Much has been made of Paul Ryan's previous self-identified subscription to Ayn Rand's ideology during this election cycle. Many have considered it scandalous given that Rand was an unapologetic, even belligerent, atheist and Ryan says he is a strict Catholic.
But what about the rest of Rand's ideology? The aspects Ryan is praising above.
Ayn Rand never had more power and influence than when one of her acolytes became one of Washington's most powerful policymakers - the ascension of Alan Greenspan to Chairman of the Federal Reserve Board. Greenspan was a true believer, as Ryan once claimed to be. But unlike Ryan his power never required an election.
(From left to right: President Ford, Alan Greenspan, and Ayn Rand at the White House)
In the Randian worldview the individual is not only paramount but anyone discussing the common (collective) good is immoral because man is an end in himself and markets are the great decider of value and merit. So those that gain wealth in a "free market" should keep it all for themselves. Or as is popularly put "taxation is theft."
Therefore lowly workers deserve as little pay as possible, whatever the Great Man is willing to pay. Demanding higher wages or forming collective organizations (read unions) is also immoral. Anything that puts demands on capital is immoral, tyrannical, and socialistic (evil).
So the task for Alan Greenspan was how to make sure the rich (great) men got richer and the poor (moochers) got poorer. And by god he found a way.
Greenspan's greatest achievement was - at least for a short time - solving the most irritating problem a Randian has with regulated capitalism; too much equality. Why are the moochers getting so much or rather why are the moochers getting anything?
Greenspan ensured the moochers got properly screwed as Randian reason dictated by using his position as Federal Reserve chair to throw more non-rich/mooching Americans into debt and poverty while pumping the rich/great men's holdings to the moon.
To put it another way, Greenspan was able to achieve asset inflation while holding down wage inflation. A difficult task only achievable with concerted effort and, as discovered in 2008, not sustainable over time. Woops.
You see the problem with massive inequality is - it's very unstable. Rich people, no matter how great they are, have limited consumption capacity. They can only buy so many cars (elevators not withstanding), eat so many meals, and buy so many toys.
Hence, cutting taxes on higher incomes has little to no stimulative effect for goods and services (GDP). What it actually does is stimulate something else.
Because the rich meet their consumption limits they take their excess capital and buy assets. Stocks, bonds... real estate. And that asset buying combined with other factors (here's where Greenspan comes in) leads to asset inflation aka bubbles. Buying begets buying and the bubble goes higher - until it pops. Something Greenspan believed, due to his philosophical convictions, would not happen.
ALAN GREENSPAN: Well, remember that what an ideology is, is a conceptual framework with the way people deal with reality. Everyone has one. You have to -- to exist, you need an ideology. The question is whether it is accurate or not.Translation: Ayn Rand was wrong.
And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.
REP. HENRY WAXMAN: You found a flaw in the reality...
ALAN GREENSPAN: Flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
But lets move past the consequences of inequality for the rich and look at Greenspan's Randian policies for the non-rich/moochers.
Creating asset inflation as Greenspan did is relatively easy for a Federal Reserve Chairman - keep interest rates ridiculously low. Chairman Bernanke has even gone farther by allowing banks to front run the Fed's treasury bill purchases aka "quantitative easing" transferring billions to Too Big To Fail Banks' balance sheet. Talk about welfare queens!
By keeping interest rates at zero Greenspan showed he really loved those great men Ayn Rand praised in her novels. One of which was based on a serial killer, but whatever.
OK, asset inflation - rich getting richer, check. What about the moochers? How to keep wages down? Lower wages means more profit!
This is where Greenspan innovated, his solution? Debt. The noose of debt would strangle workers, denying them enough blood flow to fight back, weakening them into submission. Debt combined with a volatile economy would lead to "worker insecurity" helping those great men keep the moochers in line.
Today, large numbers of people have become so demonstrably insecure about whether their skills will still be relevant in, say, five years that they fear for their jobs.But about a year later wages started to creep up. From Greenspan's February 26, 1997 report to Congress:
This insecurity is evidenced by the fact that they have increasingly forgone wage hikes for job security. As a consequence, the past few years have been a period of extraordinary labor peace. In fact, 1995 had the lowest strike record for a half-century. Moreover, labor contracts, which historically almost never extended beyond 36 months, are now sometimes going out five and six years as people try to lock in job security, often willing to forgo significant wage increases in the process.
In 1991, at the bottom of the recession, a survey of workers at large firms by International Survey Research Corporation indicated that 25 percent feared being laid off. In 1996, despite the sharply lower unemployment rate and the tighter labor market, the same survey organization found that 46 percent were fearful of a job layoff.Translation: Consumer debt is at historic highs which along with globalized competition makes workers very insecure - which is great because it has lead to peace in the labor market. Oh, and if the small wage gains continue I'm going to crack down on them.
The reluctance of workers to leave their jobs to seek other employment as the labor market tightened has provided further evidence of such concern, as has the tendency toward longer labor union contracts. For many decades, contracts rarely exceeded three years. Today, one can point to five- and six-year contracts--contracts that are commonly characterized by an emphasis on job security and that involve only modest wage increases. The low level of work stoppages of recent years also attests to concern about job security...
If heightened job insecurity is the most significant explanation of the break with the past in recent years, then it is important to recognize that, as I indicated in last February's Humphrey-Hawkins testimony, suppressed wage cost growth as a consequence of job insecurity can be carried only so far...
In light of the developments I've just discussed affecting wages and prices, we thought inflation might well remain damped, and in any case was unlikely to pick up very rapidly, in part because the economic expansion appeared likely to slow to a more sustainable pace. In the event, inflation has remained quiescent since then.
Given the lags with which monetary policy affects the economy, however, we cannot rule out a situation in which a preemptive policy tightening may become appropriate before any sign of actual higher inflation becomes evident...
... consumer debt burdens are near historical highs, while credit card delinquencies and personal bankruptcies have risen sharply over the past year. These circumstances may make both borrowers and lenders a bit more cautious, damping spending. In fact, we may be seeing both wealth and debt effects already at work for different segments of the population, to an approximately offsetting extent.
Take that moochers!
Paul Ryan is now trying to distance himself somewhat from Ayn Rand. His convention speech invoked religious rather than Randian themes.
But when it comes to fiscal and monetary policy where will the Romney-Ryan team turn?
According to the Washington Post, Hubbard may be the next Greenspan.
Besides the conflict-of-interest segment of Inside Job, Glenn Hubbard is well known as the architect for the 2003 Bush Tax Cuts, a policy he still defends. And today continues to advocate supply side economics claiming raising taxes won't work in solving the deficit:
Where President Obama is both disingenuous and feckless even is suggesting that raising marginal rates somehow would have much to do with deficit deduction. The math just doesn't work.Looks like if Romney-Ryan get in the moochers/vast majority of Americans are in for some tough times. Flaws aside.