All Watched Over by Machines of Loving Grace (2011–…): Season 1, Episode 1 - Love and Power - full transcript
♪ When I see you alone
♪ I see what's in your mind
♪ You want me, yes, you do
♪ You don't need to tell me
♪ I know you love me most
♪ No-one else take my place
♪ You need me, yes, you do
♪ Forever and ever
♪ We are in love, baby love child
♪ I take you so high
groovy love child
♪ Give me a kiss, baby love child
♪ Do it again... ♪
Ayn Rand, 225-1, take two.
Who are you, Ayn Rand?
When I say that,
I would like to know
just a little bit.
You have an accent which is...
Russian. Russian.
You were born in Russia? Yes.
Came here... Oh, about 30 years ago.
And whence did this philosophy
of yours come?
Er...out of my own mind.
With the sole acknowledgement of
a debt to Aristotle,
who is the only philosopher
that ever influenced me.
Uh-huh. I devised the rest of
my philosophy myself.
Ayn Rand had left Russia
in the 1920s
and gone to live in California.
By chance, she met the film director
Cecil B DeMille,
who gave her a job
as an extra on his epic films.
All right now, give me everything
you've got, you people!
Ready now? Speed, 957.
Places, everybody, this is a take!
Clear the set! Camera!
Then DeMille gave her a screenplay
to write called The Skyscraper.
Rand hated the characters
and the plot,
but the idea
was going to make her famous.
She started to write
her own stories,
and in 1943 she published a novel
called The Fountainhead.
Its hero is an architect
called Howard Roark who refuses
to compromise in his vision of how
to build a skyscraper in New York.
It was a bestseller,
and was made into a film.
Ayn Rand used Roark
to express her philosophy,
that she called objectivism.
Human beings, Rand said,
were alone in the universe.
They must free themselves
of all forms of political
and religious control
and live their lives guided
only by their selfish desires.
If they did this,
they would become heroic figures.
I am primarily the creator
of a new code of morality
which has so far
been believed impossible,
namely a morality not based on
arbitrary edict, mystical or social.
I hold that if man wants to
live on earth,
his highest moral purpose is
the achievement of his own happiness,
and that he must not
force other people
nor accept their right to force him,
that each must man must live
as an end in himself,
and follow his own
rational self-interest.
May I interrupt now? You may.
In the 1950s,
Rand moved to New York.
She lived next to her
favourite skyscraper,
the Empire State Building.
Rand's ideas were seen as
mad and dangerous.
Selfishness and greed had led
to the financial chaos
and the Depression of the 1930s.
The job of politics
was to manage and control
the selfish desires
of the individual.
But Rand continued to write,
and a small group of followers
began to form round her
who believed in her vision
of another kind of world,
where everyone was free.
I was 19 when I met Ayn.
I was very idealistic,
and she appealed to everything
that was idealistic in me.
We are heroic,
we can know the world,
we can tame nature,
we can achieve our goals.
We can do what we want.
What does it matter that
we're alone? Who do we need?
Why do we need anyone?
We have ourselves.
And that was enough?
And that was...for sure enough, yes.
Definitely enough.
Even at 19, I knew, "I'm not going
to meet anyone else like this.
"This is once in a lifetime."
Rand had died in 1981,
but by the start of the 1990s
her novels had become a phenomenon
in America.
A Library of Congress survey showed
that one of them, Atlas Shrugged,
was now the second most influential
book in the country.
The first was the Bible.
And the group most inspired by her
were the new entrepreneurs
of Silicon Valley,
including some of the most powerful,
like Larry Ellison of Oracle.
Many of them named their companies
and even their children
after Rand and her novels.
They set up reading groups
to spread her ideas.
But above all, they saw themselves
as Randian heroes.
I really felt like an Ayn Rand hero!
I really did
feel like an Ayn Rand hero.
I was one. I didn't just
feel like one, I was one!
I was building the products.
I was thinking independently,
I was...being rational.
I was taking pride in what I did.
Those are Ayn Rand
heroes' characteristics -
I was an Ayn Rand hero.
I wasn't in the book,
but I was an Ayn Rand hero.
Just to give you an example, my...
my six-year-old boy,
his middle name is Rand,
and I was talking to someone
in...a classmate's dad,
and we were talking about Ayn Rand
and this interview, and he said,
"Oh, I'm a huge Ayn Rand fan, in
fact my girl's middle name is Ayn."
And it's funny
when you see people,
you see companies all the time
called Fountainhead
or the Galt Group, and you see
little evidence that Ayn Rand
has heavily influenced people.
Many of the people here in Silicon
Valley were greatly inspired by
Ayn Rand.
Entrepreneurs who were
building computers,
entrepreneurs in biotech,
entrepreneurs in software,
in internet, networking.
Many here were...were inspired by
Ayn Rand. It presented a vision.
It presented a vision of
a...morally exciting enterprise,
a morally glorious project.
But the project was about more
than just the entrepreneurs
being Randian heroes,
because an idea was emerging
in California
that said that
the new computer technologies
could turn everyone
into heroic individuals.
It was a vision of a society
where the old forms of political
control would be unnecessary
because computer networks
could create order in society
without central control.
This had never happened before,
because at the heart of of
western political thought
had always been a fear that
if you allowed individuals too
much freedom, you would get anarchy.
But ever since the 1970s,
computer utopians in California
believed that if human beings
were linked by webs of computers,
then together they could create
their own kind of order.
It was a cybernetic dream which said
that the feedback of information
between all the individuals
connected as nodes in the network
would work to create
a self-stabilising system.
The world would be stable,
yet everyone would be
heroic Randian beings,
completely free
to follow their desires.
Now, in the 1990s,
the technologies had been built,
and in 1991 a leading computer
engineer from California
gave a dramatic demonstration.
He was called Loren Carpenter.
He invited hundreds of people
to a large shed.
On each seat was a small paddle,
and in front of them
was a giant screen.
We told them nothing for a while.
We just left the things on the seats,
and people would pick this up and
look at it and say, "What's that?"
And then somebody noticed that
there's little red and green dots
up there on the screen,
and this is red and green, so maybe
that has something to do with that.
It would be that. "OK, there I am."
And when that happened,
the room erupted.
Just totally spontaneous,
we didn't say anything.
Carpenter then began an experiment.
He projected the early
computer game Pong.
Each half of the audience
jointly controlled the bat
on their side of the screen.
If an individual held up
red on their paddle,
a computer sensor picked it up and
the bat on the screen went down.
If they held up green, it went up.
But they had to operate it together.
When the game is being played and
the ball is going back and forth,
if it's down here
and it's headed that way,
some people are going to have to
show red
to keep it from going
all the way to the top.
If everybody just showed green,
it would slam up to the top
and the ball would miss.
So something happened
in that group of people,
where some decided to show green
and some decided to show red
to cause it to stop
in the right place.
And we had no idea what did that.
All right! Red, red, red, red, red!
Oh, baby! Oh, yeah!
Red!
Carpenter believed that what he had
created was a model of a society
where there was no hierarchy,
where everyone made their own
decisions without guidance.
Yet because they were linked by
the machines,
out of it came a stability
and an order.
So they're all acting as individuals,
because each one of them can decide
what they're going to do.
They have total freedom about what to
decide to do, but there's an order.
There's an order that emerges
that gives them a kind of
an amoeba-like effect,
where they surge and then they play.
It was kind of
in the nature of an experiment.
I wanted to see, if no hierarchy
existed at all, what would happen.
And what did happen?
They formed a... A kind of a...
A subconscious consensus.
Out of these kinds of ideas
came what was called
the Californian ideology.
It was an odd fusion of
radical individualism
and utopian theories
about computer systems,
and an international priesthood
rose up to promote it.
What united them was was a vision
that the world
was now one interconnected system,
that nation states were irrelevant
and politicians should not
try and control the system,
they should let it free
to create a new kind of democracy.
All the mechanisms
that we are creating
are connecting everything
to everything else.
They let the individual
do their thing.
The internet, as it spreads,
is going to
radically accelerate that process of
network formation -
a different kind of
global governance.
Really, the fundamental evolution
of the global system
in the post-Cold War era.
And people, as consumers,
have moved into the 21st century -
new citizens, networkers
who'll reshape the world.
You have citizens forming
networks, global, you know,
the planetary consciousness.
They are absolutely liberating
for the individual.
The power has shifted
to the citizens,
and the government
must be a facilitator.
They should not, in the traditional
sense, control and regulate.
But at this very moment,
a new President of the United States
was elected
who believed the opposite.
He was convinced that
he could use political power
in its traditional way, to
transform the world for the better.
You have to realise
that Alan Greenspan
was and is a brilliant mind, doing
brilliant things in the real world,
but in his twenties, he's sitting
with me in New York in our apartment,
in my apartment, and telling me
that he cannot say for a certainty
that he exists, and he cannot say for
a certainty that I, Nathaniel, exist.
And he cannot say for a certainty
that this conversation exists.
That aside, he's got lots of opinions
about everything, how the economy
works, how the world works,
but he denies the possibility
of being certain about anything.
