Ding-Dong, the Witch is Dead. Now What?

There have been a lot of theories tossed around during the last several months to explain the economic crisis that has finally hit the United States. Perhaps it's because the effects of the long-brewing situation intensified during a presidential election, but it's notable just how political so many of the explanations have been. So many citizens are curious as to how the arcane manipulations of the system are going to hit them. For too long, otherwise intelligent and informed folks have taken it for granted that the markets work themselves out over time. There was no great perceived need for the populace to follow along too closely. I am certainly guilty of giving the workings of the economy little consideration.

It's become imperative that I drop my personal distaste for the details of the economy. Everyone seems to agree that we are in for a long period of tumult, and many are sure that we are entering a period of depression. How is that going to affect me and my family? How can I ensure the value of the money I have saved over a period of years? What is my life going to look like if shit really hits the fan? No doubt there are a lot of people asking themselves the same exact questions nowadays. But where can someone with little background in economics turn for substantial answers to these questions? It stands to reason that anything that has been said in the midst of a presidential election should be viewed with skepticism.

I do have recourse to a couple of friends that have been paying attention to the markets for a long time. These individuals have developed perspectives that go beyond the simple conclusion that we are "screwed". They offer insights into what may happen over the next several years. Still, it's obvious that no one can say for sure. People can't even agree on the reasons why we are in this terrible position in the first place. If you've been paying attention, you have no doubt heard from some "free market" capitalists that it's actually the fault of what little regulation has existed in the housing markets over the last decade. These guys are still pimping 80's-era mythology. The last refuge of the ideologue is denial.

Yet there are still "conservatives" that will blame the entire Wall Street debacle on Bill Clinton, Jimmy Carter, and the Community Reinvestment Act. The blame (under this theory) rests solely at the feet of low income (minority) borrowers that got in over their heads with mortgages that they could never afford. If you research the numbers, you discover quite quickly that this is a smokescreen. The percentage of subprime mortgages that were mandated by the CRA is minimal. There were people from all over the class spectrum taking out loans that exceeded the amounts that conventional wisdom dictated as prudent. Who was responsible for perpetuating the myth that housing values would increase by exorbitant amounts forever?

Naturally there were others (besides Clinton) identified as culprits. Alan Greenspan refused to raise interest rates despite the cautionary warnings that observers were delivering. Greenspan, a disciple of objectivist Ayn Rand and true believer in the "free market", failed to recognize the housing bubble until it was much too late to stave off the crisis of its resounding burst. As late as 2004 he was still encouraging prospective buyers to take out adjustable-rate mortgages. Greenspan's love affair with derivatives extended to mortgage-backed securities as well. He absolutely refused to entertain any regulations concerning these unproved and shaky financial instruments. Such tools have been identified as a further compounding cause of today's perilous economy.

Despite the fact that Greenspan was still trying to defend his outmoded libertarian views as late as this past April, he finally admitted his culpability on October 23, 2008, in testimony to Congress. In his dotage, Greenspan finally had to admit the fallibility of his lifelong commitment to "free market" ideology- "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief." Always admired for his qualities of understatement, when asked whether that meant his views had been wrong Greenspan responded, "Absolutely, precisely”. Little good that does us now. We'll pay the price of for his faith. But now that the "free market" witch is finally dead, what happens now?

John A. Allison, Ayn Rand, and Higher Education.

Sometimes I wonder about the American understanding of 'charity'. In 2005, John A. Allison IV gave a $1 million donation to the University Of North Carolina-Chapel hill. Since then, he and his company have doled out millions more to 25 colleges and universities. This past January, it was announced that Marshall University in West Virginia would be the next recipient. Allison is the chairman and CEO of BB&T (Winston -Salem, NC), which is one of the largest banks in the United States. Allison's contribution probably won't 'break the bank' (so-to-speak), as his company's assets have been estimated by the NYSE to exceed $100 billion. I have no qualms about the size of the gift. If I saved every penny of my discretionary income for the rest of my natural working life, I would likely not even be able to accumulate a fifth of that amount. Although Allison felt no real sacrifice, it was still a generous sum.

I don't want to discourage authentic philanthropy, but the conditions Allison places on the universities where he makes his offers are (at the very least) problematic. He makes his 'donations' contingent on the fulfillment of a very specific set of compromises. Each university and college has to create an Ayn Rand reading room. Additionally he requires that Rand's Atlas Shrugged be included in the curriculum of at least one course. I guess this isn't a huge surprise, given that Allison has been a major contributor to the Ayn Rand Institute: The Center for the Advancement of Objectivism (A.R.I.). Their stated mission is "...to spearhead a cultural renaissance that will reverse the anti-reason, anti-individualism, anti-freedom, anti-capitalist trends in today's culture."

It really shouldn't be shocking that a banking institution would try to promote the unconstrained embrace of capitalism. But it is dishonest for Allison to suggest that he is doing anything other than facilitating a program of propaganda in our higher educational system. The activities of Allison and the A.R.I are (by definition) extremely self-serving. Randian philosophy is characterized by an unquestioning devotion to one's own self-interests. It is a 'system' of thought inundated with arbitrary dichotomies and overly simplistic black-and-white thinking. It teaches its students to be doctrinaire in their analysis, and insensitive to nuance. In many ways it reflects the inherent values of the present leadership of the United States.

According to the disciple of Ayn Rand, anything that is not characterized by pure "laissez-faire" capitalism is "statist" (the Randian term for 'socialist'). There is no middle ground, and no acknowledgment of degree. The brand of "statist" is always damning, and serves as a shorthand method of ending conversation and/or negotiation with a 'principled' condemnation. It is the philosophy of late adolescence, when an organism strives for an individuation enabled by personal blinders. In this respect it is no better or worse than any other sort of fundamentalist thinking. It is a useful phase to pass through on the way to a fully mature development. But it is a manifestly dangerous attitude in an increasingly interdependent world wherein relationships grow ever more complex.

Obviously I find much in Objectivist thought to be objectionable. Still I would defend Allison's right to extend his offer to whatever educational institution he chooses. There is plenty of bad literature strewn throughout our nations' libraries. The notoriously awful works of Ayn Rand will be in good company among the numerous volumes of muddleheaded philosophy masquerading as 'novels' in our halls of learning. They are redeemed by the possibility of one single interesting idea. Business schools throughout the nation already extol an unfettered celebration of capitalism, and rarely present any alternative economic model. Another copy of Anthem or Atlas Shrugged is altogether superfluous. So what's the problem? What bothers me is the brazen promotion of extreme self-interest behind the facade of charity. It's a devious way to get a tax break.