....wish I had time to read it.
Sebastian Mallaby’s Biography Shows That Alan Greenspan Foresaw the Housing Crisis. Why Didn’t He Act?
Randall S. Kroszner reviews ‘The Man Who Knew,’ the story of five decades of America’s economic triumph and failure.
By
Randall S. Kroszner
Updated Oct. 10, 2016 12:19 p.m. ET
ENLARGE
Alan Greenspan in 1975. Photo: Getty Images
Alan Greenspan’s intellectual journey began with Ayn Rand, who was introduced to him by his first wife in 1953. The marriage was brief, but the relationship with Rand proved enduring. Mr. Greenspan found Rand’s philosophy of individualism and objectivism “intoxicating.” He had a fierce drive and an insatiable appetite for data—from the railway tables and baseball statistics he memorized as a child to the economic data he analyzed as a financial consultant—but he was missing a structure through which to understand the world. Rand’s approach not only filled this gap but broadened his perspective and, likely, his ambitions. Rand called him the “Undertaker” for his “dark suits and lugubrious manner,” but she soon came to see in him the potential for greatness embodied in the heroes of her novels and began to refer to him as the “Sleeping Giant.”
The Man Who Knew
By Sebastian Mallaby
Penguin Press, 781 pages, $40
In October 1987, just a few months after Mr. Greenspan became chairman of the Federal Reserve, the stock market crashed. A short, soothing public statement from the Fed and an interest-rate cut—as well as pressure from New York Fed chief Gerald Corrigan on the major banks to keep lending and efforts by Leo Melamed at the Chicago Mercantile Exchange to keep the derivatives markets open—avoided a financial meltdown. Asset prices might be volatile, but Mr. Greenspan saw that, with a few Fed actions, employment and output would continue as if nothing had happened.
And when the failure of Long-Term Capital Management threatened the markets in 1998, gathering the key players in a room to come up with a solution—and adding an interest-rate cut, for insurance—again avoided negative macro-economic consequences.
This intellectual migration from a steely Randian libertarian advocating utter market discipline and the gold standard to a supporter of fine-tuning interventions and even bailouts is the story that Sebastian Mallaby tells in “The Man Who Knew: The Life and Times of Alan Greenspan.” He takes us from Mr. Greenspan’s early forays into economic policy making under Richard Nixon to his admission, in post-2008-crisis testimony before Congress, of a “flaw” in his view of how the economic and financial world worked. And despite its nearly 700 pages of text, the book is hard to put down, thanks to Mr. Mallaby’s knack for finding just the right example or sparkling quotation to illustrate his points.
Mr. Greenspan evolved a practical view of political economy in part, Mr. Mallaby says, because he was “mugged by reality.” As chairman of the Council of Economic Advisers in 1975, he persuaded President Gerald Ford to take a hard-line stand against a near-bankrupt New York City’s pleas for federal assistance. Thus Mr. Greenspan is indirectly responsible for one of the pithiest restatements of Randian libertarianism, which appeared as a Daily News headline: “FORD TO CITY: DROP DEAD.”
Concerns about the knock-on effects of a large municipal bankruptcy and growing public sympathy for the struggling city, however, made the hard-line approach difficult to sustain. “The refusal of a bailout generated a sort of self-canceling momentum,” Mr. Mallaby writes, “with Ford’s denial of assistance causing New York to make itself more deserving of assistance” with spending cuts, tax hikes and reduced payments to bondholders. Ford eventually caved in.
Mr. Greenspan was learning that the American political process rarely tolerates hard-line stances. “Ideas were not what drove him after all,” Mr. Mallaby concludes; “his courteous, clubbable, and nonconfrontational manner proved to be a better predictor of his conduct in office than his libertarian ideology. However disarmingly Greenspan might portray himself as a sideman, he was only human, after all. He wanted to be at the center.”
Mr. Mallaby touches on that humanity with a short introduction that describes Mr. Greenspan (born 1926) growing up as a shy boy in an immigrant community in New York City during the Great Depression. His parents divorced when he was 5, and he and his mother lived in a cramped apartment with his grandparents. Anecdotes from his personal life—fancy cars, dates with “news anchors, senators, and beauty queens,” his lifelong devotion to his mother, and his courtship of the TV journalist Andrea Mitchell, whom he married when he was 70—are judiciously sprinkled throughout the book, providing short respites from economic matters. Mr. Mallaby, a fellow at the Council on Foreign Relations and a longtime columnist at the Economist and Washington Post, had Mr. Greenspan’s full cooperation for the book, and his meticulous research has created a thoroughly engaging portrait of his life and times.
