Category Archives: capitalism

Ayn Rand: Atlas Shrugged

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Who is John Galt?

This is the mystery at the center of Ayn Rand’s 1957 brilliant, controversial but flawed magnum opus, Atlas Shrugged.  Since Rand and her work remain deeply polarizing, I hope those of you who have already made up your minds about Rand will persevere with this post and hear me out.  Especially those of you who haven’t read her work, but have formulated opinions based solely on the actions or words of individuals who champion her work or hit pieces from the progressive media.

Despite the seemingly ceaseless parade of straw men from the writers at Salon, AlterNet and every other cesspool of progressive dross who attempt to prove otherwise, Atlas Shrugged is prophetic and radical on every level. It is perhaps more radical and relevant now than it was in its day, but mostly, because she’s asking the reader to empathize with heroes who are generally regarded as objects of revulsion and contempt. Individuals who, according to broad swaths of the population, need to be regulated, taxed, supervised and preferably, jailed. Individuals who, according to prevailing modern progressive mindset, are despoiling the earth, exploiting the worker and hoarding the wealth of the world.  These heroes are, of course, industrial magnates.

Atlas Shrugged is set in post-WW2 America, but it’s an America that never existed. It’s a mythological, dieselpunk retro-futuristic dystopian America. In this respect, Atlas Shrugged is properly understood as a work of dystopian science fiction. It is essentially a story of two industry leaders who are driven by a deep sense of purpose, but are thwarted by political apparatchiks, bureaucrats and would-be do-gooders whose greed, envy and narcissism are wrapped in pretensions of altruism of every stripe. As they proceed, other producers are mysteriously dropping out of society, and our heroes set out to unravel the mystery while the slow stranglehold of bureaucracy chokes progress all around them. Needless to say, it’s also an extended philosophical treatise on Objectivism which spells out Rand’s views on morality, ethics, the role of the State, and the rights of the individual. Rand does not suffer a shortage of critics of her writing or her worldview, and to be honest, a few of these criticisms have merit, but none detract from the towering achievement of this novel.

Rand’s first radical choice was making the heroes of the story captains of heavy industry. Though there are doubtless examples of railway and metallurgical innovation to be found, viewing the steel manufacturing and railway industry as dynamic fields of innovation was itself a leap of imagination. As the novel begins, Rand sets up an industry not yet completely captured by labor and regulation. She tacitly asks you to dispel the idea of the cartelized half-public/half-private industry that presently exists in America. As Amtrak proves itself a compost heap of mediocrity and inertia in the real world, Rand asks the reader to imagine steel and railways through the eyes of an Elon Musk-type mindset and builds the drama around the slowly accumulating regulatory death spiral.

As the title suggests, she also made these heroes movers of the world; titans of business which undergird modern society, and without which modern society could not function. Since the very notion of “capitalism” is presently so deeply tied to banking, high finance or software development, Rand grounds the novel with characters who make physical objects and must themselves literally move the earth in order to realize their plans.

This is an Ayn Rand novel, so naturally, our heroes are beset by the forces of collectivism and state authority at every turn. Just as she did in The Fountainhead, Rand rolls out her cannons of contempt and fires volley after volley at the ramparts of academic royalism, media pusillanimity and government bureaucracy. The regulatory state, economic planning, academic postmodernism, and state sponsored science are among her many targets. She reserves much of her heavy artillery for the statist orthodoxy of scientism and its attendant effects on social activism in order to illustrate the pernicious influence it breeds in academics, labor unions, lobbyists and social justice warriors.

Atlas Shrugged is an epic novel with a host of characters and subplots, but the main storyline centers around two characters: railroad heiress Dagny Taggart and steel magnate Hank Rearden. The heroes are eventually united with the mysterious John Galt and all of the dissident producers who dropped out of society to join the productive utopia of Galt’s Gulch.

Hank Rearden is the steel industrialist and a classically Randian heroic archetype. When we are introduced to Rearden, he is portrayed as an elemental force; a portrait of grim stolidity whose iron will was forged in the same molten furnace that makes the steel beams he sells. In a subsequent scene, we’re introduced to his family and close associates. As each character is introduced, Rand is showing how each preys on Rearden’s spirit and goodwill in different ways and is laying out the themes and dramatic conflicts that will unfold throughout the remainder of the book.

I found Rand’s portrait of Rearden family life incisive and resonant. Rand shows how Hank feels like a stranger within his own family while exposing the how family members use guilt to extract obedience. Rearden’s mother criticizes him for being too consumed by his business and wishes he’d show more humility, but he’s annoyed that she seems unwilling to recognize how much he loves his work and the dedication he brings to it.  His wife wants a rich social life and wants him to be as interested as she is in the appearances of success. She affects a posture of progressive virtue and enlightened cosmopolitanism, but he simply can’t be bothered. His brother Philip is also a progressive and what would be referred to in today’s parlance as a social justice warrior. He’s annoying, predatory, miserable and ungrateful.  Even when Hank gives him exactly what he asks for and wishes him happiness, he remains an ungrateful cunt. All of the manipulations and machinations which surface in Hank’s family dynamic are a microcosm of the the phenomena each hero experiences as the novel progresses.

Though I understand why feminists in general are put off by Rand, I still can’t help but to find it deeply ironic. Dagny Taggart is the female badass that feminists seem to revere and she’s infinitely more believable than Katniss EverdeenImperator Furiosa or any of the many ass kicking would-be archetypes that are de rigueur nowadays. Rand made an extremely radical choice by making Dagny a railroad magnate. The feminist power fantasy heroine that’s commonplace nowadays emphasizes physical strength wildly disproportionate to body size, combat capabilities obtained without training, superhuman scientific expertise or all three (looking at you Rey). By contrast, Dagny Taggart has the courage of her convictions and willpower. She climbs through the ranks of Taggart Transcontinental on pure ambition, skill and work. She doesn’t rely on affirmative action, global feminist PR campaigns, sexual favors, nepotism or any other form of special pleading. Not only does Dagny face down the sexist attitudes that surround her with work and results, the attitudes Rand invokes feel appropriate for the time period and the industry. Unsurprisingly, contemporary feminists seem intent on promoting the idea that 50’s era attitudes are not only normal, but more widespread than ever. While this does seem to be the case for progressive politicians and celebrities, feminists continue to crusade against words and the slightest perceived transgression against womanhood. Rand gives us a heroine who seeks only to be judged by her skills and her achievement.  If only feminists would pay attention.

Through Dagny Taggart, Rand presents a refreshingly adult view of female sexuality and consent which stands in stark contrast to the neo-Victorian victimology of contemporary feminism. Rand knows that when a woman wants sex from a man, it’s not necessary for him to ask for consent at each juncture. An adult woman doesn’t demand that a man she truly wants comply with a set of consent rules imposed by government bureaucrats, feminist activists and academic elitists. Contrary to the contemporary feminists who shamelessly flog rape statistics as a psychological truncheon in order to extract compliance, shame and obedience from men, Rand emphasizes the pleasure Dagny gets from sex. Rand gives us an adult woman with full sexual agency uninhibited by religious or secular Puritanism. Feminists, on the other hand, seem intent on presenting themselves as hapless victims of a predatory patriarchy. It’s strange that feminists are the ones squashing the idea that women actively seek sexual congress and companionship while ignoring that women are always the gatekeepers of sex in a normal, healthy relationship.

Contemporary feminists also insist on rehashing the seemingly deathless talking point of an alleged stigma that’s applied towards women who have active sex lives. Rand gives us a character who simply has no fucks to give around what anyone has to say about her sex life.  On a related note, Rand is also remarkably dismissive of monogamy. She sees no moral transgression in the extramarital liaison between Dagny and Hank. It is an aspect of her worldview that sets her apart from traditional conservatives and on which the libertine wing of the Left has been strangely silent. There is more than a faint air of wish fulfillment to Dagny’s amorous associations throughout the book. Is Ayn Rand injecting her own fantasies into the novel by making Dagny the savior of civilization who gets to bang the three most powerful industrialists in the world? It’s not an unreasonable guess.

I suspect that there a couple things about Rand that really get feminist panties in a twist. First, is that she portrays feminine bliss and joy as full submission to a man. For all of Dagny’s strength and independence, Rand is pretty explicit about her willingness to submit completely to Rearden and Galt. Secondly, she’s unafraid to portray female predation, vindictiveness and pathology. Rand is unsparing in portraying Lillian Rearden as vampiric and toxic influence on Hank. That kind of emotional honesty certainly doesn’t square with a worldview which casts feminists as saints who are exempt from any kind of moral judgment.

Repeating a theme of The Fountainhead, but taking it to a whole new level, Rand sharpens her critique of academic postmodernism and the elitism and nihilism it breeds. Of the many themes in Atlas Shrugged which have only accumulated in strength and relevance, this one is certainly near the top. Behind the scenes of today’s social justice activism is a years long indoctrination campaign which prioritizes social pseudoscience, cultural Marxism, nihilism and self-negation over principles of individualism, productive work, and liberty. These forces conspire to derail the heroes and infect the thought of thought of everyone who surrounds them.

Upon completion of the John Galt Line, Jim Taggart is completely unable to take pride in the achievement. Wallowing in his pointless and narcissistic self-flagellation, he befriends a young cashier and future wife, Cherryl Brooks, for the exclusive purpose of flailing at the void and whinging over the great emptiness of it all. She indulges his pretentious blathering and condescending attitude with aplomb and grace, but it’s a foreshadowing of pitfalls to come. We discover later that Cherryl tries to remain self-possessed as Jim’s megalomania increases, but meets a tragic end.

Rand correctly attributes a religious proselytizing quality to postmodernism and hints at the spiritual role that has been assigned to it in the wake of America’s increased secularism. In his insufferable soliloquy to the infinite futility of life, Jim Taggart appeals to the “higher values” which are apparently inaccessible in the pursuit of economic gain, but can be understood by studying the solipsistic wanks of Dr. Pritchett’s hilariously and appropriately titled bit of pompous dreck, The Metaphysical Contradictions of the Universe. One needs only to spend a little time perusing the New Peer Review account on Twitter to find ample evidence that Rand’s aim was true with respect to the navel gazing pointlessness of the entire spectrum of postmodern academic studies.

