Lies, Damned Lies, and Ayn Rand Groupies

Former Federal Reserve Chairman Alan Greenspan penned a paper last week with a predictable message: The economy is hindered by a lack of business investment, and the chief culprit is the strong arm of government intervention.

"I infer that a minimum of half and possibly as much as three-fourths of the [investment shortfall] can be explained by the shock of vastly greater uncertainties embedded in the competitive, regulatory and financial environments faced by businesses since the collapse of Lehman Brothers, deriving from the surge in government activism," writes Greenspan.

His story goes like this: Using simple statistical techniques, Greenspan seeks to find the correlation between why businesses aren't investing and the standard excuses for not doing so, such as excess capacity, the crowding out of money by government deficits, and shellshock from the recession.

His models show these factors explain only 45% of why businesses aren't investing. What explains the other 55%? Something else. Since there's no evidence of what that something is, he thinks it through. There was government activism during the Great Depression. Thus, continues Greenspan:

The Great Depression was far more devastating than the current crisis. Nonetheless, the parallels between the degree of business angst in those years and today's [investment] is supportive of the presumption that 'activism' is a likely explanation of the 0.55 unexplained variation in shortfalls in [investment], especially in the post-crisis years.

This is a flimsy argument at best, and is steeped in what became one of the biggest criticisms of Greenspan's legacy: Ideology suffocating evidence.

Instead of trying to calculate what's holding businesses back, the National Federation of Independent Businesses did something more clever. It asked them. Here's what its recent survey shows:

Problem

Percent Claiming Most Important Problem

Poor sales 33%
Taxes 19%
Government requirements/red tape 13%
Insurance 9%
Competition 5%
Other 5%
Inflation 4%
Quality of labor 4%
Cost of labor 3%

Source: NFIB.

Having 13% of businesses claim red tape is the largest roadblock is exactly average over the past 15 years. It was over twice as high in the mid-'90s. The 19% claiming taxes are the biggest problem is below average. The biggest outlier by far is the one-third of businesses claiming poor sales are the top problem. That's nearly three times the average rate.

Other surveys show roughly the same result. In PricewaterhouseCooper's Annual Global CEO Survey, 23% said economic growth and uncertainty was the largest driver of change; 22% said it was customer demand. Just 8% said government regulation.

Forget the cute math models. Spare me the ideological presumptions. Go into the real world and ask businesses what's holding them back, and the answer is resounding: Not enough business is the problem. Government regulation might be a burden, but not any more than it always has been. As Warren Buffett said of Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) expansion plans: "We're not reluctant to hire at ACME Brick or Shaw Carpet because of what's going on in Washington. We're worried about hiring there because of what's going on in our order book."

Then there's the irony of Greenspan's grumbles. The former head of the most powerful government organization bewailing the evils of government power is hypocrisy at its finest. Two years ago, we asked you Fools who you thought was most to blame for the financial crisis. Your vote: the repealers of the Glass-Steagall Act, a Depression-era law preventing the combination of commercial and investment banks. 

The repeal in 1999 of Glass-Steagall, called the Gramm-Leach-Bliley bill, ushered in the creation of "too big to fail" monstrosities like Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) . Among the cheerleaders of Gramm-Leach-Bliley, and a voice critically influential on Congress, was Greenspan. With the new law, Greenspan said a decade ago, "the financial services industry will be able to grow and innovate with far fewer artificial constraints." Destroy everything in its wake on occasion, too.

And don't forget Greenspan's unprecedented meddling in monetary policy. Interest rates were dropped to historic lows after 9/11 and left there for years, giving a massive artificial boost to the housing market and fueling one of the largest speculative bubbles in human history. It's a curious double standard when intervention designed to prevent bubbles is viewed as harmful, but intervention designed to fuel them is ignored.

Even Anna Schwartz, the 95-year-old economist Greenspan often heaps praise on, said "there never would have been a sub-prime mortgage crisis if the Fed had been alert. This is something Alan Greenspan must answer for."

Will he? I doubt it. This all seems like another example of what's become classic Greenspan: Take full credit for an economy's success on the way up, then point fingers at someone else after it explodes. Legacy preserving at its finest.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel owns shares of Berkshire and B of A preferred. Berkshire Hathaway is a Motley Fool Inside Value pick. Berkshire Hathaway is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Bank of America, and Berkshire Hathaway. Through a separate Rising Stars portfolio, The Fool is also short Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 18, 2011, at 5:07 PM, TheDumbMoney wrote:

    +100

  • Report this Comment On March 18, 2011, at 5:35 PM, whereaminow wrote:

    What does this have to do with Ayn Rand? Greenspan split her long before he sold out to the Progressives and the Fed. I'm sure you know that, Morgan.

    David in Qatar

  • Report this Comment On March 18, 2011, at 5:59 PM, SwiperFox wrote:

    Ayn Rand = Government (representing the dim and weak) holding down and frustrating various Titans of Industry (the brilliant and strong). Solution = limit government and we all get to live in a Capitalist Paradise.

