Greenspan on Capitalism

I had a sneaking suspicion that Alan Greenspan, former Fed chief, was not as dumb as he pretended to be. When he was on the job he could barely say a straight sentence. Probably because he didn’t really believe what he was saying.

Since he’s been unemployed, he’s begun to speak more clearly. In the Financial Times he has an opinion on capitalism which is actually among the best in the series. In it, he makes a good point. Anti-capitalists are not really annoyed at capitalism. What bothers them is “crony capitalism”:

“Crony capitalism abounds when government leaders, usually in exchange for political support, routinely bestow favours on private individuals or business. That is not capitalism. It is called corruption.”

Or you could call it zombification... or geriatric capitalism... or, as Kurt Richebacher used to call it, “degenerate capitalism”.  But it’s not real capitalism.

The ‘greed’ that preoccupies Occupy Wall Street demonstrators is not a feature of capitalism, Greenspan points out. It’s a feature of human nature. He might have pointed out that socialists are just as greedy as capitalists. They are just more corrupt. Rather than get their gains by honest deception, they get it by brute force – by using the police power of government to take it from others.

Greenspan provides an example of a corrupt system, designed to protect the wealthy from competition – immigration law. It keeps out qualified foreigners willing to work for less:

“The H1B programme is in effect a subsidy for the wealthy, a policy that is anathema to the supporters of capitalism.”

He goes on to suggest that “improvements” to capitalism, such as those to be considered at Davos, are not likely to be good ones.

Good on you, Alan.

Bill Bonner