William Greider (The Nation): The One-Eyed King

The One-Eyed King
By William Greider

When Alan Greenspan retires as Federal Reserve chairman early next year, we can expect waves of adulation for his extraordinary eighteen-year reign over the American economy. The financial press is already offering nostalgic retrospectives on the highlights: the crash of '87 and rapid rebound, the chairman's total victory over price inflation, his swift interventions to avoid financial panics and to reverse the stock market's massive meltdown of 2000-01. In tempestuous times, this Fed chairman acquired a godlike aura--the inscrutable wizard with a nerdish charisma, his wisdom cloaked in financial doubletalk. How will the nation get along without him?

A different assessment was expressed last winter by the Senate minority leader, Harry Reid. "I'm not a big Greenspan fan," the Nevada Democrat allowed. "I think he's one of the biggest political hacks we have in Washington." His harsh comment was politely overlooked in governing circles, like an off-color joke told at a Washington dinner party.

When the adulation fades and people begin to understand the full weight of Greenspan's legacy, however, they should be able to see that Reid had it right. Indeed, the Senator's critique did not go far enough. The central banker is a hack, yes, but also a man of conviction.

Alan Greenspan is the most ideological Fed chairman since the 1930s. Without ever acknowledging his intentions, he enlisted himself and the awesome governing powers of the central bank in advancing the "reform" agenda of the Republican right. The chairman thus became an important actor in achieving the profound transformations that occurred during the last generation: the retreat of government, the rise of market ideology and the financialization of American economic life. The "money guys" gained hegemony over the "real economy" of production and work--the people and businesses who make things. The consequences imposed on society are often described as "the tyranny of the bottom line." In numerous ways, the Greenspan Fed helped make it happen. However, the chairman did not produce what conservative doctrine promises--stable and secure prosperity.