15 September 2007

We're Never Our Own Worst Critics

From the Wall Street Journal review of Alan Greenspan's new memoir:
In "The Age of Turbulence: Adventures in a New World," published by Penguin Press, Mr. Greenspan criticizes both congressional Republicans and President George W. Bush for abandoning fiscal discipline.

The book is scheduled for public release Monday. The Wall Street Journal bought a copy at a bookstore in the New York area.

Mr. Greenspan, who calls himself a "lifelong libertarian Republican," writes that he advised the White House to veto some bills to curb "out-of-control" spending while the Republicans controlled Congress. He says President Bush's failure to do so "was a major mistake." Republicans in Congress, he writes, "swapped principle for power. They ended up with neither. They deserved to lose."

Many economists say the Fed, by cutting short-term interest rates to 1% in mid-2003 and keeping them there for a year, helped foster a housing bubble that is now bursting. In his book, which was largely written before much of the recent turmoil in credit markets, Mr. Greenspan defends the policy. "We wanted to shut down the possibility of corrosive deflation," he writes. "We were willing to chance that by cutting rates we might foster a bubble, an inflationary boom of some sort, which we would subsequently have to address....It was a decision done right."
I'm not a libertarian Republican (although I do have occasional intrusive libertarian impulses) and I'm copacetic with several of the big spending bills that I'm sure Mr. Greenspan opposed. Nor do I think that a bad policy becomes good because it's cheap. But I agree with Mr. Greenspan that the Republican Congress was corrupted so that it started to look exactly like a Democratic Congress. I don't know, though, that that was why the Republicans lost last year or what improvement there could be in changing a Republican Congress for a Democratic one.

But note the different ways Mr. Greenspan approaches the tough decisions he had to make, balancing benefits and costs, with his bright-line approach to criticizing Congress and the President. Politics, and life for that matter, are the art of compromise. Criticism is the assumption of perfection.


erp said...

Politics is the art of the possible and banging ones head against a stone wall because everything isn't perfect, isn't very productive.

Oroborous said...

While I soured on the GOP as a legislative party during the decade after they took control of the House in '95, saying that "congressional Republicans and President George W. Bush [abandoned] fiscal discipline" is rewriting history.

I may not like how or what they chose to spend money on, but in the twelve months composing Aug. '06 - Jul. '07, the Federal budget deficit was pocket change - $ 166 billion.

That's not exemplary, but neither is it profligate.

erp said...

When talking about millions, billions and trillions, I like to emphasize their enormity by pointing out that a million is a thousand thousand, a billion is a thousand million and a trillion is a thousand billion. Thus a deficit of 166 billion, while an almost incomprehensibly large number to most of us, is only a little more than 1% of our 2006 GNP of 13 trillion.

jim hamlen said...


Exactly. Greenspan wrote his book because he missed the media fawning and plaudits (and I suspect he wanted more face time with Maria Bartiromo).

Plus, he doesn't have to go up to the Hill and have cranks like Jim Bunning and Mel Watt insult him for an hour or so (twice a year).