One Honest Libertarian


I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.

Alan Greenspan testified before Congress today and said the one thing that every other libertarian has avoided saying to this point. This financial crisis is the direct result of the failure of his philosophy.

I’d like to give him credit for his honesty, for his willingness to examine his own beliefs critically, but all I can really do is wonder how he’s managed to stay so naive for so long.

Sure, the ideas that corporations behave like psychopaths and that CEOs are successful psychopaths are relatively new. However, any student of history can easily find examples of antisocial tendencies on the part of companies and of unchecked power that has had deleterious effects on trade. The credit scandal is nothing like unprecedented behavior.How does someone as bright as Greenspan has generally been considered to be miss this?

How does he miss the evidence of his fellow libertarians? Has he always been considered necessary by the people in power? Has he only ever seen the shark’s smile and not its teeth?

Has he not met the libertarians of my generation–the arrogant tech boys who don’t understand the amount of infrastructure necessary for them to do the one thing they know, the sheltered suburbanites dreaming of chaos, the recipients of public educations who consider themselves self-made, the swaggering idiots who think a piddly handgun will stop a determined crowd? Has he never seen the people attracted to his ideas?

What I’m saying to you is yes, I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact…A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.

A flaw. One. And he still doesn’t know how significant it is. Mr. Greenspan, the varieties and vagaries of human nature are pretty fundamental. The flaw is the model.

We listened to this man for how long?

Update: If you want to know more about “the libertarians of my generation,” Chris has a great post and a book recommendation up at denialism blog.

Comments

  1. says

    The language used to describe corporations and CEOs may be new, but Marx would have recognized it. It’s alienation.I am amazed that Greenspan is able to recognize that his system is flawed. Too many believers in unbridled capitalism will say the problem was too much regulation, not too little. The idjits.

  2. says

    True enough about Marx. I considered adding something about that, but I didn’t really want to add myself to the long list of people who’ve misrepresented his theories. That, and I’ve seen the way libertarians’ eyes glaze over at the mention of Marx. I’d prefer they have to look at this one squarely.I’m surprised about Greenspan too, but considering how much of this he was in charge for, it is a question of whether the system or his implementation is flawed. I’d think that would make it much easier to look at the system.

  3. says

    I love the description of the libertarians- very vivid, and very striking (one of those “hey, I know that guy!” moments- particularly with the tech boys). Ultimately the most reasonable of the libertarians are well aware that people are not always rational, and frequently do not behave in their own long-term best interests. They are also aware that power corrupts, and so are unsuprised by the coruption of corporations. Some of them are just selfish and assume that the irrationality can work in their favor, and that they can better exploit people in a world with fewer rules. Ultimately, there are (a precious few!) rational and non-evil libertarians I have known. They have one basic argument… polticians are also frequently successful psychopaths. Bureaucracies also exibit antisocial tendencies. And unchecked power-in the public or private sectors- has the potential for massive destruction; much more than just deleterious effects on trade. Those libertarians have just seen more evil perpetuated by Government than by Coroporate. As I see it, whether the economic system is public or private doesn’t really matter. What matters is that there are checks and balances for the distribution of power. However, as a rule of thumb, the more such controls that exist, the slower the system will be to respond to change. So even your checks and balances have to be balanced.

  4. says

    Greg, agreed.Becca, excellent points all, especially the one about the description ;). The one thing I would say to the non-evil libertarians is that we have mechanisms in place to make changes in the public system. They aren’t perfect by any means, but they exist, which is more than can be said for the private sector. Suggesting that no control should be moved because the public sector is imperfect is just more of that counterproductive cynicism I’ve been railing against.

  5. Peggy says

    You are spot on in your description. Since one of the hallmarks of the type is lack of introspection (benefited from the government? not me!) and apparent inability to understand human nature, it doesn’t surprise me at all that Greenspan missed what was right before his eyes.

  6. says

    [sigh] I know, Peggy. I shouldn’t be surprised either. It’s just that I’ve always thought of Greenspan as an economist rather than a libertarian. And damnit, the social sciences really should be learning from one another better than this. Economic models are only valid to the extent that they reflect sociology on the large scale and psychology where the behavior of individuals (say, executive officers) has more weight.As someone who argues pretty hard that social sciences are valid, if in their infancy, I find it a bit disheartening to see one of the best-known representatives of one of them behaving so unscientifically in representing his field.

  7. says

    you can model and test some aspects of small-scale social science. macro economics and political behavior? no can do. Which is why they cannot be sciences and will always permit unfettered speculation to pass as academic progress.

  8. says

    All right, DM. I’ll haul out that rant and polish it up for you this weekend. Then you can poke holes in it to your heart’s content. It’s been a while since someone determined has had a whack at it.

  9. An Anthropologist says

    As an unfettered social scientist, I often see this: The presumption that something nuanced, difficult, hard to think about, yet important and quite amenable to scientific analysis is “not a science.” It is especially disheartening (and expected) to see this coming from someone who claims to be linked to the medical industry … we begin to understand why the medical industry is poor at addressing not only the needs of society but its own needs as well.

  10. DM says

    Anthro – feel free to address the points instead of your defensive strawmanSZ-I am not particularly determined on this.

