Here is the source of much of the Republican idiocy

Ayn Rand.



Ayn Rand teaches that the only valid morality is selfishness. All Randian morality is based on the free market, and property rights are the only rights which are valid. Ownership of property is absolute and gives one the unfettered right to use or dispose of that property in whatever way the owner desires. No one may interfere with this absolute right, including the government or the community.

Ayn Rand explicitly stated that altruism and religious ethics were meaningless and wrong. They are not based on property rights and the free unfettered market and in fact can be used to justify interference with the free market and property rights.

The Fountainhead was published in 1943 and was quickly adopted by conservative American businessmen who were fighting Roosevelt and the New Deal. Rand's philosophy was also very strongly embedded in the Robert Welch's John Birch Society. Interestingly it horrified William F. Buckley.

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Here is the full 27 minute Mike Wallace interview with the Rand woman.

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OK. Here is Christopher Hitchens demolishing Ayn Rand's alleged "Objectivism."



There is really very little to add to what Christopher Hitchens said, but Ayn Rand's idiocy philosophy has been adopted by a number of American individuals who either inherited great wealth they did not earn themselves or were able to claw themselves to the highest regions of monopolistic or oligopolistic big businesses. A very few exceptions were people like Bill Gates who created new markets and had the good fortune to be able to remain at the top of the organizations they created to exploit those markets as Gates was able to do with Microsoft Corporation.

None of these individuals inherently deserve the power they have been given. A few, like Bill Gates, have comported themselves in ways that justify the social and economic power they have obtained. The problem is that when such individuals achieve such power they frequently assume they deserve it and that they should be worshiped for their combination of (mostly)good luck and (to some extent) ability to exploit their position.

Ayn Rand's Objectivism is based on the assumption that they deserve what society gave them and that the privileges they receive because of their social success are beneficial to society in general. Neither assumption is true.

Those crazy right-wingers cannot be convinced they are wrong merely by facts

Lane Wallace reports on a study by a group of researchers from Northwestern University, UNC Chapel HIll, SUNY Buffalo and Millsaps College into the problem of Motivated Reasoning. How often have we liberals complained that the right-wing knows the outcome they want and tailor the collection of facts and analysis to achieve the outcome desired before they started? This seems to be the explanation.

How is it that people can cling to an opinion or view of a person, event, issue of the world, despite being presented with clear or mounting data that contradicts that position? The easy answer, of course, is simply that people are irrational. But a closer look at some of the particular ways and reasons we're irrational offers some interesting food for thought.

In a recently published study, a group of researchers from Northwestern University, UNC Chapel HIll, SUNY Buffalo and Millsaps College found that people often employ an approach the researchers called "motivated reasoning" when sorting through new information or arguments, especially on controversial issues. Motivated reasoning is, as UCLA public policy professor Mark Kleiman put it, the equivalent of policy-driven data, instead of data-driven policy.

In other words, if people start with a particular opinion or view on a subject, any counter-evidence can create "cognitive dissonance"--discomfort caused by the presence of two irreconcilable ideas in the mind at once. One way of resolving the dissonance would be to change or alter the originally held opinion. But the researchers found that many people instead choose to change the conflicting evidence--selectively seeking out information or arguments that support their position while arguing around or ignoring any opposing evidence, even if that means using questionable or contorted logic.

That's not a news flash to anyone who's paid attention to any recent national debate--although the researchers pointed out that this finding, itself, runs counter to the idea that the reason people continue to hold positions counter to all evidence is because of misinformation or lack of access to the correct data. Even when presented with compelling, factual data from sources they trusted, many of the subjects still found ways to dismiss it. But the most interesting (or disturbing) aspect of the Northwestern study was the finding that providing additional counter-evidence, facts, or arguments actually intensified this reaction. Additional countering data, it seems, increases the cognitive dissonance, and therefore the need for subjects to alleviate that discomfort by retreating into more rigidly selective hearing and entrenched positions.

Needless to say, these findings do not bode well for anyone with hopes of changing anyone else's mind with facts or rational discussion, especially on "hot button" issues. But why do we cling so fiercely to positions when they don't even involve us directly? Why do we care who got to the North Pole first? Or whether a particular bill has provision X versus provision Y in it? Why don't we care more about simply finding out the truth--especially in cases where one "right" answer actually exists?

