After 2 decades of service as the economy’s tight-lipped Magic 8 Ball, Alan Greenspan got handed an $8-million-dollar advance to just talk it all out in a book. According the the WSJ, it’s pretty comprehensive — which Presidents he liked (Ford yes, Clinton yes too, except for the extracurriculars, Dubya notsomuch), the global arc of post-Soviet economic history, and The Future all get some ink.
He also hits on two green topics, according to the review. He predicts that a response to global warming that uses a system of taxing or capping CO2 emissions will “fail”, but doesn’t say why (here the review is cryptic — an homage to Mr. Greenspan, or to column-inch limits, we can’t say).
He also says nuclear is the way to go on energy.
So, is the consummate economic expert, whose every word was broken down like game tape for so many years, even worth listening to on carbon caps/taxes and nuclear power?
On one hand, he’s Alan Greenspan, people. People didn’t treat him like the Oracle and Delphi because he wasn’t the smartest money guy on the planet. On the other hand, even he didn’t get everything right. Some people blame his inspired stretch of super-low interest rates (1% for a while there) for the housing bubble that’s now popping.
On carbon, at least, there appear to be immediate grounds to question his take. We already capped carbon emissions in a big way when we first established MPG requirements for cars, bringing those numbers from 13 mpg to 27.5 mpg in the early 90’s. It didn’t fail; the regulations survived, proved enforceable, and didn’t damage the profitability of the industry. We didn’t call it a cap, but would a cap operate differently in the real world? Also, Europe’s CO2 trading market is ticking along.
Perhaps his basic libertarian free-marketeering side is informing his views. In the summary, a picture begins to come through of a pro-free-markets figure who is not otherwise recognizable as a modern-day Republican or Democrat. He fears higher interest rates (typically a supply-side concern) but also fears that income inequality could create massive, even violent, social upheaval (almost always a social liberal’s worry).
I can’t help but wonder if cap-and-trade schemes are emotionally confusing to a libertarian. On one hand, it’s an aggressive government manipulation of the market, which has to make a free-marketeer’s skin crawl. On the other hand, it is itself a market, where the glaring government influence is assessing a cost to pollution, which has always been a no-cost externality. In Greenspan’s case, the skin-crawl factor clearly outweighs the curiosity about a synthesized marketplace.
We’d suggest he consider the words of George Will, who said “the free market is a government program.”