It’s unlikely that any Left-leaning feminists or gender constructionists are even paying attention, but Rand even engages in some gender swapping that’s all the rage with the Tumblristas these days. The main difference is that Rand doesn’t deny biological sex differences nor does she wallow in pomo relativism. She merely acknowledges that there are general qualities found in men and women that are both biological and social norms. The fun is in observing how Rand inverts these expectations. When Jim Taggart finally marries Cherryl Brooks, she approaches Dagny and haughtily reminds her that she’s the “woman of the family now”. That’s okay, Dagny says. “I’m the man”. Boom! Suck on it, Judith Butler.

Rand made it very clear that her fiction was a vehicle for the philosophy of Objectivism. It can be seen as a distinct philosophical worldview with unique epistemological propositions. Specifically, it posits the idea that “existence exists” and all that exists is what can be perceived through sense data. Metaphysical contradictions do not nor cannot exist. There is no a prioristic knowledge about the world nor is there a spiritual reality. It is a secular, materialistic framework which is equally explicit about the objective existence of morality despite Rand’s openly atheistic convictions. What makes this especially interesting is that Rand still chose to frame morality using the language of theistic belief throughout the novel. Rand is unequivocal about the objective existence of the good and evil dichotomy. Dagny Taggart believed, for example, that “the greatest sin on earth” was to do things badly. The Objectivist conception of morality and ethics is somewhat clinical on paper, and it’s not clear how one would arrive at the exact same formulation of objective morality she specifies through a process of pure deductive reasoning. Rand never discusses the origins of morality in Atlas Shrugged nor does she sufficiently explain the existence of good and evil. Given that she is very explicit about where the moral fault lines lay throughout the novel, it seems like a foundational flaw in the overall epistemological framework. If morality itself is a metaphysical abstraction, how can one acquire certain knowledge of the objective existence of morality, let alone moral error, without appealing to some a priori external, metaphysical absolute? Even after listening to lectures from Atlas Society luminaries like David Kelley and Yaron Brook, Objectivist ethics and metaphysics strike me as questionable at best and somewhat daft at worst.

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In the Randian worldview, there are two very distinct and equally objective conceptions of moral truth. The bureaucrats, planners and looters hold just as steadfastly to their ideas that suffering is virtue just as the producers hold to their ideas of selfishness as virtue. These moral relativists are also claiming that their mandates and proclamations are objectively true. The only difference is that they require the power of the State (i.e. guns) in order to manufacture consensus. The best you can say about Randian morality is that she makes the distinction between the two worldviews very clear and asks you to make a choice. In the realms of ontology, moral psychology and ethical metaphysics, you can’t argue that there is objective error unless the behavior is being measured against some kind of metaphysical archetype or absolute. Nor am I convinced that morality is some emergent property of material reality or that the mere act of reasoning is inherently moral. Once you introduce these subjects, you have already departed from material reality. One wonders if perhaps the theists have a point when they say that atheists have generally failed to find a secular moral framework which doesn’t devolve into relativism, utilitarianism or cultish groupthink.

Yaron Brook in particular claims Ayn Rand’s ideas to be the apotheosis of enlightenment thought, but if anything, Rand is railing against a secular, enlightenment mindset run amok. The enlightenment consensus also proclaimed reason to be the ultimate engine of virtue and the French Revolution proved that disastrously false. It is the planners and bureaucrats who are able to usurp power by claiming that we live in an “enlightened age” where the altruistic values of being one’s “brother’s keeper” have prevailed. You can practically see the venomous sneer on her face as she as she heaps mounds of contempt on the idea that the mandate of a politician or a bureaucrat is equivalent to a law of nature. Objectivists undoubtedly view their creed as something beyond theistic morality, but it’s awfully difficult to see a dramatic difference between the Objectivist and the theist in the realm of moral truth.

Even more puzzling is that she speaks very openly about the existence of love, spirit and being. As the marriage between Jim Taggart and Cherryl Brooks unravels, Cherryl’s disillusionment comes from misplaced admiration while Jim’s desire for it was rooted in an overindulgence in feelings. Rand draws a clear distinction between Jim Taggart’s vision of feelings based love as an act of empty faith in contrast to Cherryl’s more noble desire for love as a true expression of affection earned through virtuous deeds. Both Cherryl and Rand consider Jim Taggart to be a parasite of the spirit and the produce of individual; someone who wants both unearned emotional and material reward. Rand is presumably making a sound point about the connection between mental health, emotional maturity and moral values, but once again, it’s not at all clear how one can distinguish these ideas as objective truths which emerge from material reality.

Adding to the credibility hurdles in Objectivism is her apparent belief in blank slate construction of selfhood which she shared with her postmodernist, neo-Marxist opponents. Rand seems to hold that people can just detach themselves from the a priori conglomeration of genetic memories, parental imprinting, emotional traumas, psychological conditions, cognitive biases, unconscious being and learned prejudices and view the world through a lens of cold reason and logic. And that’s saying nothing about IQ disparities found throughout the population. It may sound appealing, but it steps over some significant realities of the entire apparatus of the human mind. Developing the mental discipline necessary to think logically about deep philosophical questions requires not only a certain level of scholarly dedication but some willingness to wrestle with one’s own tangle of emotional proclivities and ideological biases. I suspect this may be one of many reasons people have a difficult time buying into Randian heroes. People could buy into Mr. Spock because he was a Vulcan. Accepting human characters with similar attributes may be a bridge too far.

Rand’s opponents have frequently derided Objectivism on the grounds that it is too self-centered and lacks compassion. Atlas Shrugged certainly lends credence to these charges since Objectivism seems to take a dim view of charity. The third act of the novel deals with Dagny’s arrival in Galt’s Gulch, and when Dagny suggests that Midas Mulligan give his automobile to Galt for a short usage, Galt quietly reminds Dagny that “giving” is verboten in this would-be paradise. In Galt’s Gulch, everything is earned. Rand clearly wants to draw a bright moral line around productive labor, but even the most virtuous people need assistance, care for the indigent is a genuine concern, and charity is a virtue that’s both necessary and actively cultivated. Rand is certainly correct in denigrating politicians and apparatchiks who exploit the language of altruism in order to advance political agendas, but her apparent disdain for even voluntary acts of charity seems misplaced.

This stinginess of spirit also extends into other realms of being. When Hank Rearden’s ex-wife, mother, and brother attempt to appeal to his sense of generosity and compassion as his steel mill’s economic pulse begins to seize up, none is forthcoming. They keep hoping that their emotional entreaties will get through to him, but he remains resolute in his refusal to offer even the slightest glimmer of mercy. This is entirely consistent with both Hank’s disposition and the overall framework of thought Rand has laid out, but it is also a deeply constrained and niggardly conception of humanity. Though she borders on making her heroes monochromatic in their Objectivist stoicism, Rearden refuses his family and ex-wife because of their betrayals and parasitism. The impression with which you’re left is that their posture of penitence was disingenuous and manipulative thereby justifying Hank’s cold blooded indifference. Fair enough. But Rand seems hostile to even the possibility of either genuine repentance or forgiveness. Hank is only willing to forgive if his mother encouraged him to quit and disappear. It also beggars belief that Hank didn’t harbor tons of pent up resentment and didn’t want to just vent a little. I could buy into Roark’s spartan emotional life in The Fountainhead, but giving these heroes the exact same attributes smacks of repetition and lacks basic dramatic credibility. This seems to be yet another unnecessarily impoverished Randian archetypal ideal. Even if we take the case that his family were just as duplicitous and spiritually bankrupt as Rand portrays them, sometimes people do genuinely seek absolution from those they’ve wronged. Conversely, granting forgiveness can offer just as much redemption for the person bestowing it as the person who seeks it. And sometimes, you may have to forgive the wrongs others have perpetrated if purely to achieve peace of mind because contrition is certainly not guaranteed. Not only does Objectivism seemingly disallow these possibilities, there is nothing within the framework of logical deduction that would lead anyone to seek or bestow forgiveness. Both require a certain measure of humility, and a purely rational analysis of material sense data is an insufficient epistemological model with which to develop a robust toolkit of human relations.

Objectivism has been described by some of its detractors as an atheist religion. I contend that there is validity to this charge. Objectivism’s big calling card is its claim on secular ethics. Anyone who devotes herself to the development of a set of philosophical principles which are intended to supplant the role that religion has traditionally played will undoubtedly attract a following who treat these ideas with the type of reverence normally reserved for actual religious faith. Rand denigrates and derides religious faith as a superstition which paves the way for the kind of slavish obedience to “higher authority” on which the villains preyed, but simultaneously venerates her heroes’ adherence to a higher metaphysical truth from which they drew their strength and independence. Replacing one set of theistic metaphysics with another set of allegedly secular and materialist metaphysics still constitutes an act of faith. Even as Galt’s life hangs in the balance in the novel’s climax, Wesley Mouch desperately wants him “to believe” in their cause. Like Thomas Paine and Bertrand Russell, she perpetuates a false dichotomy between faith and reason by asserting that the exercise of one faculty necessarily precludes the other. Or that the process of reasoning is somehow divorced from any embedded prerational biases. The human ability to conceptualize and concretize abstract archetypes and metaphysical ideals through language is the very essence of faith. The looters of Atlas Shrugged want to dispel the idea that the individual possesses a sovereign consciousness and that the “enlightened” citizen will abdicate logic and cede the act of thinking to the experts. Rand is essentially asking you to make a leap of faith wrapped in a tautology that’s scarcely different from that of theists. Human consciousness, free will and morality exist because existence exists.

At its core, Objectivism seems an elaborate hymn to the Logos stripped of any references to the divine. I can appreciate that she set out to create a secular philosophical framework which was intended to maximize virtue, but it seems lacking. Objectivism starts from the proposition that reason alone is the engine of virtue, reality is limited to that which can be perceived by the senses, and an objective world exists independent of our perception. Rand was deeply opposed to Immanuel Kant’s contention that both morality and human cognition were filtered through an a priori structure, but on this point, she was wrong and Kant was right. Rand rejects all prerational and a prioristic knowledge, but leans on prerational and a prioristic concepts like Good and Evil. Good and Evil all by themselves are transcendent concepts which exist outside the domain of reason. By disallowing traditional, prerational and hereditary knowledge from the Objectivist framework, the Kantian criticism of pure reason stands. A collection of independent minds processing sense data divorced from any a priori, cultural, or hereditary knowledge will necessarily arrive at different conclusions.

