An op-ed by Robert Samuelson in the Washington Post (and syndicated), entitled Robert J. Samuelson: The Greenspan paradox is a pretty fair assessment of Greenspan, but I’d like to take exception to some of it.
Greenspan’s critics have another story. “Deregulation,” championed by Greenspan, is their villain. Competent oversight could have curbed dangerous excesses. The reality is murkier. Many of the institutions that came to grief — banks, investment banks — were regulated. But regulators shared the optimistic consensus concerning the economy’s transformation. Complacency made regulation permissive.
This, to me, is talking out of both sides of one’s mouth and doesn’t say anything useful. Sorry, Robert. I was expecting something more astute.
Yes, the regulatory agencies still existed. Their regulation wasn’t “permissive”. It was next to non-existent. By design. Regulation was intentionally sabotaged, by the conservative leaners, especially (but not solely) during Republican administrations. Bush II especially put in regulators in many regulatory agencies who were particularly antipathetic to the very activities they were supposedly regulating. Thus the fox was guarding the hen house. The laisse faire-ist agency heads continually gave more and more room for the the risk-taking Wall Street bankers to play games with other people’s money. It was not “complacency” – it was by intent. Complacency implies that they were lazy and, well, these things just kind of happened. It was anything but that.
Conservatives spoke openly of shrinking the government to such a small size that they could simply flush the government down the toilet. (The conservatives didn’t mean ALL government – just the non-Orwellian departments; they LOVED the military and police and security sides of government and couldn’t do enough to expand those. It was the “for the people” side of government they targeted – especially those regulatory agencies that kept abuses from impacting millions of people.)
Such targeting cannot be soft-pedaled as mere “complacency”. Such intentional de-facto deregulation had one goal: To allow abuses to occur under the guise of a free market. You, the reader, don’t think so? Look at what happened. Abuses, abuses, abuses. No sooner than banking was deregulated in the 1980s than we had the savings and loan scandal. And step by step the abuses increased. Enron and WorldCom and several other rapes of people big and small in the early Bush II years portended more to come, in directions no one could foresee at that time. And Greenspan and his “hands off” policies were right there, aiding and abetting all of it. And failure to deal with those were clear invitations to more and greater abuses.
Enabling schoolyard bullies has only one result: The Bully beats up more kids and steals more lunch monies. Enabling banking rapists has only one result: More Joe Main Street savings are diverted by oh-so-smart manipulators and more lunch monies are stolen. And dinner monies. And breakfast monies. And retirement monies. And home equity monies. And oh-so-STUPID investors’ monies from all over the world. The oh-so-smarts looted the world’s economies. And Greenspan and his “hands off” policies were the clear invitations at every turn to more and greater abuses.
There IS no Greenspan paradox. There is only Greenspan the Great Enabler, Greenspan the Great Accessory Before the Fact. The world got looted, and Greenspan and his buddies did it, right under his supposedly calm and oh-so-smart nose.
They will certainly erect great statues to him – one in each of their $5 million condos and summer cottages. There is no Invisible Hand. There is only Greenspan’s enabling hand in all of the destruction of the American economy.
He might as well have been driving the getaway car.
It was the Great Moderation that gave us the financial crisis and Great Recession. That’s the central lesson here, and it’s both disturbing and largely unexamined. Almost everyone wants prosperity. The holy grail of “macroeconomics” (the study of the overall economy) is to minimize or eliminate business cycles. But too much prosperity for too long breeds the conditions that lead not to routine recessions but to crashes. In his book, Greenspan briefly alludes to this: “Protracted economic stability is precisely the tinder that ignites bubbles.”
No, no, no, and no.
It wasn’t the stability that was the tinder. And it wasn’t just tinder. It was all improvised explosive devices – time bombs that came back to haunt the U.S. economy and now make it magnitudes more difficult to repair the economy. You can’t repair what doesn’t exist anymore. It was the deregulatory decisions, the ones that allowed corporate raiders to rape entire companies that had been productive parts of the American economy for decades and decades – that closed down entire towns, that stole workers’ pensions, that moved those former workers’ jobs to Mexico and then China (as the raiders got better and better at how the looting thing works). It was the destruction of the pension plans in the Reagan years, replacing it with the very Wall-Street-centric IRAs and 401Ks that were later ripe for eviscerating. It was the hands off permission to play games with OPM, and then to devise sneakier ways of TAKING OPM.
When all that was forbidden was now all that was allowed, it isn’t a paradox that Greenspan’s apprentices learned well how to destroy an economy.
Don’t be blaming it on the vague and nameless “great Moderation”. WTF is THAT except a fancy term that means nothing? And don’t be blaming iot on Joe Main Street’s desire for prosperity. Joe Main Street BUILT the damned prosperity, dammit. The CEOs and managers who claim the credit – that is all bullshit. Any economy grows due to mass demand, and that demand is met by assembly lines – where Joe Main Streets built prosperity one shipped item at a time. Prosperity isn’t built by fancy spreadsheets or graphs or Power Point presentations. Prosperity is built by manufacturing GOODS. And CEOs and COOs don’t know the first thing about making assembly lines efficient or even capable. They DO know how to take credit for what the thousands of workers “under them.”
Manipulating monies or pixels or words creates no wealth, builds no prosperity. All those are pretty flowers, nice swirls and puffed-up silliness. We just happen to live in a topsy-turvy upside-down world where parasites are given credit for being creators and actual creators of useful goods are seen as beggars with their hands always out.
The looters have spun reality well. And Greenspan was their poster boy for decades, as they turned reality to shit.