Fact-checking Alan Greenspan

The best quote in the former Fed Chairman's recent book, The Age of Turbulence, comes by way of his ideological opposite, the late Senator Patrick Moynihan of New York, who is reported to have said, "You're entitled to your own opinion, but you're not entitled to your own facts."

There's much about Greenspan the person I can identify with. His parents were immigrants; he grew up in a lower middle class neighborhood. He was a geeky kid so good at math that adults liked to have him show off how quickly he could do complex calculations in his head.

One of his secrets? He loved baseball, including statistics, so he'd been memorizing the ratios of hits to at bats that yield batting averages in that sport. He wryly notes that this supposed numerical talent of his was largely restricted to the range of .200 to .400, which of course is where almost all batting averages fall.

He also loved music. (Here, unlike me, he performed as an adult. My last piano recital was when I was still a child.)

He eventually discovered Ayn Rand's novel, Atlas Shrugged, and was deeply influenced by her fire-breathing brand of libertarianism.

I might go on about the parallels between our lives, except that at this point, they've ended. It's as if we were separated at the onset of adulthood. Alan abandoned his musical career for the lovely, dismal, murky world of calculation-based economics.

I tried out economics as a major at the University of Michigan, but stumbled over the very thing that Alan loved -- the eternal caveat behind every economic theory was "all other things being equal." But, I protested (to no avail), all other things are never equal in the real world.

To Alan, this represented a beautiful opportunity. Since you could never run a controlled experiment on a living economy, an economic forecaster was in fact able to be considered successful by getting things right a third of the time. Any hitter able to sustain a .333 batting average will have a Hall of Fame career.

Economic gurus occupy the same success-to-opportunity ratio as hitters, .200-.400.

Therein lies the secret to Alan's success. he matched his boyhood proclivities perfectly with his chosen career. He buried his head in data so obscure that big-idea thinkers like Rand would have either suffered nervous breakdowns if forced to study this stuff or abandoned their libertarian notions altogether.

One does not learn from Greenspan's story whether he actually, honestly believes in his libertarian theories after a half century of testing them on real, live people -- experiments that inflicted untold misery on the people of Russia and Eastern Europe, for example, as they endured the torturous transition from centrally planned economies to free-market capitalism.

When you are rich and securely protected from the market gyrations that create and take away smaller fortunes; when you never have to feel the pang of hunger or worry whether you'll have a safe place to stay, large-scale social experiments such as these must be intellectually fascinating.

All other things being equal.

When it comes to the real world, the "things" in this equation are people -- you and me. Greenspan presided over the greatest transfer of wealth upward, from the poor and the middle classes to the super-rich, in the history of the world. He helped return us to a medieval age, where wealthy barons more or less live inside walled castles, from which they eye the rest of us warily, as we scurry around out in the open, trying to make a living and support our families.

An age of turbulence? Not so, really, for the Greenspanians, who've enjoyed a gilded existence, but all too true for all the rest of us.


-30-