Alan Murray is chief content officer for Time Inc.
I got to know Alan Greenspan in the mid-1980s, when I was cub reporter at the Wall Street Journal covering economic statistics. My predecessor had given me a list of economic sources who were ready to jump on the phone at a moment’s notice and provide instant analysis of the data. Greenspan was one.
Most of the people on the list would follow my lead and happily provide a crisp quote that suited my story line. Greenspan was different. He usually took issue with my thesis and offered obscure morsels of data to prove his point. I quickly learned he was not the person to call when I needed a quick and pithy quote to support an already determined narrative. Instead, he was the person to call when I really didn’t understand what was going on. He was the man who knew.
As Sebastian Mallaby shows in his new book by that name, it was that quality that powered Greenspan’s career as the most important economic mind of his generation. He never achieved status in the academic community, in large part because he preferred raw data to fancy theories and models. But to his business clients and a generation of political leaders, he was the indispensible source of economic wisdom. At the peak of his power and influence, he occupied that role not only for the nation but for the world.
Mallaby’s hefty book is a tour de force — the most deeply reported work on the dry art of central banking since William Greider’s “Secrets of the Temple” (1988). But Greider’s work was flawed because he pushed his reporting through a meat grinder of questionable economic theories. Mallaby avoids that pitfall. Much like the man he profiles, Mallaby shows a solid understanding of competing economic — and political — theories, without tying himself inextricably to any one.
Over the past two decades, Greenspan’s reputation has gone from breathless heights to suffocating depths. At the end of the last century, he was applauded on the cover of Time as the vaunted leader of the “Committee to Save the World” and depicted glowingly in Bob Woodward’s hagiographic “Maestro” (2000). After 2008, he became vilified as a man who, blinded by Ayn Randian ideology, refused to acknowledge clear signs of the coming mortgage crisis and, instead of saving the world, pushed it into unprecedented chaos.
Throughout this long book, Mallaby wrestles with Greenspan’s many contradictions. How a man who early in life was wedded to principles could at times abandon those principles in pursuit of political power. How he struggled to reconcile his economic philosophy and political ideology with his deep understanding of data. How he could both crave the acceptance of society — dating famous women and attending parties and receptions with such endless determination that his mentor Rand once asked, “Do you think Alan might basically be a social climber?” — and at the same time be so profoundly introverted that he would sequester himself with data for days and sit for hours at high-toned dinner parties without saying a word.
Mallaby reserves his final judgment for the end of the book. He concludes that Greenspan deserves his vaunted reputation as an analyst but had a more mixed record as a policymaker. “As an observer, analyst, and forecaster, he was formidable,” Mallaby says. “He managed to be right about most things: right about the interaction between asset values and growth, which he laid out in 1959; right about the inflationary bias in an overregulated economy, starting in the 1960s; right about the interplay between monetary policy and housing finance in the late 1970s; right about the irresponsibility of Reaganite supply-siders in the 1980s; right about the productivity acceleration in the mid-1990s; and right about the threat of low inflation in the 2000s.”
But “as a doer rather than an observer,” Mallaby concludes, “Greenspan’s record was not so distinguished.” In his efforts to reconcile analysis and action, he was often “maneuvering in cramped political terrain,” and if “he often behaved passively, it was partly because he was hemmed in by these constraints. He should not be condemned, for with limited power comes limited responsibility.”
Mallaby’s Greenspan, in short, is neither maestro nor villain. He is a determined man with a brilliant mind, a dedication to data, a commitment to public service, a love of the public spotlight and a profound recognition of the limits of power. He won some and he lost some, but in the end, like all of us, he was profoundly human.
“America’s political culture adores leaders,” Mallaby concludes in his final assessment, “but is merciless when they fall short. . . . From hero to antihero, from maestro to villain, his story is a fable of the land that made him.”
By Sebastian Mallaby
Penguin Press. 781 pp. $40