The Age of Turbulence: Adventures in a New World

The Age of Turbulence: Adventures in a New World Alan Greenspan Penguin Books, 2008 This is in effect a memoir of Alan Greenspan's professional life. Only in part (and by virtue of an Epilogue) does it deal with the financial crisis that hit in August 2007, some nineteen months after he retired from his position as chairman of the U.S. Federal Reserve Board. But because Greenspan was a leading figure in world central banking during his eighteen-plus years as chairman, and because those years included the period leading up to the financial crisis, this book deserves a prominent place among those that discuss the crisis and its causes. The main portion of this book was published in June 2007, just weeks before the crisis became evident. The Epilogue, written a year later but still three months before the crisis reached its apex, was added for later editions. Although it does not appear in the book, Greenspan's testimony before the U. S. House of Representatives' Committee on Oversight and Government Reform in late October 2008 provides still a third window into his thinking. It was in that testimony that he acknowledged trepidation about some of the premises that had long guided his economic philosophy. There is much to be mined from this book - far more than we will be able to discuss in this review. The main stem, as just indicated, is a memoir, but it also surveys a number of topics for their own sakes. For example, there is a chapter on the fall of Communism, another on the Clinton administration's economic policies, and chapters on the situations of China, Russia, Britain, Germany, France, Italy, Japan, Australia, the "Asian Tigers" and India. Greenspan was born in 1926. His parents' families, Jewish and lower middle class, had immigrated to the United States from Romania and Hungary at the turn of the century. He attended New York City's George Washington High School, which he describes as "one of the city's largest and best public schools," after which he obtained his undergraduate degree in economics summa cum laude from New York University in 1948, followed by an M.A. there two years later. His brilliance became apparent early, manifesting itself in his love of math and music, and his ability to master data. He studied under later-Fed chairman Arthur Burns at Columbia, but became so busy working in various aspects of economic data analysis and econometric model-building that he didn't follow up with his doctorate (again in economics and from NYU) until the 1970s. He wound up serving on the JPMorgan board, was chairman of the Council of Economic Advisors under President Gerald Ford, and headed a commission on Social Security reform for President Reagan. He was appointed chairman of the Federal Reserve in 1987, retiring in January 2006. Greenspan's personal characteristics provide a fascinating mixture. He immersed himself splendidly in the details of industries and firms, from which he found substantial guidance about the economy as a whole, and joined this with a strong ideological propensity, first as a devotee of the libertarian philosopher Ayn Rand and then, even though he shed some of his Randian fervor, as a "lifelong libertarian Republican" who embraced "unfettered market competition." The mixture included, too, perhaps incongruously, an aptitude for mixing congenially with major figures of varied persuasions and politics: for several years, he dated television personality Barbara Walters, whom he met at a tea dance hosted by Vice President Nelson Rockefeller. When he was married, the ceremony was conducted by U.S. Supreme Court Justice Ruth Bader Ginsburg. Consistently with this ecumenism, he has held a number of conventional views. (Even his support for "unfettered market competition" came to be the conventional view during the decades following the start of deregulation under the Ford administration in the mid-1970s.) Our interest in this review, however, is not so much in Greenspan's personal history as in the issues of policy and ideology that emerge from his book. …