ENLARGE
What to Read This Week
What Greenspan Knew About the Housing Crisis, Why America Always Fails in the Middle East, The Greatest Hollywood Sex Scandal, and Why We Talk to Ourselves. Plus new fiction from Maria Semple and Madeleine Thien.
For Mr. Mallaby, Mr. Greenspan is “The Man Who Knew” because of his mastery of data. He was the “kind of person who knew how many thousand flat-headed bolts were used in a 1964 Chevrolet and what it would do to the economy if you took out three of them” and was happy to describe this in mind-numbing detail. His command of numbers gave business leaders and politicians confidence in his analyses and allowed him to challenge even the high priesthood of economic statistics, the Federal Reserve Board staff.
His most famous call came in 1996, when he saw that productivity had accelerated in the 1990s even though it was not yet reflected in the official data. If productivity were actually growing faster than the statistics suggested, wage growth posed less of an inflation threat than most of his Fed colleagues—including Janet Yellen—were predicting. Mr. Greenspan chose not to raise interest rates that September, which would have slowed growth and increased unemployment. Lawrence Summers, who was deputy secretary of the Treasury at the time, marveled: “I don’t think most other people who could have been Fed chairman would have seen it. And I think we probably got lower unemployment for several years than we would have gotten if he had not had that perception.” No wonder he was well-liked in the Clinton White House.
Not only did this brilliant call on productivity burnish Mr. Greenspan’s reputation; it also suggested to him how strong the forces driving growth in the U.S. economy were. This was only reinforced by the quick economic recovery after the tragedy of 9/11—helped along by interest-rate cuts at the Fed. In Mr. Greenspan’s autobiography, “The Age of Turbulence,” published just before the 2008 financial crisis, he argued that “the aftermath of 9/11 was proof of an enormously important fact: our economy had become highly resilient.” He went on to say that we are “living in a new world . . . a global capitalist economy that is vastly more flexible, resilient, open, self-correcting, and fast-changing than it was even a quarter century earlier.” Perhaps Ayn Rand’s capitalist ideal was becoming reality—with just a little help from the Fed when necessary.
Yet if Alan Greenspan is “The Man Who Knew,” why did he not see that the seeds of the vast 2008 crisis were being sown in the years before his retirement in 2006? This is the question that animates much of Mr. Mallaby’s book.
He shows that time and again Mr. Greenspan warned of markets being “frothy,” or overheated. In both the first paper he published—a 1959 work that Mr. Greenspan often refers to in private conversation—and in his 1977 Ph.D. thesis, he explicitly discussed how exuberance in stock-market valuations could reduce the cost of capital and lead to unsustainable booms. In the run-up to the savings-and-loan crisis in the 1980s, he warned that the rise of home-equity loans could lead to an unsustainable consumption boom. In the 2000s, he testified about the fragility and toxic incentives of the government-sponsored enterprises Freddie Mac and Fannie Mae, which could lead to “a systemic risk sometime in the future.” He often expressed concerns about the housing market at Fed meetings in the 2000s. He did “know.” So the question is: Why didn’t he act?
Some have suggested that Mr. Greenspan remains a Randian ideologue who consistently blocked attempts by others to introduce regulation that would have prevented or mitigated the crisis. The main evidence given is Mr. Greenspan running roughshod over Edward Gramlich, a Fed governor who had wanted tough controls on subprime mortgages in 2000. Mr. Mallaby argues, however, that this goes too far and quotes Gramlich himself writing to Mr. Greenspan in 2007 “that I truly wish the press would stop kicking you around on this subprime supervision issue. . . . If I had felt that strongly at the time, I would have made a bigger stink.”
Rather than crediting an allegiance to “market efficiency” or ideology, Mr. Mallaby believes that Mr. Greenspan became “imprisoned by his reputation”: “Greenspan’s cult status had come to depend upon continual growth, exuberant finance, and miraculously low unemployment.” The problem is moral hazard. If the Fed responds when markets turn down but doesn’t suppress exuberance when markets are up, private actors will have an incentive to take on more risk than they otherwise would. This can undermine natural market discipline. Mr. Mallaby believes that in his responses to negative shocks, Mr. Greenspan crossed the line from being the “guru”—“the man who knew”—to becoming the “guardian angel.”
