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Executive Times |
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2008 Book Reviews |
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The Age
of Turbulence: Adventures in a New World by Alan Greenspan |
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Rating: |
*** |
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(Recommended) |
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Click
on title or picture to buy from amazon.com |
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Charm The Age
of Turbulence: Adventures in a New World by Alan Greenspan is a dangerous
book. By starting this book with his recollections of growing up in the
Washington Heights area of New York, studying music, and being a regular guy,
readers are lulled by his charm from the very start of the book. Two
interesting insights remain prevalent throughout the book: Greenspan wants to
understand data, and he wants to please others when he can. The Age
of Turbulence is a captivating book, and fans of Greenspan will applaud him
on every page. Readers who found that Greenspan’s inaction on many matters
represented negligence will find signs of this at many critical junctures in
the episodes he includes in this book. Here’s an excerpt, from
the beginning of Chapter 13, “The Modes of Capitalism,” pp. 267-269: Amid
the remarks of the speakers in the large, crowded meeting room at IMF
headquarters, I could hear the chanting and shouts of the antiglobalization
dissidents on the street. It was April 2000, and somewhere between ten
thousand and thirty thousand students, church group members, unionists, and
environmentalists had converged on While
central planning may no longer be a credible form of economic organization,
it is clear that the intellectual battle for its rival—free-market capitalism
and globalization—is far from won. For twelve generations, capitalism
has achieved one advance after another, as standards and quality of living
have risen at an unprecedented rate over large parts of the globe. Poverty
has been dramatically reduced and life expectancy has more than doubled. The
rise in material well-being—a tenfold increase in real per capita income over
two centuries—has enabled the earth to support a sixfold increase in
population. Yet, for many, capitalism still seems difficult to accept, much
less fully embrace. The
problem is that the dynamic that defines capitalism, that of unforgiving
market competition, clashes with the human desire for stability and
certainty. Even more important, a large segment of society feels a growing
sense of injustice about the allocation of capitalism's rewards. Competition,
capitalism's greatest force, creates anxiety in all of us. One major source
of it is the chronic fear of job loss. Another, more deeply felt angst stems
from competition's perpetual disturbance of the status quo and style of living,
good or bad, from which most people derive comfort. I am sure the American
steel manufacturers I advised in the 1950s would have been quite happy if
Japanese steelmakers hadn't improved their quality and productivity so
markedly. Conversely, I doubt that IBM was thrilled to see computerized word
processors upstage the venerable Selectric typewriter. Capitalism
creates a tug-of-war within each of us. We are alternately the aggressive
entrepreneur and the couch potato, who subliminally prefers the lessened
competitive stress of an economy where all participants have equal incomes.
While competition is essential to economic progress, I can't say I always
personally enjoy the process. I never thought kindly of rival firms seeking
to lure clients from Townsend-Greenspan. But to compete, I had to improve. I
had to offer a better service. I had to become more productive. In the end, of course, I was better
off for it. So were my clients, and I suspect so were my competitors as well.
Down deep that is probably the message of capitalism: "creative
destruction"—the scrapping of old technologies and old ways of doing
things for the new—is the only way to increase productivity and therefore the
only way to raise average living standards on a sustained basis. Finding gold
or oil or other natural wealth, history tells us, does not do that. There
is no denying capitalism's record. Market economies have succeeded over the centuries by
thoroughly weeding out the inefficient and poorly equipped, and by
granting rewards to those who anticipate consumer demand and meet it with
the most efficient use of labor and capital resources. Newer technologies
increasingly drive this unforgiving capitalist process on a global scale. To
the extent that governments "protect" portions of their populations
from what they perceive as harsh competitive pressures, they achieve a lower
overall material standard of living for their people. Regrettably, economic growth
cannot produce lasting contentment or happiness. Were that the case, the tenfold
increase in world real per capita GDP over the past two centuries would have
fostered a euphoric rise in human contentment. The evidence suggests that
rising incomes do raise happiness, but only up to a point and only for a
time. Beyond the point at which basic needs are met, happiness is a relative
state that, over the long run, is largely detached from economic growth. The
evidence shows it is determined mainly by how we view our lives and
accomplishments relative to those of our peers. As prosperity spreads, or
perhaps even as a result of its spread, many people fear competition and
change that threaten their sense of status, which is critical to their
self-esteem. Happiness depends far more on how people's incomes compare with
those of their perceived peers, or even those of their role models, than on
how they are doing in any absolute material sense. When graduate students at
Harvard were asked a while back whether they would be happier with $50,000 a
year if their peers earned half that, or $100,000 if their peers earned
double that, the majority chose the lower salary. When I first saw the story,
I chuckled and started to brush it off. But it struck a chord that unearthed
a long-dormant memory of a fascinating 1947 study by Dorothy Brady and Rose
Friedman. As in
the excerpt, Greenspan reveals throughout this book the many disparate
connections he made throughout his life. On the 500+ pages of The Age
of Turbulence, Greenspan comes across as curious, insightful, hard-working,
brilliant and consistently unflappable. It’s a delight to read, whether you
love or hate what Greenspan did during the decades he led the Federal
Reserve. Steve
Hopkins, February 21, 2008 |
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The recommendation rating for
this book appeared in the March 2008 issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/The Age of Turbulence.htm For Reprint Permission, Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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