Despite Friday's better-than-expected jobs report, there's growing concern about the state of the U.S. economy: Housing has rolled over, jobless claims are rising, first-quarter GDP growth was subpar, as was the most recent report on ISM Services.
To many observers, most notably Paul Krugman, the economy's uneven performance is a sign the government's response to the crisis of 2008 and its aftermath was insufficient. But Dr. Yaron Brook, president of the Ayn Rand Institute, says the opposite is true: The economy is sputtering because the government's response was too heavy-handed.
"I think we should have let banks fail, let auto companies fail [and] let housing prices tank to reach their true bottom," he says. "If we'd done that back in 2008-09, we'd have gone deeper into recession but we would be out of it today."
In fact, Brook believes the economy would be "steaming ahead" today had regulators let the chips fall where they may in 2008-09, rather than trying to put Humpty Dumpty — a.k.a. the U.S. economy and banking system -- back together again.
"Obviously we're growing but you'd expect much more after a recession," he says. Subpar growth is "not surprising after a period of increased regulation and government involvement."
Furthermore, concern about the impact of the Fed's zero-rate policy is "causing people to be very conservative into the future," Brook says.
Considering Ayn Rand's philosophy of Objectivism holds that laissez-faire capitalism is "the only moral social system," Brooks views are not surprising.
Similarly, it's not surprising he believes Rand's most famous protégé, Alan Greenspan, "betrayed" her teachings.
"Ayn Rand would have never advocated for the kind of policies Alan Greenspan instituted," Brook says, citing the Fed's 1% fed funds rate in the years after 9/11 as exhibit A: "By holding interest rates for two-and-a-half years below the rate of inflation, [Greenspan] encouraged the debt and credit boom we're suffering the consequence of" today -- and for the foreseeable future.
- Yaron Brook
- Alan Greenspan
- jobless claims
- Ayn Rand
- Humpty Dumpty
- interest rates
- Paul Krugman