    What does this have to do with Ayn Rand?

    Ayn Rand + Alan Greenspan = second rate ideologically driven hacks

  • Report this Comment On March 18, 2011, at 6:04 PM, oldengineer wrote:

    Morgan - great article. (one of many)

    Old Engineer

  • Report this Comment On March 18, 2011, at 6:51 PM, whereaminow wrote:

    SwiperFox,

    Except that the Federal Reserve, which Greenspan presided over, is the ultimate tool for expanding government power. Hence, Greenspanism = Socialist Paradise.

    Which is why Progressives in America worshipped Greenspan in the 1990s as the Maestro of the Recovery.

    Greenspan split with Rand in the 1970s. Nothing Greenspan has ever done or said since has anything to do with Randian ideology.

    This is a Progressive cop out to mask the fact that Greenspan was one of them, a paper money utopian.

    I've covered this before.

    http://caps.fool.com/Blogs/its-ayn-rands-fault-really/135675

    "So why the seismic shift in policy? How did Greenspan become Fed Chairman, where he systematically confiscated savings through inflation? Why did he refuse to autograph this very essay when Ron Paul mockingly showed it to him during his Chairman days?

    But most importantly, why does the government and media, all of whom are well aware of Greenspan's split with the Gold Standard community (and Ayn Rand) continue to paint Greenspan as Randian?

    Well it could just be a case of Stupidity Propagating Stupidity. I see this all the time on message boards, even here at TMF. Folks that have never picked up Rand, Hayek, Mises, Friedman, Bastiat, Rothbard, etc. feel the need to parrot the same B.S. that they heard from "respected" journalists like ...ahem... Newsweek.

    Or it could be nefarious. Those that understand the laissez faire realize that it gives power to the individual, and conversely, removes power from the State. From the State's perpective, naturally, any chance it has to discredit laissez faire is a chance to increase its power. This is why Keynes is America's revered economist, while Bastiat and Mises' works remain unknown in American schools."

    David in Qatar

  • Report this Comment On March 18, 2011, at 6:55 PM, AnthemFool wrote:

    Interesting example of confirmation bias, which is another way of saying ideology first, data to support it second. We know government regulation is the problem, how can we think otherwise?

  • Report this Comment On March 18, 2011, at 7:20 PM, ynotc wrote:

    it certainly can't be denied that most people are driven by an ideological bent. It also can't be denied that government has vast influence.

    Government have recently promoted some business over others such as "green" business. This has tipped the balance in their favor.

    The fact is that governemental policy causes shifts, for bad or for good, in the business community.

    As another fool said in a recent article, governements job should be to be the referee and when the referee begins to influence the outcome of the game the true winner does not emerge.

    Greenspan was one of the refs who helped rig games.

  • Report this Comment On March 18, 2011, at 7:20 PM, whereaminow wrote:

    Morgan,

    I eagerly await either

    1. An explanation of how the Federal Reserve system is an example of Randian ideolgoy run wild.

    Or

    2. A mea culpa in which you admit that you have no understanding of Ayn Rand.

    David in Qatar

  • Report this Comment On March 18, 2011, at 7:42 PM, ynotc wrote:

    Morgan,

    After reading many of your articles I have come to the conclusion that you are a subtle apologist for government regulation and intervention.

    Q.? If government regulation and intervention is so effective why hasn't it prevented things like the recent mortgage crisis to name two?

  • Report this Comment On March 18, 2011, at 8:39 PM, BruceHBi wrote:

    It would help if some of you folks read every word, instead of every other word.

  • Report this Comment On March 18, 2011, at 8:48 PM, eddietheinvestor wrote:

    I agree with ynotc's post and have noted the same thing for some time:

    <<"Morgan, After reading many of your articles I have come to the conclusion that you are a subtle apologist for government regulation and intervention.">>

  • Report this Comment On March 18, 2011, at 9:16 PM, TMFHousel wrote:

    <<"Morgan, After reading many of your articles I have come to the conclusion that you are a subtle apologist for government regulation and intervention.">>

    Interesting observation. I honestly don't think about it that much. If the opposite of a regulation apologist is someone who thinks economies work better when there are no laws against fraud, theft, and systemic risk, then yes, I'd say your description fits me. My only apology is that you feel I've been subtle.

    David,

    I'm sorry to have struck a nerve. You're usually a calm guy. The headline is in reference to Rand's ideology of government intervention of which Greenspan studied heavily until her death, and his subsequent twisted interpretation of the facts regarding government intervention. I don't think you and I disagree on that much: the end of this article discusses Greenspan's hypocrisy. If this still offends you, I can email you the article with an alternative headline, and hope you and I can remain friends.