Rand is frequently lumped in with the conservative tradition, but Objectivism all by itself sets her solidly within the tradition of post-Enlightenment rationalism, and by extension, classical liberalism. Rand’s philosophy could be viewed as a distinct branch of thought that descends from the classical liberal tradition set forth by Thomas Paine, John Stuart Mill and Jeremy Bentham. Ironically, her rigid insistence on the primacy of a posteriori empirical data as the only valid source of knowledge also puts her thought in close proximity to the quasi-socialist thought of Auguste Comte. Rand’s unalloyed contempt for the intellectual class and intellectual gnosticism in general is the one, and perhaps only, strand of her worldview which aligns her with the Burkean tradition. Though it doesn’t negate the existence of objective reality, one wonders whether the revelations of quantum mechanics would have prompted doubts in Rand’s mind over the viability of pure materialism.

Rand was militant in her political neutrality and vilified conservatives and libertarians alike. Though she derided them as “hippies of the right”, Rand and Objectivism are currently and rightly identified with the more secular, minarchist wing of the libertarian movement. Despite her vehement condemnation of anarcho-capitalism, Galt’s climactic speech does, in fact, spell out Non-Aggression Principle in very explicit terms. I believe this aligns her thought at least superficially with modern libertarianism.

Whatever may be open to disagreement, there is one act of evil that no man man may commit against others and no man may sanction or forgive. So long as men desire to live together, no man may initiate – do you hear me? No man may start – the use of physical force against others. 

Despite the flaws in its foundational propositions, it can’t be denied that Rand reaches some sound conclusions about both the productive class and the collective “unpersoning” to which they are frequently subject. Specifically, that there is a relatively small fraction of society that does a majority of the productive labor while simultaneously being demonized as either puppet masters or vampires. As Jordan Peterson has argued, the Pareto principle applies to the distribution of workers at the top that do most of the heavy lifting. It’s the kind of thing that sends progressives into conniptions, but Galt’s speech does correctly identify the fact that progressives use the rhetoric of “equality” to pit the will of the majority against this minority. The so called 1% are convenient villains. While many are quite eager to make common cause with progressives and affect the posture of virtue that Rand righteously derides, her overall criticism of the perverse and inverted morality of progressives is dead on.

‘The public,’ to you, is whoever has failed to achieve any virtue or value, whoever achieves it, whoever provides the goods you require for your survival, ceases to be regarded as part of the public or as part of the human race. 

The cult-like environment Rand built up around herself in her later years is well documented. The reputation of modern Objectivists appears to have done little to alter this perception. Rand didn’t come across like the most jovial or happy person to be around despite her open affirmation of the pursuit of happiness as the highest human aspiration. A keen intellect for sure, but not exactly a barrel of laughs.

The knee-jerk hatred of Rand from progressives is puzzling because, at a bare minimum, one would expect that they would be sympathetic to several components of her thought. Her militant individualism, her zealous insistence on the application of the scientific method as the ultimate epistemological framework for determining reality, her materialist worldview and libertine approach towards sex set her far from anything in the conservative tradition of thought. Aside from her views on the free market and the role of the State, I see little daylight between her and the likes of Russell, Harris and Dawkins. If anything, the hatred she gets from progressives serves as confirmation that Objectivism is an untenable proposition as a complete philosophy of the world. People filter the world through a set of biases, and if anything, the very materialistic worldview she espoused has bred a fealty to political power as the font of virtue. Aside from the relentless demonization she gets in the media, the mental dissonance the mere perception of her message creates in the progressive mind likely creates too much of a barrier to warrant engagement. Because after all, how many Rand haters can actually say they’ve read her work?

The fact that Ayn Rand’s work has become a both a progressive dog whistle and lightning rod that is meant to signify the thought of all conservatives or libertarians says quite a bit about the effectiveness of leftist propaganda and the power of her work. Like Adam Smith, it’s assumed that if you’re conservative or libertarian, you automatically subscribe to everything she had to say and that your beliefs mirror hers exactly.

Above all else, Atlas Shrugged is an extended diatribe and warning against the slow encroachment of socialism in a free society. Contrary to the idiotic screeching about the alleged advent of fascism that emanates from the MSM echo chamber 24/7, totalitarianism doesn’t just spring forth from a single politician. It’s the slow accumulation of a consensus built slowly and carefully by bureaucrats and intellectuals. This book’s greatest strength is its sustained attack on the influence of the intellectual class in building a consensus for socialism. People have criticized Rand for the voluminous length of the novel as well as the lengthy philosophical expositions contained in the monologues of various characters, but there is a painstaking deliberateness in every word of this novel. Rand wants you to see and understand collectivism in every manifestation. She wants to show how each character is ultimately corrupted by it until it spreads through society like a virus and brings the gears of progress to a grinding halt.

Rand saves her heaviest artillery for the economic central planners. Upon Dagny’s return to the rapidly collapsing world after her convalescence in Galt’s Gulch, she returns to a Taggart Transcontinental laboring under the weight of the bureaucratic mandates of Directive 10-289. The regulations had throttled the normal functions of the line and plunged the operation into a spiral of unused resources, service shortages and diminishing short-term profit chasing. Dagny pried her hapless brother for any sign that he was thinking in the long-term for the company. Rand loads the cannon, and fires an ordnance directly at the legacy of John Maynard Keynes by putting his words in the mouth of hilariously named Railroad Unification bureaucrat, Cuffy Meigs. “In the long run, we’ll be dead”, he snorts. Indeed, Mr. Keynes. It’s too bad you were so dismissive of the price in human liberty your demand management models would extract for a little short term boost in GDP.

Rand clearly wants to venerate and celebrate the heroism she sees in the producer. The producers in Galt’s Gulch do not recoil or retreat from hard physical labor even if they were failed intellectuals in the world of the looters. They revel in the pride of having the opportunity to put their minds and bodies to their highest use. Work is always a virtue. Success that is honestly earned is never a vice. It’s also worth emphasizing that the crony capitalists who make common cause with the bureaucrats and planners are the ones that Rand considers villains.The caricature of Rand that’s widely circulated is that she blindly worshipped corporations and businesses while keeping her scorn limited to moochers and bureaucrats. Not so. The archetypal Randian hero stands alone and seeks only to be judged by the quality of his work.

The popular conception of Rand’s work is that she championed the pursuit of profit to the exclusion of all other considerations. Anyone who actually reads Atlas Shrugged (or any of her other works for that matter) will recognize that this is a complete misrepresentation of her position. One of the key events which spurs the heroes to uncover the mystery of the disappearance of the leaders of industry is their visit to an abandoned car manufacturing plant. After making their way through the squalor of the dying town which remained after the factory shuttered its operations, Hank and Dagny stumble upon the plans for a car powered by renewable energy. That’s right. Ayn Rand, the living epitome of capitalist rapacity and insensitivity, imagined a non-carbon based, renewable energy source in her book. I wonder why this little detail is overlooked in the Rand hate mill. Through this storyline, Rand simultaneously rebukes historical materialism and gives an elegant lesson on the virtues of free market innovation. When new technology is developed, it displaces old methods, increases efficiency, and frees up every individual. It is the absence of capitalism which leads to degradation, exploitation and servitude. The only thing Rand got wrong was that she didn’t anticipate that the planners would lure the masses into submission with lofty promises of an environmentally friendly techno-utopia.

It’s a theme that doesn’t figure as prominently in Atlas Shrugged as it does in The Fountainhead, but when she swings the wrecking ball at media mendacity, it’s well deserved demolition. As society grinds to a halt in the novel’s final chapters, the media remains focused on narrative while ignoring the chaos and violence happening throughout society. 

Atlas Shrugged is filled with big ideas, but there are plenty of small details that suggest that Ayn Rand’s foresight wasn’t limited to macro phenomena. As the bureaucratic bigwig Mr. Thompson tries to forestall societal collapse by attempting to negotiate with Galt, violence and civil unrest breaks out in California. Rand describes a band of communist militants led by Ma Chalmers and her “soybean cult of Orient admirers”. Ma Chalmers became a soybean mogul by securing government subsidies. If you simply swapped in “Yvette Felarca and the Antifa Soy Boys“, it would sound like a headline ripped from today’s alternative media.

Another central theme in the book that’s accumulated relevance is the corrupting influence of the State on science and the attendant appeal to scientism in political discourse. In the novel, Rearden and Taggart each have to contend with would-be scientists who spend their time idling in the government insulated confines of the National Institute of Science drawing up industry mandates wrapped in a veneer of “public good”. The bureaucrats at the National Institute of Science end up creating a deadly sonic weapon which is greeted by a great rhetorical fanfare of Unity, but for which no one will take ultimate responsibility.

Rand righteously skewers the false antagonism between commerce and science.  In Dagny’s quest to discover the inventor of the mysterious atmosphere powered motor, she seeks assistance from Institute of Science charlatan, Dr. Stadler. Stadler expresses his smug, entitled incredulity at the idea that such a brilliant mind would squander his discovery in the realm of commerce, and Dagny shoots back with a barbed retort about how he probably enjoyed living in this world. 

Near the novel’s conclusion, Stadler makes a final appeal to Galt in which he attempts to justify his alliance with the State. He pleads ineptitude at persuasion while denigrating the masses of unthinking plebs as his justification for resorting to force in order to pursue the life of scientific progress he envisioned. This monologue is simultaneously one of the most powerful critiques of modernity in Atlas Shrugged and one of its biggest contradictions. Progressives have supplanted a spiritual worldview with a purely scientific one. Rand scores another ideological point by devoting so much of the novel to this line of critique, but the very materialistic rationality she espouses is the framework that allowed the mentality of the likes of Stadler to flourish. 

She extends the critique of State influence on science into the mentality of the artist. Richard Halley is Dagny’s favorite composer, and she delights in having the opportunity to meet him in Galt’s Gulch. Once again, Rand lays waste to the belief that art and commerce are mutually exclusive.

