By Professor Henry Mark Holzer
In the mid-1960s my wife, Erika Holzer, and I were members of a small circle the hub of which was Ayn Rand, whose magnum opus, Atlas Shrugged, had been published in 1957.
Another member—who by then had been associated with Rand for several years—was Alan Greenspan.
In
addition to our social relationship with Rand we were also her lawyers,
so frequently we made “house calls” to her apartment to conduct legal
business. On more than one occasion when Erika and I arrived, Ayn and
her husband would be finishing a private dinner with Alan Greenspan. It
was apparent to us that Ayn had a special relationship with him, an
impression buttressed by comments Ayn made occasionally to the effect
that Alan was a brilliant man.
In those days, Rand and her erstwhile “intellectual heir,” Nathaniel Branden, edited and published The Objectivist, a journal devoted to expounding and disseminating her ideas.
One was allowed to write for The Objectivist
only if the content was in accordance with Rand’s philosophy, and could
withstand the laser-like editorial scrutiny she unmercifully delivered
(but to the great advantage of the essay’s author). Erika and I were
victims/beneficiaries of Rand’s almost supernatural abilities as a
non-fiction editor.
In the July 1966 issue of The Objectivist
there appears an essay entitled “Gold and Economic Freedom.” Its
opening paragraph is as follows: “An almost hysterical antagonism toward
the gold standard is one issue that unites statists of all
persuasions. They seem to sense—perhaps more clearly and subtly than
many consistent defenders of laissez-faire—that gold and economic
freedom are inseparable, that the gold standard is an instrument of
laissez-faire and that each implies and requires the other.” (My
emphasis.)
The essay goes on to explain the role of gold in a
free society, the meaning of money (see my Blog of February 12, 2009),
and the history of the Federal Reserve System. Then, the author notes
critically that “[w]hen business in the United States underwent a mild
contraction in 1927, the Federal Reserve created more paper reserves in
the hope of forestalling any possible bank reserve shortage. * * * The
Fed succeeded: it stopped the [British] gold loss, but it nearly
destroyed the economies of the world, in the process. The excess
credit which the Fed pumped into the economy spilled over into the stock
market—triggering a fantastic speculative boom. Belatedly, Federal
Reserve officials attempted to sop up the excess reserves and finally
succeeded in braking the boom. But it was too late: by 1929 the
speculative imbalances had become so overwhelming that the attempt
precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result the American economy collapsed.” (My emphasis.)
The
balance of “Gold and Economic Freedom” emphatically endorses the gold
standard, disdains government interference in the economy, and condemns
the statists who repudiated the former while fostering the latter.
The
essay’s penultimate and concluding paragraphs eloquently reiterate this
point: “In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. There is no safe store of
value. If there were, the government would have to make its holding
illegal, as was done in the case of gold [see my Blog of January 25,
2009]. If everyone decided, for example, to convert all their bank
deposits to silver or copper or any other good, and thereafter declined
to accept checks as payment for goods, bank deposits would lose their
purchasing power and government-created bank credit would be worthless
as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. * * * (My emphasis.)
The author of “Gold and Economic Freedom” is, of course, Alan Greenspan.
The
“statists” whom Dr. Greenspan rightly condemned are adherents to, and
promoters of, “Statism”: “concentration of economic controls and
planning in the hands of a highly centralized government often extending
to government ownership of industry.” (Merriam- Webster Dictionary, On Line).
Or, as Greenspan’s editor, Ayn Rand, once explained it: “The political expression of altruism is collectivism or statism,
which holds that man’s life and work belong to the state—to society, to
the group, the gang, the race, the nation—and that the state may
dispose of him in any way it pleases for the sake of whatever it deems
to be its own tribal, collective good”: (“Introducing Objectivism,” The Objectivist Newsletter, August 1962, p.35).
Since
it was Ayn Rand herself speaking through Alan Greenspan in “Gold and
Economic Freedom” in the author’s lauding of laissez-faire and
condemnation of statism, it was incredible that he accepted Gerald
Ford’s appointment as Chairman of the President’s Council of [three]
Economic Advisers.
Putting aside four of the Council’s main
duties and functions, the fifth is “[t]o develop and recommend to the
President national economic policies, to foster and promote free
competitive enterprise, to avoid economic fluctuations or to diminish
the effects thereof, and to maintain employment.”
What?
An
acolyte of the political philosopher who, among other achievements,
built a moral foundation for capitalism, signing on with a statist
President to “develop national economic policies” (like the bureaucrats
in Atlas Shrugged?), “to foster and promote free competitive
enterprise” (through stricter anti-business anti-trust laws?), “to avoid
economic fluctuations” (by wage and price controls?), and “to maintain
employment” (with FDR-like public works projects?)?
Not only did
Greenspan sign on with Ford, but Rand signed on with the both of
them—sanctioning the new Greenspan-Ford economic partnership by her
glowing presence at the new Chairman’s White House swearing-in ceremony.
Soon
after Rand died, President Reagan put Greenspan in charge of a
boondoggle called the National Commission on Social Security Reform. One
of its recommendations was an anti-laissez-faire, pro-statist, large
tax increase.
Then came the Fed job, making Greenspan the world’s economic/financial puppet master.
According
to a 2007 speech by a Federal Reserve Board member Frederic S. Mishkin,
“In a democratic society like our own, the ultimate purpose of the
central bank [the Fed] is to promote the public good by pursuing a course of monetary policy that fosters economic prosperity and social welfare.
In the United States, as in virtually every other country, the central
bank has a more specific set of objectives that have been established by
the government. This mandate was originally specified by the Federal
Reserve Act of 1913 and was most recently clarified by an amendment to
the Federal Reserve Act in 1977. According to this legislation, the
Federal Reserve's mandate is “to promote effectively the goals of
maximum employment, stable prices, and moderate long-term interest
rates.” (My emphasis.)
So for year after year, the fallen
pro-laissez-faire, anti-statist, Objectivist, Chairman of the Fed, went
about pulling on the Fed’s strings, doing the government’s business of
“promoting the public good” and “fostering social welfare.”
Repudiating
everything he had written, and Rand had sanctioned, in “Gold and
Economic Freedom,” Greenspan manipulated the “creation” of “money,”
opened and closed the credit valve, and virtually if not actually
controlled the economic/financial system of the United States and thus
of the world.
And then, finally, at the end of 2008 when the
system imploded, Rand’s brilliant acolyte finally confessed . . . and
his confession continues: Yes, he was wrong about self-regulating
capitalism. Yes, this time laissez-faire didn’t work. Yes, the bailouts
were/are necessary. Yes—and that noise you hear is Ayn Rand spinning in
her grave—the government must now nationalize banks (in the “public interest, and only “temporarily,” of course).
And
with these unrepentant anti-capitalism confessions, Alan Greenspan is
nakedly exposed for what he became when first he drank from the
inebriating waters of the Washington trough, abandoning not only “Gold
and Economic Freedom,” but the moral principles which it implies, and
about which he wrote with Rand’s approval those many years ago.
Alan Greenspan is a person whom he, and Ayn Rand, deplored: just another statist.