    Happy Friday,

    Morgan

  • Report this Comment On March 18, 2011, at 9:38 PM, whereaminow wrote:

    Morgan,

    Thanks. On the crux of the article, that Greenspan is a lying snake, we agree. But let's be honest about what Greenspan was and is: a central planner.

    Rand did not espouse an ideology of government, so I don't know what you are referring to.

    I addressed the fallacy that Greenspan is a Rand understudy in my post.

    I have also read Marx and continue to do so. That doesn't make me a Marx cultist. And if I were to get elected and promote the gold standard, that wouldn't mean I followed Marx ideology in promoting the gold standard.

    Do you understand my complaint?

    There is enough confusion about laissez faire, central banking, and government intervention. Let's not add to it.

    David in Qatar

  • Report this Comment On March 18, 2011, at 9:39 PM, whereaminow wrote:

    "Rand did not espouse an ideology of government"

    Should read: Rand did not espouse an ideology of government INTEVENTION.

    yikes.

    David in Qatar

  • Report this Comment On March 18, 2011, at 10:21 PM, whereaminow wrote:

    One last thing Morgan, in case my thoughts are fuzzy due to a couple Guinness.

    You can't claim that Greenspan was following an ideology of non-intervention when he was Chairman of the largest market interventionist organization in world history, the central bank of the United States.

    That's my gripe. It's like saying a serial killer is not a murderer because he didn't kill YOUR granny. Yes, he was non-murder on that one occasion. And sure, maybe that serial killer read some New Testament. Doesn't make him a Christian.

    David in Qatar

  • Report this Comment On March 18, 2011, at 10:34 PM, TMFHousel wrote:

    David,

    You bring up a point I should have made clearer: Rather than saying one thing and doing another (hypocrite), he did two conflicting things simultaneously (two faced?).

    Greenspan led a charge of deregulation while at the same time intervening in monetary policy to a degree perhaps never seen before. Whatever it's called, it's confusing.

  • Report this Comment On March 18, 2011, at 11:29 PM, maiday2000 wrote:

    Okay, so poor sales are the problem? Poor sales are the result of what? People just don't all of a sudden one day say they are going to stop buying "things." Uncertainty? Taxes? Government Regulations? There could be many factors...this article reminds me of the "They Took 'er Economy" episode on South Park.

    The fact is, if we are talking "Randian" you could argue she would have been all for letting banks fail and destroy the economy, if it would have taught people a lesson and made it better later, sounds a lot like the self-immolation in "Atlas Shrugged" to me. Maybe that is a philosophical argument (would anyone REALLY let the country fail) but can we say that a lot of the outcome - The Financial Regulation Bill - is really going to fix any systemic issues? Does ANYONE believe that?

    We are always hearing that government regulations will fix everything but the evidence doesn't seem to support this very well.

  • Report this Comment On March 18, 2011, at 11:43 PM, whereaminow wrote:

    Morgan,

    As usual, we end up on the same page.

    David in Qatar

  • Report this Comment On March 19, 2011, at 12:21 AM, TMFHousel wrote:

    Sorry for not getting to this one yet:

    <<If government regulation and intervention is so effective why hasn't it prevented things like the recent mortgage crisis to name two?>>

    It's not the only reason -- I'm not as fanatical about regulation as some assume -- but I'll let Kyle Bass, the hedge fund manager who made hundreds of millions shorting the mortgage market, answer that one:

    "How many trillion dollar markets that directly touch the consumer are you aware of that are unregulated? I don't know of one other than residential mortgage origination."

    .

  • Report this Comment On March 19, 2011, at 4:23 AM, Clint35 wrote:

    Isn't Greenspan retired? Why can't he just shut up and enjoy retirement? He's worse than Bill Clinton.

  • Report this Comment On March 19, 2011, at 8:39 AM, PanBob wrote:

    I, too, found Ayn Rand to be a stretch, but in fact she wasn't mentioned in the article itself, only the headline. Since on most newspapers and magazines authors/reporters don't write the heads, I was curious if you do. Your note to David indicates you do, or at least didn't disagree with shoehorning Rand. So we readers wind up discussing a headline reference that's never mentioned or alluded to in the article. I thought the article itself made good points--you might want to look into the practice of having a copy editor write the headlines. #

  • Report this Comment On March 19, 2011, at 10:23 AM, skypilot2005 wrote:

    I was eagerly waiting to learn more about Ayn Rand as I read the article. Instead, I discovered an Alan Greenspan “hit piece”. That is fine but I feel it should have been reflected in the title. I wouldn’t have wasted my time reading it.

    I think a more appropriate title would be “Almost Three Years later, It is still Greenspan and George Bush’s fault.”

  • Report this Comment On March 19, 2011, at 10:59 AM, TMFHousel wrote:

    Thanks for comments folks.

    Sorry you didn't like the headline. I wrote it, and I'm going to continue writing them.

    I don't think referring to Greenspan as an Any Rand groupie is misleading in the slightest -- Greenspan has stated many times that much of his ideological background regarding government activism was influenced by Rand.

