Calhouns Can(n)ons

Calhoun’s Cannons, The Bay News, Tolosa Press, for November 7, 08

Spilled Milk, Barn Doors and Chairman Louie

It was an astonishing confession. Here’s former Fed chief Alan Greenspan testifying before Congress on the present financial crisis we’re in:

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

Apparently Mr. Greenspan, reportedly a fan of Ayn Rand’s “libertarian philosophy” to be found in such novels as “The Fountainhead” and “Atlas Shrugged,” believed that Rand’s world was a real one. That people will always act in their self interest and that governmental rules and regs aren’t really necessary since self interest will guarantee they won’t do anything self-destructive.

In short, Mr. Greenspan was running the Fed and advising our leaders and manipulating our economy as if it were 1952 and bankers and CEOs of vast corporations were sober, cautious men of probity, men who would never do anything rash that could damage their reputations in the community, jeopardize their own jobs or endanger the solvency of the companies they were running. And now, like “Casablanca’s” Inspector Louie, he’s shocked – shocked!-- to find gambling going on in this establishment!

But here’s what Mr. Greenspan clearly overlooked: While he was still stuck in the middle of Ayn Rand World, the real world had turned into a Financial Demolition Derby run by genetically modified high-risk takers with high adrenalin-rush thresholds who were armed with vast golden parachutes. These people had one mandate: make as much money as fast as possible by any means available. And if the companies they were running went broke doing it, they would simply jump ship with their booty and soon be welcomed aboard another corporate ship, given another golden parachute, twice the salary and standing orders to repeat the process.

Their self interest was amply rewarded and protected and they acted accordingly. Thanks to Greenspan and our elected officials, we had ironically created and allowed a pure Ayn Rand World, with one component missing: No penalties for bad choices, no consequences for anything. Imagine Howard Roark given a promotion and a huge sack of money instead of being put on trial as a common criminal.

Most people read Ayn Rand’s novels in high school. Howard Roark is the perfect adolescent fantasy – genius only answerable to itself in a purified fantasy world where nobody real actually gets destroyed. Most people grow up after high school and realize that the real world is a far more complicated and interconnected place of actions and unintended consequences.

Unfortunately and apparently, our former Chief financial guru never did. And we are now paying the price for our failure as a nation to ignore the siren song and the ultimate consequences of this freebooting. In the November New York Times Review of Books, Benjamin Friedman notes from James Gailbraith’s new book, “The Predator State,” that “. . . . financial firms and their leaders . . . have neither the desire nor the ability to ensure that the business they now control are productive or honestly run – and still less interest in whether they deliver benefits to their customers, their workers, their communities or anyone other than whoever controls them.” while “ . . . The government rushes to bail out big firms, and to protect their creditors (and their executives’ pensions), but declines to help ordinary citizens, including those bilked by questionable lending practices or even outright deceit. The government awards rich contracts to companies either owned or run by political supporters and former colleagues, often in violation of rules requiring competitive bids.”

It’s a system we have voted for, lived under and tolerated for years and now we’re reaping its harvest.

As I write this, I have no idea how this election will turn out. We have been a sleepwalking nation for far too long, believing patent nonsense, denying fiscal reality, running on lies and fear, allowing a new class of Guilded Age predators to abscond with our silverware. We have the methods and means to turn everything around to reconstruct an America that brings real benefit, not just to the Fortune 500, but to a very real main street. We have the means, but do we have the will? That’s the compelling question of Nov. 4th .