Part of the reason, according to Kleiman, is "the brute fact that people identify their opinions with themselves; to admit having been wrong is to have lost the argument, and (as Vince Lombardi said), every time you lose, you die a little." And, he adds, "there is no more destructive force in human affairs--not greed, not hatred--than the desire to have been right."

So, what do we do about that? If overcoming "the desire to have been right" is half as challenging as overcoming hate or greed, the outlook doesn't seem promising. But Kleiman, who specializes in crime control policy and alternative solutions to very sticky problems (his latest book is "When Brute Force Fails: How to Have Less Crime and Less Punishment"), thinks all is not lost. He points to the philosopher Karl Popper, who, he says, believed fiercely in the discipline and teaching of critical thinking, because "it allows us to offer up our opinions as a sacrifice, so that they die in our stead."

A liberal education, Kleiman says, "ought, above all, to be an education in non-attachment to one's current opinions. I would define a true intellectual as one who cares terribly about being right, and not at all about having been right." Easy to say, very hard to achieve. For all sorts of reasons. But it's worth thinking about. Even if it came at the cost of sacrificing or altering our most dearly-held opinions ... the truth might set us free.

Mark Kleiman describes what a liberal education should do to counter the logical problems caused by motivated reasoning. How do we deal with evangelical religious and ideological political institutions that exist to teach their students to practice motivated reasoning? Because that's exactly what Regent University, Liberty University, the Discovery Institute, the Heritage Institute, the American Enterprise Institute, the CATO Institute and other cults all do.

Consumption drops because of recession; How did we get here?

The current status of the economy

The current economic problems were caused when the banks were caught lending to customers who couldn't pay. The result was that banks have lots large amounts of money, many have failed and more will fail. But the financial sector is beginning to figure out how much trouble they are in and how to deal with it. Unfortunately, to get this far they stopped almost all lending.

Since the economy depended on consumers to buy goods and services, but at the same time families have not had an increase in real income since 1970, the only way consumers have been able to buy is by (1) spending savings or (2) home equity, or by (3) borrowing money. Savings disappeared decades ago, and the housing bust that created the financial crisis also stopped most home equity loans. The money simply isn't there to spend. Then the banks lost so much money as the housing bust swept through them they stopped lending, both to consumers and the producers.

Producers have bought fewer goods to stock for Christmas because the banks have not been lending. At the same time, the businesses have not increased hiring for Christmas as much as usual. This, combined with the layoffs that have been constant all of 2008 have reduced consumer income sharply, so they have decided to do what sensible people do when money is short and the possibility of lay-offs is high. They have decided not to consume as much. Here is the latest report on consumer activity:

The panic on Wall Street has eased in the last few weeks, and banks have become somewhat more willing to make loans. But in those same few weeks, American households appear to have fallen into their own defensive crouch.

Suddenly, our consumer society is doing a lot less consuming. The numbers are pretty incredible. Sales of new vehicles have dropped 32 percent in the third quarter. Consumer spending appears likely to fall next year for the first time since 1980 and perhaps by the largest amount since 1942.

With Wall Street edging back from the brink, this crisis of consumer confidence has become the No. 1 short-term issue for the economy. Nobody doubts that families need to start saving more than they saved over the last two decades. But if they change their behavior too quickly, it could be very painful.

Let's not forget that anticipated consumption is what drives investment spending. Consumption is the key to total Gross Domestic Product.

Right now the banks don't anticipate an increase in consumption, so they want to hold on to the money given them by the Bush administration in the bail-out plan instead of lending it out. See the paradox in that behavior? In an economy in which the only source of money for consumers to spend is borrowing, the banks fear reduced consumption so they don't want to lend.

The lack of bank lending leads to less money for producers to operate their business, including hiring workers, so they cut back on employment. Consumers either being laid off or seeing those around them laid off want to save money instead of spending it, and at the same time the banks are cutting back on lending so there is less money to be borrowed for spending.

Every individual and organization in that economic system is doing what seems safest for them in a time of high uncertainty, and the result is that the overall economy is getting worse faster than before. Since the economy is getting worse, everyone is doing more of what makes it get worse.

How did we reach this point?