The approach that the Fed under Mr. Greenspan took to market exuberance, including the housing boom, was that it is extremely difficult to “know” whether you are in a bubble or not at the time. The Fed has limited instruments at its disposal—primarily its control over short-term interest rates—and trying to use this tool for “bubble bursting” while still addressing the Fed’s traditional mandates for full employment and low and stable inflation could lead to conflicting prescriptions. Better, Mr. Greenspan believed, to be ready to clean up the debris if a bubble were to burst, as in 1987. Mr. Mallaby argues that the inflation-targeting framework, which focused central banks world-wide on the goal of low and stable inflation in response to their bad behavior in the 1970s when they eased credit in the short run to boost employment, provided an intellectual underpinning for Mr. Greenspan’s approach.
Since the 2008 crisis, there has been a lot of discussion about giving the Fed greater power to make proactive attempts to take the wind out of the sails of overheated markets—raising mortgage down-payment requirements when property markets spike, for example, or requiring countercyclical capital buffers for banks that would rise in good times. Central banks are being asked to move from being “fire extinguishers”—providing liquidity to douse the flames of a crisis after it has started—to being “smoke detectors,” finding hot spots and preventing smoke from turning into fire.
The challenge, of course, is what you “know.” Is a market overheating? And if so, what are the most effective instruments to reduce the froth without excessively constraining growth or causing a sharper downturn than would have occurred when the bubble burst? Assuming that central bankers know in real time whether a market is overheating and how to respond in order to minimize the economic damage involves what Friedrich Hayek called a “pretense of knowledge.” This is the policy maker’s dilemma, and Mr. Mallaby brings it out wonderfully clearly over the course of this book. The markets will never get everything right, but neither will the central bankers. Too much faith in either will end in tears.
How, then, should we act when a market appears to be in danger? The easiest choice is to wait to see if something does go wrong—though it is best to be stockpiling the sandbags and preparing for a negative shock. The Bank of England’s preparation for a pro-Brexit vote, which seemed unlikely as well as being something that the leaders of the bank clearly did not favor, is an example.
Then there is the question of a central banker expressing concerns publicly. The difficulty here is that voicing a worry about risk can be a self-fulfilling prophecy—the sharp decline in the equity markets after Mr. Greenspan questioned the possibility of their experiencing “irrational exuberance” in 1996, for example. Further, in a fragile situation, the policy maker may want to do the exact opposite of setting off an alarm. Mr. Greenspan put forward a more optimistic view of the economy immediately after 9/11 than he really felt, as he admits in his memoirs. He was hoping to restore confidence, even if it was confidence that he did not fully have. Central bankers can affect outcomes with their words. The risk is that markets come to rely too heavily on them.
There is always a temptation to act. If a cut in interest rates, combined with a few soothing words from the Fed chairman, can help avoid a significant rise in unemployment and a slowdown in short-term economic activity, it is difficult to stand by and allow an asset-price deflation to turn ugly.
While well-motivated, adding financial-stability mandates to the central banks’ and regulators’ tasks can give markets a false sense of confidence and stimulate their appetite for risk. In Mr. Greenspan’s view, despite short-run swings, level heads should always prevail in the private markets in the longer run. The flaw in the system was that this self-correcting mechanism was not as strong as it seemed to be during the nearly two decades of growth under Mr. Greenspan’s chairmanship. The apparent resiliency of the U.S. economy may have relied more on his deft interventions than he realized, and the deft interventions in part may have weakened the self-correcting mechanism that Mr. Greenspan came to see as driving the resiliency. The lesson Mr. Mallaby draws from the Greenspan era is: “The delusion that statesmen can perform the impossible—that they really can qualify for the title of ‘maestro’—breeds complacency among citizens and hubris among leaders.”
“The Man Who Knew” is a tour de force, the story not just of Alan Greenspan’s career but equally of America’s economic triumphs and failures over five decades. This carefully researched and elegantly written book will be essential reading for those who aspire to make policy and for anyone who wants to divine what drives the choices that our leaders make.
—Mr. Kroszner is the Norman R. Bobins Professor of Economics at the Booth School of Business at the University of Chicago. He was a member of the president’s Council of Economic Advisers from 2001-03, where he got to know Alan Greenspan through the monthly lunches the chairman hosted for the CEA, and was a governor of the Federal Reserve System from 2006-09, joining just after Mr. Greenspan retired.
