Why the Economy Crashed?


Day two of TTLA's four-part inteview with Yaron Brook, president of the Ayn Rand Institute, in Irvine.

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The Ayn Rand Institute is the parent organization of the Ayn Rand Center, as well as the host of a Rand archive and a shrine of sorts "? book covers, her desk, etc. "? to the author and Objectivism founder. The Institute is located in the Von Karman Corporate Center, a non-descript Irvine office park. More on the building's architecture is here and more about Brook is here.

TTLA sat down last winter "? ages ago, we realize "? for a Q&A with Yaron Brook, president of the ARI. Bits of the conversation have previously been posted here and here. What follows today and later this week is more of the interview, which has been edited for brevity and clarity.

Monday: Ayn Rand as Think Tank?

Tuesday: Why the Economy Crashed

Wednesday: What Would Ayn Think?

Thursday: Money, Money, Money

TTLA: You are invited to appear at universities. With the audiences you draw, do you feel like you're meeting only like-minded folks? Are you introducing new people to the work here? Are you being attacked for your views?

YB: Most speeches are not speaking to the choir. I speak in front of kind of general audiences. Certainly a big percentage of our audiences are in agreement, but a lot of them are not. I do a lot of panels. I do a lot of debates, and we debate both sides of the issues.

TTLA: ARC-affiliated writers contribute op-ed pieces not just to the org's website, but to other publications. You appear as a television commentator.

YB: Our mission is to get out these particular philosophical ideas into the culture, to give them a voice in the culture and in the debates that are going on about current events. We're also trying to affect events, but we realize that we're not on the radar yet in some [circles], politically. But you know that media influences the public, and, and so all of these different things that we publish are attempts to influence the public, attempts to influence the debate that's going on.

The financial crisis [has been] a good example. We're, we're trying to get our voice heard about this financial crisis, because we believe we have something interesting to say about it that's very different than what other people are saying, and that's crucial for the future of this country.

TTLA: You've been doing a lot of work online.

YB: We've set up a web page on the financial crisis. If you go to the ARC website, it will be there, and there will be a link to a web, to a whole page with all our stuff on the, on the financial crisis. And there will be a lot more stuff coming out in the future. We're working on a number of white papers and more extensive material on the crisis. There's also video.

TTLA: Can you summarize why the economy crashed?

YB: The short version is that we believe that the crisis is failure of government policy. It's a failure of deliberation. I think we had a succinct line somewhere, you know, I've seen markets fail, so let's try a free market. And, and that, that is a contrast with maybe ninety percent of what you hear, which is, "Capitalism failed, freedom has failed." And of course, from our perspective it is absurd to claim that we live in a free market when you have a Federal Reserve, printing our money, determining our interest rates, bailing out banks, being the lender of last resort. That is massive government intervention in the economy, and that is fundamentally what has failed. The Federal Reserve System as a system has failed. It caused this problem and it is in the culture of perpetuating the problem, making the crisis much worse than it needed to be.

TTLA: How does the country recover?

YB: Our solution is: Get government out of our lives. The U.S. should be considering getting rid of the Federal Reserve and returning to what we had before the Federal Reserve, which is private banking. I think the most important point is for people to understand from our perspective is that this is not a failure of capitalism. Capitalism didn't exist in a dying economy, and doesn't exist in America. This is a failure of government.

There are solutions. I was just talking to a banker friend of mine. [Ed. Note: Remember, this was months ago.] He was saying one of the things you need to do is stabilize the housing market. Nobody's talking about the housing markets. They're bailing out banks, but they're not going to help the housing market. One easy way to help the housing market would be to allow more immigration, open up the borders. Let people come here and buy houses. I would even propose the slogan, 'Buy a house, get a green card.' Allow anybody in the world to buy a house in the United States and they automatically get a green card. You would have the entire excess housing capacity in the United States swallowed up within a couple of months, because people value green cards.

And in a sense, you'd be selling off green cards and that would be great. I mean, who loses if you do that? Nobody loses and everybody gains. That's kind of a free market solution to the kinds of problems that we face. Short of doing away with the Federal Reserve, we're worried about the non-invested capital in banks, and so the government can invest the capital into banks. And do away with the capital gains tax. Suddenly people have a strong incentive to take their money out of deposits and put it into investments, into capital. There are lots of free market solutions to these problems that nobody's considering. Everybody's looking to government "? who created this problem "? to get us out of this problem. The government can't. It can only create the next problem.

Coming Wednesday: What Would Ayn Think?

Illustration copyright and courtesy Richard Nielsen, 2008

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