Even, and this, of course,
is reductio ad absurdum,
even he cannot be certain
that he exists.
So my challenge became
to persuade him
that he can be certain
that he exists.
Alan Greenspan
believed in a philosophy
called logical positivism.
It was an extreme form
of rationality
that questioned everything
and used logic
to reach absurd conclusions.
To try and save him from this,
Nathaniel Branden
introduced Greenspan to Ayn Rand.
Branden and his wife Barbara
were the leaders of the small group
that had formed around Ayn Rand.
They jokingly called themselves
the Collective,
and they met in Rand's apartment
every Saturday night
to read the latest section of
the novel that she was writing,
called Atlas Shrugged.
Nathaniel liked him,
Ayn did not like him at all.
Nathaniel did,
and began discussing ideas with him.
And every Saturday night,
the Collective gathered to read
what Ayn had written,
to read in manuscript what Ayn had
written of Atlas Shrugged that week,
and finally Nathaniel persuaded Ayn
to include Alan in that.
And he loved the book, and he was...
He became a loyal member
of the Collective.
Atlas Shrugged is set in
a science-fiction world,
but one which is very similar
to 1950s America.
In it, Ayn Rand attacks head-on
the idea of altruism,
the care of others, as an
organising principle for society.
In the story, the government
and the state control everything.
But one by one, the creative
individuals in America -
the industrialists,
the inventors and the artists -
are all mysteriously disappearing.
They have gone on strike,
and they hide out
in a remote mountain valley
as America falls apart.
At the end of the book,
they reappear,
and set out to build Rand's vision
of the world to come,
a world in which politics
has disappeared
and is based instead on what she
called "the virtues of selfishness."
The critics hated it.
And let me start by
quoting from a review
of this novel, Atlas Shrugged,
that appeared in Newsweek.
It said that you are out to destroy
almost every edifice in the
contemporary American way of life -
our Judeo-Christian religion,
our modified
government-regulated capitalism,
our rule by the majority will.
Are these accurate criticisms?
Er, yes.
I'm challenging
the moral code of altruism,
the precept that man's moral duty
is to live for others,
that man must sacrifice himself
to others.
I say that man is entitled
to his own happiness,
and that he must achieve it himself,
and nor should he wish to sacrifice
himself for the happiness of others.
I hold that man
should have self-esteem.
'Atlas Shrugged was the great
disappointment of her life.'
What hurt her terribly
was that when it came out,
not a single person
whom she considered a peer
stood up publicly
to say what an achievement
that book was.
Not one. Nobody.
Vicious, horrible criticisms.
She felt very alienated,
and this small group around her,
the Collective,
were the only people
she had admitted to, in effect,
her private world,
the world that
she wasn't alienated from.
Alan Greenspan remained
fiercely loyal to Ayn Rand.
He married another member
of the Collective,
a painter called Joan Mitchell.
Together, they and the other
members of the group saw themselves
as models for a new kind of world
that they were convinced was coming.
We thought of ourselves
as being instigators of
a revolution that was coming,
and, uh...
we were so enthusiastic about what
a difference it was going to make
to the world, and we were there,
and we were in on it,
and we hoped we were contributing,
even, to it.
And what would that revolution
lead to?
Oh, totally free society.
At the end of 1992, Alan Greenspan
went to see President Clinton.
It was a few days after
Clinton had been elected,
and what Greenspan said
in that conversation
was the beginning of a revolution.
By now, Greenspan was
the head of the US Federal Reserve,
and what he told Clinton
was that his election promises
of social reform were impossible.
The government deficit was so large,
Greenspan said,
that if he borrowed any more
to pay for his political programme,
then interest rates would go up
and damage growth.
But, Greenspan said,
there was a radical alternative.
Clinton should do the very opposite.
Cut government spending,
then interest rates would go down
and the markets would boom.
Greenspan's idea was simple.
Clinton should let the markets
transform America, not politics.
He said later that he was surprised
that Clinton agreed with him.
I had hoped to invest in your future
without asking more of you,
and I worked harder than I've ever
worked in my life to meet that goal.
But I can't, because the deficit
has increased so much.
There will be many more budget cuts.
This is the beginning, not the end.
The house has already embarked
on that course. There will be more.
If our national debt were
stacked in thousand dollar bills,
the stack would
reach 267 miles into space.
As Greenspan had predicted,
a boom began.
And as share prices rose higher
and higher, a belief started to grow
that this time,
the boom would be different.
It wouldn't run out of control.
And the reason was the computers.
The computers allowed the banks to
create complex mathematical models
that could predict the risk of
making any loan or investment.
This had enormous implications,
because if a risk
could be predicted,
then it could be balanced
by hedging against it.
For the banks and the hedge funds,
this was like a new world.
For, in the chaos and
the volatility of the markets,
the computers had -
for the first time ever -
created stability.
It allowed banks to lend money
to millions of people
they would never
have touched in the past.
At the same time, the internet
and other computer networks
allowed businesses to respond to
each others' needs instantaneously -
and to the consumers' desires.
It was the cybernetic feedback
predicted by the Californian
ideologists.
And a belief arose
that America had now entered into
a new age of stability.
It was called the New Economy.
Whether they came from Silicon Valley
or from Washington,
from academia or from Wall Street,
there were a number of
leading individuals who basically
articulated a body of thought
now known fondly as
"the New Economy".
It was based on the premise of
a dramatic and permanent increase
in the rate of productivity growth,
sparked by new information
technologies that would
let this thing go on forever.
'This is manna from heaven -
'this is the candy
that politicians only dream of.
'You don't have to do anything - '
you just push a button and presto!
You've got a brand new economy
that creates jobs and prosperity.
It's the rising tide
that lifts any and all boats,
even if there's no water
in the ocean.
But Alan Greenspan was worried.
Every morning in his bath,
he read page after page of data
about what was really
happening in the factories
and businesses of America.
What puzzled him was that
the figures showed that, actually,
there was hardly any increase
in productivity,
yet reported profits
kept on going up.
There was something wrong.
And in 1996, Greenspan
made a speech that warned that
the market might be overvalued.
That a dangerous speculative
bubble was being created.
Early December of 1996,
Alan Greenspan warned
that the US stock market
may be in a period of
irrational exuberance,
and you would have thought
the world had come to an end.
Politicians attacked him
from the left, from the right,
mainstream was upset with him,
Wall Street was upset with him.
And at that point, there was
a very unfortunate turn of events,
because he knuckled under
to political pressure.
He changed his mind.
Greenspan decided he was wrong.
That the computers were increasing
productivity in ways that were
so new his data couldn't see it.
And he went to see President Clinton
to tell him the good news.
It really was a New Economy.
Greenspan described it to Clinton
as like discovering a new planet.
♪ There's a monkey on my back
♪ Makes me talk like that
♪ There's a monkey on my back
♪ Makes me talk like that
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back
♪ Makes me talk like that... ♪
(MUSIC DROWNS SPEECH)
The boom continued,
and Time magazine described
how a sense of lethargy
and quietness
came over the White House.
It was as if the President
didn't have anything to do.
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back... ♪
This was a woman who was very
powerful in a great many ways,
who was mentally more powerful
than anyone she met,
who was more determined,
who was more hardworking
than anyone she met.
What she would have loved
would be to find a man
who was stronger than she.
She would have loved to meet
someone who was smarter than she,
braver than she, a greater genius.
She never met him.
But she longed for him
all her life.
And I think this accounts for
her sexual psychology.
In the 1940s, Ayn Rand had married
an actor called Frank O'Connor.
But now, faced with
the hostility to her ideas,
Rand turned to the leading member of
the collective, Nathaniel Branden.
She told him that she had
fallen in love with him,
and, despite the fact
that he was married to Barbara -
another member of the collective -
Rand told him that
the only rational course
was for Nathaniel
to have an affair with her.
Ov...I don't think...
I must be failing to make
a certain point clear to you, sir.
Ayn Rand thought that
she was being rational
about anything or everything
that she did.
So it would never occur to me to ask,
"Did Ayn Rand think she was being
rational about that?"
She would say, if she were here,
I can feel her,
she would say, "Why, yes,
do you think I would do something
"if I didn't think it was rational?"
In your book, you talk about love
as if it were
a business deal of some kind.
Isn't the essence of love
that it is above self-interest?
In love, the currency is virtue.
You love people not for
what you do to or for them,
or what they do for you.
You love them for their values,
their virtues,
which they have achieved
in their own character.
You don't love causelessly.
You don't love everybody
indiscriminately.
You love only those who deserve it.
And then if a man is weak,
or a woman is weak,
then she, he is beyond love?
He certainly does not deserve it.
She was attempting to portray it,
that affair between them,
as totally rationally justified.
She said it was nobody's business,
and we were sworn to
absolute secrecy,
but she said since they were
such unusual people,
it was inevitable that they feel
what they felt -
that there could be
no objection to an affair.
I also felt... I was very aware
of how little Ayn Rand had
had in her life from the outside,
from other people.
And I thought, OK,
if I could press a button,
and make Ayn romantically happy,
would I do it?
And I thought, yes, I would.
