As most economists recognize (sort of) markets are not bastions of “perfect reason.” They are human institutions and like all human insinuations they are full of all sorts of nonsense if for no other reason than that cognition cannot be separated from emotion. We can try to be objective and emotionless, but there’s a limit. We love a good yarn and that means we get into trouble much too easily.
That’s why I enjoyed the story of the failure of the Founders College so much. It’s a good example of how absurdly faithful people can be to the idea of the market– the all too visible hand that makes everything work– perhaps especially when they’ve been ideologically seduced by a faux philosophy, especially a faux market philosophy. I sometimes think unreal ideas have a special attraction.
If you can believe Ayn Rand, in other words, and you can be convinced that “Objectivism” is a legitimate form of philosophical inquiry, then I think you can really be convinced of anything. Why not start your own college? Sometimes this persistent credulousness is just silly, as when someone made millions selling pet rocks. But it can be dangerous, too, as the continuing financial crisis shows.
This story is irony all the way down. There’s the irony of the silliness of Rand’s ideas, the irony that grown men and women believed them and then tired to found a college based on them, and then the irony that the scheme went largely undiscovered becuase the prevelant pro-market fever precludes substantive regulations. A perfect storm of objective market nonsense.