Welcome to the free market with unregulated financial institutions. Four key factors which led to this are

1. No increase in worker real wage since 1970 - Workers have been increasing productivity more than anywhere else in the world, leading to fewer workers producing more goods and services. But the increased profits from that increased productivity have flowed to a few very wealthy families instead of being shared by the workers to create the goods and services. The wealthy invest the money they don't need to live on, so consumption suffers. Consumption - the key to the economy - can only be pumped up by lending money to spend or by creating bubbles to create fake wealth that consumers can spend.


2. Unrealistically low interest rate creating financial bubbles - Low The Federal Reserve under Alan Greenspan and the bankers lowered interest rates to the level of inflation in order to keep the economy going. That happened first to create the Dot Com boom, and then after Bush was elected Greenspan again lowered interest rates to create the Housing boom. Consumer lending was also pushed up by the deluge of credit cards the banks have been pushing onto anyone who would take them for two decades now. Greenspan also encourages banks to create "innovative" new lending products to reach new potential consumers and get them buying homes and consumer goods.
   • New ways to transfer risk - A part of the innovative financial products included insurance instruments such as Credit Default Swaps (CDS). By buying a CDS the investor who bought part of a bundle of loans was able to transfer the risk of default to the seller of the CDS. However, the lack of regulation meant that anyone with a good name could buy the risk of default - that is, sell a CDS. AIG sold a lot of them, and the investors assumed that AIG was so big that if they had to pay off, they would be able to. Had CDS been a regulated insurance product, the seller would have been required to hold reserves in case they had to pay off a whole lot of them at once. CDS were specifically designed to avoid being regulated as insurance. That's why they were called "swaps" instead of default insurance. AIG sold so many CDS and held no reserves to back them that it has caused the collapse of AIG as they find they cannot pay off all the defaults they have insured.


3. Lack of regulation of bank lending and borrowing processes - Based on the erroneous assumption that banks would lend carefully and protect themselves from default, Alan Greenspan refused to regulate the sloppy mortgage lending practices during the housing bubble, while the banks, enamored with the higher fees available with newer financial products such as Adjustable Rate Mortgages and subprime mortgages, were ready to lend to anyone with a pulse who could sign their name. The individuals actually originating the mortgages got the fee up front, the banks did so also, and the loans were packaged anonymously in great bundles to be sold to investors.
   
   The investors represented very wealthy individuals and pension plans. The wealthy individuals were given lower taxes so that the money they were getting from increased labor productivity created a massive market for these bundles of mortgages created with the new types of lending. The rating agencies only got paid for saying the bundles of mortgages were top financial grade, so everyone was happy as long as home prices went up. Naturally the rating agencies, paid to say the investments were high quality, did not bother to spend the time and money required to learn what the real underlying risks involved were, and there was no government regulator with responsibility for oversight of the process except possibly the Federal Reserve, who did not do so because the ideology of market fundamentalism says such investigations by government are both unnecessary and a burden on banks and investors. Of course, the entire market depended on interest rates which were too low to continue rising.
   
   Immediately after Bush was reelected in 2004 Alan Greenspan and the Fed started raising interest rates. They increased interest rates a quarter percentage point per month for 17 months, killing the housing bubble - which Greenspan had said did not exist. The collapse of the housing bubble then place great strain on the investment banks which were buying and selling the bundles of mortgages as well as bundles of other kinds of debt.


4. The collapse of the over-leveraged investment banks - A major aspect of the deregulation was to stop regulating the amount of leveraging investment banks did in order to buy bundles of loans and mortgage loans. The less of its own money a bank uses to buy an investment, the greater the profit possible - but the reverse is also true. If instead of paying more than the borrowed money costs, the investment pays less, the leverage will make the losses greater. When an investment defaults and can no longer pay back the amount invested, the leverage multiplies the loss by the degree of leverage. Bear Stearnes was leveraged at a rate of 30 to 1 when it collapsed, as were the other investments banks which have since disappeared.
   
   Under regulated banking depository banks which took in government insured deposits could not use leverage beyond the conservative level the regulators permitted. During booms this cuts into banking profits by limiting leverages profits, but during busts it prevents the bank from going broke because of leveraged losses.
   