Sebastian Mallaby’s Biography Shows That Alan Greenspan Foresaw the Housing Crisis. Why Didn’t He Act?
Randall S. Kroszner reviews ‘The Man Who Knew,’ the story of five decades of America’s economic triumph and failure.
By
Randall S. Kroszner
Updated Oct. 10, 2016 12:19 p.m. ET
Alan Greenspan in 1975. Photo: Getty Images
Alan Greenspan’s intellectual journey began with Ayn Rand, who was introduced to him by his first wife in 1953. The marriage was brief, but the relationship with Rand proved enduring. Mr. Greenspan found Rand’s philosophy of individualism and objectivism “intoxicating.” He had a fierce drive and an insatiable appetite for data—from the railway tables and baseball statistics he memorized as a child to the economic data he analyzed as a financial consultant—but he was missing a structure through which to understand the world. Rand’s approach not only filled this gap but broadened his perspective and, likely, his ambitions. Rand called him the “Undertaker” for his “dark suits and lugubrious manner,” but she soon came to see in him the potential for greatness embodied in the heroes of her novels and began to refer to him as the “Sleeping Giant.”
The Man Who Knew
By Sebastian Mallaby
Penguin Press, 781 pages, $40
In October 1987, just a few months after Mr. Greenspan became chairman of the Federal Reserve, the stock market crashed. A short, soothing public statement from the Fed and an interest-rate cut—as well as pressure from New York Fed chief Gerald Corrigan on the major banks to keep lending and efforts by Leo Melamed at the Chicago Mercantile Exchange to keep the derivatives markets open—avoided a financial meltdown. Asset prices might be volatile, but Mr. Greenspan saw that, with a few Fed actions, employment and output would continue as if nothing had happened.
And when the failure of Long-Term Capital Management threatened the markets in 1998, gathering the key players in a room to come up with a solution—and adding an interest-rate cut, for insurance—again avoided negative macro-economic consequences.
This intellectual migration from a steely Randian libertarian advocating utter market discipline and the gold standard to a supporter of fine-tuning interventions and even bailouts is the story that Sebastian Mallaby tells in “The Man Who Knew: The Life and Times of Alan Greenspan.” He takes us from Mr. Greenspan’s early forays into economic policy making under Richard Nixon to his admission, in post-2008-crisis testimony before Congress, of a “flaw” in his view of how the economic and financial world worked. And despite its nearly 700 pages of text, the book is hard to put down, thanks to Mr. Mallaby’s knack for finding just the right example or sparkling quotation to illustrate his points.
Mr. Greenspan evolved a practical view of political economy in part, Mr. Mallaby says, because he was “mugged by reality.” As chairman of the Council of Economic Advisers in 1975, he persuaded President Gerald Ford to take a hard-line stand against a near-bankrupt New York City’s pleas for federal assistance. Thus Mr. Greenspan is indirectly responsible for one of the pithiest restatements of Randian libertarianism, which appeared as a Daily News headline: “FORD TO CITY: DROP DEAD.”
Concerns about the knock-on effects of a large municipal bankruptcy and growing public sympathy for the struggling city, however, made the hard-line approach difficult to sustain. “The refusal of a bailout generated a sort of self-canceling momentum,” Mr. Mallaby writes, “with Ford’s denial of assistance causing New York to make itself more deserving of assistance” with spending cuts, tax hikes and reduced payments to bondholders. Ford eventually caved in.
Mr. Greenspan was learning that the American political process rarely tolerates hard-line stances. “Ideas were not what drove him after all,” Mr. Mallaby concludes; “his courteous, clubbable, and nonconfrontational manner proved to be a better predictor of his conduct in office than his libertarian ideology. However disarmingly Greenspan might portray himself as a sideman, he was only human, after all. He wanted to be at the center.”
Mr. Mallaby touches on that humanity with a short introduction that describes Mr. Greenspan (born 1926) growing up as a shy boy in an immigrant community in New York City during the Great Depression. His parents divorced when he was 5, and he and his mother lived in a cramped apartment with his grandparents. Anecdotes from his personal life—fancy cars, dates with “news anchors, senators, and beauty queens,” his lifelong devotion to his mother, and his courtship of the TV journalist Andrea Mitchell, whom he married when he was 70—are judiciously sprinkled throughout the book, providing short respites from economic matters. Mr. Mallaby, a fellow at the Council on Foreign Relations and a longtime columnist at the Economist and Washington Post, had Mr. Greenspan’s full cooperation for the book, and his meticulous research has created a thoroughly engaging portrait of his life and times.