That's altruism. >
I know. I know.
It was. I'm not proud of saying yes,
but I said yes.
Well, this is the second floor.
And this is one of my favourite
parts of the house.
This is a beautiful,
central corridor up here.
Must be a bear keeping
this carpet clean, huh?
Well, the main things that...
♪ ..You can spend
the night beside her
♪ And you know that she's half crazy
♪ But that's why you
want to be there
♪ And she feeds you tea and oranges
♪ That come all the way from China
♪ And just when you mean to tell her
♪ That you have no love to give her
♪ Then she gets you on her wavelength
♪ And she lets the river answer
♪ That you've always been her lover
♪ And you want to travel with her
♪ And you want to travel blind
♪ And you know she will trust you
♪ For you've touched her perfect body
♪ With your mind... ♪
'First time I ever
looked into his eyes,
'I saw somebody totally different
than I had expected to see.
'And that's the person
I fell in love with.'
♪ And you want to travel with him
♪ And you want to travel blind
♪ And you think
maybe you'll trust him
♪ For he's touched your perfect body
with his mind. ♪
By 1997, the American boom
was reshaping the whole world.
Economists and bankers
who saw the world as
one giant economic system
now dominated
the American government.
They believed that the way
to achieve global economic stability
was for nations
to open themselves up
to the free flow of capital.
And the laboratory that they had
created for this experiment
was South East Asia.
Under American pressure,
countries like
South Korea and Thailand
had given up all restrictions
and Western capital flooded in.
It helped fuel what was called
"The Asian Miracle".
But a group within the White House
were worried that
much of the Western money
was going to fund
a giant speculative bubble
in property.
And when the boom collapsed,
the money would flee,
leaving the countries like Thailand
and South Korea decimated.
The group were led by the economist
Joseph Stiglitz.
The Council of Economic Advisers
was very worried
about these short-term
speculative capital flows
because while the countries benefit
a little bit when the money comes in,
when the money goes out,
the countries are devastated.
So, it was not
in the interest of Korea.
And it was not in the interest
of the US.
It was in the interest of
a very small group of people
who make their money from
these short-term capital flows.
Bankers, and hedge funds.
It was a very small group
in whose interest it was.
The Council of Economic Advisors
decided to warn the President.
They wanted to persuade him to
stop some of the more excessive
short-term speculation
in the Asian countries.
But they came face to face
with the Secretary of the Treasury,
Robert Rubin.
Rubin had previously
run Goldman Sachs
and under his leadership
the bank had created
many of the computer models
that underpinned the boom.
Rubin had a revolutionary vision
of a world system
completely open to the free flow
of capital.
Joseph Stiglitz, who headed
the Council of Economic Advisers,
was convinced that the Treasury
was stopping the warnings
reaching the President.
He believed that Rubin and
the Treasury had effectively become
agents of the financial world
embedded in the heart of government.
Treasury had close connections
with the financial markets.
The Secretary of the Treasury
had come from
the largest investment bank,
and went afterwards into
the largest commercial bank.
These are the people with whom
the US Treasury naturally interacts.
To Wall Street, we were threatening
a bursting of the bubble.
To Wall Street,
we were threatening their profits.
The Treasury worked extremely hard
to make sure the President
never got to consider the issues.
Making sure that perspectives of
the Council of Economic Advisors...
Which was you?
Yes. ..Never reached the president.
So they kept your arguments from
the President? Effectively, yes.
What some people
were beginning to see
was that the computer networks
and the global systems
that they had created
hadn't distributed power.
They had just shifted it,
and, if anything,
concentrated it in new forms.
And some of the computer utopians
from Silicon Valley
were also beginning to realise
that the World Wide Web
was not a new kind of democracy,
but something far more complicated
where power was exercised
over the individual
in new and surprising ways.
Carmen Hermosillo had been
one of the earliest believers
in the new communities
of cyberspace.
Her online name was Humdog
and she lived on the West Coast.
But then she lost faith,
and she posted an attack
which caused a sensation online.
"It is fashionable to suggest",
she wrote,
"that cyberspace is some island
of the blessed
"where people are free to indulge
and express their individuality.
"This is not true. I have seen many
people spill out their emotions,
"their guts online,
and I did so myself,
"until I began to see that
I had commodified myself.
"Commodification means that
you turn something into a product
"which has a money value.
"In the 19th century,
commodities were made in factories
"by workers
who were mostly exploited.
"But I created my interior thoughts
as commodities for the corporations
"that owned the board I was
posting to, like CompuServe or AOL,
"and that commodity
was then sold on
"to other consumer entities
as entertainment."
"Cyberspace", she wrote,
"is a black hole.
"It absorbs energy and personality
"and then re-presents
it as an emotional spectacle.
"It is done by businesses
"that commodify human interaction
and emotion.
"And we are getting lost
in the spectacle."
♪ She wore blue velvet
♪ Bluer than velvet
was the night... ♪
'The navy blue dress. My cousin
is a genetic whatchamacallit.
'He said if she has preserved
a pinprick size of crusted semen,
'they can match the DNA.'
In 1997, Bill Clinton
made it clear to Monica Lewinsky
that their love affair was over.
Hurt and bewildered,
Lewinsky poured out her feelings
to her colleague Linda Tripp -
who had become her friend.
But in September of that year,
Linda Tripp
secretly began to
record their phone conversations.
At the very same time,
on the other side of the world,
the property bubble
in South East Asia finally burst.
Two enormous crises
were about to engulf the world.
One would strip the last remnants
of power from Bill Clinton.
The other would bring the global
economic system to its knees.
The dream of a stable world
was about to be assaulted
by the two uncontrollable forces
of love and power.
The Asian crisis began in Thailand.
Hundreds of thousands of offices
and apartments had been built.
But no-one wanted them.
As the developers went bust
and defaulted on their loans,
Western investors panicked
and rushed to take their money
out of the country.
The panic began to spread,
first to South Korea.
Housewives queued
to give their spare dollars
to the government
to rescue the country.
But it wasn't enough.
Teams from the IMF flew in
and they offered billions
of dollars in loans
to stabilise the economies.
But there was a price.
The IMF said that the reason
the crisis had happened
was because the Asian economies
weren't Western enough.
In return for the loans,
they would have to turn themselves
into models of the free market.
This meant cutting
government spending
and getting rid of corruption
and nepotism in the ruling elites.
Then the crisis got worse.
It spread to Indonesia.
Indonesia was ruled by
President Suharto.
He was an autocrat surrounded
by a corrupt clique
of advisers and family members.
He refused to do
what the IMF wanted.
So the IMF turned to
the US Secretary of the Treasury,
Robert Rubin.
Our objective was not to reform
the country for the sake of reform.
The problem the international
community faced was that both
the international markets
and the domestic holders of capital
were very quickly losing confidence
in the Indonesian regime.
By that time, it was our view
that if President Suharto was
going to re-establish confidence,
he had to deal with corruption.
That was something
he was unwilling to do.
Robert Rubin and the US Treasury
were determined to force Suharto
to their will.
In an atmosphere of growing panic
in Washington,
Rubin's team began to argue
that the overthrow of Suharto
might be the only way
to solve the crisis.
President Clinton
was now increasingly enmeshed
in the crisis over Monica Lewinsky,
and enormous political power
was passing to Rubin
and his Treasury team.
They, and not the State Department,
were now running
America's foreign policy.
And everything was judged by
whether it was a threat
to the global economic system.
There is no question that
the Treasury Secretary,
in this case, me, got involved
in sensitive issues
that went way beyond
what Treasury Secretaries
ordinarily got involved in.
But the reason was that
there was real risk
that if Indonesia had chaos,
political chaos I'm talking about,
that could spread, threatening
the interest of the global economy.
In January 1998, Suharto gave in
and signed the IMF agreement,
watched over by the head of the IMF,
Michel Camdessus.
Indonesia received a massive loan
to stabilise the economy.
For a moment it worked. But then
the strangest thing happened.
Indonesian's currency has collapsed,
losing 80% of its value
and the economy is in ruins.
With riots and looting
breaking out across the country,
there are fears that
it's now on the brink of anarchy.
Indonesia's exchange rate
crashed disastrously
and the economy went into freefall.
But Indonesia was not alone.
In every country
that the IMF bailed out,
like Thailand and South Korea,
for a moment there was stability,
and then the exchange rate
collapsed.
Rubin's critics in
the White House began to argue
that there was another agenda
also at work in the bail-outs -
that part of their real function
was to rescue the western investors,
not the countries.
Billions of dollars were paid
into the Asian banks by the IMF,
but many of those same dollars
were immediately used
to pay off western investors
who wanted to get their money
out of the country.
And once that had happened,
the economy crashed.
It was another illustration
that the interest
of the financial community
dominated over other interests.
By providing mega-billion-dollar
loans,
the IMF was bailing out
the Western investors
and leaving the taxpayers
in the countries further in debt,
because they had to repay the IMF.
The effect of the cuts was
devastating throughout the region.
In Indonesia,
government subsidies were removed,
as instructed by
the Western bankers.