   A major intent of the Glass-Steagall Act passed in 1933 had been to prevent depository banks whose funds were based on government insured deposits from accepting the risk of high leverage ratios. When the government insures deposits, the bank could then leverage the investments it takes on, sharply increasing profits but also sharply increasing the risk of failure. The bankers then keep the profits when the investments succeed, but pass the losses that result from failure off to the tax payers who have to pay off the insured deposits the banks lost in bad leveraged loans.
   
   When Senator Phil Gramm, then Chairman of the Senate Banking Committee, passed the Gramm-Leach-Bliley Act in 1999 the depository banks were allowed to buy or merge with unregulated investment banks. This permitted the depository banks to take on the much greater risks involved in high leverage ratios. Note that the repeal of Glass-Steagall was a party line Republican vote. Here is what Wikipedia says about passage of the Gramm-Leach-Bliley Act. It was passed

   ...on a party-line vote of 54 (53 Republicans and 1 Democrat) to 44 (all Democrats) and on a 343-86 vote in a different form in the House of Representatives, before being resolved by a joint conference committee; the conference report was approved by both houses of Congress (Senate: 90-8-1, House: 362-57-15) and signed by President Bill Clinton

The Primary cause of the recession is the conservative market fundamentalist ideology

Market fundamentalism is the faith-based belief that markets themselves can maintain a stable economy and do best in an environment of deregulation by a small government. The small government should not tax to provide more than minimal government services.

Unfortunately, market fundamentalism is wrong. Economic markets and the economy they facilitate do not work reliably without appropriate government regulation. The idea that unregulated markets can create and maintain a modern economy has been repeatedly demonstrated to be false.

Here's what the Reagan Revolution has done to the American economy to lead to the current economic downturn. First The Reagan administration worked to destroy effective unions, which resulted in shifting of all profits from increased worker productivity to the wealthy, Second the conservatives restructured the economy to promote the removal of risk from large corporations and acted to pass it on to consumers and workers. Third conservatives manipulated the economy by lowering interest rates to where we have a series of booms and busts. This was the cause of both the Dot Com bubble and the Housing Bubble.Fourth conservatives happily exported higher paying middle class production jobs to lower cost labor areas as though the only cost under control of managers was labor. They also encouraged the growth of financial jobs to replace them. This has resulted in hollowing out the American economy in much the same way as the British economy was hollowed out - financialized - in the late 19th century. Finally The conservatives have spent three decades deregulating the financial economy so that the lending processes themselves are no longer reliable; they have also encouraged banks to take on too much risk by permitting extreme levels of leverage. All of these practices were recognized as highly economically dangerous in the 1930's and were regulated against to prevent another Great Depression. Profit-seeking conservatives who were not even alive during the 1930's considered such dangers nonexistent and skirted the regulations before finally removing them entirely in the name of their market fundamentalism ideology.

Additional problems have been caused the new and "innovative" financial products which transfer risk from the original lender so that it appears that investors can receive high returns of the type associated with high risk investments while someone else bears the risk of default. But the investors cannot be entirely blamed for this. They have found it necessary to search for alternative higher rate-of-return investments because the Federal Reserve has been holding interest rates at levels so low that investors could get little return above the rate of inflation. A related problem is that there are larger sums of money to be invested, since the profits from increased worker productivity have been being siphoned off into investment funds instead paid to workers who would use them for consumption. Greater sums of investment money required the investors to compete with each other for secure high-return investments. This also created the market for new "innovative" financial instruments. Those "innovative" financial instruments could be sold as secure high-return investments because no one really knew how much risk they included. They had never been tested in declining markets. The sale of derivatives to transfer risk simply added to the general ignorance of what risk the investors were taking because no one really knows who bears the risk. Shifting the risk to the seller of CDS adds to the possibility of the risk of failure of the seller of the CDS to the risk of default on the original loans in the loan packages the investor buys.

As the Bush/Paulson bail-out plan has demonstrated, that unknown financial risk has been ultimately been borne by the American taxpayers. The resulting weakened unstable economy has created the current truly nasty recession we are entering, a recession which will be borne by all of us.

This isn't all of the problems that brought us into the harshest recession since the Great Depression, but is it a lot of them. The shift of the risk of bad health onto the individual instead of considering health care a human right is another problem with many economic consequences, one caused by conservative ideology and its refusal to permit the only institution large enough to deal with the health care crisis - government - to do so. Another major problem is the escalating price of education and the strange way society makes students bear the total cost of their own education through loans that now frequently last a lifetime. This discussion is a fast description of where we are right now and the reason why consumers have stopped much of their consumption. The consumers are individually acting very reasonably, but the pull-back on consumption will rapidly make the economic downturn worse.

