A piece that I read in Parker Palmer’s book, Healing the Heart of Democracy:
Parker writes about Alan Greenspan who testified before members of Congress in 2008. Greenspan served as chairman of the Federal Reserve from 1987 to 2006. He spoke to members of Congress who were “confused and distraught” about what had happened to a plan that was supposed to lead to a vibrant economy. Parker writes. “He used the same ‘rational’ economic arguments he had been using for years. But now, through the magic of economics, he arrived at a different conclusion.”
Q: As you look back on this catastrophic wreck involving a train that you and your colleagues had tracked for years with the best tools of economics, what surprises you the most?
A: The fact that dishonesty and greed played such a major role in the financial transactions that we allowed the industry to make without any real oversight or regulation.
Parker: “What Greenspan actually said was that he found himself in ‘shocked disbelief’ to learn that the people who ran unregulated lending institutions had not acted to protect shareholder equity. He had ‘found flaw’ in his model of ‘how the world works,’ a model based on the assumption that people who have power over big money will equate investors’ interests with their own and so do not need to be regulated.”
Whenever someone defends the trickle-down theory as something that should work, I always want to say that you have to figure in the greed factor. Greed will undermine a system, no matter what system we use…economic or otherwise…we have to be honest about the corrupt nature of wealth and power and this is the reason for oversight and regulation.