What to Read This Week
What Greenspan Knew About the Housing Crisis, Why America Always Fails in the Middle East, The Greatest Hollywood Sex Scandal, and Why We Talk to Ourselves. Plus new fiction from Maria Semple and Madeleine Thien.
For Mr. Mallaby, Mr. Greenspan is “The Man Who Knew” because of his mastery of data. He was the “kind of person who knew how many thousand flat-headed bolts were used in a 1964 Chevrolet and what it would do to the economy if you took out three of them” and was happy to describe this in mind-numbing detail. His command of numbers gave business leaders and politicians confidence in his analyses and allowed him to challenge even the high priesthood of economic statistics, the Federal Reserve Board staff.
His most famous call came in 1996, when he saw that productivity had accelerated in the 1990s even though it was not yet reflected in the official data. If productivity were actually growing faster than the statistics suggested, wage growth posed less of an inflation threat than most of his Fed colleagues—including Janet Yellen—were predicting. Mr. Greenspan chose not to raise interest rates that September, which would have slowed growth and increased unemployment. Lawrence Summers, who was deputy secretary of the Treasury at the time, marveled: “I don’t think most other people who could have been Fed chairman would have seen it. And I think we probably got lower unemployment for several years than we would have gotten if he had not had that perception.” No wonder he was well-liked in the Clinton White House.
Not only did this brilliant call on productivity burnish Mr. Greenspan’s reputation; it also suggested to him how strong the forces driving growth in the U.S. economy were. This was only reinforced by the quick economic recovery after the tragedy of 9/11—helped along by interest-rate cuts at the Fed. In Mr. Greenspan’s autobiography, “The Age of Turbulence,” published just before the 2008 financial crisis, he argued that “the aftermath of 9/11 was proof of an enormously important fact: our economy had become highly resilient.” He went on to say that we are “living in a new world . . . a global capitalist economy that is vastly more flexible, resilient, open, self-correcting, and fast-changing than it was even a quarter century earlier.” Perhaps Ayn Rand’s capitalist ideal was becoming reality—with just a little help from the Fed when necessary.
Yet if Alan Greenspan is “The Man Who Knew,” why did he not see that the seeds of the vast 2008 crisis were being sown in the years before his retirement in 2006? This is the question that animates much of Mr. Mallaby’s book.
He shows that time and again Mr. Greenspan warned of markets being “frothy,” or overheated. In both the first paper he published—a 1959 work that Mr. Greenspan often refers to in private conversation—and in his 1977 Ph.D. thesis, he explicitly discussed how exuberance in stock-market valuations could reduce the cost of capital and lead to unsustainable booms. In the run-up to the savings-and-loan crisis in the 1980s, he warned that the rise of home-equity loans could lead to an unsustainable consumption boom. In the 2000s, he testified about the fragility and toxic incentives of the government-sponsored enterprises Freddie Mac and Fannie Mae, which could lead to “a systemic risk sometime in the future.” He often expressed concerns about the housing market at Fed meetings in the 2000s. He did “know.” So the question is: Why didn’t he act?
Some have suggested that Mr. Greenspan remains a Randian ideologue who consistently blocked attempts by others to introduce regulation that would have prevented or mitigated the crisis. The main evidence given is Mr. Greenspan running roughshod over Edward Gramlich, a Fed governor who had wanted tough controls on subprime mortgages in 2000. Mr. Mallaby argues, however, that this goes too far and quotes Gramlich himself writing to Mr. Greenspan in 2007 “that I truly wish the press would stop kicking you around on this subprime supervision issue. . . . If I had felt that strongly at the time, I would have made a bigger stink.”
Rather than crediting an allegiance to “market efficiency” or ideology, Mr. Mallaby believes that Mr. Greenspan became “imprisoned by his reputation”: “Greenspan’s cult status had come to depend upon continual growth, exuberant finance, and miraculously low unemployment.” The problem is moral hazard. If the Fed responds when markets turn down but doesn’t suppress exuberance when markets are up, private actors will have an incentive to take on more risk than they otherwise would. This can undermine natural market discipline. Mr. Mallaby believes that in his responses to negative shocks, Mr. Greenspan crossed the line from being the “guru”—“the man who knew”—to becoming the “guardian angel.”
