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Atlas Shrugged

robindch

For those not familiar with it, it's a large table-thumper of a book, written by a Russian emigrée to the USA named Ayn Rand who, through that book and others, expounded a philosophy she called Objectivism, something which she claimed was entirely rational. The book is hugely popular in the USA, and apart from the bible, I gather it's the only book which all the members of the US Congress have claimed to have read (or tried to). Thankfully, the book and Rand are relatively unknown in Europe.

I've read perhaps the first 150 pages a few years back and could not continue. It's atrociously badly written, even allowing for the fact that English was not Rand's native language. The following quote describes my own opinion of it accurately:

Rand had many followers, one of whom was Alan Greenspan, the former Chairman of the Federal Reserve and it's hard not to view much of his broad policy of "the market comes first" as an acting out of the general social autism that characterizes Rand's writings.

Anyhow, have anybody read this book and found it worthwhile?

Hell, forget about getting to the end. Has anybody even got past page 20 without losing the will to live?

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Permabear

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Valmont

This is why you're unable to debate outside of your own forum.

robindch

I'm quite serious in what I say - Rand's cockaninny economic views are expounded not in the form of a concise, succinct economic theory published in the academic, peer-reviewed literature, but in the form of a massive book, popular amongst a very small portion of the population.

If you're aware of any economic papers by Rand which were peer-reviewed and published in high impact-factor economic journals, then I'd certainly like to hear of them.

marienbad

How is this any different than saying the market failed ? And if I am wrong please excuse my ignorance .

Permabear

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KahBoom

None of that persons work has ever been peer-reviewed for faults/errors (something a review board of professional economists or related experts would have to do - not forum posters), they are just 'working papers', so can safely discard their work as 'low credibility' - try again with a peer reviewed study.

Permabear

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marienbad

Look will you forget about 'the left' it is really irrelevant in this discussion , it seems to be your bogeyman for everything.

All you are saying above is that the market failed to understand that house prices can not rise forever - is that correct ?

robindch

As I've said, as far as I'm concerned her entire output is sophistic - open whatever book you have to hand, move forwards to the first lecture on economics, and there you go - that's the sophistic prose you're looking for. If you're not happy to do this yourself, I'll go back to her "Anthem" piece and find something there.

For my part, I'd like to see her notions boiled down until they're clear and succinct and admit of a single, unambiguous meaning. Ideally, notions which have passed peer review and have been published in a high-impact factor journal and not in length stretches of airport novels.

KahBoom

This is contradictory - the risk calculations are effectively a part of the model.

The bad risk calculations are one of the primary parts of the reason why the whole lot is viewed as being so dangerous: The greater the complexity and thus obfuscation/lack-of-clarity in the models, the more you can hide risk and achieve greater leverage/profits in the short term, at the long term cost of potentially tanking entire industries or economies, if the use of financial instruments based on the risk miscalculation, becomes widespread enough.

Permabear

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Permabear

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Permabear

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recedite

Interest rates are set by the entity which is licensed to issue the base credit. In the EU this is the ECB whose policies are controlled by EU finance ministers, and whose prime directive is to maintain inflation at or below 2%.
In the USA it is the federal reserve, which is a privately owned banking entity.

Who do you propose should manipulate base interest rates?
I am distinguishing now between setting the base rate of notional "fiat" money created out of thin air, not asset backed real money.

The problem with CDO's and other "imaginative" financial instruments is that they deliberately mix and obfuscate those debts that are backed by real collateral and those that are not. Those that will be paid, and those that may not.
Debt and credit are two sides of the same coin, but not all credit/debt is real. Some debt is imaginary pie in the sky debt and some is real collateralised debt. The same goes for credit; the bank or state issuing money/credit may not have the assets to back up their promises.

So with the CDO, the financial wizards gave their new device a fancy name which conveyed a false meaning which is actually the opposite to its real meaning and function; Collateralised Debt Obligation.

robindch

Well, I can't blame you avoiding her leaden prose

So, as I promised, here's an example from her "Anthem" text. The scene is that a street-sweeper has invented the electric lightbulb. He's presenting this to the "Home of the Scholars" and the following exchange ensues:

Now, I can understand why somebody of Rand's background would have a problem with collectivism -- why else would she abandon Russia -- but is this really supposed to be a serious criticism of collective activity?

This sophistry reads more like something written by a petulant 14-year old and cannot, in any sense, be taken seriously despite it apparently being one of the central plot themes.

Permabear

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KahBoom

My argument has nothing to do with how easy it is for a layman to understand complex financial instruments: It's purely about how complexity/obfuscation within the financial instruments, can lead or be used to miscalculate or hide the real amount of risk.

I've provided a link to an article based on peer-reviewed studies earlier, showing that the risk models used with these securities, do lead to a problem there.

Valmont

Robindch, I don't particularly like Anthem either, but there isn't any 'sophistry' in that selection of text.

Permabear

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Permabear

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marienbad

are these 'people' not the market ?

Permabear

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robindch

Yes, there is. Quite apart from the poor prose style, it's the presumably-intentional straw-manning of collectivism. Fifty years to approve the design of a candle -- is that comment supposed to be serious, and should it be taken seriously, even if it is?

Soviet planning, which, for example, produced the first workable nuclear bomb around four years after the US did theirs? And which also put a man into orbit before the US, put the first woman into space, and delivered the N1 Rocket Engine which, thirty-odd years after its development in the SU, was still more advanced than anything the US had developed up to that point?

I could go on producing prose and ideas from just about any of Rand's output, but I'm sure you'd declare yourself unhappy at every one. Nonetheless, I've produced the sophistry you asked for.

Any sign yet of that paper by Rand which was peer-reviewed and published in a high impact factor economic journal?

KahBoom

You're hair-splitting now over the words I use (complexity/obfuscation), rather than actually addressing my argument - in order to try and divert the debate into lawyering over semantics.

I've explained my point multiple times now, and provided an article based on peer-reviewed studies, showing the problems with the risk modelling, that contributes to miscalculating risk with these financial instruments - which is more than enough to prove my point.

Permabear

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Permabear

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[Deleted User]

One which she didn't come up with but used Bastiat's...

a bit like the equivalent of russell's teapot, if you ask me

robindch

I'm not "extolling the virtues of Soviet central planning" since much of it it was built upon an unconscionable heap of human bones.

I am, however, just finished blowing a hole the size of Siberia in your central -- false -- allegation that "bureaucratic central planning" was either slow to react or was unable to come up with the good when it puts it mind to. And that Rand's juvenile characterization of it was, therefore, totally inaccurate.

Any sign of that peer-reviewed paper by Rand that appeared in a high impact factor economic journal?

Karl Stein

And this is what's know as psychological projection.

You didn't even read the report you cited and when I took points from that very report that showed you to be wrong you try to back-pedal.

Embarrassing.

Karl Stein

Sure isn't it what made America 'great' and sowed the seeds of US/Western Capitalism's golden age in the post WWII period.

There isn't a country on earth that doesn't employ central planning to one degree or another.