Monday, October 15, 2007

The Age of Turbulence

Little known fact: I originally intended to major in Economics. Thankfully, the beatniks in Comparative History convinced me a liberal arts degree with no professional future was more up my alley. However, my interest in the economy has stayed with me and I have read some of the the popular economists of the day: Stiglitz, Sachs, Altman, etc.

Alan Greenspan, in his book "The Age of Turbulence" shares many of their beliefs. In general, it seems, there is consensus that free markets work and that protectionism will hurt both poor and wealthy alike. None of the authors advocates a total laissez-faire approach, however. Greenspan, the most conservative of the bunch, spent his career as THE governmental interference in the markets for god's sake. Where Greenspan differs from his colleagues is in his politics and ideas about human nature.

To understand this side of Greenspan it is important to remember his early relationship with Ayn Rand. It is clear he sees himself as a Howard Roark of economics and is quick to categorize those without financial success as "losers". In his Randian view of mankind, as thus the politics best suited to deal with it, people are engaged in a massive competition from which the superior rise to the top. In fact, he argues in "The Age of Turbulence" that the remedy to massive income differential in the United States is best addressed by providing the people of lower incomes with more "skills" through education. However, SOMEBODY must do the labor of society, and those people should be compensated with a living wage.

He claims the protestors of the WTO are basically idiots who are against capitalism because it causes "stress". He also claims that they are not representative of the developing world, as they believe. These statements indicate an uninformed dismissal of the full spectrum of economic thought that is disconcerting considering his former role of influence and responsibility. Most of the protestors were and are in favor of utilizing the power of the marketplace. The concern, valid in my opinion, is when the WTO undermines democratically determined laws in the interest of trade. People have the right to govern themselves. And as for not truly representing the developing world, I think the breakdown of the Doha round of international trade negotiations clearly demonstrated there is a difference of opinion on whether the current world market adequately benefits the third world.

I would recommend reading the book. The first half is autobiographical and has fascinating insights into the personalities and interworkings of several presidencies. The second half is more economic theory, and I found it insightful, if sometimes contradictory. Without going into details, his ideas on income distribution and government fiscal policy left me with more questions than answers. But this is definitely a book that makes you think. And, his dry sense of humor and obvious intelligence make this a fun read.

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