Prices soared, and within months,
in a country of 200 million people,
15% of the male workforce
lost their jobs.
Economic output fell by 14%.
As Robert Rubin had wanted,
Suharto was forced from power,
but at a very high price.
The economy now lay in ruins
and ethnic and religious strife
began.
The same thing happened
in Thailand and South Korea.
Millions and millions of people
fell back into the poverty
that they thought
they had escaped forever.
By the middle of 1998,
the Asian economies had collapsed.
It was the most catastrophic
economic disaster
suffered by any countries
since the depression of the 1930s.
Many people cannot have the money,
don't have the money.
Millions of people are unemployed.
They don't have jobs, education.
Education and hospitals
are expensive.
Everything's expensive
for the common people.
If Monica Lewinsky says that while
you were in the Oval Office area,
you touched her breast,
would she be lying?
Bill Clinton had become President
with the vision
of using political power
to transform America.
But he had been persuaded
to give away that power
to the financial markets,
with the promise that this time
they would create
a new kind of stability,
a new kind of democracy,
free of the corruption
of elite politics.
But it was now becoming clear
that in reality,
America's political power had just
been transferred to another elite -
the financiers and Wall Street.
And when faced by a crisis,
they had simply used that power
to rescue themselves.
In the process, far
from creating stability,
their actions were
leading to a chaotic
and far more unstable world.
To the leaders of
the Asian countries,
this was just as much
a corruption of power
as anything their governments
were guilty of.
Power corrupts.
As much as government
can become corrupt
when invested with absolute power,
markets also can become corrupt
when equally absolutely powerful.
We are seeing the effect
of that absolute power today.
The impoverishment and misery
of millions of people
and their eventual slavery.
What did you tell your
cabinet, Mr President?
Ask him.
Are you considering...?
Do you think it went well?
Are you considering resignation,
Mr President?
OK, I don't know
if you saw that.
Did you see that look on his face?
Great, great.
Come in.
I love you, Rourke.
Would it please you to hear
that I've lived in torture
all these months,
hoping never to find you again
and wishing to give my life
just to see once more?
But you knew that, of course.
That's what you wanted me
to live through.
Yes.
Why don't you laugh
at me now? You won.
I've no pride left to stop me.
I love you without dignity,
without regret.
I came to tell you this
and to tell you that
you'll never see me again.
By now, I've had
a lot of time to think.
I'm four, five years older
and I realise I've made
a terrible, terrible mistake.
But the trouble is, I've become
very, very important to Ayn.
She tells me,
"You are my lifeline to reality.
"I don't know how I would
have survived without you.
"You started the
Nathanial Brandon Institute."
That's how the philosophical
movement of Ayn Rand got launched,
was by this institute I created.
So my idol is telling me every day...
..I'm her lifeline to reality.
I don't know what to do.
I didn't know what to do.
And then...
..a young woman comes to
my lectures and I meet her
and I fall in love with her.
And now the situation
has got even worse.
She then launched into
a tirade against him
that was so shocking,
accusing him of utter irrationality,
of betraying objectivism,
betraying her.
It went on and on indefinitely.
And it ended with her saying...
.."If he had an ounce
of morality left,
"he would be impotent
for the next 10 years."
And then slapped him
across the face three times
and said "Get out."
He got out.
And that was the end.
And ultimately, it ended
an absolute disaster for everybody.
Ayn Rand's anger and despair
destroyed the small, perfect world
that she had built around her.
The Collective was torn apart
by the revelation of her affair
and by her violent
reaction at her betrayal.
And by the early 1970s,
Ayn Rand was left almost alone.
She still lived in her apartment
by the Empire State Building
and she took up stamp collecting.
One of the few people who remained
loyal to her was Alan Greenspan,
who worked in New York as an
economic consultant to Wall Street.
It's feasible in the way
in which it stays down
and does not merely drop
and bounce around
and have within it,
in a sense, an unstable future.
In 1974, President Ford
made Greenspan the chairman
of his Council of Economic
Advisers in Washington.
It was the beginning of
Greenspan's rise to power.
Rand was left alone in New York,
but she wasn't lonely, she said.
In her philosophy,
all you needed was yourself,
because you were the world.
I kind of think of this
whole thing as ongoing,
that there is an eternity,
and that we are going
to be a part of that eternity
that we aren't just
corpses in graves when we die.
But we aren't corpses in graves,
we are not there.
Don't you understand that
when this life is finished,
you're not there to say, "Oh, how
terrible that I'm a corpse"?
No. Well, this is true.
It's finished.
And what I've always thought
was a sentence from
some Greek philosopher,
I don't unfortunately
remember who it was.
I read it at 16 and
it's affected me all my life.
"I will not die.
It's the world that will end."
And that's absolutely true.
Oh, my God!
The attack on the World Trade Center
was an assault by political
Islamism on American power,
and on what the Islamists believed
was the destructive force
that drove that power,
radical individualism.
When the World Trade Center
towers collapsed,
everyone knew that
everything had changed.
But then it didn't.
The system returned to normal.
And the heroic individual
who did this,
and who bent history to his will,
was Alan Greenspan.
And he became the most
powerful man in the world.
As we struggle to make
sense of our profound loss
and its immediate
consequences for the economy,
we must not lose sight
of our longer-run prospects,
which have not been significantly
diminished by these terrible events.
But it started badly.
A week after the attacks,
the American markets opened again.
Dealers waited to see
what would happen.
Our heroes will now
open the marketplace.
The green button.
It was a disaster.
Immediately, the market suffered the
largest fall ever in its history.
Two weeks later,
the Enron scandal was revealed.
And it quickly became clear
that it was only one example
of a vast corporate fraud.
Since the early '90s, many major
corporations had faked profits
and hidden their debts,
helped by some of the
major accounting firms.
It seemed as if the American
economy might collapse.
Greenspan took action.
He dramatically cut interest
rates again and again.
His aim was simple,
to encourage American consumers
to borrow and spend.
They and their desires were
going to be the machine
that stabilised the system.
Huw, today's rate cut
is the culmination
of an extraordinary few
days for central banks.
It's all part of a
concerted global effort
to bolster consumer confidence
and make sure those consumers
carry on spending money
because that is what's keeping
economies afloat at the moment.
It was an enormous risk.
By cutting the rates
to almost zero,
Greenspan was unleashing a flood
of cheap money into the economy,
and in the past this had always led
to inflation and
dangerous instability.
But this time it didn't.
A vast consumer boom began,
bigger than anything
ever before in history.
But there was no inflation.
Everything remained stable.
It seemed that the system
could manage itself
without direct political control.
But it was an illusion.
The reason for the extraordinary
boom was the very opposite.
It happened because of a giant
exercise of political power
by an elite thousands of miles
away on the other side of the world.
HE SPEAKS IN CHINESE
The Asian countries, led by China,
had decided that never again
would they put themselves
at the mercy
of America and its
financial elites,
as had happened two years before.
So the Chinese Politburo
created a system to manage America.
They deliberately held their
currency's exchange rate
at a low level.
This meant that their
exports were cheap,
and Chinese goods
flooded into America.
And to pay for them,
American dollars flooded into China.
But instead of spending
the money on their population,
the Chinese leaders immediately
lent the money back to America,
by buying government bonds.
It was a perfect system of
cheap goods and cheap money
flowing into America, all
controlled by the Chinese Politburo.
And it was this that
created the stability.
From it came an orgy of lending
by the banks to the poorest
and least credit-worthy
borrowers in the US.
It was a mirror image of
what the West had done
in East Asia in the 1990s,
and just like then,
out of it came
a vast property bubble.
"It is as if over a trillion
dollars has been recycled"
wrote one economist, "to a third
world developing economy
"that exists within
America's own borders."
The Chinese money had led
America into a dream world,
but the reason that so few bankers
and politicians questioned it
was because of their
faith in computers.
They were convinced
that it was the computers
that had brought the
stability to the system.
The machines created mathematical
models that parcelled out the loans,
and then hedged and balanced
them so that there was no risk.
But then, in 2008,
that dream collapsed.
Alan Greenspan's
vision of a new planet,
and Gordon Brown's promise
of no more boom and bust
were revealed to be fantasies
built on a wave
of financial speculation.
That speculation had happened
because those running the financial
sectors in America and Britain
had promised that they could create
a new kind of market democracy
that would be stable.
But again and again,
it had led to the opposite,
chaos and instability
around the world.
And now, finally, that had happened
in the very heart of the west.
But yet again, just as in south
east Asia ten years before,
those running the financial sector
now mobilised political power
to rescue themselves
and protect their supremacy.
They asked the politicians
to bail them out,
and they agreed.
And again, just as
in south east Asia,
the price is being paid by the
ordinary people of the countries.
And we are now living through
a very strange moment.
We know that the idea of
market stability has failed,
but we cannot imagine
any alternative.
The original promise
of the Californian Ideology
was that the computers
would liberate us
from all the old forms
of political control
and we would become Randian heroes
in control of our own destiny.
Instead, today we feel the opposite,
that we are helpless components
in a global system,
a system that is controlled
by a rigid logic
that we are powerless
to challenge or to change.
