Alan did very well for himself. He ran a consulting company that made tons of money. He was on the board of directors for Alcoa, Capital Cities/ABC, Inc., General Foods, Inc., J.P. Morgan & Co., Inc., and more. He dated Barbara Walters. In 1987, Ronald Reagan appointed him as Chairman of the Federal Reserve. He stayed on through Bush I and Bill Clinton.
Then along came George W. Bush. He was one of those gentiles - the kind who would take a Jewish idea, whether it was Christianity or free market economics, and ride it's ideology as far as circumstances would allow, unaware that he'd left it's humanistic heart behind. With nobody to restrain him, Greenspan put his full faith in the markets. He kept interest rates low. Which pumped money into the credit markets. He resisted regulations. When he was warned that real estate was blowing a big, big bubble, he refused to act.
Why? Because he believed in the inherent virtue of markets.
So there he was, being quizzed by one of the heroes of the House of Representatives, Henry Waxman. First, Greenspan said, in a prepared statement, "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity (myself especially) are in a state of shocked disbelief."
Well, yes. One of the fundamentals of conservative, free market, laissez faire, Objectivist economics is that business people will act sanely and sensibly, thereby protecting people who trust in them. That's a theological belief. Now, watching the bubble burst, Greenspan was doing a remarkable thing, and he does deserve some credit for it. He was acknowledging reality!
Then he said, "I made a mistake in presuming they were best capable of protecting their own shareholders." Which means they need to be regulated. By someone else. By government.
"In other words, you found that your view of the world, your ideology, was not right, it was not working," Waxman said. Meaning this notion that individual greed would, as if "guided by an invisible hand," lead to the greatest social good.
"Absolutely, precisely," Greenspan replied.
The acolyte of Alissa Rosenbaum, the apostle of Adam Smith, the enabler of George W. Bush, had acknowledged that their god - the free market - had failed.
Larry Beinhart is the author of Wag the Dog, The Librarian, and Fog Facts: Searching for Truth in the Land of Spin. All available at nationbooks.org
His new novel is: SALVATION BOULEVARD. Website: http://www.larrybeinhart.com
Responses can be sent to beinhart@earthlink.net
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