South Carolina’s jobless rate rose to 11.6% in September, up two-tenths of a point from the previous month. The Palmetto State currently has the 5^th highest unemployment rate in the nation, trailing only Michigan (15.3%), Nevada (13.3%), Rhode Island (13%) and California (12.2%).  More than 250,000 South Carolinians (including myself) are currently out of work. South Carolina has lost over 24,000 factory jobs in the past year alone…more than at any time since 1994.

If you think the dire economic conditions in South Carolina have instilled a sense of urgency in our Governor  you would be wrong. For while South Carolina’s economy burns, Governor Mark Sanford fiddles. Sanford found time to write a two page book review in the latest edition of Newsweek Magazine. Sanford reviewed Anne Heller’s Ayn Rand and the World She Made and also found time to editorialize about the causes of our recent economic collapse. Sanford glosses over the effect of the free unregulated derivatives market and the financial collapse of over leveraged banks like Lehman Brothers and instead blames the government and government run financial institutions like Fannie Mae and Freddie Mac for the financial tsunami. Sanford clings tightly to his theory that government is bad and the free market is good. He says, “As Rand shows in her book, when the government is deprived of the free market’s best minds, it staggers toward collapse.”

It is statements like this that truly make me wonder in what parallel universe Mark Sanford resides. In Mark Sanford’s world you simply ignore facts that are incompatible with your world view. Thus he chooses to ignore the fact that the United States did allow a free market economy to thrive over the past 10 years. Deregulation of financial markets and the business sector that began during the Clinton administration were allowed to progress full steam ahead during the Bush administration. The effects of market deregulation and the refusal to regulate the derivatives market have been so devastating that even Ayn Rand’s biggest fan, former Federal Reserve chief Alan Greenspan is now supporting government oversight, “U.S. regulators should consider breaking up large financial institutions considered ‘too big to fail,’ “ he said earlier this month. 

Another former Federal Reserve Chairman, Paul Volcker is now pressing for commercial banks to be barred from heavy proprietary trading and supports regulation of derivatives. Michael Hirsh of Newsweek Magazine reports that Financier George Soros is funding a $50 million dollar effort to reform economic theory and practices by promote and supporting the work of market-skeptics who were pushed aside during the era of “free-market fundamentalism.” For many economists and political leaders the theories of Ayn Rand have taken a back seat to the ideas put forth by the late Hyman Minsky. In “Financial Instability Hypothesis” (published in the 60’s) Minsky writes that success in financial markets always breeds its own instability. The longer a boom lasts, the less market players consider failure a possibility; as a result, careful borrowing, lending and investment inevitably give way to recklessness and speculative euphoria. Margins and capital cushions come to be seen as unnecessary. At a certain watershed point-sometimes called a “Minsky moment,” the foreordained collapse begins. The most speculative bets crash, loans are called in, asset values plunge, and the downward spiral feeds on itself. This is almost exactly what happened over the last two years.

We have seen and felt the ill effects of free and unfettered financial markets and the fall out has convinced Volker, Greenspan and many other conservatives to rethink their economic theories. Apparently Mark Sanford is either incapable of revising his views in light of current events or he simply chooses to live in a world where facts don’t matter. Either way his resistance to change and inability to recalibrate his libertarian philosophies make him incapable of being an effective elected official.