  11. says

    Stephanie- sort of. I loves me some votin’ and wouldn’t trade it for the world. However, given that I do live in a country of rabid capitalists, I do enjoy wielding my power to make them suffer. If you want to punish the private sector, just don’t spend your money on them. I wonder if I’m the only one who watches Bill O’Reily to keep track of the commercials… just so I can avoid ever purchasing those products. It’s (at best) more symbolic than real, but if everybody did it… (which applies to voting too, I suppose) As soon as I get around to not being a poor student, I’m going to try out the “good works” style of investing in green energy or something. That way, I get to feel virtuous even if they loose money and smug *and* virtuous (and who doesn’t love that?) if I make money. That said, all this “vote with your $” definitely has it’s failings (like when a necessary good or service is only provided by evil options), so I’m not at all opposed to regulation. My original point was just that there is a reasonable argument on the Libertarian side. DM, so are you arguing that societies have emergent properties?What are societies and politics other than the sum of a large number of individual decisions? What you’re saying is a bit like “we can model and test some aspects of individual molecules. Immune communication or organ function, not so much”. In theory, if we could figure out the molecules and eventually cells, and from there all the way on up. Therefore, barring some quasi-magical “and then you mix A and B and get not just AB, but also Q!” alchemy of human relations (or molecules) it seems it’s a problem of computing power. I’m not partial to the idea that human behavior is somehow exempt from rules of the natural world. Granted, that’s all in theory and I’m none too sure we’ll ever get there ;-)

  12. An Anthropologist says

    Becca: I agree that voting with one’s feet or cash is effective, except in those instances where one is over a barrel. Like loans and utilities. My boyfriend watches ‘Bill O’Really’ for the commercials as you do. I would but I can’t sully myself in that manner. You two watch the bad TV, I’ll do something else dirty or messy, like clean the toilets or spay the dog. DM: Make yourself clear and maybe I’ll talk to you. I *think* you are saying that the social sciences are not really sciences. But what you have said is so cryptic that it is hard to tell. Say what you mean, provide valid examples, try to put your biases aside. I’ll check back later and see if you’ve done your homework.

  13. says

    An Anthropoligist, welcome to the discussion. I just put up a new post on the social sciences topic. Maybe you and DM can find some common ground for argument there.DM, it was about time anyway that I pulled that particular rant into shape from all the arguments that have generated it. Feel free to whack or not, as you wish.Becca, I would argue that groups have emergent properties. Don’t underestimate the influence one human has on another, much less a whole bunch of them at once. The history of panics, fads, mass delusions and things like economic bubbles is really pretty cool. Not heartening, necessarily, but cool.

  14. says

    I *think* you are saying that the social sciences are not really sciences.Since I did not even come close to generalizing to all social sciences, what you “think” has more to do with pre-existing biases than it does with what I wrote. There are two particular areas of so-called social science that perplex me and in the present time, it is mostly the intersection between politics and macro-economics that is the issue. I am taking issue with hypotheses advanced about the outcome of specific social and/or economic policies. I think they are for the most part untestable (which is one thing) and essentially unfalsifiable when it comes to practice. Tax cuts and deregulation didn’t work? Well, we just didn’t do enough of it. Trickle down is a joke? Well, that’s because we didn’t give enough money to the super rich. If we ban gay marriage we will fix,….umm, what was the hypothesis again? We also refuse to take the available field studies and apply them to our sacred cow positions, but that has more to do with application. There are similar critiques for lefty positions, I will note. The point here is not the specific hypothesis but rather the fact that it is essentially untestable because we refuse to try it one way, take the results then try it the other way. We just can’t do the proper experiments. As I said, I believe we can model some social behaviors in tractable samples with good results. Other social behaviors, not so much. Yes becca, things emerge from complex systems which cannot be predicted from simple ones. Do you have any idea how many highly promising (tested in vitro) drug compounds fail when put into an animal model? How about the ones that make it through even clinical trials but “fail” post-marketing?

  15. says

    DM- Don’t get me wrong. Emergent properties are a pretty cool idea. However in many cases, what appears to be an “emergent property” isn’t that things are really so much more than the sum of their parts, but that we are missing some serious parts in our calculations.For example, we know full well that cells-in-dish are missing thousands of other cell types, the three dimensional scaffolding necessary for communication, natural growth factor levels… and probably dozens of other things. Whether a drug “succeeds” in a business sense is likewise dependent on a plethora of factors (only a few of them scientific). There are issues we don’t predict well because our models are indadquete- i.e., we cannot do the experiments. But they are not necessarily random or unpredictable or even incompatible with rigorous analysis. I am inclined to believe that much of macro-economics and political science is riddled with sloppy thinking and assumptions in the place of experiments. But part of the problem is not that the experiments “cannot be done” but that we haven’t figured out how to do them. To be honest, I suspect we haven’t figured it out not because they are oh-so-very-complicated, but because it wouldn’t matter. On these issues, people simply don’t want facts.

  16. An Anthropologist says

    There is an entire field of study that looks at these issues noted by he who calls himself DrugMonkey, it is quite scientific, not particularly a social science, widely applied, it works, and has little to do with political positions a righty vs. lefty might take. Certainly there is not a scientific way to link political, philosophical, or moral attitudes to policy, but policy can be assessed scientifically. That these assessments are usually ignored is not relevant. … has more to do with pre-existing biases than it does with what I wrote. Oh, and what are those? You identify my biases? No, don’t answer. You presume too much, just like every other white male shit in the blogosphere. You were right, though, like a stopped clock is right now and then. You were not speaking of social sciences.