The former Fed chairman on where the economy went wrong, where he went wrong—and Ayn Rand.
Studying the minutiae of the events leading to the financial crisis brought to mind some lessons from his famous friendship, from the 1950s on, with the late Objectivist philosopher Ayn Rand. He says that Rand didn't influence him politically—he was always a libertarian—but she did point out tensions in his philosophy about life. "She caught me in contradictions, which shook me, and I said, 'My God, she is right,' " he says.
Mr. Greenspan then believed in analysis based mainly on hard science and empirical facts. Rand told him that unless he considered human nature and its irrational side, he would "miss a very large part of how human beings behaved." At the time they weren't discussing economics, but today he realizes the full impact of emotions and instincts on markets.
"I'm not in favor of intervention, because markets so effectively function and work unless they are broken," he says. He did support TARP, the Troubled Asset Relief Program, because at the time the market needed sovereign credit during "the most debilitating financial crisis ever." But, he says, "eventually I think they carried the extent of what they did well beyond what was necessary." With his new book, Mr. Greenspan hopes to provide politicians and the public with a road map to avoid making the same mistakes again.
His suggestions include reducing entitlements and embracing "creative destruction" by letting facilities with cutting-edge technology displace those with low productivity.
http://online.wsj.co...139900796324772
Edited by Rogerdodger, 19 October 2013 - 10:57 PM.