    Morgan

  • Report this Comment On March 19, 2011, at 11:08 AM, midnightmoney wrote:

    Two cents: a musician writes a song and gives it a title that doesn't reflect the content, yet we listen to it and are not bothered by that fact.

    Morgan has written a piece here while he or someone else has given it a title that would seem inappropriate. Yet the result is we get this probing conversation in the comments section that takes the whole thing in directions beyond what is written in the article. Suddenly it's about Ayn Rand, or has started to be, which gives it a quality of being finished not by the writer himself but by his readers.

    Since the commentators here have not shied away from name-dropping, I'll drop another: Borges, the great Argentinian writer of fiction and essays. I think he would very much have endorsed the idea of text being an open-ended creation that only ends when no one has anything else to say. Brecht, the Marxist playwright, would have championed the idea as well for it giving everyone a voice. After the article itself, the piece should be judged by the weight of and work done in the comments section more than by the title.

    David in Qatar, I'd love to here to what extent you've been able to reconcile Marx and Rand, if you think doing so is important.

    Morgan, my hat's off to you for getting the whole thing going, and for doing it day after day. May I say that the most effective piece of prose I have ever read came from Garrett Hongo, a Japanese-American poet who wrote an op-ed piece for the Eugene weekly back in the late 1990s. It was about how he felt a marginalized outsider in the backwoods of Oregon, having come from the more diverse metropolis of Los Angeles. It was a scathing piece that was met with such vitriol by residents of Eugene that I thought Hongo would have to leave the area. Letters to the editor flooded in for like a month and it was all anybody talked about. My take on journalism is that if people disagree with you, you are doing your job as a writer, or at least one job a writer can do, as it makes people examine their thinking.

  • Report this Comment On March 19, 2011, at 2:34 PM, fwhite590 wrote:

    SUBAYE

    ¿Is it true that a private equity fund will buy 51% of the company a price of 7 dollars a share?.

    That is 100% gain.

  • Report this Comment On March 20, 2011, at 2:57 AM, davidm8797 wrote:

    At least Greenspan was decrepit and old - making him less corruptible than Bernanke - never trust a man who sports a beard that has no stylistic explanation - it seems that that beard is his only real conviction, economy be damned.

    On Greenspan - the existence of his position (Fed Chairman) is "interventionalist" - him taking that seat without a permanent frown - tacit consent to interventionalism

  • Report this Comment On March 20, 2011, at 9:49 AM, Diogeron wrote:

    http://www.ritholtz.com/blog/2010/10/alan-greenspans-asset-b...

    It's a great post. See above for some visual explication of the same thesis...

  • Report this Comment On March 20, 2011, at 5:17 PM, TMFMitten wrote:

    I have to echo what others have said about the Ayn Rand name-drop. Rand didn't support central planning or fiat money. If Greenspan was a Randian at one point in his life, he certainly couldn't have been by the time he became Fed chief. I take no issue with the criticism of Greenspan, and I'm no big fan of Ayn Rand, but I do think the headline misses the mark and tries to lay blame where it doesn't really belong.

  • Report this Comment On March 20, 2011, at 5:34 PM, David369 wrote:

    I still liked the article even if the commenters' try to confuse me with the facts. Maybe it should have been entitled "The Ghost of Policies Past (and other haunts)".

  • Report this Comment On March 20, 2011, at 5:50 PM, TMFHousel wrote:

    Thanks for the comments all.

    "If Greenspan was a Randian at one point in his life, he certainly couldn't have been by the time he became Fed chief."

    Well, that's assuming there are only two groups: Randians and nonrandians. Can't something exists in between? Greenspan has made it clear, notably in his biography, that his laissez faire philosophy was heavily influenced by Rand. Whether he eventually strayed into the world of fiat money doesn't overrule that. I think Buffett is wrong on several points regarding derivative regulation. Does that mean I have to reject everything else I've learned from him?

    I'm sorry this headline became an issue, and perhaps took away from the article. Still, I'm sticking with it. The headline promised you a Rand groupie; I gave you Greenspan's twisted facts regarding govt intervention. I think that's fair.

    Morgan

  • Report this Comment On March 20, 2011, at 6:32 PM, TMFHousel wrote:

    Another point to consider in this Greenspan-ditched-Rand-when-he-went-into-government debate: Rand stood next to Greenspan as President Ford swore him into office.

    Asked about the discrepancy between Randism and Greenspan going into central government, Rand said, "Alan is my disciple. He's my man in Washington."

