Alan Greenspan Was Wrong

Originally posted at on February 10, 2012

People make mistakes. They sometimes admit it, as Alan Greenspan did when he figured out that when you deregulate the banking industry, the markets don’t just fall neatly into place accordingly.

What I want to know is: with the enormity of that error, how does Mr. Greenspan live with himself?

Thinking the banking industry will self-regulate is akin to putting a huge chocolate cake in front of a glutton. Just what kind of logic is that? It’s cognitive dissonance at its height.

Maybe now Greenspan waxes philosophical about how in a democratic society (presumably ours) there is no better paradigm than laissez faire capitalism. Did he forget that we do not live in a democracy (it’s a republic) and that our citizens frequently do not participate in their civic duties, such as voting?

If we did live in a truly democratic country, would the electorate be educated enough to decide how to handle monetary policy? For that, ironically, we would have to follow one of Greenspan’s ideas: to improve our primary and secondary education systems.

This is my way of tipping my hat to Greenspan: you were right about education.

But to say that free markets rein and capitalism works in a democracy is like living in a vacuum that ignores the corruption that is at the basis of humanity: power and money corrupt. Does corruption figure in to Greenspan’s theories?

First acknowledge human nature; then account for it. Responsibility starts with maturity, and maturity needs to be taught.

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