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Alan's World. - Review - book review

Industry Standard, The, Nov 27, 2000 by Daniel Akst

Two new books peer into the mind of everybody's favorite Fed chief.

Maestro: Greenspan's Fed and the American Boom by Bob Woodward (Simon & Schuster, $25)

Greenspan: The Man Behind Money by Justin Martin (Perseus, $28)

Ayn Rand said he looked like an undertaker. His public pronouncements are so ponderous and convoluted that competing newspapers run diametrically opposed stories about what they think he said. For fun, he does calculus. Alan Greenspan, it would seem, is the soul of technocratic sobriety, which is precisely how we like our high priests of the Economic Temple. Federal doesn't get much more reserved than this.

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Yet judging by the evidence of two new books about him, beneath the funereal exterior America's smartest (or perhaps luckiest) Federal Reserve chairman is one wild and crazy guy.

Greenspan's strange story is an oft-told one, but no less fascinating for it. After a hardscrabble childhood in New York's Jewish Washington Heights, he enrolled at Juilliard, only to drop out and become a professional clarinetist in a jazz band. He was a member of Rand's inner circle and a hard-nosed believer in her rationalist, free-market ideas, even during the left-leaning 1960s. And instead of toiling anonymously in some corporation, he acquired and expanded an economic consulting firm that made him a good deal of money even though his record as a forecaster was dismal. It took him more than 20 years to get his doctorate in economics, and he never did write a conventional thesis. He Was also something of a ladies' man. Barbara Walters was among the many he dated.

In this credentialist age, it's unlikely that there will ever again be a Fed chief with a background as colorful as Alan Greenspan's. That's a shame because, as both books make abundantly clear, Greenspan's colorful past informs his decision-making at the Fed. Like any good jazz aficionado, he's comfortable about improvising and trusts his gut. And Greenspan's experience as a consultant and board member to large companies gives him a feel for business that many academic economists can't match.

Perhaps as a result, Greenspan has presided over the longest-running economic expansion in U.S. history, an age of low inflation, high employment and strong growth that seemed almost inconceivable during the 1970s.

To some extent, Greenspan has been lucky. An enormous confluence of factors has helped, including the microchip revolution and the rise of the Internet. But he's also been good.

According to Bob Woodward's disappointing Maestro, for instance, Greenspan several years ago had a sense that the data he was poring over was wrong -- that low inflation, high employment and falling productivity taken together formed an economic oxymoron. But he couldn't prow it. Finally the Fed chief launched a massive research project to get to the bottom of this disparity and came to the conclusion that investment in new technology was causing a productivity boom a boom that wasn't being measured by outdated economic yardsticks.

Of the two new Greenspan books, Woodward's is sure to make the bigger splash, in part because the press-shy Greenspan, according to the Washington Post (where Woodward is assistant managing editor), "appears to have cooperated extensively" with the author.

Unfortunately, the author's strong reportage is unadorned by even the most rudimentary literary skills. It's not even clear what the purpose of this book is. There is no particular thesis and little in the way of psychological insight. The effect is at times stupefying, as when Woodward details a series of long-ago quarter-point interest-rate changes.

Woodward's great strength lies in trading on his own legend to gain access other reporters might not get, here used to penetrate the depths of Federal Reserve machination. Not surprisingly, Greenspan emerges as a master political operator. The credibility of this portrait is simultaneously strengthened and subverted by Greenspan's apparent cooperation, which gives Woodward the chance to talk about what the Fed chief thought at various times, but which also makes Woodward himself -- and the reader by extension - the subject of Greenspan's considerable and subtle manipulative skills.

The picture is more or less credible, though, because it isn't always pretty, and it matches the one painted by Justin Martin's book.

A former staff writer at Fortune, Martin tells us that as chairman of the Council of Economic Advisors under Gerald Ford, Greenspan turned the three-member panel into a one-man band, unapologetically hogging presidential face-time and important work for himself. Greenspan would do the same later as Fed chief, a position he has held since 1987. Examples abound. Federal Reserve interest-rate decisions, for Instance, are largely the province of the Federal Open Market Committee, a panel Greenspan has managed entirely to co-opt, driving out influential potential dissidents such as Alan Blinder, an economist who argued that higher growth was possible without additional inflation.

Alan's World. - Review - book review

Industry Standard, The, Nov 27, 2000 by Daniel Akst

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