  • Report this Comment On March 20, 2011, at 9:58 PM, TMFDiogenes wrote:

    "Since the commentators here have not shied away from name-dropping, I'll drop another: Borges, the great Argentinian writer of fiction and essays. I think he would very much have endorsed the idea of text being an open-ended creation that only ends when no one has anything else to say. "

    @midnightmoney

    +1000

  • Report this Comment On March 20, 2011, at 10:00 PM, TMFDiogenes wrote:

    It's fair to characterize Greenspan as an Ayn Rand groupie to the extent that the article is a rebuttal of his laissez faire attitude towards regulation. The fact that he was hand-on with interest rates is confusing and perhaps in tension with his ideology regarding regulation, but it's not relevant to an article criticizing him for specifically and only for his Randian tendencies.

  • Report this Comment On March 20, 2011, at 10:41 PM, whereaminow wrote:

    @TMFDiogenes,

    That's utter nonsense. Let me list all of the regulatory powers of the Federal Reserve:

    Bank holding companies

    State-chartered banks

    Foreign branches of member banks

    Edge and agreement corporations

    US state-licensed branches, agencies, and representative offices of foreign banks

    Nonbanking activities of foreign banks

    National banks (with the Comptroller of the Currency)

    Savings banks (with the Office of Thrift Supervision)

    Nonbank subsidiaries of bank holding companies

    Thrift holding companies

    Financial reporting

    Accounting policies of banks

    Business "continuity" in case of an economic emergency

    Consumer-protection laws

    Securities dealings of banks

    Information technology used by banks

    Foreign investments of banks

    Foreign lending by banks

    Branch banking

    Bank mergers and acquisitions

    Who may own a bank

    Capital "adequacy standards"

    Extensions of credit for the purchase of securities

    Equal-opportunity lending

    Mortgage disclosure information

    Reserve requirements

    Electronic-funds transfers

    Interbank liabilities

    Community Reinvestment Act subprime lending requirements

    All international banking operations

    Consumer leasing

    Privacy of consumer financial information

    Payments on demand deposits

    "Fair credit" reporting

    Transactions between member banks and their affiliates

    Truth in lending

    Truth in savings

    Not enough regulation, huh?

    David in Qatar

  • Report this Comment On March 20, 2011, at 11:12 PM, TheDumbMoney wrote:

    Greenspan attended Ayn Rand's funeral, too. There was never a split. There was a politically-expedient stepping-back. I think it is objectively true, too, that pretty much the only area in which Greenspan even arguably believed in a government hand was with the currency. As to every other regulatory duty of the Fed, he did his best to minimize it, within the constraints imposed upon him by Congress and by the beaurocracy.

  • Report this Comment On March 20, 2011, at 11:39 PM, Cholbird wrote:

    Dear Morgan,

    After reading your article and the comments made by the other readers, who I assume know a lot more about the economy than I do, as I see it, there was a quite a bit of controversy about what you were writing. You covered a lot of territory – was it about Ayn Rand groupies, a Greenspan hit piece, the lack of or too much regulation, why businesses are not investing or the lies told us about our economic woes?

    The part I am focusing on and what resonated for me is the why! Why are businesses not investing? Using Warren Buffett’s quote from the article "We're not reluctant to hire at ACME Brick or Shaw Carpet because of what's going on in Washington. We're worried about hiring there because of what's going on in our order book."

    As a small business owner, what Warren Buffett is saying and how it pertains to my 10 year old business is that over the last 2 years I have had to let 6 people go, I can not afford to upgrade my equipment, let alone buy new carpet, nor can I even advertise because my sales have fallen so drastically. I can not get a business loan; no matter how much I cut expenses, my debt level has increased due to the lack of sales. My business is on the verge of closing because I am out of funds and out of hope that this economy is improving. Which in turn, leaves our government without the taxes I would have continued to pay for the privilege of having a business, I won’t be paying rent to my landlord, or buying inventory from other businesses or paying for utilities, insurance, business supplies and 3 more people will be out of work! How is this good for the economy?

    Along with Warren Buffet statement and my own personal situation you have 33% of the businesses surveyed saying they are struggling due to "poor sales”. That number reflects 2x more than government intervention 13% or taxes 19% combined, add the cost of labor (a paltry 3%) and you have the so-called culprits that are always at the forefront and surprisingly believed to be the reason why businesses are struggling in this country but it is a big fat lie!!!!!

    Whether we like it or not our economy and economies around the world are built on making a product and selling that product in exchange for money or another product for our livelihoods. It is important to understand that without the sale/exchange – taxes, government intervention and the cost of labor become a moot point. When people lose their jobs or have their hours cut back or their wages reduced or both, people can not spend and buy products if they do not have the money and businesses will continue to fail and jobs will continue to be lost. Since 33% of businesses need sales and there are only 3% of businesses complaining about the cost of labor – it would appear that investing in the hiring of more workers and paying the workers a little more would help keep our economy healthy? To me it seems to be simple math – do you really need a PHD in economics to figure that out!

  • Report this Comment On March 20, 2011, at 11:52 PM, whereaminow wrote:

    "Greenspan attended Ayn Rand's funeral, too" - dumberthanfool

    Ayn Rand's funeral was in 1982.

