Alan Greenspan: Hero or Villain?

Benjamin M. Friedman, a political economist at Harvard, has a review of Alan Greenspan's "The Age of Turbulence" in the latest issue of the New York Review of Books (see Chairman Greenspan's Legacy). Why read a review almost six months after its subject has been published? For its nuance and its perspective. Greenspan is increasingly being fingered for failing to keep the housing bubble from inflating. Friedman shows why Greenspan's monetary policy was sage â€" no other part of the economy was seeing the huge run-up that was occurring in the housing market, and the economy itself was still shaky in the wake of the downturn of 2001.

Friedman shows what part of the subprime mortgage crisis should not fall on Greenspan's shoulders (keeping interest rates too low) and what part should (failing to regulate the increasingly questionable practices in mortgage lending). He does it by putting Greenspan's entire career in context. He shows us some of the man's impressive flexibility, his personality and the areas where he strayed from brilliance. He is also able to flag inconsistencies in Greenspan's framework. In particular, Greenspan claims to dislike government intervention in markets, but frequently did intervene. As Friedman puts it, "Greenspan and his colleagues treated financial markets more as delicate flowers requiring careful attention and nursing.

Friedman brings perspective to Greenspan's book that almost no non-economist could bring, and does it in a way that any non-economist can read. Mostly, he respects and admires Greenspan. But there is a clear difference between admiration and veneration.