Rebirth of Reason

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Cyprus Seizes Bank Accounts
Posted by Michael E. Marotta on 3/30, 7:58am
Cyrus was a "tax haven" for foreign investors.  But now the government is bankrupt and it will get its money from everyone with more than 100,000 in the bank.  This article from The Guardfian quotes and cites errors, omissions, ignorance, and evil. 

(See also this Reuters article for the details of the "loan" of 60% of their assets to the Central Bank.)

Here on RoR, we called John Fredriksen "Ragnar Danneskjold" for giving up his Norwegian citizenship and taking a Cypriot passport. (Read Ed Hudgins' article here.)  The events on Cyprus demonstrate the truth of Ayn Rand's insistence that the root of our problems - and the path to their solution - is in philosophy, not politics.  Islands of enterprise, tax havens, off-shore commerce, e-commerce, electronic money, ...  none of them addresses the basic error that allows travesties such as this to re-emerge with alarming regularity. 

Austrian economists are not alone in claiming that the market is amoral. It seemed like simple bookkeeping that Fredriksen would just take his money elsewhere rather than spending it to fix Norway's culture.  But Ayn Rand was not alone in claiming that the market is expressly moral; and given a properly defined "market morality" of rational self-interest based on objective values, the market impels us towards integrity and moral excellence. In that, Ayn Rand only followed Benjamin Franklin, whose Way to Wealth was quoted extensively by Max Weber in The Protestant Ethic and the Spirit of Capitalism

One of the many shards of warning in this event is that the Laiki Bank (Cyprus Popular Bank) itself lived and died by the consequences of a good idea killed by bad philosophy.  (Wikipedia article here.)  Founded in 1901 as a savings bank for workers, its last decade was hallmarked by expansion into Russia and China, acquisitions, and rebrandings, and other fast shuffles that were announced as growth, but were evidence of coming collapse.

The events on Cyprus are not the hapless story of one small place with a run of bad luck. As the shockwaves of the banking "crisis" spread, it became obvious that this was not a temporary emergency caused by unforeseeable events. For all of their entreprise (or what little of it they have) the Germans generally and the Bundesbank in particular cannot hold the euro together because they are pulled down not by some bad investments but by bad philosophies. Broadly speaking, European liberalism as a product of the Enlightenment never held up against the deep traditions of religion and the shallow clamorings of existentialism and post-modernism.   It is a lesson and a warning for America.

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