In mentioning the parallels between our current economic situation and the story of Atlas Shrugged in Part I, I pointed out that in the face of Nixon’s wage and price controls (and other depressing events in the late 60s and early 70s), Ayn Rand argued that dictatorship could not yet take hold in America. Americans would rebel. But I indicated that the current embrace of “stimulus czars” and “regulatory czars” is a small sign that this distinctively American attitude may be eroding. Let me now develop this last point.
A Czar is a tyrant who ruled over Russia. As monarch or emperor, he is the superior one, possessing the privilege to command; you, his lowly Russian subject, are the ignorant one, whose duty is to unquestionably obey. This captures the unstated premise that is responsible for the Czars now popping up across America.
Consider the economy. A free market is a complex integration of the voluntary decisions and actions of millions of individuals producing and trading services and goods, from a barber cutting a customer’s hair to Apple manufacturing and selling you an iPhone. No government Czar is needed to plan or run any of this: those who “plan” and “run” a free economy are you, me and every other productive individual who makes decisions and takes actions for his own individual life.
The idea that a handful of men sifting through mountains of data could plan a productive and prosperous economy is absurd. Does no one remember the central planners of Soviet Russia? Yet on a lesser scale, a central planner is precisely what the Fed Chairman is supposed to be. By manipulating money, credit and interests rates, he will allegedly coax us to produce. And now, in the midst of our crisis, few intellectuals or commentators will tell Americans that our economic problems were caused not by a free market but by the very idea of a “monetary czar.” Few will explain to Americans how Alan Greenspan’s low interest-rate, inflationary policies practically mandated unproductive actions on the part of the economy’s participants.
And no, Greenspan is not an advocate of capitalism or of Ayn Rand’s philosophy; when he was, or at least when he seemed to be, he wrote in favor of the gold standard and against the very existence of the Federal Reserve. That was in Capitalism: The Unknown Ideal. The recommended bibliography in the book includes the works of the Austrian economist Ludwig von Mises, who painstakingly explains how government Czars’ manipulation of money and credit destroys economic production and leads to uneconomic, unsustainable booms followed by inevitable busts. If you want to understand the fundamental economic forces responsible for our present crisis, tune out the New York Times’s coverage, turn off Fox News, and instead read Human Action, particularly Chapter XXXI.
Of course average citizens can’t be expected to be economic experts. The principal failure of understanding here rests with our intellectuals and commentators. But what is disturbing is how readily Americans seem to accept that the form of a solution, whatever its details, will look like this: concentrate even more unchecked power into the hands of government Czars. Give Bernanke or Paulson or Geithner even wider authoritarian powers to dream up new schemes, and they’ll tell us what to do. People seem unfazed by the palpable look of uncertainty in the faces of these “financial czars”–i.e., by the fact that the Czars don’t have a clue what to do.