For if there is more tragic a fool than the businessman who doesn’t know that he’s an exponent of man’s highest creative spirit – it’s the artist who thinks that the businessman is his enemy. 

Hating on Ayn Rand is a subgenre of the political Left that’s well established at this point. I have yet to read a single anti-Rand diatribe which doesn’t straw man her position or blatantly distort her message in some way. It’s also quite fashionable to be penitent about your former fascination with Rand and proclaim that you’ve “grown up and opened your eyes.” All of these mendacious, spineless, virtue signaling twats can suck on it. Rand was a serious thinker and her ideas warrant serious engagement. It seems churlish and uncharitable to focus on what she got wrong rather than the really important stuff she got completely right.

Heaping smug disdain on Rand is an easy way to score points with leftists. While I’m sure there are leftists who actually attempt to engage honestly with what she’s written and that there are surely legitimate critiques to be found, everything I’ve read is throwaway snark, a pathetic straw man or knee-jerk disdain. You don’t have to look very far to find people who bash Rand, and to be fair, there are definitely shortcomings to her writing and her philosophy.

Some criticize her prose as leaden and hamfisted and I think there’s some merit to this charge. In her defense, I propose that the world has become so accustomed to obfuscation and postmodern obscurantism, her writing seems artless by comparison. The straitjacket of Objectivism also partially accounts for this phenomenon. She has no difficulty portraying corruption and evil, but when she wants to convey transcendent acts of heroism or romantic ecstasy, it feels wooden because she has confined all of these phenomena to the realm of reason. It fails more often than not.

There is also something emotionally arid to the various philosophical monologues. The content is great, but no one I know talks like that. Maybe hardcore Objectivists do, but most people don’t. The only way the dialogues make sense is to view them as mythological Randian archetypes. Even if you set aside the leaden tone of the content, she’s also recycling the basic dramatic template she used in The Fountainhead. The forces of collectivism conspire towards one dramatic event with high stakes which sets the table for the hero to lay down a heavy philosophical lesson on morality and virtue.

The sex scene between Dagny Taggart and John Galt is a bit of a groaner, too. Rand is trying to render the heat of erotic passion using the language of Objectivist rationalism and it comes off as clunky as it sounds. It’s clear that she’s saying that sexual fulfillment emerges from mutual respect and shared values, but like everything else in the Objectivist framework, this seems too narrow a view of humanity. To suggest that pure physical attraction doesn’t play some role in sexual arousal seems daft. Besides some level of pure animal magnetism, long-term relationships which prioritize communication and intimacy also play just as big a part in sexual fulfillment as mutual respect and values parity. Rand apparently sees it through this clinical and antiseptic lens which steps over some rather significant aspects of human psychology, physiology and pair bonding.

Despite all of their flaws, Ayn Rand and Atlas Shrugged both deserve respect. Rand was trying to provide an all encompassing philosophy for life which addressed the question of how to formulate a system secular morality. There’s a reason that religion and a religious worldview animated the great achievements of Western civilization. Mankind flourishes when he upholds ideals larger than himself. The pre-Enlightenment worldview stood atop the premise that man was striving for divinity and that the works of civilization must reflect this pursuit. Strip away that foundational view, and you’ve got a very large void in the human consciousness to fill. Unless you can fill it with a higher metaphysical ideal, the vampires of the State are going to fill it for you. I believe Ayn Rand knew this as well as anyone in history you can name whose highest aspiration was the emancipation of the individual. The fact that she fell short of meeting the challenge shouldn’t preclude an earnest engagement with the ideas she laid down in Atlas Shrugged

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The Founder (2016)

A cynic might view John Lee Hooker’s portrait of Ray Kroc, The Founder, as an indictment of the American Dream itself. McDonald’s has come to signify everything illusory, toxic and and inhuman about American capitalism and idealism. Whether it’s Morgan Spurlock’s Supersize Me, Eric Schlosser’s Fast Food Nation, or any of the various #FightFor15 campaigns, the progressive Left has the fast food industry squarely in the crosshairs. Depending on the outrage du jour, the fast food industry is underpaying workers, poisoning the population with toxic food, contributing to the obesity epidemic, hastening the global warming crisis and propping up oversized agribusiness conglomerates. No other restaurant chain embodies all of this amoral rapacity, soulless industrialism, and ruthless expansionism more than McDonald’s. Of course, there is some truth to the charges leveled at McDonald’s and the fast food industry. However, as this film brilliantly illustrates, these qualities were features of Ray Kroc’s personality flaws and what he injected into the McDonald’s brand rather than design flaws in the fabric of American values or even the fast food industry.  

The Founder is a fairly straightforward historical biopic which, like its subject matter, succeeds on economical storytelling and tasty performances. It’s a fascinating story because it reveals how McDonald’s and fast food became synonymous with American values. More importantly, it shows how Ray Kroc deformed those values through his own ruthless ambition. 

Hollywood films often present their subjects through an ideological lens of progressive politics, and I suspect the filmmakers of The Founder had a similar aim. As long as you recognize that, the film presents some fairly decent lessons in market economics, industrial engineering of food production, contract law ethics, and brand building. The title of the film is very loaded because it draws up an assumption in your mind about its meaning. What Ray Kroc “founded” is not exactly what you might think.

Before McDonald’s, Ray Kroc was a mediocre traveling salesman trying to hock milkshake multimixers to the burgeoning fast food industry.  The drive in was the dominant model and it included features of the fast food experience that have been long consigned to the historical memory bin. Hamburgers and fries were served on washable dinnerware and delivered to your car by waitresses on roller skates. Ray Kroc had a mass market mentality, but no one in the middle American fast food business seemed to share it. His attempts to appeal to American ingenuity and Say’s Law fell on deaf ears.

Ray Kroc: But if ya had the Prince Castle, 5-spindle, multimixer… with patented direct-drive electric motor we’d greatly increase your ability to produce… delicious, frosty milkshakes, FAST. Mark my words. Dollars to donuts, you’ll be sellin’ more of those sons of bitches… then you can shake a stick at. You increase the supply, and the demand will follow… Increase supply, demand follows. Chicken, egg. Do you follow my logic? I know you do because you’re a bright, forward thinking guy who… knows a good idea when he hears one. So… What do you say? 

When Kroc receives an order for eight multimixers from a burger joint in San Bernardino, his hopes and curiosity intensify. Kroc arrives at McDonald’s and he is thunderstruck. He receives his order instantaneously, the wrappings are completely disposable, there’s no wait staff, and there’s a line of customers as far as the eye can see. However, all of this innovation came from the minds, sacrifices and work of Dick and Mac McDonald. Through a combination of ambition, courage, and Dick McDonald’s ruthless pursuit of cost savings and production efficiency, McDonald’s changed the fast food game for all time. Kroc is captivated and ingratiates himself with the McDonald brothers. 

Kroc pitches the McDonalds a national vision for the restaurant. The Golden Arches are more than just a visual brand; they are the symbolic glue between the Christian cross and the American flag. The McDonalds aren’t sold because they tried franchising the restaurant but couldn’t maintain quality control. Dick McDonald was a master of industrial food production and a capitalist through and through, but he didn’t want to lose control over the quality of the product. Being the more sentimental of the brothers, Mac sees a possibility for the kind of national success that eluded them and persuades his hard headed brother to sign a deal with Kroc.

Kroc returns to the Midwest with his sights set on complete domination. He makes appearances at Rotary clubs, churches and synagogues and begins recruiting families into the McDonald’s franchise with the fervor of an evangelist. Kroc may not have invented the food production system, but he did succeed in grafting the idea of McDonald’s to the psychological infrastructure of American ideals: family, opportunity, optimism. 

Despite his early success, his is unable to repay his business loans due to the small percentage allotted in his contract. He grows increasingly impatient with Dick McDonald’s insistence on quality control. Kroc really turns an ethical corner when he forms a real estate holding company at the advice of Harry Sonneborn.  By owning the land on which the franchises are built, he is guaranteed a larger revenue stream and capital base. Most importantly, it offers him leverage over the McDonalds. When he sees a possibility to cut costs with milkshake mix instead of real ice cream, Kroc sets himself on a collision course with the McDonalds. Kroc amasses enough power to buy his way out of his contract. Through the process, he kicks his wife of 39 years, Ethel Kroc, to the curb and courts the wife of franchisee, Rollie Smith. 

The film tips its partisan hand in a final scene which shows Kroc rehearsing a speech he’s preparing for an event in which Governor Ronald Reagan is scheduled to attend. Kroc is rehearsing all of the catch phrases and appeals to American ideals he perfected during McDonald’s ascent. When he finally approaches the part of the speech involving the first restaurant, he stammers and stumbles. Yes, we get it, folks. Republicans are shallow hypocrites who don’t uphold the ideals they espouse. But that’s a little too simplistic. Kroc won the McDonald’s enterprise, but he sacrificed its soul in the process. He took Dick McDonald’s industrial food production innovation and replaced it with a ruthless Benthamism. The McDonalds were the Jeffersonian capitalists who wanted to keep their idea regional and decentralized, but Kroc was the Hamiltonian who wanted a strong national identity for McDonald’s.

If you walk away from The Founder with the impression that American capitalism and idealism are false and hollow, you bought the cynicism that Hollywood is always selling. Fortunately, it’s a film that I believe has more meat on its bones than the average agitprop shit sandwich. Corruption, soulless industrialism, megalomaniacal ambition and hollow appeals to nationalism aren’t inextricably linked to capitalism. If that’s what the business is projecting into the world, that says more about the values of the individuals behind it. In the case of McDonald’s in its contemporary incarnation, the blame for these phenomena lies squarely at the feet of Ray Kroc. The McDonald brothers embodied American idealism without any grandiose speeches or national ambitions. Capitalism takes on the characteristics of the individuals behind it, and McDonald’s was ultimately hijacked by a particularly ruthless individual.  If there’s any overriding message of The Founder, that is surely it.  