That's a thumbnail description of why economy is headed down right now. There is no way of telling where or when the bottom will be. The only institution large enough to possibly deal with the current economic downturn is government, and no one in government or out of it knows what is going to happen next or what to do about it.

The next two or more years are going to be a rough ride for a lot of people in America and around the world. The conservative ideology of free market fundamentalism is directly responsible for most of the problem.

Republicans: their radical ideas to solve middling problems are gone as the problems the ideas caused overpowered them

David Brooks really caught the zeitgeist of the Republican Party on Face the Nation yesterday. He was asked what the current status of the Republican party was. This was his reply:

"World of pain," Brooks said. "A generation of pain. 1964, it was so much better than now. In '64, they had a coherent belief system. They lost, they didn't persuade the American people about it, but they understood where they wanted to take the country.

"Now it's just a circular firing squad, with everybody attacking each other, and no coherent belief system, no leaders. You've got half the party waiting for Sarah Palin to come and rescue them. The other half is waiting for Bobby Jindal, the Louisiana governor, to come rescue them. But no set of beliefs. Really a decayed conservative infrastructure. It's just a world of pain."

Harris said that the party has to decide whether they are looking for "another Ronald Reagan to carry them out of the wilderness? By the way, that took Reagan years, a full generation to do that. Or are they looking for a Republican version of Bill Clinton?"

Harris said that the party is now divided into two wings: the "hell, no" wing and a "yes, but" wing. "The 'hell, no' is going to fight [Obama] every step of the way" on ideological grounds.

"The other will say, '[Y]es, we agree with a lot of his objectives; we want to do it in a somewhat different way.' It really, I think, goes right to a tactical and philosophical fault line in the Republican Party."

Brooks was not convinced that Sarah Palin could be taken seriously as the GOP's next Ronald Reagan.

"Well, the 'hell, no' group is rallying around her," he said. "And this past week, I don't think, has been particularly flattering to her, the McCain people - and the whole thing has been a complete disaster. They've attacked her for her lack of human capital and for being a diva.

"I'm not sure it's all fair, but one would not say she has spent her life preparing for an intellectual revolution to lead the party out of the wilderness. Let's put it that way."

Brooks declared himself a part of the "yes, but" wing. "You know, this is where the American people are," he said. "And, fundamentally, the conservative movement failed (and I've been in it my entire life) because it hasn't addressed the problems of today, the rise of China and Russia, the rise of inequality, energy, health care. It's great to worry about Reagan. I loved Reagan, but those days are over."

Conservatives now how no new ideas and no leaders they trust (Christ! They are discussing resurrecting Gingrich? Palin will go nowhere.) For a national political party that prides itself for being held together by big ideas, this is a disaster. Many Republicans realize that America's current economic problems are a direct result of the failure of their conservative ideology. They're in Brooks' "Yes, but" camp.

Meanwhile the remaining Congressional Republicans seem to be mostly members of the "Hell No!" camp. Senator Jon Kyl is already threatening to filibuster Obama's (unnamed) choices for future Supreme Court nominees, while the House Minority Leader John Boehner appears to believe that the Republicans lost this last election because they weren't conservative enough.

Steve Benen points out:

Brooks' even more compelling observation is that Republicans lack a "coherent belief system." This became evident when John McCain failed to present a policy agenda beyond an anti-earmark crusade, but it's bound to be even more glaring moving forward. After '64, Republicans knew exactly where they wanted to take the country. After '92, Gingrich had the sketch for a Contract with America.

At this point, though, the party exists to oppose Democratic ideas. That's fine for an opposition force, but for a governing philosophy, it's an obvious sign of bankruptcy.

The Republicans have been bankrupt for years.

