Friday, October 8, 2010

Nerding Out with Mr. (Ex-) Chairman

So I’ve spent the past several weeks falling in love with Alan Greenspan, liver spots and all. I blame it all on a certain green fedora’ed friend of mine. Three years ago, that friend and his girlfriend gave me a copy of Greenspan’s Age of Turbulence. I wasn’t sure how I felt about reading it at first, which is why it took me so long to get around to it. I assumed it would be a bunch of Neo-Con-Reaganomics-Objectivist propaganda. (Side note: I do actually have a great fondness for Ayn Rand and the Objectivists, despite many areas of disagreement. There was a time in my life when Ayn Rand gave me the exact kind of kick in the ass I needed, and I will thank her dead capitalist soul for it forever.)

I was surprised to find that Greenspan’s agenda is not what I assumed it would be. His focus is not on politics, but rather, on numbers. During his years as Federal Reserve chairman, his primary goal was to keep the American economy growing at a stable rate as it went through the natural ups and downs of the business cycle. If the economy grew too fast, inflation could get out of control. If it grew too slow, there was the risk of severe recession. Politicians from both parties always wanted the economy to grow at high speed, in order to bolster their political popularity. This political goal often clashed with the Fed’s desire to keep inflation down. Greenspan frequently bemoans the difficulties of trying to get a president to do what was best for the long-run health of the economy any time a re-election campaign was on the horizon.

Greenspan’s praise and criticism of the politicians he worked with is pretty bi-partisan. I never would have guessed that some of the presidents he enjoyed working with the most were Democrats, and that he often clashed with Republican presidents. Though Greenspan clearly states his party preferences in the book (he calls himself a Libertarian-Republican), he does acknowledge that free-market capitalism has its costs. He states that there is no one-size-fits all economic model for all cultures. Each country has to choose the right mix of growth and stability to suit its own needs. In the USA, we tend to make economic growth the priority. The drawbacks are increased risk and lowered stability for people who become unemployed. The benefit is that our economy is able to adjust to market changes rapidly and efficiently. In many western European countries, the emphasis is on stability and lowered risk. This makes life less stressful for the people, but it also places a handicap on the economy’s ability to adjust quickly to changing world markets. Each country decides on a different mix based on its cultural needs and domestic political situations.

It’s funny… I never expected that Alan Greenspan would become a political bridge between my father and me, but he has. As I read the book, I gave my father daily updates about what I was learning. Seeing things from Greenspan’s perspective opened both our minds. For the first time in a decade, we’ve managed to have some constructive political conversations. We’ve even agreed on some things.

Alan Greenspan, a family relationship counselor?!

I’d like to end this post with some quotes from the book that show a certain endearing side of Alan Greenspan’s personality:

1. “The concept of irrational exuberance came to me in the bathtub one morning as I was writing a speech. To this day, the bathtub is where I get many of my best ideas…Immersed in my bath, I’m as happy as Archimedes as I contemplate the world.” (Ha ha! I hope he has a rubber ducky and a shower cap!)

2. “It might not be everybody’s idea of a first-date conversation, but at the restaurant we ended up discussing monopolies. I told her I’d written an essay on the subject and invited her back to my apartment to read it.” (Dude, SCORE!)

3. “She always jokes that it took me three tries to propose to her, because I kept popping the question in Fedspeak, but that is not true. Actually I proposed five times—she missed a couple.” (Here, he’s talking about a marriage that occurred when he was seventy-one years old! Awwwwww! He and his wife were married by Supreme Court Justice Ruth Bader Ginsburg. How cool is that?)

4. “As we strolled along one of the canals [of Venice], my inner economist finally got the better of me. I asked Andrea, ‘What is the value-added produced in this city?’” (This was on their honeymoon. A few paragraphs after this sentence, Greenspan comes to the conclusion that sometimes humans value things that don’t make economies grow rapidly, such as art or romantic ancient cities. This seems to be a striking, if somewhat reluctant, epiphany for Greenspan.)

A photo from the book of Greenspan with his wife:

Awwwwwwwwww! Aren't they adorable? One more thing about Alan Greenspan: He dated Barbara Walters in the seventies! Ha ha ha hahahahaha!


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  2. It seems like he has lots of pretty reasonable and useful insights. I don't know what I expected out of Alan Greenspan, but I don't think it was that, haha!

  3. When I took economics in high school I had the idea that it was a boring, dry, stuffy topic. However, when I got older my great friend and mentor Fred introduced me to Alexander Hamilton. Since then, I've come to appreciate that money is linked to human life in just as poetic a form as memory and ritual (two concepts that signify pure beauty to me and by which I am obsessed).

    Now I see economics as a fluid, changeable reflection of human desire and dread. It's gotten much more interesting! Age of Turbulence has definitely been added to my "Good Books" list to read.