Ben Mezrich: Once Upon a Time in Russia

Once Upon a Time in Russia is Ben Mezrich’s highly entertaining and informative account of the rise of the so-called Russian oligarchs who accumulated power after the collapse of the USSR. The allusion to the American Wild West is intentional since the period chronicled was nothing short of a seismic shift in Russian society. The story centers around the ascent of two of Russia’s most ambitious oligarchs, Boris Berezovsky and Roman Abramovich, and the complex web of power they wove in order to attain their respective positions. Within this sticky mass are dueling loyalties, inverted moral expectations, and internecine turf wars within and without the government. The book is refreshing because it opens a window of insight into the rise of private industrialists in a country which was (is) highly secretive and outlawed private industry for decades. Though it was certainly not as bloody and repressive as the Bolshevik regime, it was a period filled with plenty of violence and political intrigue in its own right.  Like Mezrich’s other novels, Once Upon a Time in Russia was culled from exclusive firsthand accounts of events, but it reads like a hardboiled political thriller/gangland novel.   

Imagine being an entrepreneur attempting to obtain some semblance of security for commerce and property rights after living under the bootheel of a corrupt kleptocracy which terrorized its own population for 70 years and you get a small sense of the challenges these men faced. Some people are likely to view the oligarchs as the corrupt gangsters who destabilized and terrorized, but in my estimation, this book paints a more nuanced picture. The new, quasi-liberal order in Russia was very fragile, and the only way they could push back against the resurgent Communist Party was buy patronage from the the Yeltsin government. 

You know you’re in for a juicy tale right off the bat. The book opens with a meeting of the oligarchs hosted by Vladimir Putin at none other than Joseph Stalin’s Moscow dacha.  Dashing all hopes that they had just bought themselves a yes-man, freshly installed president, Vladimir Putin, chose an appropriate venue to send the message that the oligarchs were subordinate to the Russian government. Not vice versa.

The story kicks into gear by taking us back to the beginning of Berezovsky’s story.  An assassination attempt on Berezovsky leaves him badly burned, his driver dead and his car a bombed out slag heap. Since he couldn’t get any business done without security, he enlisted the services of FSB agent, Alexander Litvinenko, and became what’s known in Russia as a krysha or “roof”. Taking private money under the table for security work was considered illegal, but given the porous nature of the state institutions in the early days of the newly liberalized Russian Republic, people were often willing to look the other way.

With Abramovich’s partnership and protection from Litvinenko, the two oligarchs set out to consolidate ownership of aluminum, oil, and most importantly, television. The remainder of the story weaves its way through the Yeltsin and Putin regimes as the oligarchs compete for political influence in the new and very tenuous capitalist order. It’s a race for survival and economic power, but the fate of the recently freed Russian economy hangs in the balance.  

As Berezovsky’s influence grew, his ties to Litvinenko came under scrutiny of the bureaucrats in the FSB who had ties to his political enemies and commercial rivals.  Litvinenko was ultimately given an order to execute Berezovsky, but couldn’t betray his trust or patronage.  Berezovsky used his growing influence to unseat the director of the FSB and replace him with an individual he believed to be a reliable yes-man: Vladimir Putin.  How much they had to learn about this former KGB administrator.

After Putin’s election, Berezovsky grew frustrated by his betrayal, and used his own influence in the Russian television station, ORT, to undermine public confidence in Putin. Berezovsky shamelessly exploited the Kursk submarine incident and attempted to make a random military accident a referendum on Putin’s leadership. This overt act of vindictiveness and dissidence forced Putin’s hand resulting in Berezovsky selling his shares in ORT and being exiled from his home country.   

Berezovsky’s antagonism towards the Putin regime threatened the stability of Abramovich’s active interests in oil and aluminum in Russia which sets the former krysha/protege relationship on a collision course.  The escalating tensions between these former business associates culminates in a civil suit over Berezovsky’s claim on assets accumulated during the active years of their partnership. 

Mezrich’s narrative seems to stick to the facts, but he compromises his own objectivity when describing the failing Communist regime as “right-wing”.  Communism is an ideology long associated with the political Left, and the Soviet Republic was, in fact, Marxist doctrine taken to its logical conclusion.  Throughout the book, he refers to Communist hardliners as “conservatives” while describing capitalist reformers as being for “democracy”.  Besides the fact that it distorts the historical legacy of European classical liberalism (and American constitutional conservatism by extension), he’s feeding the standard Right/Left false dichotomy of American politics which places the Left on the side of virtue, reason and decency and the Right on the side of authoritarianism, thuggery and resistance to change. Lenin believed in democracy, too, and it ultimately amounted to nothing. Democracy and economic freedom do not necessarily go hand in hand, and the American Left have more and more in common with the Bolsheviks with each passing election cycle as Bernie Sanders’ campaign amply attests.

Though it’s a minor detail, Mezrich also betrays his bias in his passing mention of Litvinenko’s conversion to Islam and apparent sympathy towards the Chechen Muslim separatists.  Litvinenko’s story certainly wasn’t the focus of the novel, but given the ever increasing prevalence of Islamic terrorism as well as the intensified focus on the connection between Islamic belief and acts of terror, Mezrich missed an opportunity to anchor this story more firmly into the debates of the present.  

Minor flaws notwithstanding, Once Upon a Time in Russia is an entertaining read which shines a light on a slice of history which, like Russian Communism itself, remains largely unknown to America and the West. Highly recommended.

The Big Short (2015)

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Despite its own blatant obsession with profits and artifice disguised as substance, Hollywood has been deeply unkind to Wall Street in its films. It’s unsurprising given the fact that liberals have colonized Hollywood and an overwhelming majority of films and television shows have varying quantities of leftist editorial.  You’d assume they’d be nicer given that plenty of Wall Street hedge fund money flows into Hollywood. Perhaps the tone of reproach and recrimination that forms the backdrop of The Big Short can be attributed to Wall Street’s increasing reticence to fund Hollywood ventures. Regardless, The Big Short is filled to the brim with contempt for banking and partisan agitprop.

I went into the cinematic adaptation of The Big Short expecting it to have the same editorial flaws as the book and these expectations were confirmed. Unfortunately, the film exceeds the dishonesty of the book and makes additional errors which alternate between rehashing thinly veiled leftist talking points and acts of blatant deception. And the book is plenty dishonest all by itself.

Why grouse about it?  Because the film, like the book, wants to have its cake and eat it too. It wants to be big Hollywood entertainment while simultaneously convincing you that it’s being honest with you and giving a definitive, fact-based account of the housing crisis. It’s a movie that wants you to believe that it is a Smart, Hollywood Movie made by Smart, Educated People Who Get It and it’s exposing that stuff you always assumed was a bunch of shit, but it’s really here to confirm your bias! See? The New York Times and the Wall Street Journal agree, too!

The film deploys a number of techniques to insinuate its truthfulness. Just like House of Cards, The Big Short makes generous usage of the dramatic aside. The actors deliver little monologues directly to the audience which refer to the actual historical events to let you know that you’re being admitted into a circle of confidence and being given the straight dope.

In the book, Michael Lewis offers little explanatory passages throughout the book to help the reader understand the actual instruments and transactions being discussed. In the film, they use celebrity cameos and snarky text blocks. They’re lifting the veil of secrecy and demystifying all that Wall Street technobabble! Margot Robbie explains CDO tranches while luxuriating in a bubble bath! Anthony Bourdain makes an analogy between CDO’s and fish stew made with aged ingredients!  Selena Gomez breaks down synthetic CDO’s while playing blackjack! How droll!

Bear in mind that the film isn’t without entertainment value. Director Adam McKay has a track record in comedy and he wisely sought to emphasize the book’s bleak humor. As a piece of entertainment, The Big Short is a Wall Street movie that at least has a little fun with an admittedly gloomy topic.  I just wish it was as substantive, informative and morally righteous as its cheerleaders claim. 

The film’s partisan bias surfaces right away.  In a voiceover delivered by Jared Vennett (Deutsche Bank trader Gregg Lippman IRL), Ryan Gosling takes us back to the heady days of Salomon Brothers in the late 70’s and early 80’s where the mortgage-backed security had its humble origins.  We’re introduced to Lewis Ranieri, the presumed father of the MBS as recounted by Michael Lewis in Liar’s Poker.  Before mortgage securitization, Vennett says, banking was a boring profession. It was inhabited by losers. It was devoid of this absurd speculation with Byzantine instruments and impenetrable jargon.  It was boring. You got that, proles? Banking used to be boring.  Let’s make banking boring again, Comrades!  If only there was a politician with those aspirations.

The film also shamelessly deploys some blatantly partisan semantic dogwhistles. In Vennett’s initial pitch to FrontPoint Partners (the hedge fund run by Mark Baum who was played by Steve Carrell), he uses a jenga tower to explain the CDO. In his explanation, he says old fashioned mortgage-backed securities were backed by the government and were safe. But then along comes private market subprime bond securitization which introduces all these risky instruments into the system! Got that, proles? Government = safe and boring. Private market = unregulated, risky, unbridled, rapacious greed

If only it was actually true.  Let’s take a look at what Cameron Cowan of the American Securitization Forum had to say to the House of Representatives Subcommittee about the role of legislation and GSE’s on the expansion of the subprime mortgage securitization market back in 2003:

As part of the Tax Reform Act of 1986, Congress created the Real Estate Mortgage Investment Conduit (REMIC) to facilitate the issuance of CMOs. Today almost all CMOs are issued in the form of REMICs. In addition to varying maturities, REMICs can be issued with different risk characteristics. REMIC investors—in exchange for a higher coupon payment—can choose to take on greater credit risk. Along with a simplified tax treatment, these changes made the REMIC structure an indispensable feature of the MBS market. Fannie Mae and Freddie Mac are the largest issuers of this security.

Add to this home ownership mandates from HUD, the FHA and pieces of legislation like the Community Reinvestment Act, and you’ve got a pretty clear set of government mandates and incentives which provided more than enough fuel for a housing bubble.

The film is playing a very simple game of misdirection. Just because subprime mortgage bonds were underwritten by private institutions does not mean that private institutions created the conditions for the housing bubble.  Both the film and the book make no effort to distinguish between mortgage loan origination and securitization and the moral hazard that accompanies this separation. 

