The Federalist recently published an adapted excerpt from Yaron Brook and Don Watkins’s new book In Pursuit of Wealth: The Moral Case for Finance, in which they indicate why Ayn Rand’s philosophy is “indispensable for understanding and defending the morality of finance.”
While you’re waiting for your copy to arrive in the mail, check out this new YouTube playlist devoted exclusively to the themes found in In Pursuit of Wealth: The Moral Case for Finance, the new book edited by Yaron Brook and Don Watkins.
Financiers don’t create the products that enrich our lives — they help grow the businesses that create the products that enrich our lives. Yet many people believe on some level that finance is immoral. Maybe not totally. Maybe it has some redeeming features. But at best it is regarded as a necessary evil. If our economic well-being depends on a vibrant and innovative financial industry, why does no one speak up to defend finance?
Myth: The Great Recession was caused by free-market policies that led to irrational risk taking on Wall Street. Reality: The Great Recession could not have happened without the vast web of government subsidies and controls that distorted financial markets.
Myth: Finance was deregulated during the 1980s and 1990s, laying the groundwork for the 2008 financial crisis. Reality: Although some financial regulations were rolled back during the late 20th century, the overall trend was toward increased government control.
The Myth: New Deal regulation of the financial system made the system safer. The Reality: New Deal regulation of the financial system failed to address the real source of the problems that led to the Great Depression and laid the foundation for future crises.
The Myth: An unregulated free market and unrestricted Wall Street greed caused the Great Depression and only the interventionist policies of Franklin D. Roosevelt got us out. The Reality: The Great Depression was caused by government intervention, above all a financial system controlled by America’s central bank, the Federal Reserve — and the interventionist policies of Hoover and FDR only made things worse.
The Myth: We tried free banking and the result was constant bank runs and panics. The Federal Reserve was created to make the system stable and it succeeded. The Reality: America’s recurrent panics were the product of financial control, and there is no evidence the Federal Reserve has made things better.
Now that Trump is in office there is talk that his administration will support repealing or revising Dodd-Frank — the government’s regulatory response to the financial crisis of 2008. The bill was sold as a way to protect ourselves from future crises by making the financial system more stable.