, on the flip side, brokers are paid on commission, so they have strong incentives to make sure that mortgages make it. I point this out to say that neither morals nor "rational self-interest" represented serious constraints on the growth of lending, because the problem with the argument from self-interest is that it's usually considered with respect to the wrong person's interests. Anyway, during the later days of the real estate bubble of the '00s, the focus for particularly bad lending shifted to loans in which banks did not actually verify the applicants' stated income. (This is normally reserved for people who the bank has good reason to believe are actually good for it.) So I suppose the point is, in principle this could represent a higher constraint, but in practice, "where there's a will, there's a way."
I have no doubt that mortgage fraud played a big role. But what I am suggesting is that monetary policy could fuel an asset bubble simply by increasing available credit by pinning down rates. No doubt, relaxed lending and fraud would only exacerbate this, which I'm sure it did.
Yes, I suspect that is possible, but then my theory of asset prices is that people have a bias toward the status quo, and the perception of change ("new information") makes people think prices should change, so they proceed to change prices. So there is a question about how much policy rate changes are just due to this sort of circular reasoning ("something should be happening, so let's do something!") versus actual changes to the availability of credit. That being said, the real skepticism here is whether monetary policy can be used to stop an asset bubble once it's started.
Yeah, I've read that book. It's interesting that Greenspan managed to make everyone forget he was an acolyte of Rand's right about the time he shot to fame. I've also heard the claims of Greenspan's massive (negative) influence on the west. So if your argument is that Rand (and libertarianism) influenced Greenspan, who influenced everything else (especially the bubble, which he partially caused), then I agree with you. But that's an extremely roundabout way to have influence.
Because Rand was only one of presumably dozens of influences on Greenspan's political makeup, and Greenspan was only one of several causes of the 2008 collapse. And keep in mind that fringe beliefs can cause major occurrences and still be considered fringe. (Also as I said below to u/sphericalvoxel, fringe to describe libertarians is somewhat hyperbolic.)
Sadly, while self avowed Libertarians may be fringe, some of the more demented and intellectually stunted aspects of their ethos have taken hold in mainstream Republican Politik. Libertarianism can't be mainstream because it literally doesn't work in practice. The actual mechanics of it don't map to reality. But Libertarianism's ideals are aspirational for half of our political culture's mainstream then there is plenty of damage to be done. We've been seeing this for years now. It's horrendous.Libertarians are fringe
Although I think you can easily find instances of people practicing 'libertarian principles' (and probably just as easily 'communist principles'), IMHO there is a great distance between that and a successful public policy. The reason why I also mention communism is that I find libertarianism and communism to be very similar in the fact that they don't naturally occur on large scales, which I think is very telling.
I think "libertarian" is a large umbrella. Remember that Paul Ryan (who at least identifies as an objectivist) is the chairman of the House Budget Committee and was a major party vice presidential candidate last year. Of course, they lost, but the margin was way closer than it should've been if this ideology is at the fringe. More pressingly, though, neoliberal dogma has reduced much of the economic discourse to "private sector good, public sector bad." That is, it's still very commonly believed that governments negatively distort markets (and that this is inherently and always bad), that public deficits (fiscally) crowd out private investment, and I'm sure there are still people who believe that public deficits are self-defeating because consumers will save the extra money to pay imagined increased future taxes. So anyway, it may seem blindingly obvious (and a bit silly) to beat up on libertarianism, but by all accounts, people do in fact believe their bullshit. Maybe not under that particular banner, and maybe not in all ways, but neoliberalism is still the benchmark.Libertarians are fringe.... Yeah, great, you've realized that Rand's followers are silly. Trumpeting it to everyone like you've had an epiphany quite possibly makes you even sillier.
Yes, that was slight hyperbole. Paul Ryan is obviously not fringe, but he's not mainstream either. There's something in between, and he's it. In my opinion, he and his supporters have a much better chance of slipping back to fringe than they do ascending to mainstream. And I think Rand, specifically, can truly be called fringe at this point in time.
Yes, sweeping generalizations are always something to avoid. It may be true that a majority of the people act that way, but to assume that all of them do is a dangerous position to take.
“To describe [Ayn Rand]as a minor figure in the history of philosophical thinking about knowledge and reality would be a wild overstatement,” says Brian Leiter, director of the Center for Law, Philosophy and Human Values at the University of Chicago. http://www.nytimes.com/2009/08/02/business/02bbt.html?_r=0&#...
Good Read pertaining to Ayn Rand
Here is a unbiased biography of Ayn Rand. http://en.wikipedia.org/wiki/Ayn_Rand I personally call her a minor figure though those that follow her philosophy would probably not.