Let me try this idea out. Two things kept the Republicans competitive in national politics. First, the Democrats were similarly bankrupt in grand ideas. They ran on good government but were not trying to change American society. They offered improvement (or perhaps just change) around the edges of what appeared to already be a good society along with government that was effectively doing what most Americans wanted it to do. But why should Democrats offer grand new ideas for change when the American society faced no major existential problems? This was at one time Bill Clinton's lamentation. He felt he could have been a great President, but was never faced with great problems that would allow him to prove it. The Democratic Party in general was designed to face such a generally non-threatening environment. The Republicans are an alliance of people who each think they have compelling problems that need to be fixed by government, and their alliance was based largely on opposition the the Democrats who did not share their belief if the need to deal with the Republican grab bag of problems.

Second, when Bush 43 was elected he was rapidly going nowhere until 9/11. When 9/11 happened Dick Cheney largely took control of the administration's response and directed it into regaining the power he believed had been taken from the Presidency after Nixon resigned. Dick Cheney had absolutely no interest in how his ideas played politically. He left that to Karl Rove to deal with politically.

In short, the Republicans sold themselves as the party of grand, massive radical solutions to solve middling difficulties, and as they did it their Congressional Senators and Representatives became more and more corrupt, happily stealing what they could of the massive amounts of money that flowed through the government. This is not just a Republican problem. Democrats in government become corrupt also. But for a party that has both contempt for and disinterest in what government does, it is easier to justify so it has been a lot more widespread among Republicans.

These grand solutions found a willing ear in George W. Bush. Bush has a belief that when making changes, big changes are better than small changes [*]. He and Cheney agreed that an appropriate reaction to 9/11 should be a lot more than just attacking al Qaeda in Afghanistan. They wanted to completely recreate the Middle East, and for that they adopted the NeoCon ideas offered by the PNAC. They felt that attacking Iraq and recreating it as a conservative free market small government democracy they could accomplish that recreation.

The War in Iraq foundered in part on the Republican distaste for good governance and the conservative belief that intellectuals were to be ignored. Sure Iraq was the wrong war fought for reasons not well thought out, but it was also incompetently run from the White House down through the Pentagon. The White House gave the Pentagon total control of the war, cutting the State Department out of the loop because of conservative dislike for diplomacy. Don Rumsfeld ignored the experience of his Generals when they told him the invasion would require 400,000 troops. Lt. Col. Kwiatowski has written about the planning by Doug Feith in the Pentagon. When staff officers wanted to work out contingency plans for anticipated problems, Feith told them that such plans indicated a lack of faith in the success of the plan, so they did not make such contingency plans. So when the looters ran wild after Baghdad fell, no one knew what to do about it or what it might mean. The looting led directly to Sunni insurgency. Rumsfeld then refused for a long time to acknowledge that they faced an insurgency. In short, conservative ideology and dislike for good methods of planning and governing were very important in causing the invasion of Iraq to become the mismanaged occupation of Iraq.

The end result has been a discrediting of the ideas offered by the conservatives. First, the radical solutions to middling problems caused so many unanticipated nasty side effects that even a great many conservatives have at last broken with the rigid top-down message control of the Republican party. Second, the anti-intellectualism of the right-wing populism, together with the Libertarian disdain for government itself, has created a political party which used to present itself as the realistic managers but now simply can't run government competently.

The end result is the party that used to pride itself that it was held together by grand and radical ideas has tried them, and found they cannot make the ideas work. This has left the party with no new ideas, no national leaders and a deep gap between those who have accepted the failure of the conservative ideology (Brooks' "Yes, But..." Republicans) and the surviving "Hell No!" politicians. The "Hell No" politicians consist of House Republicans who were reelected only because they represent districts gerrymandered to contain a majority of conservative true-believers and Senate Republicans either from the South or who have not faced reelection this year.

The conservative radical, poorly thought out "ideas" which made such good political propaganda when it came time to be elected have clearly failed when serious problems face America. Worse, the radical ideas have been in large part the cause of America's current severe problems. The conservatives simply can't govern a modern industrial nation.

The National Republican Party in the near future is going to look a lot like the California Republican party since Governor Pete Wilson ran on the anti-immigrant idea which proved to be so unpopular in California. The California Republican Party has since been a permanent minority party generally dominated by "Hell No!" Republicans who can occasionally elect a "Yes, but..." Republican like Arnold Schwartznegger to statewide office. The National Republican party has followed the California Republican party down the same disastrous path.

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[*]Bush's effort in 2005 to solve the Social Security problem by destroying it and recreating it as a massive government-run IRA was another of the massive changes Bush wanted to implement.