    David in Qatar

  • Report this Comment On March 21, 2011, at 1:30 AM, NOTvuffett wrote:

    The elephant in the room is the 33%. I find myself in the same position as Cholbird above.

    Credit is not really an issue. However, you don't get a loan just so that you can hire people, you have to have a return on the money.

    The Fed keeps generating new money. Why does it seem like that money only goes into the pocket of bankers? That is a real brain twister, isn't it? A quasi-government institution with no accountability made up of bankers... what could possibly go wrong? lol.

    I have little doubt that Greenspan was in part responsible for our current economic malaise but he was held out as one of the smart guys to guide us- much in the same way as Bernanke is now. Do we have to wait 10 years for another horrible outcome before a new wizard of smart takes the reins?

  • Report this Comment On March 21, 2011, at 7:39 AM, TMFBent wrote:

    Ahhh Morgan. You let the facts get in the way of a good story.

  • Report this Comment On March 21, 2011, at 1:22 PM, Jbay76 wrote:

    +100 for David

    Semper Fi

  • Report this Comment On March 21, 2011, at 6:02 PM, Hitchhiker042 wrote:

    Current government red tape does not necessarily relate to the "blowin' in the wind" administration and the "who knows what he'll think of next" fear that many business owners have. We don't what will happen next regarding taxes, health care requirements, new hires, and cannot plan far enough ahead to decide whether to hire, or not; or expand, or not. Greenspan didn't talk about regulations. He talked about the "vastly greater uncertainties" caused by "government activism." I think that's exactly the problem. Business owners don't trust what the government is going to try next.

  • Report this Comment On March 21, 2011, at 9:32 PM, skypilot2005 wrote:

    “I'm sorry this headline became an issue, and perhaps took away from the article. Still, I'm sticking with it.” – Morgan

    I was with you until the last sentence.

    Perhaps?

  • Report this Comment On March 21, 2011, at 9:40 PM, skypilot2005 wrote:

    “My take on journalism is that if people disagree with you, you are doing your job as a writer, or at least one job a writer can do, as it makes people examine their thinking.” - midnightmoney

    Some people think title means a descriptive name when used in the context of a financial publication. I visit the Motley Fool in order to be Enriched; Amused and Educated not to participate and observe political debate.

  • Report this Comment On March 22, 2011, at 3:06 PM, mtf00l wrote:

    Seems these days everything is a political debate...

  • Report this Comment On March 22, 2011, at 4:14 PM, ToweringPine wrote:

    Maybe the title should have been "Greenspan: Strict Rand Adhereist had finger's crossed all along."

  • Report this Comment On March 22, 2011, at 7:09 PM, ilovesumm wrote:

    Look at Greenspans track record and then tell me if he should even open his mouth.

    He couldn't migrate the past properly , how can he navigate the future now?

    He is a lying , bumbling , delusional fool.

  • Report this Comment On March 22, 2011, at 8:33 PM, shoobeedoobee wrote:

    Thanks, Morgan. Very good article. Good follow-up discussion, too.

    There is a lot of people in politics right now who feel that everything the government touches goes bad. Unfortunately, these same people then get elected, and prove it.

    Eric S.

  • Report this Comment On March 23, 2011, at 5:47 PM, Clawhammer08 wrote:

    To all of those anti-government interventionists out there: Please explain to me the so-called free-market phenomenon that is Germany, please. I have worked for several Northern European companies (including a few German ones), and I can promise you that they are easily six times as regulated, on average, as any American counterpart, with some variations between sectors (some being more regulated, some less than this 6x factor). I mean, in Germany, by law, as an individual you cannot burn a piece of wood as firewood until it has seasoned (aged) for two full years. I am just curious to hear the various explanations for this.

  • Report this Comment On March 23, 2011, at 9:25 PM, Isaacroccoco wrote:

    ynotc,

    Q.? If government regulation and intervention is so effective why hasn't it prevented things like the recent mortgage crisis to name two?

    Brooksley Born, head of the CFTC under Clinton attempted to regulate the derivatives market but was pretty much shut down and run out of Washington by Greenspan & co - thus paving the way for the mortgage bubble. Soon afterward, they got pushed a law through Congress preventing the government from ever regulating the derivatives market.

    Citation: "The Warning" PBS Frontline documentary.

    http://www.pbs.org/wgbh/pages/frontline/warning/view/

  • Report this Comment On March 25, 2011, at 12:07 PM, jsb54 wrote:

    Thank you thank you thank you. I have screamed for years our own Texas turkey Phil Gramm can almost single-handedly have this financial disaster laid at his doorstep because he was the head cheerleader for the republicans to repeal the Glass-Steagall Act. The republicans have been trying to undo every protective law since Theodore Roosevelt so the pigs can run wild. Thank you.

