Alan Greenspan Unplugged

Well, now that Alan Greenspan does not work for the government, he has been freely disclosing some interesting thoughts. His just-published book The Age of Turbulence: Adventures in a New World is supposedly worth reading if you are interested in Alan Greenspan's views, central banking, or economics in general. I'm too cheap to buy the book ;) and have a million other books on the list (I'm a newbie so I still have a million classics to catch up on). I'm going to list two interesting views of his. I agree with both of them.

Oil is a Big Factor in War

Alan Greenspan managed to say what warmongers and war profiteers the world over never say. Namely, that oil was one of the major--but not the only--reason for the Iraqi war, not to mention US foreign intervention in the Middle East.

I'll quote Robert Weissman's remark regarding this situation:

Greenspan's remarks, appearing first in his just-published memoirs, are eyebrow-raising for their directness:

"Whatever their publicized angst over Saddam Hussein's 'weapons of mass destruction,' American and British authorities were also concerned about violence in the area that harbors a resource indispensable for the functioning of the world economy. I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

His follow-up remarks have been even more direct. "I thought the issue of weapons of mass destruction as the excuse was utterly beside the point," he told the Guardian.

Greenspan also tells the Washington Post's Bob Woodward that he actively lobbied the White House to remove Saddam Hussein for the express purpose of protecting Western control over global oil supplies.

"I'm saying taking Saddam out was essential," Greenspan said. But, writes Woodward, Greenspan "added that he was not implying that the war was an oil grab."

"No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will."

(source: From Greenspan to Kissinger - Oil Warriors By ROBERT WEISSMAN; September 19, 2007; URL:

This is a tough position to take, especially when the "blind patriots" attack anyone who stands against any bogus war (for what it's worth, Greenspan was in favour of the war and was indeed promoting an attack on Iraq). I think the Iraqi war was completely unnecessary and immoral.

The Best Thing About America: Freedoms

Marcus Gee of The Globe & Mail has written an article elaborating Greenspan's views of China. Alan Greenspan is impressed with China but is concerned with something that parallels my view. A lot of people fail to realize that USA is the best country, for investing as well as living*, because of its freedoms. The so-called American Founding Fathers were extremely intelligent in creating a Constitution (and Bill of Rights) that was--and still is--far ahead of the rest of the world. If I moved to Titan and started a colony ;) I would base it primarily on the American Bill of Rights (but I would use British-style parliamentary system instead--USA/French-style system will lead to a two party or one party state IMO). Speaking a liberal-libertarian, I think this is the best thing about America. It is also what will make it an attractive country for centuries, until other countries catch up.

Greenspan points out that China, being a totalitarian country, is going to have problems in the future. I personally think that China will have to switch its econopolitical system at some point in the future (likely will be a messy scenario but better for the long run).

One reason, he argues, is that the United States has a secret economic weapon: the Constitution. "I do not believe most Americans are aware of how critical the Constitution of the United States has been, and will continue to be, to the prosperity of our nation," he writes. "To have had, for more than two centuries, unrivalled protection of individual rights, for all the participants in our economy, both native-born and immigrant, is a profoundly important contributor to our adventuresomeness and prosperity."

With their property protected from arbitrary confiscation, he argues, Americans have had the confidence to take the risks that make a capitalist economy thrive.

How many countries can say that property cannot be easily** seized by the government? Who is going to work hard if the government can grab what you have?

For one thing, foreign investors sometimes find that the technology they bring to their joint-venture factories in China mysteriously shows up in the Chinese-owned factories next door. With shaky property rights and dubious courts, there's not much they can do.

For the Chinese, the effects are much more serious. Mr. Greenspan notes that despite three decades of reform, Chinese farmers still do not own the land they till. They can lease it and take their produce to market, a huge improvement over the days of Mao-era collective farms, but they cannot buy or sell it or use it as collateral to secure a loan.

This handicap - a lack of access to capital - keeps hundreds of millions of peasants trapped in poverty on the farm while the urban middle-class thrives. "Granting legal title to peasant land could, with the stroke of the pen, substantially narrow the wealth gap between urban and rural residents," Mr. Greenspan writes. As it is, there are thousands of protests in China every year, many of them by peasants evicted from their land for urban expansion or factory construction.

Anyone watching China should pay attention to what happens to the farmers. The vast majority of the population are still in the rural areas and work as farmers. They are not sharing much in the wealth creation in China and this can lead to unrest (This is an even bigger problem in places like India but the system isn't totalitarian and property rights are better.)

(* Well, USA is the best country to live in on aggregate but there are several things that make it worse off than other countries. For instance, high discrepancy in wealth results in some people with immense wealth while many have very little. This creates all sorts of social problems including high violent crime and underemployment/waste of human resources. It's sad that the richest country in the world on GDP per capita terms (if you ignore little countries like Luxemberg) essentially has streets where some people are scared to walk on. You can literally go from one side of the street to another and the environment just deteriorates. All of this means that my country, Canada, is arguably better :) (no hate mail from you Americans please :) )).

(** Do note that USA is nowhere near perfect. Unfortunately ,the Constitution can be manipulated at times. For example, the government stripped assets of Japanese Americans in the 40's (this should have been impossible under the Constitution). On a non-economic issue, if I'm not mistaken, Abraham Lincoln held (executed?) Confederate soldiers/collaborators without trial (sounds eerily similar to George Bush and Guantanomo Bay). )


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