towards a better Europe   Return to the archives list What is the Economist going on about? Alan Greenspan, Chairman        A very strange article appeared in the Economist Newspaper last week which bordered on bad taste. It was entitled "A bias towards change" carried a rather unflattering photograph of Alan Greenspan and advocated that he pack up. The reasons given by the Economist appear to have no merit at all. As long as his health remains there is no need for anyone to take the Economist's advice. During this last week there has been some US-centred criticism of Greenspan for not getting it right. But Mr. Greenspan Chairs a Board which deliberates, analyses figures and statistics and as a group they come to conclusions. Mr. Greenspan is also the Board's spokesman so it is he who gets to say what their analysis is and what they think. As a professional economist he clearly has a right to actually think about what he is saying and give views. But in his position he cant go off on "what-ifs?" or "would it be a good idea if?", he is dealing with the reality of the markets and constantly faces the problem, with his Board, of gaining access to accurate information. So Alan Greenspan isn't the problem. He has shown independence in his interaction with President Bush, and with his Board, he is a steadying influence; indeed this is the role of the Fed and Bush, of all people need this. The Economist article steps around these realities and drives on to an unimpressive conclusion that plausible candidates "abound" for Mr. Greenspan's post. They then mention three people, two of whom are hardly in the same "camp", Larry Summers and Glenn Hubbard, and the first-mentioned by the Economist, an academic at a greater distance from the other two called, Martin Feldstein. Feldstein does come up with some simple text book analyses on the relative merits of the Euro and Pound for the United Kingdom, such as his recent article in the Financial Times. But in his US forays he hasn't always prevailed. His proposal for private savings accounts financed by tax credits, sent to the Congressional Budget Office was broadly attacked because of necessary assumptions (presumptions) on where the deficit was going up to a 20 year horizon; hardly Fed stuff. Larry Summers is better known but he is the individual who justified US funding of the low income development facility, the IDA, on the basis of the procurement contracts won by American business. He also made some rather unfortunate comments concerning pollution and the third world whilst at the World Bank. He is credited with coming up with statements such as,"The major challenge for the United States is whether it can become the first outward-looking, continental, non-imperialist power in history," and "Start with the idea that you can't repeal the laws of economics. Even if they are inconvenient." He is generally know to hold Robert Rubin in great esteem and even admires Alan Greenspan. Glenn Hubbard on the other hand has been somewhat controversial with his views which "nonsense" and "Rubinomics" on the issue of higher deficits leading to lower growth. This overall bearing caused there to be a constant pressure for him to give up the Chairmanship of the White House Council of Economic Advisers. So these candidates, and after all this is economics, do not come without some fuzzy bits or unblemished records. There are imps jumping around the system and people do not see consistency. These imps maybe need to be exorcised appropriately before there should be an immediate change with attendant risks. It seems that it might be more prudent if we wait until a more suitable cache of potential Fed Chairmen turn up and, in the meantime, if indeed Alan Greenspan wishes to continue, let him. This would do a service to monetary policy and to Greenspan.