Just like the book, the film turns a completely blind eye to the role that monetary policy played in inflating the bubble. In a particularly revealing scene, a Goldman Sachs employee informs the “garage band hedge fund”, Cornwall Capital that they can buy credit default swaps because “If you give us free money, we’ll take it.” 

Of course, the filmmakers wanted to portray the dirty, evil greedy bankers as unscrupulous thieves.  But if you just reorient that statement and apply it to the relationship between the Federal Reserve and the banks, it’s actually remarkably accurate.  The Fed dispenses “free” money, and the banks take it

The film’s biggest partisan offense is McKay’s decision to swap Cornwall’s visit to the SEC with a visit to the Wall Street Journal. Cornwall wanted to expose the imminent housing collapse and they made their initial pitch to the press. In the film, their pleas are met with indifference by a Wall Street Journal reporter who’s so deep in the tank with the bigwigs, he can’t jeopardize his position to do the right thing.  Of course! Those bootlickers at the Journal aren’t going to have any courage. They’re toadies for the bankers! They were completely oblivious to the possibility of a housing bubble!

In the book [1] however, the WSJ connected them directly with the enforcement division of the SEC. And guess what?  Their case was treated with total indifference. 

They tried to make up for it in a scene involving a female college friend recently departed from the SEC.  In a poolside conversation at an extravagant industry conference in Las Vegas, the former SEC employee is basking in the sun in a sexy bathing suit listening to the impassioned pleas of Jamie Shipley and Charlie Geller. She confides that the SEC wasn’t pursuing enforcement actions because the funding dried up. 

Come on, guys. This is a bald-faced lie. Not only did SEC enforcement actions escalate during the Bush administration with nothing to show for it, but SEC agents were busy watching porn when the economy cratered. The SEC are not exactly the indispensable watchdogs that many politicians would lead you to believe.

They even sneaked in a line of incredulity when their friend flirts with a shirtless hunk from Goldman. “You mean there isn’t a law which prohibits you from seeking employment in the private sector?!”

Yes, we get it, McKay. You’re doing your best to include all the requisite talking points.  

Topping off this turd pile of talking points is the parting speech Mark Baum gives as he’s persuaded into selling FrontPoint’s position in credit default swaps just as the economy grinds to a halt. He anguishes over the decision because he knows that the crisis will be blamed on “immigrants and minorities.”  That’s right, you dirty conservative bastards.  Not only do you sanction unscrupulous Wall Street thievery, but you’re xenophobes and racists and you’ve screwed everything up for people who are just trying to get a modest piece of the American Dream.  Now shut up and get in line. 

The book and the film are remarkably unwilling to assign any real criticism towards the government. Both Lewis and the filmmakers seem intent on having you believe that the government played no role in encouraging mortgage securitization, home ownership, leveraged finance or excessive household debt.

In the last scene, Mike Burry as played by Christian Bale is typing up his final letter to his clients after banking $720 million from credit derivatives. In a voiceover, he inveighs against fraud and following authority.  On the surface, it’s a powerful screed, but like the remainder of the film, it’s shallow and slightly misleading.

Surely, we should repudiate fraud in business dealings, but if you aren’t going to discuss government fraud or how it contributes to a culture of fraud, the moral lesson seems unnecessarily selective and intellectually dishonest.  Unquestioned deference to authority is something that each person should challenge, but if your story about the 2008 financial collapse doesn’t question any government authority and heaps all of the blame at the feet of Wall Street, you might just be a partisan hack. 

[1] p. 166, The Big Short


Henry Hazlitt: Economics in One Lesson

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This book holds a vaunted status amongst libertarians. Not only does it live up to its reputation, it’s a damn shame that this isn’t the go-to text for anyone seeking a rational and clear-headed approach to economics. 

Hazlitt builds his case by taking the central fallacy found throughout mainstream economics. This fallacy was famously revealed in the Frédéric Bastiat parable, That Which is Seen and That Which is Unseen, and he proceeds to apply it to each realm of economic life. By applying this logic, he demonstrates how the various manifestations of government intervention destroy wealth, savings, and positive incentives to work and produce.  

Stated very simply, the lesson is this: the effects of economic policy cannot be evaluated in terms of its effects on one group, but on all groups. 

Not only do these fallacies persist, but they are accumulating strength and being accorded cultish deference. 

Hazlitt covers all the bases in his analysis. He opens with the one-two punch of the fallacy of destruction followed by a withering exposé of the production disincentives resulting from taxes. Hazlitt runs a steamroller of truth over every conceivable government policy initiative and deformation. The effects of automation, subsidies, loan guarantees, tariffs, trade quotas, industrial policy, price fixing, rent control, minimum wage, and inflation are all explored. 

The opening chapter exposes the perverse obsession with destruction as an economic incentive that persists to this day.  One only needs to peruse the pages of Rolling Stone to find this doctrine in the insufferable moronic blathering of Jesse Myerson. He openly praises rioting as some kind of economic boon and mutates the broken windows fallacy into an ugly article of faith.

The chapter pertaining to the rise of automation is particularly fascinating since fantasies of a “post-labor” economy are gaining traction in the media. The widespread belief of the imminent arrival of a world in which robots displace human labor hinges on the assumption that there is a finite amount of work to be done in the first place. Or perhaps the public fails to grasp the role price floors on labor may have played in hastening the creation of the automation in the first place.  Either way, the belief of a Star Trek-like world of plenitude has taken root. 

On the issue of free trade, Hazlitt argues that people are correct to be suspicious of free trade agreements like the TPP and NAFTA, but are mistaken to attribute any benevolence to the very idea of a managed trade agreement in the first place. Especially if it’s cloaked in gauzy rhetoric about workers and the environment.

Just what the government planners mean by free trade in this connection I am not sure, but we can be sure of some of the things they do not mean. They do not mean the freedom of ordinary people to buy and sell, lend and borrow, at whatever prices or rates they like and wherever they find it most profitable to do so. They do not mean the freedom of the plain citizen to raise as much of a given crop as he wishes, to come and go at will, to settle where he pleases, to take his capital and other belongings with him. They mean, I suspect, the freedom of bureaucrats to settle these matters for him. And they tell him that if he docilely obeys the bureaucrats he will be rewarded by a rise in his living standards. But if the planners succeed in tying up the idea of international cooperation with the idea of increased State domination and control over economic life, the international controls of the future seem only too likely to follow the pattern of the past, in which case the plain man’s living standards will decline with his liberties.

His analysis of minimum wage is as elegant a refutation of minimum wage as you’ll ever read.  He argues that the minimum wage is more correctly viewed as a minimum price law.  If the price of labor is artificially raised, the price of production is raised. Populist politicians always attempt to sell minimum wage law as a boon for low skill labor and ignore the adverse effects.  Sadly, the fervor for this boondoggle remains as strong as ever.

The most potent analysis by far is the section dealing with inflation.  As we enter our 10th year of ZIRP administered by our allegedly benevolent overlords at the Fed, the ill gotten gains and economic perversions abound. While politicians beat the drums of hate and envy, they draw more support for further expropriation as a corrective. 

Economics in One Lesson is a timeless classic and the lesson contained in its pages burns with even greater urgency. It’s easy to look at the current state of affairs and despair, but Hazlitt ends with an optimistic note. The principles for which Hazlitt fought are indeed proliferating, but the voices agitating for socialism grow louder as well. The best defense against the lazy and callous recriminations of apparatchiks and statists is this righteous lightsaber of reason left for us by a Jedi master of economics. 

William Grieder: Secrets of the Temple

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William Greider’s 1987 opus, Secrets of the Temple, is a remarkable investigation of the Federal Reserve which covers a lot of ground. It is an essential document of the modern history of the Federal Reserve which takes us inside the Fed under the leadership of Paul Volcker. It is a fairly extensive summary of the events, people and ideas which shaped the creation of the Federal Reserve. It is also an occasionally muddled and partisan analysis of the effects of central banking on the economy. Greider weaves all of these threads together to form a grand narrative which reaches back to the Middle Ages up to the heights of the Reagan administration. Perhaps most importantly, he exposes the policy actions and interventions which drive the boom-bust business cycles largely perceived as “capitalism”.

Greider reveals the impact of an institution which sits squarely at the center of American finance and politics whose power and primacy goes mostly unchallenged. Though Greider is no libertarian, his book validates libertarian arguments by uncovering several absurdities and deceptions in central banking and fiat currency. The deformations of central banking aren’t limited to the perverse incentives it breeds in the economy. Both parties have capitulated to the cult of monetary policy. The effects of regulatory capture within the Fed and its subsequent failure to regulate the banking industry it oversees are additional problems brought to light. He also exposes the illusion of an institution allegedly immune to partisan politics and pressure. Not only does the Fed fail at achieving its stated aims, but it aids and abets the banking cartel which owns it. Rather than mitigating the shocks of the business cycle, it exacerbates moral hazard and amplifies risk. It incentivizes speculation, misallocation and overconsumption. It destroys price discovery and capital formation, fuels the warfare/welfare state which feeds from it and aggrandizes the power of the State at the expense of the average citizen.

The book opens by describing the political and economic climate of 1979 which drove Jimmy Carter to makes his national appeal for sacrifice. The Iran hostage crisis, the OPEC oil embargo and record inflation were white hot political fires for which Carter was ill prepared.  From there, we enter the corridors of power on Capitol Hill travel through the canyons of Wall Street and take a seat inside the inner sanctum of the Eccles building. Using direct accounts from insiders, the negotiations and actions which shaped history are revealed.

This book is a rare feat from a liberal. It’s a polemic that addreses monetary policy and the role it plays in shaping economic outcomes and policy initiatives. Greider’s level of intellectual honesty remains very high while demonstrating the subordinate and deferential role party politics play in relation to Fed actions. There is a lot to praise in this book. Despite his pretensions of espousing radical thought, the conclusions he draws have proven themselves ineffectual.

Far and away, the most significant achievement of the work is the unveiling of the cultish mysticism which surrounds the Fed. He uncovers what I believe is the fundamental deception at the heart of all state power; the intentional conflation of statecraft with divine powers of insight and benevolence to lead the unwashed masses.

