The GOP Can't Quit Ayn Rand

Written by Gary Weiss on Wednesday September 28, 2011

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Two years ago, I began work on a book that was to examine the ideological roots of the 2008 financial crisis. Over time this became a broader examination of the radical right’s renaissance in America. For many months I’ve been eating, sleeping and breathing Ayn Rand—and on February 28 the results of my journey will be published by St. Martin’s Press, in a book entitled Ayn Rand Nation: The Hidden Struggle for America’s Soul.

Ayn Rand’s spirit hangs over the 2012 presidential race like the aftermath of a bad meal that, for some reason, we’ve all forgotten that we’ve eaten. In the run-up to the financial crisis the markets became a kind of Fifth Estate, the ultimate arbiters of American society. This was not a Republican disease; some of the most voracious deregulation took place during the Clinton Administration. It was as if a moral choice had been made, substituting the “wisdom of the markets” for admittedly flawed and sometimes grossly inept regulators. It made perfect sense, especially in an era in which the stock market averages rose by as much as 40% in one year, but today we know, or should know, that untrammeled capitalism doesn’t work.

But you’d never know any of this when listening to the Republican candidates for president, especially the one who most overtly embodies Rand’s philosophy: Ron Paul.

Paul is by no means a card-carrying Objectivist—his embrace of religion, and his views on foreign policy, makes him anathema to Randian true believers. But his embrace of the most primitive, extreme forms of free-market, almost-zero-government capitalism comes closest to Rand’s belief system of any in the Republican field.

What’s remarkable about Paul is how effective he is at putting forward his views, extreme as they are. Indeed, the unyielding, unwavering non-flip-flopping character of his opinions is perhaps his greatest asset. He is the best friend free-market capitalism has at present, as can be seen by his recent debate performances and especially his recent triumphant appearance at Jon Stewart’s Daily Show. The man exudes small-town charm while at the same advocating positions that would make life into hell for the great majority of his followers and listeners.

I was struck by Paul’s appearance on the Daily Show because Stewart has taken a strong, sometimes angry position against Wall Street excesses. Yet no presidential candidate embodies the worst instincts of Wall Street—and is more aggressive at promoting the financial industry’s hopes, dreams, and hatred of regulation.

Like many on Wall Street, Paul is opposed to the very existence of the Securities and Exchange Commission, the only regulatory agency that stands between the Street and the American public. Now, let’s be clear on what that means. Many people, myself included, feel that the SEC has done an abysmal job of regulating the markets. It probably should be abolished—but replaced by a stronger agency, one with teeth and a culture of aggressiveness, not bureaucratic lassitude. But Paul wants it replaced by nothing. In 2009 he said,

For a good many years now, since the 1930s, every time a problem like this comes up, like in the Depression, we think that it is a lack of regulation, so we introduce regulatory agencies like the SEC, and, like after Enron, that was a major problem so we appropriate more money, and hire more people… that doesn’t do any good.

But this circumstance I think really makes my point, that the approach is completely wrong. [The approach] that the regulatory agencies are preempting people from doing bad things, just doesn’t work. There are millions and millions and millions of transactions. You can’t do it. All they do is give a false sense of security.

This is a perfect example of it. The SEC was involved with Madoff over the last decade. And that sort of gives the stamp of approval and says, “oh, must be okay”. So everybody’s guard is let down. This creates the moral hazard that allows people to make these mistakes and not to assume responsibility for themselves.

As I said earlier, Paul is not an Objectivist. But this eloquent exposition of unregulated capitalism is straight out of the Rand canon, specifically a 1963 essay by Alan Greenspan in her anthology Capitalism: The Unknown Ideal. His essay was entitled “The Assault on Integrity.” Greenspan argued that “regulation—which is based on force and fear—undermines the moral base of business dealings.” Using very much the same rationalizations as was employed by Paul 46 years later, Greenspan argued for the entombment of every form of regulation, from local building inspectors to the Food and Drug Administration. Greenspan said, “It is precisely the ‘greed’ of the businessman or, more appropriately, his profit-seeking, which is the unexcelled protector of the consumer.”

Needless to say, Paul did not invoke the despised Greenspan in his appearance on the Daily Show. Nor did he advocate ending the FDA and abolishing building codes, which might sound extreme to even his most dedicated supporters. Instead, in his charming and folksy manner, he appealed to his audience by invoking the corrosive effects of the war on drugs and the CIA.

Stewart did not seem convinced but was suitably impressed, as we all should be, by Paul’s candor. But yet there was an odor to the appearance that lingered. Perhaps it was the way he pandered to his audience. Or perhaps it was that he was repeating the same tortured reasoning that has proven so destructive to the financial system. Or perhaps it’s that Paul is in the forefront of a campaign to strip the public of its protections from the excesses of capitalism, out of a professed belief that the alternative is a government that is even worse than the worst excesses of business.

Yet it was business, not government, that caused the financial crisis—unless you believe, as does Paul and many on the far right, that the financial crisis was caused by government policies.

Recently there was an SEC action that should mean a lot to every Paul acolyte—or at least the ones that have a keen sense of irony. In July, the SEC brought fraud charges against a man named Jeffery A. Lowrance. The SEC said that Lowrance “defrauded investors by promising high fixed rates of return from foreign currency trading.” The SEC contended that Lowrence engaged in “affinity fraud” by targeting people who shared his belief—in Ron Paul. (H/T The Financial Arts blog.)

In the Randian world of laissez-faire capitalism, the markets would effectively police themselves, and be more effective than hard-pressed government bureaucrats. So don’t fix regulation. Don’t improve it; abolish it.

Ayn Rand believed that we all should pursue our own rational self-interests. When you hear the cheers that Paul gets when he manipulates his audiences, you have to wonder: Do these people understand their own rational self-interests?