Greenspan – I Was Wrong About the Economy. Sort Of 2


Follow this link to the article in the UK Guardian about Alan Greenspan‘s testimony before Congress today.

“I have found a flaw,” said Greenspan, referring to his economic philosophy.

“I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms,” said Greenspan.

I have been telling people for years that reading too much Ayn Rand can lead to these kinds of flaws in one’s philosophy.  I made this discovery when I was a sophomore in college in 1962. For those who do not know, Alan Greenspan is famous for being an acolyte of Ayn Rand.

In Ayn Rand’s universe, industrialists were the heroes who fought to make the world work only to be hindered by lesser mortals who were just interested in taking these heroes’ well gotten gains.

Although it has nothing to do with being poor, I suppose in Greenspan’s universe only poor people commit crimes.  That is why we have police and jails.  It is certainly not for the wealthy industrialists/bankers.  I don’t know if Greenspan was aware of the stream of CEOs that were being tried and heading toward their own stays in the Graybar hotel. Maybe Greenspan managed to hear about Enron.

Greenspan could just not contemplate the possibility that managers who were paid millions of dollars a year, were given stock options, and golden parachutes if they got fired would make as much money, as quickly as possible, by whatever means necessary, and then get the heck out.

Alan Greenspan has years and years of experience yet he is more naive than a college sophomore.  It would be unbelievable had I not already known what a big fan of Ayn Rand that he was. From that fact alone, I knew we were in trouble the moment that I discovered who his favorite author was.

Perhaps we need a President who is not so ideologically driven that he is afraid to hear ideas that contradict his philosophy.  Colin Powell has identified Obama as intellectually rigorous as opposed to McCain, whose judgment he questions.

For the record, let it be known, that I believe almost all purist adherents to a single philosophy suffer from a common problem.  In the ideal universes that they build up in their minds, they make no concession to the range of observed human behavior.  Such purist adherents to single philosophies include both Communists and Capitalists, among others.


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2 thoughts on “Greenspan – I Was Wrong About the Economy. Sort Of

  • Ginny

    Interesting insight, of course Greenspan was never purely ideologically driven or naive. I have a hard time believing he did anything other than follow a script, and as always we were the naive ones, as always the middle class backs bear the burden. Corporate socialism & rule is the legacy of the Bush admin., and Greenspan & Bernanke are nothing more than participants. We, the people, are the lesser mortals.

  • SteveG Post author

    It was 1996 when Alan Greenspan coined the phrase irrational exuberance. Why has it taken him 12 years after the discovery to admit that there was a hole in his philosophy.

    Given that he was Fed Chairman for 10 more years after the discovery, you’d think he could have done something about the housing bubble before it burst.