Richard Syron, former vice president of the Boston Fed and special assistant to Paul Volcker, likens the Federal Reserve to the Catholic Church:

The System is just like the Church.  That’s probably why I feel so comfortable with it. It’s got a pope, the chairman; and a college of cardinals, the governors and bank presidents; and a curia, the senior staff. The equivalent of the laity is the commercial banks. If you’re a naughty parishioner in the Catholic Church, you come to confession. In this system, if you’re naughty, you come to the discount window for a loan. We even have different orders of religious thought like Jesuits and Franciscans and Dominicans only we call them pragmatists and monetarists and neo-Keynesians.

Greider elaborates further:

But the Federal Reserve did also function in the realm of religion. Its mysterious powers of money creation, inherited from priestly forebears, shielded a complex bundle of social and psychological meanings. With its own form of secret incantation, the Federal Reserve presided over awesome social ritual, transactions so powerful and frightening they seemed to lie beyond common understanding.

He sums it up pretty effectively with one elegant sentence:

The money process, nonetheless still required a deep, unacknowledged act of faith, so mysterious that it could easily be confused with divine powers.

Herein, I contend, is the secret behind the great confidence game called fiat currency to which we so willingly submit.  Money has value because the almighty government say it does, Citizen.

In a subsequent chapter, he unravels the psychological and religious symbolism associated with money fairly convincingly. He traces money’s origins back to the Catholic Church. The observations of Marx, Veblen, and Freud are given an airing. Money’s mythic connections to the devil, including a theory tying it to the excrement of a child, are also considered. Since money was formerly controlled by the church, it was used primarily to instill guilt and control the masses. It’s little surprise that politicians and religious leaders are still keenly attuned to the psychological symbolism of money and exploit the guilt inducing power to their own ends.

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Another one of the great masterstrokes of the book is how he reveals Democratic establishment’s utter fealty to Fed orthodoxy. Central banking has its origins in Progressive Era “reform”, and even if inadvertently, the Fed is exposed as a pretty blatant form of socialism.

The Federal Reserve is very much a product of Democratic policy. It was created by Democrats and has been shepherded by Democrats through the years. The responsibility for the creation of state sanctioned institutions which have polluted and deformed the incentives of the market and enshrined a culture of cronyism lies squarely at the Democrats’ feet. It is more than a little ironic that the party which actively foments antipathy towards capitalism and trades in on populist anger bears responsibility the current state of affairs. In his own words:

The Federal Reserve was, more profoundly, an important prototype for the modern liberal state. For the first time, a governing arrangement would explicitly mix public and private interests in a manner that was elaborated many times later in different ways.  However inadvertently or reluctantly, the creation of the central bank committed the federal government to a direct role in managing the private economy, and, once involved, it could no longer pretend to be aloof. It was, in fact, the beginning of the end of laissez-faire.

The conspicuous silence and knee-jerk defensiveness on all matters of monetary policy explains the ascendancy of a party which panders to the sensibilities of the working class and disaffected. The Democrats are happy to cater to the demands of the banking sector when the campaign coffers are lined.

A big turning point for the Democrats which illustrates this phenomenon was their role in passing the Monetary Control Act of 1980.  This law paved the way for a myriad of deformations. The abolition of Regulation Q disincentivized savings and increased speculation in the market. Regulatory capture of the Fed and moral hazard all increased as a byproduct of the deposit insurance limits for member banks.

The incident that perfectly captures the Democrats’ ignorance, mendacity and manipulativeness around monetary policy is Robert Byrd’s impotent attempt to rally legislative support to rein in the Fed in the wake of the 1981 contraction. The Balanced Monetary Policy Act of 1984  was simultaneously toothless, half-hearted and calculated. Nowadays, Democrats seem content to grill the Fed Chairman in committee simply to get a few sound bites worth of righteous indignation which can be transferred to a propaganda meme.  By conveniently sidestepping monetary policy, the Democrats focus exclusively on the perverse side effects and then shamelessly ply on populist fears and prejudices in order to accumulate more power for themselves. Whether it is actual or willful ignorance, intentional deflection or all three, the Democrats’ refusal to engage with issues of monetary policy reveal a party so craven in its lust for power, it is nothing less than a vile pathology.

He also gives a brief but detailed account of the formerly dueling orthodoxies of Keynesian fiscal stimulus versus Chicago school monetarism.  Two views which once represented two opposing poles in an ideological spectrum have joined forces in a harmonious union to stoke aggregate demand and create a “wealth effect”.

As Nancy Teeters, Jimmy Carter’s “liberal” appointment to the Board of Governors and doctrinaire Keynesian confirms:

I think I’m very much a central banker now. You’re in a position where your views on money, credit and banking are not really a reflection of your political party or your positions on economic issues. It’s not really a political job. I understand the whole milieu of what we’re doing, the continuous decisions, the mystique of central banking.

Bless you, Child.  The Lord will shower you with blessings for your service to His House.

Throughout the book, Greider repeatedly tries to draw a contrast between Volcker’s monetarist “restraint” and Teeters’ “courageous” Kenynesian desire to open the spigots, but it comes across as more partisan propaganda. As the past ten years alone of Fed policy attest, Volcker’s discipline feels like a modest attempt to stave off the parasitic addiction to monetary crack on which the banking sector so hungrily feeds.

Worse still, the bureaucrats are pretty open about the internal pressure to conform to the institutional orthodoxy based on salary increases.

Larry Roos, former president of the St. Louis Fed explains:

These are very real influences on how vociferous a Reserve Bank President is going to be about dissenting. It’s subtle, but it’s real. If one is a young, career oriented president who’s got a family to feed, he tends to be more moderate in his opposition to the governors than an older person like myself who’s more independent.

Excellent!  Pursue a career at the Fed so you can agree with the prevailing opinion of your superiors!

The details of Arthur Burns’ tenure are just as bleak.  By all accounts, Burns was a craven, manipulative autocrat who was intolerant of independent thought and was unafraid to manipulate both numbers and the will of his subordinates in order to get his way.  When the Carter administration was elected, he switched his demeanor and became an obsequious sycophant.

This culture of groupthink also resulted in regulatory capture.  The bank lending to LDC’s in the early 80’s and the subsequent squabbles over leverage and capital ratios eerily mirrors the squabbles over the same phenomena which arose in the wake of the 2008 collapse.

The Federal Reserve, for all its legendary power, behaved in this crucial matter much like other regulatory agencies of the federal government. It yielded to the ambitions of the industry it was supposed to regulate, instead of enforcing the larger public interest. Federal Reserve officials might worry that the largest commercial banks, the Fed’s primary constituency, were pursuing a dangerous course, but the Fed lacked the will to discipline them.

Greider never defines “public interest”, but complete intellectual honesty and philosophical consistency is apparently not his aim.

Despite his hackneyed and pious recriminations, his account of the collapse and bailout of Continental Illinois in 1982 foreshadows the collapse 2008. It further reinforces the perception that the Fed creates moral hazard and has no real ability to prevent reckless leverage or lending activities.  The playbook of events was a microcosm of everything that came to pass in the collapse of 2008 only on a much bigger scale.  Small bank borrows heavily from the Fed to finance some risky wildcat oil and gas deals, sells the loans upstream to some bigger banks resulting in “systemic risk”, FDIC and Fed step in to engineer a bailout in order to forestall additional panic. Debates between bureaucrats ensue with the head of the FDIC arguing for allowing a collapse and Volcker and dittoheads basically insisting that the government must forestall the impending financial contagion.  Sound familiar?

What is equally staggering about this account is the sheer folly of central planning. Chapter after chapter, one is left with the distinct impression that these alleged philosopher kings are simply megalomaniacal ideologues making it up as they go. If they aren’t kowtowing to political pressure, cloaking their actions in obfuscatory smokescreens or in the thrall of groupthink, they often seem to have no fucking clue what they’re doing. It’s as though they’re playing a game of economic whack-a-mole. Tighten here and hope for the best.  Loosen there because the first move didn’t produce the desired outcome. Should the Fed focus on money supply growth or GDP targets? Can the Fed accurately measure money aggregates? If the outcome produced perverse incentives, the administration would impose controls to offset the effects.  Rinse, repeat. His account of the disastrous credit controls and the subsequent erratic attempts to loosen the money supply in the run up to the 1980 election illustrates this phenomenon perfectly.

Despite all that is revealed, Mr. Greider is a liberal and his pro-statist bias surfaces on many occasions.

Greider is certainly not unbiased in his analysis of monetary history. Despite his expert deconstructions of the Fed and the illusory power it wields over the money supply, he takes a pretty standard view on numerous issues. He takes a standard post-Keynesian view that an inelastic hard money base is incompatible with an expanding economy and that deflationary cycles are always bad. He cites Lincoln’s expansion of the money supply with government specie to finance the Civil War as salutary, but describes the subsequent contraction and return to hard money as a catastrophe.

Though he appears to concede that the Fed induces business cycles, he seems totally fine with price controls and other fiscal countermeasures to offset the effects of monetary policy.

The 1981 inflation, for instance, was driven by escalating prices in oil and agriculture, both of which might have been contained temporarily by direct controls and other aggressive government policies. Some people would have been hurt but far fewer people.

His passing mention of the Fed’s role in fueling the run up of asset prices which lead to the crash of 1929 is remarkably casual and blasé:

The surplus money flowed, instead, into financial markets-artificially inflating financial values and fueling the run-up of stock prices that ended abruptly in the autumn of 1929.

My goodness. It’s almost as if history is repeating itself, isn’t it?

So just remember these rules, kids.  Money is illusory, and it’s evil. Proponents of hard money are evil and deflation is bad.  But government driven money supply expansion to finance war helps the middle class. And a Fed fueled frenzy of speculation which leads to a crash?  Nothing that can’t be mitigated by a few government controls or better policy if the Right People are in charge.

He even manages a very subtle, but very insidious inversion of conventional outlooks towards libertarian thought.  He takes the view that the credit boom of 1830 unleashed by the Jackson administration ushered in unprecedented capitalist progress.  At the same time, he cites Bray Hammond’s comments on this these actions as “reckless, booming anarchy” and appears to frame them as the sentiments of regressive, hidebound ideologue.  But it was this so-called “anarchy” which produced “fundamental progress” according to Greider.  While this concession towards the creative energy of capitalism is an admission one rarely hears from liberals these days and hardly an expression of anarchy in any way that modern libertarians advocate, he’s also validating the virtues of the expansion of credit by government fiat.