♪ I see what's in your mind
♪ You want me, yes, you do
♪ You don't need to tell me
♪ I know you love me most
♪ No-one else take my place
♪ You need me, yes, you do
♪ Forever and ever
♪ We are in love, baby love child
♪ I take you so high
groovy love child
♪ Give me a kiss, baby love child
♪ Do it again... ♪
Ayn Rand, 225-1, take two.
Who are you, Ayn Rand?
When I say that,
I would like to know
just a little bit.
You have an accent which is...
Russian. Russian.
You were born in Russia? Yes.
Came here... Oh, about 30 years ago.
And whence did this philosophy
of yours come?
Er...out of my own mind.
With the sole acknowledgement of
a debt to Aristotle,
who is the only philosopher
that ever influenced me.
Uh-huh. I devised the rest of
my philosophy myself.
Ayn Rand had left Russia
in the 1920s
and gone to live in California.
By chance, she met the film director
Cecil B DeMille,
who gave her a job
as an extra on his epic films.
All right now, give me everything
you've got, you people!
Ready now? Speed, 957.
Places, everybody, this is a take!
Clear the set! Camera!
Then DeMille gave her a screenplay
to write called The Skyscraper.
Rand hated the characters
and the plot,
but the idea
was going to make her famous.
She started to write
her own stories,
and in 1943 she published a novel
called The Fountainhead.
Its hero is an architect
called Howard Roark who refuses
to compromise in his vision of how
to build a skyscraper in New York.
It was a bestseller,
and was made into a film.
Ayn Rand used Roark
to express her philosophy,
that she called objectivism.
Human beings, Rand said,
were alone in the universe.
They must free themselves
of all forms of political
and religious control
and live their lives guided
only by their selfish desires.
If they did this,
they would become heroic figures.
I am primarily the creator
of a new code of morality
which has so far
been believed impossible,
namely a morality not based on
arbitrary edict, mystical or social.
I hold that if man wants to
live on earth,
his highest moral purpose is
the achievement of his own happiness,
and that he must not
force other people
nor accept their right to force him,
that each must man must live
as an end in himself,
and follow his own
rational self-interest.
May I interrupt now? You may.
In the 1950s,
Rand moved to New York.
She lived next to her
favourite skyscraper,
the Empire State Building.
Rand's ideas were seen as
mad and dangerous.
Selfishness and greed had led
to the financial chaos
and the Depression of the 1930s.
The job of politics
was to manage and control
the selfish desires
of the individual.
But Rand continued to write,
and a small group of followers
began to form round her
who believed in her vision
of another kind of world,
where everyone was free.
I was 19 when I met Ayn.
I was very idealistic,
and she appealed to everything
that was idealistic in me.
We are heroic,
we can know the world,
we can tame nature,
we can achieve our goals.
We can do what we want.
What does it matter that
we're alone? Who do we need?
Why do we need anyone?
We have ourselves.
And that was enough?
And that was...for sure enough, yes.
Definitely enough.
Even at 19, I knew, "I'm not going
to meet anyone else like this.
"This is once in a lifetime."
Rand had died in 1981,
but by the start of the 1990s
her novels had become a phenomenon
in America.
A Library of Congress survey showed
that one of them, Atlas Shrugged,
was now the second most influential
book in the country.
The first was the Bible.
And the group most inspired by her
were the new entrepreneurs
of Silicon Valley,
including some of the most powerful,
like Larry Ellison of Oracle.
Many of them named their companies
and even their children
after Rand and her novels.
They set up reading groups
to spread her ideas.
But above all, they saw themselves
as Randian heroes.
I really felt like an Ayn Rand hero!
I really did
feel like an Ayn Rand hero.
I was one. I didn't just
feel like one, I was one!
I was building the products.
I was thinking independently,
I was...being rational.
I was taking pride in what I did.
Those are Ayn Rand
heroes' characteristics -
I was an Ayn Rand hero.
I wasn't in the book,
but I was an Ayn Rand hero.
Just to give you an example, my...
my six-year-old boy,
his middle name is Rand,
and I was talking to someone
in...a classmate's dad,
and we were talking about Ayn Rand
and this interview, and he said,
"Oh, I'm a huge Ayn Rand fan, in
fact my girl's middle name is Ayn."
And it's funny
when you see people,
you see companies all the time
called Fountainhead
or the Galt Group, and you see
little evidence that Ayn Rand
has heavily influenced people.
Many of the people here in Silicon
Valley were greatly inspired by
Ayn Rand.
Entrepreneurs who were
building computers,
entrepreneurs in biotech,
entrepreneurs in software,
in internet, networking.
Many here were...were inspired by
Ayn Rand. It presented a vision.
It presented a vision of
a...morally exciting enterprise,
a morally glorious project.
But the project was about more
than just the entrepreneurs
being Randian heroes,
because an idea was emerging
in California
that said that
the new computer technologies
could turn everyone
into heroic individuals.
It was a vision of a society
where the old forms of political
control would be unnecessary
because computer networks
could create order in society
without central control.
This had never happened before,
because at the heart of of
western political thought
had always been a fear that
if you allowed individuals too
much freedom, you would get anarchy.
But ever since the 1970s,
computer utopians in California
believed that if human beings
were linked by webs of computers,
then together they could create
their own kind of order.
It was a cybernetic dream which said
that the feedback of information
between all the individuals
connected as nodes in the network
would work to create
a self-stabilising system.
The world would be stable,
yet everyone would be
heroic Randian beings,
completely free
to follow their desires.
Now, in the 1990s,
the technologies had been built,
and in 1991 a leading computer
engineer from California
gave a dramatic demonstration.
He was called Loren Carpenter.
He invited hundreds of people
to a large shed.
On each seat was a small paddle,
and in front of them
was a giant screen.
We told them nothing for a while.
We just left the things on the seats,
and people would pick this up and
look at it and say, "What's that?"
And then somebody noticed that
there's little red and green dots
up there on the screen,
and this is red and green, so maybe
that has something to do with that.
It would be that. "OK, there I am."
And when that happened,
the room erupted.
Just totally spontaneous,
we didn't say anything.
Carpenter then began an experiment.
He projected the early
computer game Pong.
Each half of the audience
jointly controlled the bat
on their side of the screen.
If an individual held up
red on their paddle,
a computer sensor picked it up and
the bat on the screen went down.
If they held up green, it went up.
But they had to operate it together.
When the game is being played and
the ball is going back and forth,
if it's down here
and it's headed that way,
some people are going to have to
show red
to keep it from going
all the way to the top.
If everybody just showed green,
it would slam up to the top
and the ball would miss.
So something happened
in that group of people,
where some decided to show green
and some decided to show red
to cause it to stop
in the right place.
And we had no idea what did that.
All right! Red, red, red, red, red!
Oh, baby! Oh, yeah!
Red!
Carpenter believed that what he had
created was a model of a society
where there was no hierarchy,
where everyone made their own
decisions without guidance.
Yet because they were linked by
the machines,
out of it came a stability
and an order.
So they're all acting as individuals,
because each one of them can decide
what they're going to do.
They have total freedom about what to
decide to do, but there's an order.
There's an order that emerges
that gives them a kind of
an amoeba-like effect,
where they surge and then they play.
It was kind of
in the nature of an experiment.
I wanted to see, if no hierarchy
existed at all, what would happen.
And what did happen?
They formed a... A kind of a...
A subconscious consensus.
Out of these kinds of ideas
came what was called
the Californian ideology.
It was an odd fusion of
radical individualism
and utopian theories
about computer systems,
and an international priesthood
rose up to promote it.
What united them was was a vision
that the world
was now one interconnected system,
that nation states were irrelevant
and politicians should not
try and control the system,
they should let it free
to create a new kind of democracy.
All the mechanisms
that we are creating
are connecting everything
to everything else.
They let the individual
do their thing.
The internet, as it spreads,
is going to
radically accelerate that process of
network formation -
a different kind of
global governance.
Really, the fundamental evolution
of the global system
in the post-Cold War era.
And people, as consumers,
have moved into the 21st century -
new citizens, networkers
who'll reshape the world.
You have citizens forming
networks, global, you know,
the planetary consciousness.
They are absolutely liberating
for the individual.
The power has shifted
to the citizens,
and the government
must be a facilitator.
They should not, in the traditional
sense, control and regulate.
But at this very moment,
a new President of the United States
was elected
who believed the opposite.
He was convinced that
he could use political power
in its traditional way, to
transform the world for the better.
You have to realise
that Alan Greenspan
was and is a brilliant mind, doing
brilliant things in the real world,
but in his twenties, he's sitting
with me in New York in our apartment,
in my apartment, and telling me
that he cannot say for a certainty
that he exists, and he cannot say for
a certainty that I, Nathaniel, exist.
And he cannot say for a certainty
that this conversation exists.
That aside, he's got lots of opinions
about everything, how the economy
works, how the world works,
but he denies the possibility
of being certain about anything.
Even, and this, of course,
is reductio ad absurdum,
even he cannot be certain
that he exists.
