The Maestro



Wow. You don’t hear admissions like this every day:

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Greenspan is, of course, hardly unique in having been mistaken about some important public policy issues. He was, however, an unusually powerful official — arguably the second most important member of the government after the president — for an unusually long time. But beyond that, for a long time he managed to acquire an air of infallibility about him that was totally unique among political figures. He was treated as an oracle to be interpreted, not as an official to be scrutinized. It was, I think, a strange and unhealthy moment in the life of our country. At the end of the day, appointing people so brilliant that they’re never wrong about anything isn’t a real option in terms of thinking about ways to run the government.