  • Report this Comment On March 25, 2011, at 12:16 PM, jrj90620 wrote:

    David 1,Morgan 0

  • Report this Comment On March 25, 2011, at 1:18 PM, jra9999 wrote:

    Great article and great headline. Not much to add this late in the game except to underscore the obvious: the Ayn Rand reference is wholly on-target, precisely because Greenspan -- and several prominent participants in this forum -- have burrowed themselves so deeply into their ideological bunkers, they've lost any ability to see reality for what it is. Really, the tortured arguments made by some here for "real" laissez faire remind me of the arguments made by latter-day Marxist-Leninists who brilliantly insulated themselves from the horrid track record of real-life communism by insisting that one sell-out after another had prevented "real" communism from ever being implemented.

    Scarcely anyone listens to these tired and discredited voices on the far left anymore. Yet people like Greenspan still manage to command a respectful audience. No, I'm not suggesting a facile moral equivalence. But I'm tired of people denying that the deregulate-at-any-cost crowd bears no responsibility for all the economic destruction they've enabled. Ideologically-driven agendas from the right have also created their amount of human wreckage & suffering, and it's time these guys be held accountable for as much.

  • Report this Comment On March 25, 2011, at 2:04 PM, frankinCA wrote:

    jrj90620 -3, David -2 , Morgan +1 Ayn 8

    Her works woke up the world to the laissez-faire addiction being perpetrated on the public, of to which she was an addict. ( I can understand why David is in Qatar through reading his bemusings)

    David, explain to me why our Rep Congressmen are telling the public to put less money into government, yet they all want military, financial and social activities controlled so the rich can do as they will, and pay little to ensure their playground is undisturbed !!!!

    Business 1/3 Government 1/3 People 1/3

    None can exist very long without the other. Think about it and how China's leaders (government are trying to control the economy so that their efforts are lasting and not a quick gain like the mortgage securitization (spelling?) people did, and the accompanying CDO's. We need lot's of government to control the wall street gamblers who use 401k's and other peoples money to fill their middle-man pockets !

  • Report this Comment On March 25, 2011, at 2:35 PM, EBerg13 wrote:

    I am a fair believer in the free market, but I wonder why businesses aren't screaming to have the yoke of employee benefits taken off them so they can better compete in the world markets.

    Of course, with our government spending 42% of the world's total defense costs, how can they afford it? I am sure that Rand would have something pithy to say about this if she were alive today.

  • Report this Comment On March 25, 2011, at 3:28 PM, Live2eng wrote:

    First, if you add the 13% who recognize a direct link to Government intervention with the 33% who blame slow sales without noting why, you get the same answer as Greenspan. I am no fan of Alan, but there is no doubt that my clients, those who used to borrow money to hire my for project designs in the past, some in other countries, are sitting on their investment money and not borrowing leverage money, because of uncertainty in what will remain legal, what will be subsidized, which competitor will be subsidized or bailed out, and what will the tax situation look like over the payback period of the project. None of these are consumer driven concerns like "low sales."

    I was, up until recently, a NFIB member, and none of us are lenders, and all of us who are left were not dependent on borrowed money for continued existence. All of those guys are already out of business when the taps were turned off, presumable no longer available to answer the poll.

    I have one different question. At risk of further exposing my ignorance, why would a bank member of the Federal Reserve loan money in a slow economy which eats businesses regularly at say, 8%-10%, when it can deposit that money with a federal guarantee with the Fed for 6% and not hire people to process loans and loan payments?

  • Report this Comment On March 25, 2011, at 3:52 PM, hestaman16 wrote:

    Greenspan is an early Paris Hilton, famous for being famous, who has consistently worked very hard to endear himself equally to members of both parties who were in a position to help him, and is in reality, an emperor with no clothes. Even Ayn Rand said of him: "I think that Alan basically is a social climber". His biggest ability has always been to sell the image of himself as some kind of economic genius, while giving one wrong prediction after another in the volumous narrative style that Ayn Rand wrote in. Fellow economist Brian Wesbury has stated about Greenspan, "He was the greatest, the Maestro. Only if you look at his record, he was wrong about almost everything he ever predicted." He consistently preached free-market mechanism, while also acting as an interventionist for those who could help him, as he did when encouraging the repeal of Glass-Steagall.

    Greenspan, more than any other single individual, enabled this latest recession. In short, he's been a real disaster for the United States and the world.

  • Report this Comment On March 25, 2011, at 5:42 PM, drborst wrote:

    Morgan,

    I know it means very little this late in the comment cycle, but I liked the headline. I usually prefer the meat or your articles to the headlines, but this one generated some interesting comments.

    That said, the rest of the article was a little drab. The data was from a survey, which offers the insightful conclusion that businesses aren't investing mostly because they don't think they can make money. If data from the same survey were included from previous years, it might have been interesting, but the subsequent references to earlier data weren't revealing.