So my challenge became
to persuade him
that he can be certain
that he exists.
Alan Greenspan
believed in a philosophy
called logical positivism.
It was an extreme form
of rationality
that questioned everything
and used logic
to reach absurd conclusions.
To try and save him from this,
Nathaniel Branden
introduced Greenspan to Ayn Rand.
Branden and his wife Barbara
were the leaders of the small group
that had formed around Ayn Rand.
They jokingly called themselves
the Collective,
and they met in Rand's apartment
every Saturday night
to read the latest section of
the novel that she was writing,
called Atlas Shrugged.
Nathaniel liked him,
Ayn did not like him at all.
Nathaniel did,
and began discussing ideas with him.
And every Saturday night,
the Collective gathered to read
what Ayn had written,
to read in manuscript what Ayn had
written of Atlas Shrugged that week,
and finally Nathaniel persuaded Ayn
to include Alan in that.
And he loved the book, and he was...
He became a loyal member
of the Collective.
Atlas Shrugged is set in
a science-fiction world,
but one which is very similar
to 1950s America.
In it, Ayn Rand attacks head-on
the idea of altruism,
the care of others, as an
organising principle for society.
In the story, the government
and the state control everything.
But one by one, the creative
individuals in America -
the industrialists,
the inventors and the artists -
are all mysteriously disappearing.
They have gone on strike,
and they hide out
in a remote mountain valley
as America falls apart.
At the end of the book,
they reappear,
and set out to build Rand's vision
of the world to come,
a world in which politics
has disappeared
and is based instead on what she
called "the virtues of selfishness."
The critics hated it.
And let me start by
quoting from a review
of this novel, Atlas Shrugged,
that appeared in Newsweek.
It said that you are out to destroy
almost every edifice in the
contemporary American way of life -
our Judeo-Christian religion,
our modified
government-regulated capitalism,
our rule by the majority will.
Are these accurate criticisms?
Er, yes.
I'm challenging
the moral code of altruism,
the precept that man's moral duty
is to live for others,
that man must sacrifice himself
to others.
I say that man is entitled
to his own happiness,
and that he must achieve it himself,
and nor should he wish to sacrifice
himself for the happiness of others.
I hold that man
should have self-esteem.
'Atlas Shrugged was the great
disappointment of her life.'
What hurt her terribly
was that when it came out,
not a single person
whom she considered a peer
stood up publicly
to say what an achievement
that book was.
Not one. Nobody.
Vicious, horrible criticisms.
She felt very alienated,
and this small group around her,
the Collective,
were the only people
she had admitted to, in effect,
her private world,
the world that
she wasn't alienated from.
Alan Greenspan remained
fiercely loyal to Ayn Rand.
He married another member
of the Collective,
a painter called Joan Mitchell.
Together, they and the other
members of the group saw themselves
as models for a new kind of world
that they were convinced was coming.
We thought of ourselves
as being instigators of
a revolution that was coming,
and, uh...
we were so enthusiastic about what
a difference it was going to make
to the world, and we were there,
and we were in on it,
and we hoped we were contributing,
even, to it.
And what would that revolution
lead to?
Oh, totally free society.
At the end of 1992, Alan Greenspan
went to see President Clinton.
It was a few days after
Clinton had been elected,
and what Greenspan said
in that conversation
was the beginning of a revolution.
By now, Greenspan was
the head of the US Federal Reserve,
and what he told Clinton
was that his election promises
of social reform were impossible.
The government deficit was so large,
Greenspan said,
that if he borrowed any more
to pay for his political programme,
then interest rates would go up
and damage growth.
But, Greenspan said,
there was a radical alternative.
Clinton should do the very opposite.
Cut government spending,
then interest rates would go down
and the markets would boom.
Greenspan's idea was simple.
Clinton should let the markets
transform America, not politics.
He said later that he was surprised
that Clinton agreed with him.
I had hoped to invest in your future
without asking more of you,
and I worked harder than I've ever
worked in my life to meet that goal.
But I can't, because the deficit
has increased so much.
There will be many more budget cuts.
This is the beginning, not the end.
The house has already embarked
on that course. There will be more.
If our national debt were
stacked in thousand dollar bills,
the stack would
reach 267 miles into space.
As Greenspan had predicted,
a boom began.
And as share prices rose higher
and higher, a belief started to grow
that this time,
the boom would be different.
It wouldn't run out of control.
And the reason was the computers.
The computers allowed the banks to
create complex mathematical models
that could predict the risk of
making any loan or investment.
This had enormous implications,
because if a risk
could be predicted,
then it could be balanced
by hedging against it.
For the banks and the hedge funds,
this was like a new world.
For, in the chaos and
the volatility of the markets,
the computers had -
for the first time ever -
created stability.
It allowed banks to lend money
to millions of people
they would never
have touched in the past.
At the same time, the internet
and other computer networks
allowed businesses to respond to
each others' needs instantaneously -
and to the consumers' desires.
It was the cybernetic feedback
predicted by the Californian
ideologists.
And a belief arose
that America had now entered into
a new age of stability.
It was called the New Economy.
Whether they came from Silicon Valley
or from Washington,
from academia or from Wall Street,
there were a number of
leading individuals who basically
articulated a body of thought
now known fondly as
"the New Economy".
It was based on the premise of
a dramatic and permanent increase
in the rate of productivity growth,
sparked by new information
technologies that would
let this thing go on forever.
'This is manna from heaven -
'this is the candy
that politicians only dream of.
'You don't have to do anything - '
you just push a button and presto!
You've got a brand new economy
that creates jobs and prosperity.
It's the rising tide
that lifts any and all boats,
even if there's no water
in the ocean.
But Alan Greenspan was worried.
Every morning in his bath,
he read page after page of data
about what was really
happening in the factories
and businesses of America.
What puzzled him was that
the figures showed that, actually,
there was hardly any increase
in productivity,
yet reported profits
kept on going up.
There was something wrong.
And in 1996, Greenspan
made a speech that warned that
the market might be overvalued.
That a dangerous speculative
bubble was being created.
Early December of 1996,
Alan Greenspan warned
that the US stock market
may be in a period of
irrational exuberance,
and you would have thought
the world had come to an end.
Politicians attacked him
from the left, from the right,
mainstream was upset with him,
Wall Street was upset with him.
And at that point, there was
a very unfortunate turn of events,
because he knuckled under
to political pressure.
He changed his mind.
Greenspan decided he was wrong.
That the computers were increasing
productivity in ways that were
so new his data couldn't see it.
And he went to see President Clinton
to tell him the good news.
It really was a New Economy.
Greenspan described it to Clinton
as like discovering a new planet.
♪ There's a monkey on my back
♪ Makes me talk like that
♪ There's a monkey on my back
♪ Makes me talk like that
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back
♪ Makes me talk like that... ♪
(MUSIC DROWNS SPEECH)
The boom continued,
and Time magazine described
how a sense of lethargy
and quietness
came over the White House.
It was as if the President
didn't have anything to do.
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back
♪ Makes me act like that
♪ There's a monkey on my back... ♪
This was a woman who was very
powerful in a great many ways,
who was mentally more powerful
than anyone she met,
who was more determined,
who was more hardworking
than anyone she met.
What she would have loved
would be to find a man
who was stronger than she.
She would have loved to meet
someone who was smarter than she,
braver than she, a greater genius.
She never met him.
But she longed for him
all her life.
And I think this accounts for
her sexual psychology.
In the 1940s, Ayn Rand had married
an actor called Frank O'Connor.
But now, faced with
the hostility to her ideas,
Rand turned to the leading member of
the collective, Nathaniel Branden.
She told him that she had
fallen in love with him,
and, despite the fact
that he was married to Barbara -
another member of the collective -
Rand told him that
the only rational course
was for Nathaniel
to have an affair with her.
Ov...I don't think...
I must be failing to make
a certain point clear to you, sir.
Ayn Rand thought that
she was being rational
about anything or everything
that she did.
So it would never occur to me to ask,
"Did Ayn Rand think she was being
rational about that?"
She would say, if she were here,
I can feel her,
she would say, "Why, yes,
do you think I would do something
"if I didn't think it was rational?"
In your book, you talk about love
as if it were
a business deal of some kind.
Isn't the essence of love
that it is above self-interest?
In love, the currency is virtue.
You love people not for
what you do to or for them,
or what they do for you.
You love them for their values,
their virtues,
which they have achieved
in their own character.
You don't love causelessly.
You don't love everybody
indiscriminately.
You love only those who deserve it.
And then if a man is weak,
or a woman is weak,
then she, he is beyond love?
He certainly does not deserve it.
She was attempting to portray it,
that affair between them,
as totally rationally justified.
She said it was nobody's business,
and we were sworn to
absolute secrecy,
but she said since they were
such unusual people,
it was inevitable that they feel
what they felt -
that there could be
no objection to an affair.
I also felt... I was very aware
of how little Ayn Rand had
had in her life from the outside,
from other people.
And I thought, OK,
if I could press a button,
and make Ayn romantically happy,
would I do it?
And I thought, yes, I would.
That's altruism. >
I know. I know.
