Ayn Rand and Objectivism

[Ignis Fatuus]

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.

Rarely do I disagree with you on matters of fact, but I have to here. The Clinton administration did oblige lenders to give a proportion of loans to lower-income Americans, for political reasons. The 1995 amendment to the 1977 Community Reinvestment Act changed the measure of banks' conformity with the CRA provisions, basically from one that measured their efforts to reach low-income would-be buyers, to one that measured results, i.e. how many sub-prime mortgages they actually issued. So they started issuing them, because they'd get into trouble if they didn't.

[sasguru]

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

All my reading, travel and experience of the world suggest to me that different societies are suited to different economic systems.
But all succesful economic systems have some sort of a capitalistic core. It seems to be a better way of directing human energies.
Unfettered capitalism however, given human nature, will ultimately lead to its own destruction (Marx was right about that at least) since the masses will not put up indefinitely with a small minority having all the economic wealth.
And that is why all succesful and mature societies, have some componet of redistribution of wealth i.e. a socialistic component.

The level of capitalism versus socialism in a mature economy is open to debate but I'm convinced an element of each is essntial for a healthy society.

[edit]
The country I admire most in Europe is Germany and by all objective evidence-based accounts it is much more succesful than Britain (althought you wouldn't think so given the BS we are sold by our leaders). I would argue that it is more socialist than Britain.

But is it more succesful because of its added socialism (more powerful trade unions, higher taxes) or is it because of German culture which is more communal and less individual?

[end edit]

[LisaContractorUmbrella]

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.

Then what you are suggesting is that we need a system of control which makes sure that people are doing their jobs properly - the problem with that is that you develop a society where collective responsibility and not personal responsibility becomes the norm. As I have said, whilst you are dealing with human beings, you will never stop mistakes, dishonesty, ineptitude or any of those other things which have contributed to our current problems. My feeling is just that the economy would be better served by people who are passionate about what they do and been succesful in their chosen field.

[Mich the Tester]

Then what you are suggesting is that we need a system of control which makes sure that people are doing their jobs properly

No; a system which makes sure people are competent and qualified to do their jobs properly, and whereby ineptitude and dishonesty can't hide behind creative accounting.

[Mich the Tester]

Rarely do I disagree with you on matters of fact, but I have to here. The Clinton administration did oblige lenders to give a proportion of loans to lower-income Americans, for political reasons. The 1995 amendment to the 1977 Community Reinvestment Act changed the measure of banks' conformity with the CRA provisions, basically from one that measured their efforts to reach low-income would-be buyers, to one that measured results, i.e. how many sub-prime mortgages they actually issued. So they started issuing them, because they'd get into trouble if they didn't.

Point taken; a very bad piece of well intentioned legislation. However, they didn't oblige the banks to package up the sub-prime mortgages along with the primes, which is really where it went so dreadfully wrong.

Also, 'low income' is not the same as 'unstable income' and should have a very different risk profile. A US postal worker or a junior Army medic has a low income, but very stable employment. An unqualified person who does odd jobs through temp agencies is a different matter, as is a highly qualified and experienced self employed person.

[Ignis Fatuus]

...My feeling is just that the economy would be better served by people who are passionate about what they do and been succesful in their chosen field.

But from the Objectivist point of view that is irrelevant. To be concerned with how well the economy is served by someone is to ask them to live their life for others, which is exactly contrary to Objectivism.

If you look at a philosophy that denies the whole principle of doing good, you cannot judge it by whether it does good.

[sasguru]

... the problem with that is that you develop a society where collective responsibility and not personal responsibility becomes the norm. .

Would you say that countries like Germany and Japan are more collective and less individual? Most people would.
Yet they are very succesful societies (Japan's economic woes notwithstanding).

[Mich the Tester]

All my reading, travel and experience of the world suggest to me that different societies are suited to different economic systems.
But all succesful economic systems have some sort of a capitalistic core. It seems to be a better way of directing human energies.
Unfettered capitalism however, given human nature, will ultimately lead to its own destruction (Marx was right about that at least) since the masses will not put up indefinitely with a small minority having all the economic wealth.
And that is why all succesful and mature societies, have some componet of redistribution of wealth i.e. a socialistic component.

The level of capitalism versus socialism in a mature economy is open to debate but I'm convinced an element of each is essntial for a healthy society.

[edit]
The country I admire most in Europe is Germany and by all objective evidence-based accounts it is much more succesful than Britain (althought you wouldn't think so given the BS we are sold by our leaders). I would argue that it is more socialist than Britain.

But is it more succesful because of its added socialism (more powerful trade unions, higher taxes) or is it because of German culture which is more communal and less individual?

[end edit]

Perhaps it's to do with the Rhineland economic model which prefers cooperative relations between employers and unions and stresses the need for a balance of qualification, experience and innovation among professionals and tradespeople.

[sasguru]

Perhaps it's to do with the Rhineland economic model which prefers cooperative relations between employers and unions and stresses the need for a balance of qualification, experience and innovation among professionals and tradespeople.

Now there's a phrase you won't find in any Rand works

[GreenLabel]

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.

Governments did encourage banks to lend to dodgy borrowers, however. The US Department of Housing and Urban Development set targets for Freddie Mac and Fannie Mae that determined what percentage of mortgage securities that they purchased should come from subprime customers. Similarly, the Community Reinvestment Act pushed banks to hand out loans to home buyers in poor communities.

(Edit: Bugger, looks like Ignis beat me to it.)