Once they’ve been carved out and stamped, reiterated in books and taught to schoolchildren, the units of historical time can seem as natural and apparent as the continents and oceans on a map of the Earth: the Progressive Era, the Gilded Age, Reconstruction. We know that each of these names is a human invention, each year dividing these periods a matter of human choice. But we don’t notice the invention when it’s happening; we never see anyone decide when an era begins, or what to call it, or what qualities mark it as an epoch.
What has defined our time — America since the 1960s? Historians are now trying to figure it out. In “Restless Giant,” James T. Patterson placed prosperity and freedom at the center of our fin de siecle journey. For Sean Wilentz, it was “The Age of Reagan,” a time of ascendant conservatism. Daniel Rodgers calls it an “Age of Fracture,” when old and widely shared verities splintered into a jumble of irreconcilable premises.
Jeff Madrick, in his compelling new history, dubs it an Age of Greed. Madrick is not a professional historian but an accomplished economic journalist known for his essays in the New York Review of Books. Nor is he surveying all of American politics since the 1960s, just the major changes in business, finance and policymaking. Yet his book tries, like the others, to define and explain the long era, creating a larger framework by which future generations will understand our time. Ambitious in its scope and frequently persuasive in its arguments, “Age of Greed” abounds with powerful men, ugly fights, infamous scandals, twists and turns, and, true to the book’s title, lots of shameless cupidity.
“Age of Greed” chronicles how Americans ended up with the highly unregulated financial system that produced the meltdown of 2008 and the fallout that lingers three years later. What’s most novel about the book, which relies heavily on other secondary accounts, is that unlike other recent treatments of the financial crisis, it traces the origins of the problem not to the Bush or Clinton or even Reagan years, but all the way to the late 1960s.
Back then, in the heyday of the post-World War II economy, a handful of bankers, businessmen, economists and politicians began campaigning to discredit, repeal and, when necessary, evade the controls that had governed lending and borrowing since the New Deal. Steadily, they made inroads, taking advantage of hard times, such as the stagflation-plagued ’70s, as well as good times, such as the tech-fueled ’90s. By 2008, as Madrick tells it, a once-worthy regime of safeguards had ceased to meaningfully police Wall Street or many other realms of American business.
A 40-year march through the world of Eurodollar CDs, greenmail and credit default swaps might strain a general reader’s comprehension, let alone interest. To relieve the tedium, Madrick breaks his story into 20 chapters, each a biographical thumbnail of one or more key players. Laying out these sketches in a strategic order, like a bridge player setting down his cards, Madrick constructs a more or less coherent tale out of his many political, financial and business-world fragments.
At times the book can feel fractured. A chapter on Ronald Reagan precedes a section on moguls Ted Turner, Sam Walton and Steve Ross, and then it’s back to Jimmy Carter. But at its best, Madrick’s panoptic view illuminates the big picture of American financial history in a way that a micro-study of Fannie Mae or Bear Stearns or the Federal Reserve never could.
Since history gets cloudier as time passes, the book’s most fascinating chapters are the earliest. Madrick’s capsule reviews of recent events — how Fed Chairman Alan Greenspan or GE head Jack Welch deepened America’s economic mess — are bound to feel familiar. More revelatory are his discussions of the malign roles played by people often left out of the history books. Walter Wriston of Citicorp (now Citigroup), for instance, worked to eliminate “Regulation Q” of the 1933 Banking Act, which limited the rates paid on savings accounts. Corporate lawyer Joe Flom, now little remembered except as a philanthropist, masterminded the hostile takeover. (Never again will I enter the Flom Auditorium at Washington’s Woodrow Wilson International Center for Scholars, where I work this year, with a clean conscience.)
The book’s slightly lurid title recalls the Reagan years, when liberals seethed at a new culture that extolled an unfettered market and rampant acquisitiveness. (Illustrative of the zeitgeist was the way that Michael Douglas’s “greed . . . is good” line in the 1987 movie “Wall Street” — spoken by a villain and meant as an indictment of him — was parroted without irony as a watchword for the times.) Despite the title’s undertones, however, Madrick is no polemicist or ideologue. He writes in restrained, dispassionate prose, letting out only hints of the outrage rumbling below. And yet he has a clear interpretative slant. Unerringly critical of financial adventurism and deregulation, he argues that his subjects’ relentless quest for personal wealth, enabled by politicians who were either ideologically compliant (Reagan) or politically timid (Carter), produced a society rife with inequality and injustice.
The problem with the book’s title, actually, isn’t its melodramatic oversimplicity — every author should be cut a little slack in trying to sell books. What “Age of Greed” elides, it seems to me — not only in its title but also in its analysis — is the difference between those rogues whose greed led them to run afoul of the law and those whose greed the system has in fact smiled upon.
So, Madrick’s narrative rightly includes sordid characters such as Ivan Boesky, Michael Milken, Ken Lay and Sandy Weill — poster boys of financial malfeasance — whose transgressions appalled almost everyone. Even Wall Street’s defenders have sometimes claimed that high-profile miscreants such as these men simply prove the rule that by and large the system functions well.
More problematic are cases such as those of Welch or Flom — men who amassed their fortunes by threading loopholes, breaking with customs and violating unspoken codes of behavior, but never technically committing crimes. It’s fine and well to condemn these men as greedy, but greedy people will inevitably flourish in a system rooted in the profit motive. It’s naive to expect civic-mindedness, a sense of social responsibility or even a human conscience to restrain them when laws and regulations don’t.
If you believe in capitalism — as most of us do — this stubborn truth points to one humane alternative. The government needs to construct strict rules and revise them often to clamp down on egregious practices as soon as they start. It was possible, once, to stop the leveraged-buyout craze before it wrought so much havoc or, years later, to blow the whistle on collateralized debt obligations before the crash. Bankers who invent and exploit these tools are obviously avaricious by most definitions, but it’s the government’s job to look out for those being victimized, and for the economy as a whole.
The real scandal revealed by Madrick’s important book is not the well-known tales of dastards such as telecom analyst Jack Grubman or Internet stock promoter Frank Quattrone, but the more elusive — and more consequential — story of how the government came to abdicate this supreme responsibility.
David Greenberg is a professor of history and of journalism and media studies at Rutgers University. He is a fellow at the Woodrow Wilson International Center for Scholars for the 2010-11 academic year.