Another loathsome manifestation of his statist bias surfaces in his lionization of Charles W. Macune and the Texas Populists.  Aside from his laughable and contemptible reference to Keynes’ praise of the latter as “a brave army of heretics”,  he lays his cards on the table by saying that the government was “the ultimate guarantor of the future” which derives its power from the “mutual consent given by all.”

Bravo, William Greider.  Apparently, all heretical, transgressive and radical thinking are the product of seeking solutions from the institution which possesses the power to initiate violence. No, wait. I meant to say THE MUTUAL CONSENT GIVEN BY ALL.

He starts to pour it on thick in recounting the ascension of Marriner Eccles, the Republican Mormon from Utah who ran the Fed during FDR’s years, into the halls of power.

Greider claims that “Eccles had the uncommon courage to articulate this thinking before it became fashionable”.

Apparently, his “courage” amounted to vigorous support for the array of government fueled demand-side spending that was eventually codified in Keynes’ General Theory before Keynes’ famous work was even published.

Greider portrays Eccles as the true architect of the New Deal.  He lays out the entire contemporary progressive economic playbook. Everything from minimum wage to mortgage financing were included in his confirmation hearing and the FDR administration were more than happy to carry it out. The progressive economic playbook hasn’t really changed since then.

His analysis of the origins of so-called “supply side” economics is deeply partisan.  He makes repeat mentions of Andrew Mellon’s advocacy of lowered tax rates for the wealthy, but fails to mention that both JFK and Keynes advocated similar policies. He rationalizes the Reagan deficits and tax cuts and the attendant stimulation of aggregate demand as an inversion of Keynesian theory. However, he also fails to mention that Reagan’s expansion of the warfare state was in and of itself inherently Keynesian. It was simply an application of the theory which didn’t fit the progressive narrative or agenda.

His repeated conflation of hard money advocacy with “conservative” statist economic policy is also particularly odious.  Not only does he insinuate that Reagan’s closet belief in the gold standard was linked to the tax cutting agenda he eventually pursued, his portrayal of Jude Wanninski as a ideological zealot who infected the thinking of the administration reeks of partisanship.

He was a relentless advocate for gold. He was a close adviser to representative Jack Kemp and other conservative reformers. Now, with Ronald Reagan in power, Wanninski kibbitzed his friends in the White House and at the Treasury and and even dined infrequently with the chairman of the Federal Reserve. No one could say whether Wanninski had any influence on government policy, but important people listened to him.

And it doesn’t stop there.

These fetid piles of shite are further surpassed by his revolting attempts to inject gender politics into his argument.  He argues that Volcker’s policy of tough medicine in 1981 was somehow the product of the masculine culture at the Fed. He cites the theories of unnamed feminist critics and refers to some generic tendencies in women to be more attuned to compassion and negotiations.  He caps off this steaming pile of fecal matter by referring to Nancy Teeters’, the sole hardline Keynesian, as the lone voice of dissent in that time whose “bravery” in advocating for looser money would have forestalled economic devastation.

That’s right, proles.  The appointment of Janet Yellen has COMPLETELY changed the nature of the Fed. The policy initiatives are BRAND NEW in contrast to her male predecessor.

By Greider’s logic, she’s ushered in a whole new standard of idiotic pandering dressed up as compassion which we can totally attribute to the fact that she has a uterus.

Where’s Carmen Segarra when we need her? Clearly, we need a True Government Heroine.  Preferably, a strong womyn POC, too.  Because everyone knows that power is totally transformed by genitalia and skin color.

His most nauseating cop out by far is his idiotic and contemptible conflation of religion and free market economics.  Sadly, it’s a belief firmly held amongst progressives to this day, and somehow, the unclouded belief in the State is accorded total deference and escapes this very analysis.

Every important economic theory, one could say, relied upon an unstated subtext drawn from religious convictions. To declare correct principles for the functioning of the economy, one would first have to make certain assumptions about the larger nature of life itself-about God’s purpose and humanity’s obligations and the moral law that derived from the relationship of deity and mortals.

Perhaps it would be useful to examine how this analysis applies to progressives’ relationship to the STATE, Bill.  But no.  He pushes this moronic nonsense even further.

In this context, Keynes and his followers were the heretics. They were secular humanists who claimed men and women could manage human affairs for themselves.

The latter sentence would be a fantastic argument if it didn’t include deference to the doctrine of Keynesian statist economics, but that’s not what Greider is saying. He’s just flattering the smug elitism of modern progressives. He also seems conveniently oblivious to Keynes’ own warnings of the pernicious effects of inflation.

Still, Greider manages to drop many big truth bombs for those whose minds are open.  Not only does he cop to the drag the New Deal created for the economy, he reveals some other historical figures who adopted Keynesian policy to further their own political ambitions.

As it turns out, one the biggest proponents of Keynesian economics was none other than Adolf Hitler!

The pre-Keynes Keynesians included Adolf Hitler.  After 1933, Hitler initiated the Third Reich’s version of government-induced recovery-borrowing vast sums to build superhighways and armaments. He was so successful that by 1936 the Depression was substantially over for Nazi Germany.

Are you listening, Krugman fans?

For the inequality warriors, Greider thankfully points the finger of blame in the right direction.

If one viewed the Federal Reserve’s policy of high interest rates as an implicit government program for redistributing incomes, its magnitude by 1982 was approximately as great as all of the government’s other income-transfer programs combined, the redistribution of income that was explicit and controversial. The vast flow of money distributed to various beneficiaries through Social Security, veterans’ pensions, welfare and the rest came to $374 billion, now about the same as the income distributed to wealth holders through the high interest rates, $366 billion. Interest payments reached a record share of the nation’s personal income in 1982, more than 14 percent, almost doubled from 10 years before.

He spells out the mechanics of the con game in very explicit terms.

To economists, the effect was called “monetizing” the debt-a circular game in which the central bank bailed out the treasury by inflating the currency. The circle went like this: The executive branch borrowed money from the private sector by selling new Treasury notes and bonds.  The Fed then diluted the value of this debt by buying up old Treasury notes and bonds from the private sector and paying for them with newly created money.  The Federal Reserve, in effect, wound up holding more and more of the government’s debt paper in its own cloistered portfolio-and the private economy ended up with a bloated money supply.

He even gives a direct testimony from Stephen H. Axilrod explaining how the Fed, in its allegedly benevolent attempt to keep price inflation in check, artificially suppresses employment.

If you have a lot of demand, you’ve got to keep interest rates to keep the demand from overheating the economy. When you’re trying to wring out inflation, you have to keep the economy below its potential. The nasty way of putting that is you have to keep unemployment high.

Nowadays, all you hear from the intelligentsia and the apparatchiks is a lot of carefully crafted academic blathering about how the drop in the labor force participation rate is a natural phenomenon and can be attributed to generational attrition.  Right.

If one still isn’t convinced of the malevolent nature of the Fed after all these revelations, he explains how the bailout of Mexico resulting from the LDC debt crisis hobbled growth in these countries and disadvantaged American producers simultaneously.  If the dollar strengthened against international currencies, exports suffered. The contraction weakened demand for imports which subsequently thwarted debtor nations struggling to meet the terms of loans and punitive fiscal austerity mandates imposed by the Fed and IMF; a phenomenon that continues to play out on the international stage as Greece and Puerto Rico attest.

The main insight of this book which I hope that anyone who opposes the state war machine gleans from this book is the unholy alliance between central banking and the warfare state.

If anyone had any doubts that the apparatus of the central bank aids and abets the war machine of the state, this book should hopefully settle that score.  He doesn’t make it a centerpiece of his argument, but he lifts the veil enough for you to see it.

Every war, every one of them, was accompanied by a massive expansion of credit.  Generally, the State can’t get it through straight up taxation, so they get it by expanding the money supply.

Ultimately, Secrets of the Temple is rewarding, informative and deeply revealing book which is somewhat undermined by Mr. Greider’s muddled thinking, partisan biases, and deference to the authority of the State.

His prescriptions for higher inflation and a globally coordinated effort to ward off trade imbalances has played itself out to disastrous results on the international stage. In the wake of the Greenspan/Bernanke/Yellen era, those who share his convictions are stoking increasingly louder pleas from the population for ever increasing government involvement in economic life.

We’ve entered an era where the American Left has openly embraced a socialist running for president and policies that are exclusively focused on constraint of economic freedom. Confiscatory taxation and redistribution coupled with the strengthening of government cartels are standard articles of progressive faith. The unlimited expansion of the money supply with no apparent regard for hyperinflation is considered cutting-edge thought. Bill Greider’s book is refreshing because it is perhaps one of the last attempts by an intellectual of the Left to address monetary policy with an analysis which goes beyond smug condescension, avoidance or an open embrace of the printing press.  Perhaps it’s one of the Left’s last grasps at real honesty for a political coalition whose respect for human freedom is, at best, minimal and at worst, nonexistent.

A Most Violent Year (2014)

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Despite the provocative title, this film is not the crime bloodbath you might presume. 

This film tells the story of Abel Morales, an immigrant businessman who is doing everything in his power to retain a sense of morality during one of New York City’s most violent years. 

That’s right.  This is a story of a virtuous, moral immigrant capitalist.  

Abel is besieged on all sides. His oil shipments are being hijacked.  He’s being investigated by an overzealous DA.  His loan funding dried up on a deal that would allow him to expand his business. His family is threatened.  

Just about everything that could break his spirit happens, and yet Abel remains unbowed. 

In my estimation, this film is a rare phenomenon.  Hollywood generally resorts to caricatures of capitalists and the business world in general and portrays them as soul crushing, greedy and corrupt.  

For once, we are given a film with a character who is doing everything in his power to walk the line when everything around him is putting him to the test. 

And he’s an immigrant to boot.  

It’s a great reminder that the free market is not inherently corrupt. Rather, it is the free market that challenges you to look within yourself to determine whether you have what it takes to live up to its promise.  

Jessica Chastain turns in another great performance as Abel’s tough-as-nails wife. 

Good stuff.