Fall 2009 -- Some believe that a real low point for Rand’s philosophy of Objectivism took place on October 23, 2008, when former U.S. Federal Reserve Chairman Alan Greenspan appeared before the Committee on Oversight and Government Reform .
Under pointed questioning by Henry Waxman, the committee chairman, Greenspan issued a mea-culpa that resounded around the world.
"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity—myself especially—are in a state of shocked disbelief," said Greenspan. He went on to state he had been "partially" wrong to hold that some complex trading instruments, such as credit default swaps, did not need oversight.
The crucial moment came when Waxman asked Greenspan, "You found your view of the world, your ideology, was not right, it was not working?"
"Absolutely, precisely," Greenspan replied, going on to say: "You know, that's precisely the reason I was shocked, because I have been going more than 40 years or more with very considerable evidence that it was working considerably well."
Was Ayn Rand’s most famous and powerful follower brought low by objective evidence that the politics of Objectivism are wrong? Admittedly, a number of Objectivists have viewed Greenspan as a “fallen” Objectivist who long ago abandoned his principles to become a garden-variety statist. But more importantly, as the knee-jerk leftists in the media didn’t notice, the credit crisis was no indictment of Objectivism at all.
Objectivism doesn’t support goosing the money supply to try to promote an economic boom—but that was what Greenspan did following the dot-com bubble. Objectivism holds that people should be rational—not that people always are rational. It’s disappointing to Objectivists if bankers lose their shirts through reckless lending, true—but it only refutes Objectivism if reckless, irrational lending turns out to be the secret to wealth, health, and a happy life. Since bankers are not wishing now that they had worked at Lehman Brothers, we are safe on that score.
Although it was cited by many Rand foes as prima facie proof of her villainy, the coverage of Greenspan’s “confession” may also have galvanized Rand fans. It also may well have injected an extra dose of Rand into a blogosphere that was already ruminating about the “going Galt” phenomenon. One way or the other, it kept the culture looking to Rand.