    Also, while you use a lot of the article to accuse an old man of the shocking crime of 'legacy preserving' (one who, we should be reminded, did admit that he got it wrong) and of letting ideology trump facts, I find the survey rusults showing that roughly 1/3 of business leaders say they aren't investing because of taxes and regulation more interesting. (though less so if it really is unchanging over time). Do business leaders really not invest because they want lower taxes and less regulation? That says a lot about the business leaders

    Finally, To David In Qatar, thanks for making a drab article into an interesting comments section.

  • Report this Comment On March 25, 2011, at 11:02 PM, kvryland wrote:

    What does Ayn Rand have to do with anything that Greenspan ever did? Does Morgan Housel know nothing of what Ayn Rand stood for, or is this just a catchy headline to get attention, which is often the case when writers are trying to get people read their writings who otherwise would not?

    In sum, Ayn Rand and Alan Greenspan have very little in common.

  • Report this Comment On March 26, 2011, at 11:00 AM, buffalonate wrote:

    Rand was against excessive government regulations correct? Greenspan constantly fought against regulating the banks. He said that their self interest in preventing their own bankruptcy would prevent them from taking too much risk. The Federal Reserve is well known to have been asleep at the wheel and did not regulate much of anything. Isn't that what Rand would preach, the government staying out of everything?

  • Report this Comment On March 26, 2011, at 12:52 PM, JBFMF wrote:

    Are you scared of Ayn Rand? I didn't see her mentioned. Is it her philosophy or just a novel that she wrote? Very confusing.

  • Report this Comment On March 27, 2011, at 9:48 AM, Sparkynet wrote:

    You forgot Larry Summers' roll in the recession. A major proponent of repealing Glass/Steagall while in Clinton's cabinet. Of course he's been until recently an Obama advisor. I saw Gramm walking through DFW airport a couple of months ago. I really wanted to say " Thanks for the recession", but decided not to.

    I'm not an Ann Rynd groupie but I must admit that "The Fountainhead" was a great read.

  • Report this Comment On March 27, 2011, at 11:13 AM, TMFHousel wrote:

    "You forgot Larry Summers' roll in the recession."

    The article was about Greenspan, not naming everyone involved.

  • Report this Comment On March 27, 2011, at 6:35 PM, AllInItTogether wrote:

    Greenspan certainly has clay feet. History will paint him as the Neville Chamberlin of the financial markets.

    And David in Qatar, perhaps you've been out of the country too long, but from where I sit, here in the good old USA, you indeed seem to be kowtowing before the idols of ideology rather than addressing the data from the surveys in this post, which clearly indicate why business is lagging. And it ain't over-regulation!

    Ayn Rand is dead and a distraction from the argument; Morgan should have left her out of the title.

  • Report this Comment On March 27, 2011, at 7:31 PM, NOTvuffett wrote:

    This discussion has been lost in the weeds because of the Ayn Rand reference.

    Earlier in the discussion I said the elephant in the room was the 33%. The point I was trying to make (rather poorly) was that the 33% can be made of other things- if others don't buy because they are worried about the other things, 'poor sales' would be a box they would check on a survey. Why is competition even in this? All businesses (free market) are about competition.

    For that matter the entire survey data is skewed.

    Let businesses know that there will not be increased taxes and regulations on them for many years, and you will see the money come off the sidelines.

  • Report this Comment On March 27, 2011, at 8:19 PM, NOTvuffett wrote:

    While I am at it, and nobody will probably notice anyway, does anybody here actually think Ayn Rand wrote 'Atlas Shrugged' so that women could pick it up in the market for a little light reading?

    I thought using fiction to express her ideas was an effective means of conveying her ideas , even if it was clumsy on certain levels.

    Most that will probably see this have read Jean Paul Sartre's work 'Being and Nothingness'. The thing wanted to make me shoot myself in the head..... oh wait, wanted to make me shoot a certain Frenchman in the head, my bad, lol.

  • Report this Comment On March 28, 2011, at 11:55 AM, kvryland wrote:

    If Ayn Rand had had her way, "The Creature from Jekyll Island," i.e., the Fed, would not exist.

  • Report this Comment On March 28, 2011, at 12:18 PM, KwizatzHaderach wrote:

    "If the opposite of a regulation apologist is someone who thinks economies work better when there are no laws against fraud, theft..."

    That is not, in fact, the opposite of regulation apologist.

    What you write is the classic play of a pro-large-government thinker. "If you're against heavy-handed regulation, then you must be for a lawless society."

    Even the most unbridled laissez-faire Randian is still for laws against theft and fraud. In those cases damage was done to at least 1 party, and it is absolutely necessary for government to employ its monopoly on the use of force to enforce the law and demand restitution. This is one of the foundations of a civil society. This is also not regulation.

    Regulation is the legal equivalent of preemptive warfare, and has the same disastrous consequences. In this latter case, no wrong has yet been done, but government interferes in the system anyway. No one is smart enough to predict and contain the blowback from such operations, and so we get things like the Great Depression and more recently the Great Recession.

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