Ayn Rand and Objectivism

[Mich the Tester]

The banks did have a part to play I will agree but Government encouraged indiscriminate borrowing against the value of property because it suited their purposes and therefore they have culpability

Nobody would claim that governments have no culpability here. However, while governments encouraged house buying, no government ever obliged banks to lend money at exponential interest rates to unemployed or underemployed single parents in places like Detroit. They also did not oblige banks to wrap up the mortgages in packages and then sell them on to investors with a gold stamp saying 'AAA'. OK, that's not really what they did; they filled packages with 95% safe mortgages and 5% risky, but then the IBs went on and split up the packages and glued them back together again in new packages stamped 'AAA'. Do you know what happens if you do that? Try, as an experiment, taking 100 pieces of blank paper and making a black mark on each of them covering 5% of the surface. Take all those bits of paper into a dark room, cut them up, shuffle them around and glue them back together again. What you find when you switch the light on will explain the crash of mortgage backed securities quite well. Basically, comsumer banks duped the IBs and the ratings agencies joined in the duping; nobody knew what the packages contained. All the while, governments stood by as this fraudulent practice continued.

Capitalism needs protecting against itself, because if this happens again, capitalism will die in a violent bloodbath.

[TimberWolf]

Some might argue that it's a shame we didn't let objectivism run to its logical conclusion:


Have the French gone soft?

[LisaContractorUmbrella]

That is a different issue entirely - the level of government interfernce is open to debate.
But that is not what we are discussing and what you implied in your previous post.
What we are discussing is Rand's idea (and it seems you agree with her) that capitalism should be completely unfettered.
Xog, Mich and I have pointed out why that is a bad idea.
Can you tell us what you think would have happened if there were no regulations at all and why?

Tell you what Sas - you answer one of my questions then I'll carry on answering yours

[LisaContractorUmbrella]

So what use is it then?
You've actually hit on the problem with Rand's Ideas - they're Utopian and therefore impractical.

If I have to explain that to you then it is utterly pointless us having a discussion about any sort of philosophical theory.

To give the counter argument - what use is Socialism?

[LisaContractorUmbrella]

Nobody would claim that governments have no culpability here. However, while governments encouraged house buying, no government ever obliged banks to lend money at exponential interest rates to unemployed or underemployed single parents in places like Detroit. They also did not oblige banks to wrap up the mortgages in packages and then sell them on to investors with a gold stamp saying 'AAA'. OK, that's not really what they did; they filled packages with 95% safe mortgages and 5% risky, but then the IBs went on and split up the packages and glued them back together again in new packages stamped 'AAA'. Do you know what happens if you do that? Try, as an experiment, taking 100 pieces of blank paper and making a black mark on each of them covering 5% of the surface. Take all those bits of paper into a dark room, cut them up, shuffle them around and glue them back together again. What you find when you switch the light on will explain the crash of mortgage backed securities quite well. Basically, comsumer banks duped the IBs and the ratings agencies joined in the duping; nobody knew what the packages contained. All the while, governments stood by as this fraudulent practice continued.

Capitalism needs protecting against itself, because if this happens again, capitalism will die in a violent bloodbath.

The fact that the Government stood by and did nothing whilst being totally aware of what was going on would signify to me that the Government operated from a point of view of self-interest and is therefore far more culpable than the bankers themselves

[Mich the Tester]

The fact that the Government stood by and did nothing whilst being totally aware of what was going on would signify to me that the Government operated from a point of view of self-interest and is therefore far more culpable than the bankers themselves

I think government inaction had more to do with fear than self-interest. Fear of going against the prevailing ideology, fear of giving the public bad news, fear of seeing banks relocate etc. Also, I think that banks' methods had become so complex that governments simply didn't understand what was going on anymore. Neither did bankers, it would seem.

[sasguru]

If I have to explain that to you then it is utterly pointless us having a discussion about any sort of philosophical theory.

To give the counter argument - what use is Socialism?

3 points:

1. Ayn Rand's work does not count as philosophy. That's why it's not studied in the philosophy departments of any reputable university.

2. Socialism is not a philosophy, it is an economic method of organisation. It has, arguably, achieved some sort of success in several societies e.g. the Scandinavian countries, some might say Cuba and East Germany, as opposed to Russia.

3. My personal inclination is to be practical. I'm not interested in some cloud-cuckoo-land ideas that are not to be applied to the real world. In that sense at least Socialism has been tried.
I'm sure "objectivism", if tried, would fairly quickly lead to anarchy, human nature being what it is. In fact the only difference really between the anarchists and "objectivists" is that anarchists usually have dogs on strings and objectivists wear suits.

[LisaContractorUmbrella]

I think government inaction had more to do with fear than self-interest. Fear of going against the prevailing ideology, fear of giving the public bad news, fear of seeing banks relocate etc. Also, I think that banks' methods had become so complex that governments simply didn't understand what was going on anymore. Neither did bankers, it would seem.

But fear in that way is self-interest - fear of losing power i.e. self-serving.

[LisaContractorUmbrella]

3 points:

1. Ayn Rand's work does not count as philosophy. That's why it's not studied in the philosophy departments of any reputable university.

2. Socialism is not a philosophy, it is an economic method of organisation. It has, arguably, achieved some sort of success in several societies e.g. the Scandinavian countries, some might say Cuba and East Germany, as opposed to Russia.

3. My personal inclination is to be practical. I'm not interested in some cloud-cuckoo-land ideas that are not to be applied to the real world. In that sense at least Socialism has been tried.
I'm sure "objectivism", if tried, would fairly quickly lead to anarchy, human nature being what it is. In fact the only difference really between the anarchists and "objectivists" is that anarchists usually have dogs on strings and objectivists wear suits.

I am actually really interested in your opinions on the benefits of socialism v capitalism

[Mich the Tester]

But fear in that way is self-interest - fear of losing power i.e. self-serving.

To some extent, yes.

But you probably accept that there are laws about who can be a surgeon and cut you open or who can pilot the aeroplane or drive the train that takes you off on holiday.

Banks are essential for the functioning of the economy, and by extension for the stability of a society. Remember when RBS crashed? McPillock and Goodwin couldn't even explain to a parliamentary inquiry what a mortgage backed security is, even though it was one of their best selling products.

Who's the odd one out in this list: Fred Goodwin, Gordon Brown and Terry Wogan?

Terry Wogan; he's the only one with a banking qualification.

An industry which is so essential to the functioning of economies and which has displayed such endemic unprofessionalism can not expect to continue unregulated; the public simply won't stand for it, and capitalism cannot survive it.