2007 has not been a particularly memorable year, except perhaps if you are a Red Sox fan or the holder of a zero-down ARM. The economy has managed a respectable showing in the face of a major melt-down in the sub-prime mortgage market, $100 dollar a barrel crude oil prices, and a precipitous decline in the dollar. The American economy is a pretty miraculous thing. It keeps on generating new jobs, in spite of market forces that would decimate most other economies in the world.
Not that I am not nervous, of course. A wise man once said that something too good to be true often is. Nonetheless, after reading The Age of Turbulence, by Alan Greenspan, my nomination for book of the year, I have new respect for the resilience of the American economy and for the steady hand of the Fed that has helped us through more than a few tough spots.
Greenspan presided over the Fed from August, 1987 to January of 2006. It was an extraordinary period for the American economy. Greenspan's key insight was that new levels of U. S. productivity, driven by technology, meant that interest rates could be kept low even while sustaining unprecedented levels of employment and little inflation.
Greenspan's book is something more than just the history of this his time at the Fed. He was an advisor to Richard Nixon back when Nixon toyed, disastrously, with price controls. He witnessed Paul Volker, his predecessor as Fed Chairman, tame the rampant inflation of the late 70's by taking the unprecedented step of clamping down hard on the nation's money supply. It also turns out he was quite a sax player in his younger years, touring with one of the big bands. “I got along well with the other band members, I did their taxes” is Greenspan's comment on this period of his life. When it comes to the American economy, if not American music, Alan Greenspan is the man of his generation.
Greenspan comments on many aspects of today's economy, even CEO compensation. Although a classic free-market man, he is troubled by the enormous compensation packages that many of today's CEO's get simply by showing up. We may be reaching the peak of this folly as John Thain, formerly of Goldman Sachs and the New York Stock Exchange, is being paid fifty million dollars a year to take over Merrill-Lynch. If A-Rod isn’t worth fifty million a year, certainly John Thain isn’t. Of course, Thain is being paid fifty million because Stephen Schwarzman of the Blackstone Group is taking down four hundred million. Go figure.
This is not inspiring. We have teachers who bring more value to the economy than John Thain or Steve Schwarzman. What is wrong with this picture?If you are in need of inspiration, read Three Cups of Tea, by Greg Mortenson to get a sense of what a difference a committed person of passion can make.
On the home front, I started writing a weekly Op Ed column for the Portland Press Herald in January. My columns may be found each Tuesday at www. pressherald. com. I tend to write on issues of the economy and education, but, as minister without portfolio, I have written on Maine summer camps, the Red Sox, and the North Dakota economy. It's been fun, not withstanding the pressures of a Monday deadline.
Looking ahead, 2008 could be a more difficult year. The vibes in the economy are jarring just at the moment. We Americans have powerful adaptive instincts. These may just get us through. It is an election year so lots of focus will be on keeping the country on an even keel. .
As for the Presidential candidates, at this point I find no compelling rationale for supporting anyone. If pressed on whom will win, I would put my money on America's first woman President – but that is about a million political ads, debates, and programmed phone calls away. My best advice:turn off the TV, keep your telephone answering machine on, and draw your political insight from www. vote-smart. org.
My best wishes for a fine holiday season.