It was. I'm not proud of saying yes,
but I said yes.
Well, this is the second floor.
And this is one of my favourite
parts of the house.
This is a beautiful,
central corridor up here.
Must be a bear keeping
this carpet clean, huh?
Well, the main things that...
♪ ..You can spend
the night beside her
♪ And you know that she's half crazy
♪ But that's why you
want to be there
♪ And she feeds you tea and oranges
♪ That come all the way from China
♪ And just when you mean to tell her
♪ That you have no love to give her
♪ Then she gets you on her wavelength
♪ And she lets the river answer
♪ That you've always been her lover
♪ And you want to travel with her
♪ And you want to travel blind
♪ And you know she will trust you
♪ For you've touched her perfect body
♪ With your mind... ♪
'First time I ever
looked into his eyes,
'I saw somebody totally different
than I had expected to see.
'And that's the person
I fell in love with.'
♪ And you want to travel with him
♪ And you want to travel blind
♪ And you think
maybe you'll trust him
♪ For he's touched your perfect body
with his mind. ♪
By 1997, the American boom
was reshaping the whole world.
Economists and bankers
who saw the world as
one giant economic system
now dominated
the American government.
They believed that the way
to achieve global economic stability
was for nations
to open themselves up
to the free flow of capital.
And the laboratory that they had
created for this experiment
was South East Asia.
Under American pressure,
countries like
South Korea and Thailand
had given up all restrictions
and Western capital flooded in.
It helped fuel what was called
"The Asian Miracle".
But a group within the White House
were worried that
much of the Western money
was going to fund
a giant speculative bubble
in property.
And when the boom collapsed,
the money would flee,
leaving the countries like Thailand
and South Korea decimated.
The group were led by the economist
Joseph Stiglitz.
The Council of Economic Advisers
was very worried
about these short-term
speculative capital flows
because while the countries benefit
a little bit when the money comes in,
when the money goes out,
the countries are devastated.
So, it was not
in the interest of Korea.
And it was not in the interest
of the US.
It was in the interest of
a very small group of people
who make their money from
these short-term capital flows.
Bankers, and hedge funds.
It was a very small group
in whose interest it was.
The Council of Economic Advisors
decided to warn the President.
They wanted to persuade him to
stop some of the more excessive
short-term speculation
in the Asian countries.
But they came face to face
with the Secretary of the Treasury,
Robert Rubin.
Rubin had previously
run Goldman Sachs
and under his leadership
the bank had created
many of the computer models
that underpinned the boom.
Rubin had a revolutionary vision
of a world system
completely open to the free flow
of capital.
Joseph Stiglitz, who headed
the Council of Economic Advisers,
was convinced that the Treasury
was stopping the warnings
reaching the President.
He believed that Rubin and
the Treasury had effectively become
agents of the financial world
embedded in the heart of government.
Treasury had close connections
with the financial markets.
The Secretary of the Treasury
had come from
the largest investment bank,
and went afterwards into
the largest commercial bank.
These are the people with whom
the US Treasury naturally interacts.
To Wall Street, we were threatening
a bursting of the bubble.
To Wall Street,
we were threatening their profits.
The Treasury worked extremely hard
to make sure the President
never got to consider the issues.
Making sure that perspectives of
the Council of Economic Advisors...
Which was you?
Yes. ..Never reached the president.
So they kept your arguments from
the President? Effectively, yes.
What some people
were beginning to see
was that the computer networks
and the global systems
that they had created
hadn't distributed power.
They had just shifted it,
and, if anything,
concentrated it in new forms.
And some of the computer utopians
from Silicon Valley
were also beginning to realise
that the World Wide Web
was not a new kind of democracy,
but something far more complicated
where power was exercised
over the individual
in new and surprising ways.
Carmen Hermosillo had been
one of the earliest believers
in the new communities
of cyberspace.
Her online name was Humdog
and she lived on the West Coast.
But then she lost faith,
and she posted an attack
which caused a sensation online.
"It is fashionable to suggest",
she wrote,
"that cyberspace is some island
of the blessed
"where people are free to indulge
and express their individuality.
"This is not true. I have seen many
people spill out their emotions,
"their guts online,
and I did so myself,
"until I began to see that
I had commodified myself.
"Commodification means that
you turn something into a product
"which has a money value.
"In the 19th century,
commodities were made in factories
"by workers
who were mostly exploited.
"But I created my interior thoughts
as commodities for the corporations
"that owned the board I was
posting to, like CompuServe or AOL,
"and that commodity
was then sold on
"to other consumer entities
as entertainment."
"Cyberspace", she wrote,
"is a black hole.
"It absorbs energy and personality
"and then re-presents
it as an emotional spectacle.
"It is done by businesses
"that commodify human interaction
and emotion.
"And we are getting lost
in the spectacle."
♪ She wore blue velvet
♪ Bluer than velvet
was the night... ♪
'The navy blue dress. My cousin
is a genetic whatchamacallit.
'He said if she has preserved
a pinprick size of crusted semen,
'they can match the DNA.'
In 1997, Bill Clinton
made it clear to Monica Lewinsky
that their love affair was over.
Hurt and bewildered,
Lewinsky poured out her feelings
to her colleague Linda Tripp -
who had become her friend.
But in September of that year,
Linda Tripp
secretly began to
record their phone conversations.
At the very same time,
on the other side of the world,
the property bubble
in South East Asia finally burst.
Two enormous crises
were about to engulf the world.
One would strip the last remnants
of power from Bill Clinton.
The other would bring the global
economic system to its knees.
The dream of a stable world
was about to be assaulted
by the two uncontrollable forces
of love and power.
The Asian crisis began in Thailand.
Hundreds of thousands of offices
and apartments had been built.
But no-one wanted them.
As the developers went bust
and defaulted on their loans,
Western investors panicked
and rushed to take their money
out of the country.
The panic began to spread,
first to South Korea.
Housewives queued
to give their spare dollars
to the government
to rescue the country.
But it wasn't enough.
Teams from the IMF flew in
and they offered billions
of dollars in loans
to stabilise the economies.
But there was a price.
The IMF said that the reason
the crisis had happened
was because the Asian economies
weren't Western enough.
In return for the loans,
they would have to turn themselves
into models of the free market.
This meant cutting
government spending
and getting rid of corruption
and nepotism in the ruling elites.
Then the crisis got worse.
It spread to Indonesia.
Indonesia was ruled by
President Suharto.
He was an autocrat surrounded
by a corrupt clique
of advisers and family members.
He refused to do
what the IMF wanted.
So the IMF turned to
the US Secretary of the Treasury,
Robert Rubin.
Our objective was not to reform
the country for the sake of reform.
The problem the international
community faced was that both
the international markets
and the domestic holders of capital
were very quickly losing confidence
in the Indonesian regime.
By that time, it was our view
that if President Suharto was
going to re-establish confidence,
he had to deal with corruption.
That was something
he was unwilling to do.
Robert Rubin and the US Treasury
were determined to force Suharto
to their will.
In an atmosphere of growing panic
in Washington,
Rubin's team began to argue
that the overthrow of Suharto
might be the only way
to solve the crisis.
President Clinton
was now increasingly enmeshed
in the crisis over Monica Lewinsky,
and enormous political power
was passing to Rubin
and his Treasury team.
They, and not the State Department,
were now running
America's foreign policy.
And everything was judged by
whether it was a threat
to the global economic system.
There is no question that
the Treasury Secretary,
in this case, me, got involved
in sensitive issues
that went way beyond
what Treasury Secretaries
ordinarily got involved in.
But the reason was that
there was real risk
that if Indonesia had chaos,
political chaos I'm talking about,
that could spread, threatening
the interest of the global economy.
In January 1998, Suharto gave in
and signed the IMF agreement,
watched over by the head of the IMF,
Michel Camdessus.
Indonesia received a massive loan
to stabilise the economy.
For a moment it worked. But then
the strangest thing happened.
Indonesian's currency has collapsed,
losing 80% of its value
and the economy is in ruins.
With riots and looting
breaking out across the country,
there are fears that
it's now on the brink of anarchy.
Indonesia's exchange rate
crashed disastrously
and the economy went into freefall.
But Indonesia was not alone.
In every country
that the IMF bailed out,
like Thailand and South Korea,
for a moment there was stability,
and then the exchange rate
collapsed.
Rubin's critics in
the White House began to argue
that there was another agenda
also at work in the bail-outs -
that part of their real function
was to rescue the western investors,
not the countries.
Billions of dollars were paid
into the Asian banks by the IMF,
but many of those same dollars
were immediately used
to pay off western investors
who wanted to get their money
out of the country.
And once that had happened,
the economy crashed.
It was another illustration
that the interest
of the financial community
dominated over other interests.
By providing mega-billion-dollar
loans,
the IMF was bailing out
the Western investors
and leaving the taxpayers
in the countries further in debt,
because they had to repay the IMF.
The effect of the cuts was
devastating throughout the region.
In Indonesia,
government subsidies were removed,
as instructed by
the Western bankers.
Prices soared, and within months,
in a country of 200 million people,
15% of the male workforce
lost their jobs.
