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.
Alan Greenspan testified before Congress today and said the one thing that every other libertarian has avoided saying to this point. This financial crisis is the direct result of the failure of his philosophy.
I'd like to give him credit for his honesty, for his willingness to examine his own beliefs critically, but all I can really do is wonder how he's managed to stay so naive for so long.
Sure, the ideas that corporations behave like psychopaths and that CEOs are successful psychopaths are relatively new. However, any student of history can easily find examples of antisocial tendencies on the part of companies and of unchecked power that has had deleterious effects on trade. The credit scandal is nothing like unprecedented behavior.How does someone as bright as Greenspan has generally been considered to be miss this?
How does he miss the evidence of his fellow libertarians? Has he always been considered necessary by the people in power? Has he only ever seen the shark's smile and not its teeth?
Has he not met the libertarians of my generation--the arrogant tech boys who don't understand the amount of infrastructure necessary for them to do the one thing they know, the sheltered suburbanites dreaming of chaos, the recipients of public educations who consider themselves self-made, the swaggering idiots who think a piddly handgun will stop a determined crowd? Has he never seen the people attracted to his ideas?
What I'm saying to you is yes, I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact...A flaw in the model that I perceived is the critical functioning structure that defines how the world works, so to speak.
A flaw. One. And he still doesn't know how significant it is. Mr. Greenspan, the varieties and vagaries of human nature are pretty fundamental. The flaw is the model.
We listened to this man for how long?
Update: If you want to know more about "the libertarians of my generation," Chris has a great post and a book recommendation up at denialism blog.