“In a market system based on trust, reputation has a significant economic value,” Mr. Greenspan told the audience. “I am therefore distressed at how far we have let concerns for reputation slip in recent years.”
As the long-serving chairman of the Fed, the nation’s most powerful economic policy maker, Mr. Greenspan preached the transcendent, wealth-creating powers of the market.
A professed libertarian, he counted among his formative influences the novelist Ayn Rand, who portrayed collective power as an evil force set against the enlightened self-interest of individuals. In turn, he showed a resolute faith that those participating in financial markets would act responsibly.
Does everybody over the age of four understand why "enlightened self-interest" will never, ever, ever cause individuals to act responsibly? If you don't, or if you're age three or less, or a libertarian, I'll give you a hint:
In the first Congressional hearing into the financial crisis, the former CEO of the bankrupt Lehman Brothers, Richard Fuld, became the poster boy for Wall Street greed today as he defended the $484 million he received in salary, bonuses and stock options since 2000.
I know a lot of people who value their reputations. I don't know any people who value their reputations at four hundred and eighty four million dollars.
Given the choice between trust and reputation, and even one million dollars, 99.99% of people are going to take the cash and deal with the shame.
They always have. They always will. And you know why?
Because making enough money to free you from relying on "trust" and "reputation" is the very height of "enlightened self-interest". Why? Because absent regulations, trust and reputation are all that's left of "collective power".
Libertarianism and magic free markets are all well and good, as long as everybody is making fifty to a hundred thousand a year. But once some asshole discovers he can make eighty million a year by wrecking his company, his reputation, and the global economy, well, they're like a "Please Take Only One" sign at a $1.99 All You Can Eat lobster tail buffet.
It's fucking stupid. You have to be an idiot to believe in this stuff.