Economic output fell by 14%.
As Robert Rubin had wanted,
Suharto was forced from power,
but at a very high price.
The economy now lay in ruins
and ethnic and religious strife
began.
The same thing happened
in Thailand and South Korea.
Millions and millions of people
fell back into the poverty
that they thought
they had escaped forever.
By the middle of 1998,
the Asian economies had collapsed.
It was the most catastrophic
economic disaster
suffered by any countries
since the depression of the 1930s.
Many people cannot have the money,
don't have the money.
Millions of people are unemployed.
They don't have jobs, education.
Education and hospitals
are expensive.
Everything's expensive
for the common people.
If Monica Lewinsky says that while
you were in the Oval Office area,
you touched her breast,
would she be lying?
Bill Clinton had become President
with the vision
of using political power
to transform America.
But he had been persuaded
to give away that power
to the financial markets,
with the promise that this time
they would create
a new kind of stability,
a new kind of democracy,
free of the corruption
of elite politics.
But it was now becoming clear
that in reality,
America's political power had just
been transferred to another elite -
the financiers and Wall Street.
And when faced by a crisis,
they had simply used that power
to rescue themselves.
In the process, far
from creating stability,
their actions were
leading to a chaotic
and far more unstable world.
To the leaders of
the Asian countries,
this was just as much
a corruption of power
as anything their governments
were guilty of.
Power corrupts.
As much as government
can become corrupt
when invested with absolute power,
markets also can become corrupt
when equally absolutely powerful.
We are seeing the effect
of that absolute power today.
The impoverishment and misery
of millions of people
and their eventual slavery.
What did you tell your
cabinet, Mr President?
Ask him.
Are you considering...?
Do you think it went well?
Are you considering resignation,
Mr President?
OK, I don't know
if you saw that.
Did you see that look on his face?
Great, great.
Come in.
I love you, Rourke.
Would it please you to hear
that I've lived in torture
all these months,
hoping never to find you again
and wishing to give my life
just to see once more?
But you knew that, of course.
That's what you wanted me
to live through.
Yes.
Why don't you laugh
at me now? You won.
I've no pride left to stop me.
I love you without dignity,
without regret.
I came to tell you this
and to tell you that
you'll never see me again.
By now, I've had
a lot of time to think.
I'm four, five years older
and I realise I've made
a terrible, terrible mistake.
But the trouble is, I've become
very, very important to Ayn.
She tells me,
"You are my lifeline to reality.
"I don't know how I would
have survived without you.
"You started the
Nathanial Brandon Institute."
That's how the philosophical
movement of Ayn Rand got launched,
was by this institute I created.
So my idol is telling me every day...
..I'm her lifeline to reality.
I don't know what to do.
I didn't know what to do.
And then...
..a young woman comes to
my lectures and I meet her
and I fall in love with her.
And now the situation
has got even worse.
She then launched into
a tirade against him
that was so shocking,
accusing him of utter irrationality,
of betraying objectivism,
betraying her.
It went on and on indefinitely.
And it ended with her saying...
.."If he had an ounce
of morality left,
"he would be impotent
for the next 10 years."
And then slapped him
across the face three times
and said "Get out."
He got out.
And that was the end.
And ultimately, it ended
an absolute disaster for everybody.
Ayn Rand's anger and despair
destroyed the small, perfect world
that she had built around her.
The Collective was torn apart
by the revelation of her affair
and by her violent
reaction at her betrayal.
And by the early 1970s,
Ayn Rand was left almost alone.
She still lived in her apartment
by the Empire State Building
and she took up stamp collecting.
One of the few people who remained
loyal to her was Alan Greenspan,
who worked in New York as an
economic consultant to Wall Street.
It's feasible in the way
in which it stays down
and does not merely drop
and bounce around
and have within it,
in a sense, an unstable future.
In 1974, President Ford
made Greenspan the chairman
of his Council of Economic
Advisers in Washington.
It was the beginning of
Greenspan's rise to power.
Rand was left alone in New York,
but she wasn't lonely, she said.
In her philosophy,
all you needed was yourself,
because you were the world.
I kind of think of this
whole thing as ongoing,
that there is an eternity,
and that we are going
to be a part of that eternity
that we aren't just
corpses in graves when we die.
But we aren't corpses in graves,
we are not there.
Don't you understand that
when this life is finished,
you're not there to say, "Oh, how
terrible that I'm a corpse"?
No. Well, this is true.
It's finished.
And what I've always thought
was a sentence from
some Greek philosopher,
I don't unfortunately
remember who it was.
I read it at 16 and
it's affected me all my life.
"I will not die.
It's the world that will end."
And that's absolutely true.
Oh, my God!
The attack on the World Trade Center
was an assault by political
Islamism on American power,
and on what the Islamists believed
was the destructive force
that drove that power,
radical individualism.
When the World Trade Center
towers collapsed,
everyone knew that
everything had changed.
But then it didn't.
The system returned to normal.
And the heroic individual
who did this,
and who bent history to his will,
was Alan Greenspan.
And he became the most
powerful man in the world.
As we struggle to make
sense of our profound loss
and its immediate
consequences for the economy,
we must not lose sight
of our longer-run prospects,
which have not been significantly
diminished by these terrible events.
But it started badly.
A week after the attacks,
the American markets opened again.
Dealers waited to see
what would happen.
Our heroes will now
open the marketplace.
The green button.
It was a disaster.
Immediately, the market suffered the
largest fall ever in its history.
Two weeks later,
the Enron scandal was revealed.
And it quickly became clear
that it was only one example
of a vast corporate fraud.
Since the early '90s, many major
corporations had faked profits
and hidden their debts,
helped by some of the
major accounting firms.
It seemed as if the American
economy might collapse.
Greenspan took action.
He dramatically cut interest
rates again and again.
His aim was simple,
to encourage American consumers
to borrow and spend.
They and their desires were
going to be the machine
that stabilised the system.
Huw, today's rate cut
is the culmination
of an extraordinary few
days for central banks.
It's all part of a
concerted global effort
to bolster consumer confidence
and make sure those consumers
carry on spending money
because that is what's keeping
economies afloat at the moment.
It was an enormous risk.
By cutting the rates
to almost zero,
Greenspan was unleashing a flood
of cheap money into the economy,
and in the past this had always led
to inflation and
dangerous instability.
But this time it didn't.
A vast consumer boom began,
bigger than anything
ever before in history.
But there was no inflation.
Everything remained stable.
It seemed that the system
could manage itself
without direct political control.
But it was an illusion.
The reason for the extraordinary
boom was the very opposite.
It happened because of a giant
exercise of political power
by an elite thousands of miles
away on the other side of the world.
HE SPEAKS IN CHINESE
The Asian countries, led by China,
had decided that never again
would they put themselves
at the mercy
of America and its
financial elites,
as had happened two years before.
So the Chinese Politburo
created a system to manage America.
They deliberately held their
currency's exchange rate
at a low level.
This meant that their
exports were cheap,
and Chinese goods
flooded into America.
And to pay for them,
American dollars flooded into China.
But instead of spending
the money on their population,
the Chinese leaders immediately
lent the money back to America,
by buying government bonds.
It was a perfect system of
cheap goods and cheap money
flowing into America, all
controlled by the Chinese Politburo.
And it was this that
created the stability.
From it came an orgy of lending
by the banks to the poorest
and least credit-worthy
borrowers in the US.
It was a mirror image of
what the West had done
in East Asia in the 1990s,
and just like then,
out of it came
a vast property bubble.
"It is as if over a trillion
dollars has been recycled"
wrote one economist, "to a third
world developing economy
"that exists within
America's own borders."
The Chinese money had led
America into a dream world,
but the reason that so few bankers
and politicians questioned it
was because of their
faith in computers.
They were convinced
that it was the computers
that had brought the
stability to the system.
The machines created mathematical
models that parcelled out the loans,
and then hedged and balanced
them so that there was no risk.
But then, in 2008,
that dream collapsed.
Alan Greenspan's
vision of a new planet,
and Gordon Brown's promise
of no more boom and bust
were revealed to be fantasies
built on a wave
of financial speculation.
That speculation had happened
because those running the financial
sectors in America and Britain
had promised that they could create
a new kind of market democracy
that would be stable.
But again and again,
it had led to the opposite,
chaos and instability
around the world.
And now, finally, that had happened
in the very heart of the west.
But yet again, just as in south
east Asia ten years before,
those running the financial sector
now mobilised political power
to rescue themselves
and protect their supremacy.
They asked the politicians
to bail them out,
and they agreed.
And again, just as
in south east Asia,
the price is being paid by the
ordinary people of the countries.
And we are now living through
a very strange moment.
We know that the idea of
market stability has failed,
but we cannot imagine
any alternative.
The original promise
of the Californian Ideology
was that the computers
would liberate us
from all the old forms
of political control
and we would become Randian heroes
in control of our own destiny.
Instead, today we feel the opposite,
that we are helpless components
in a global system,
a system that is controlled
by a rigid logic
that we are powerless
to challenge or to change.