The approach that the Fed under Mr. Greenspan took to market exuberance, including the housing boom, was that it is extremely difficult to “know” whether you are in a bubble or not at the time. The Fed has limited instruments at its disposal—primarily its control over short-term interest rates—and trying to use this tool for “bubble bursting” while still addressing the Fed’s traditional mandates for full employment and low and stable inflation could lead to conflicting prescriptions. Better, Mr. Greenspan believed, to be ready to clean up the debris if a bubble were to burst, as in 1987. Mr. Mallaby argues that the inflation-targeting framework, which focused central banks world-wide on the goal of low and stable inflation in response to their bad behavior in the 1970s when they eased credit in the short run to boost employment, provided an intellectual underpinning for Mr. Greenspan’s approach.
Since the 2008 crisis, there has been a lot of discussion about giving the Fed greater power to make proactive attempts to take the wind out of the sails of overheated markets—raising mortgage down-payment requirements when property markets spike, for example, or requiring countercyclical capital buffers for banks that would rise in good times. Central banks are being asked to move from being “fire extinguishers”—providing liquidity to douse the flames of a crisis after it has started—to being “smoke detectors,” finding hot spots and preventing smoke from turning into fire.
The challenge, of course, is what you “know.” Is a market overheating? And if so, what are the most effective instruments to reduce the froth without excessively constraining growth or causing a sharper downturn than would have occurred when the bubble burst? Assuming that central bankers know in real time whether a market is overheating and how to respond in order to minimize the economic damage involves what Friedrich Hayek called a “pretense of knowledge.” This is the policy maker’s dilemma, and Mr. Mallaby brings it out wonderfully clearly over the course of this book. The markets will never get everything right, but neither will the central bankers. Too much faith in either will end in tears.
How, then, should we act when a market appears to be in danger? The easiest choice is to wait to see if something does go wrong—though it is best to be stockpiling the sandbags and preparing for a negative shock. The Bank of England’s preparation for a pro-Brexit vote, which seemed unlikely as well as being something that the leaders of the bank clearly did not favor, is an example.
Then there is the question of a central banker expressing concerns publicly. The difficulty here is that voicing a worry about risk can be a self-fulfilling prophecy—the sharp decline in the equity markets after Mr. Greenspan questioned the possibility of their experiencing “irrational exuberance” in 1996, for example. Further, in a fragile situation, the policy maker may want to do the exact opposite of setting off an alarm. Mr. Greenspan put forward a more optimistic view of the economy immediately after 9/11 than he really felt, as he admits in his memoirs. He was hoping to restore confidence, even if it was confidence that he did not fully have. Central bankers can affect outcomes with their words. The risk is that markets come to rely too heavily on them.
There is always a temptation to act. If a cut in interest rates, combined with a few soothing words from the Fed chairman, can help avoid a significant rise in unemployment and a slowdown in short-term economic activity, it is difficult to stand by and allow an asset-price deflation to turn ugly.
While well-motivated, adding financial-stability mandates to the central banks’ and regulators’ tasks can give markets a false sense of confidence and stimulate their appetite for risk. In Mr. Greenspan’s view, despite short-run swings, level heads should always prevail in the private markets in the longer run. The flaw in the system was that this self-correcting mechanism was not as strong as it seemed to be during the nearly two decades of growth under Mr. Greenspan’s chairmanship. The apparent resiliency of the U.S. economy may have relied more on his deft interventions than he realized, and the deft interventions in part may have weakened the self-correcting mechanism that Mr. Greenspan came to see as driving the resiliency. The lesson Mr. Mallaby draws from the Greenspan era is: “The delusion that statesmen can perform the impossible—that they really can qualify for the title of ‘maestro’—breeds complacency among citizens and hubris among leaders.”
“The Man Who Knew” is a tour de force, the story not just of Alan Greenspan’s career but equally of America’s economic triumphs and failures over five decades. This carefully researched and elegantly written book will be essential reading for those who aspire to make policy and for anyone who wants to divine what drives the choices that our leaders make.
—Mr. Kroszner is the Norman R. Bobins Professor of Economics at the Booth School of Business at the University of Chicago. He was a member of the president’s Council of Economic Advisers from 2001-03, where he got to know Alan Greenspan through the monthly lunches the chairman hosted for the CEA, and was a governor of the Federal Reserve System from 2006-09, joining just after Mr. Greenspan retired.
