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Rev. Marilyn Sewell: Greenspan Passes the Buck

Today's post is from Marilyn Sewell, senior minister at the First Unitarian Church in Portland, Oregon. Sewell is the author of Breaking Free: Women of Spirit at Mid-Life and Beyond and Resurrecting Grace: Remembering Catholic Childhood, and the editor of two collections of poetry, Claiming The Spirit Within: A Sourcebook of Women's Poetry and Cries of the Spirit: More Than 300 Poems in Celebration of Women's Spirituality. This post also appeared on her personal blog, Reflections.

Cover of Breaking Free: Women of Spirit at Midlife and Beyond. Link to Beacon Press page for book. People are mad at Greenspan. Yes, the Lord of the Stock Market, the One True God we worshiped, has failed us, we see. Alan Greenspan, almost three years after retiring as chair of the Federal Reserve, is realizing that free markets don't always self-correct. Last Thursday he told the House Committee on Oversight and Government Reform, "Those of us who have looked to the self interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief."

Lawmakers asked him to say, "I was wrong, and I'm sorry." Pretty simple. But Greenspan declined. At a time when unprecedented numbers of people all over the nation are losing homes and now losing jobs, as well, the former Chair refused to accept responsibility for the crisis. He did say, however, that his faith in deregulation has been shaken. We were hoping you might have noticed sooner, Mr. Greenspan. And since you have fiercely opposed deregulation for almost 15 years, one would hope that you would at least apologize for letting ideology rather than market realities determine our economic policy. "The whole intellectual edifice . . . collapsed in the summer of last year," he said.

This kind of real-world crash is what happens when leaders hold to a blind faith in abstract notions of how things work, to the exclusion of what is happening to real people in real time. (Another good example of the dominance of ideology over common sense and the lessons of history is President Bush's belief that the war in Iraq would be quick and easy, and we would be "greeted as liberators.")

Did Alan Greenspan really believe that people would fail to act in their own (short-term) self-interest in a culture in which that is the absolute name of the game? Did he think that most bankers would fail to sell mortgages to people, if these bankers had no risk of losing money and had every reason to gain? Did he think that ordinary people who had always wanted a home but thought they might not ever be able to afford one would turn down a loan that was handed to them so readily? Did he think that speculators would not try to speculate, when easy money is available? I am not an economist—my field of study is theology. But I could have told Mr. Greenspan, had he asked, that people do tend to act in their own self-interest most all of the time, even if their actions might very well hurt others—yes, even if their actions stand to cause massive social dislocation and the suffering of many.

This is how it works, Mr. Greenspan. With sin, I mean. First you decide what you want to do, out of your own need, or greed. Then you rationalize that this action is not harmful to others—in fact, it probably will even benefit others (consider the totally discredited "trickle-down theory"). Then you ignore the consequences of your behavior, when they don't match your rationale. When it turns out that your chosen ignorance and your greed have harmed another (or many), you say, "Gee, I just didn't know!"

Greenspan blamed our troubles on "the modern risk-management paradigm." Theologians might use the word "concupiscence," meaning lust or greed. Maybe you economists should consider lacing your curricula of mathematics and logic with a little study in ethics and theology. You could even consider meditation and prayer, to attempt an engagement of the heart.