Ryan's Reviews > The Age Of Turbulence: Adventures In A New World

The Age Of Turbulence by Alan Greenspan
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Jan 05, 08

Read in October, 2007

While I´ve always respected Greenspan, I had no idea he was such a renaissance man. The first half of the book, his biography, is fascinating. His first career was as a jazz musician - a musician who did the other bandmembers taxes, because he enjoyed it! He became a part of Ayn Rand´s circle, and she was actually a humanizing influence on him! Maybe I shouldn´t be surprised, but it isn´t exactly what I expected from the world´s leading living authority on economic matters.

As for the second half of the book, I also found it interesting, especially since several of his predictions have come to pass, even in the short period between the publication of the book and now, January of 2008. However, while the first half of the book makes good reading for anyone interested in learning a little bit about one of the most influential men of the last 30 years, the second half can be skipped by anyone who doesn´t have a more specialized interest in economics.

One thing that I found interesting was his discussions of happiness as it relates to individual economic welfare, and immigration. Greenspan has always been a proponent of free markets, in the belief that free markets are the most powerful engine for improving material well-being. He acknowledges, however, that it has become very clear in his career that there is not a straight-line correlation between increases in material prosperity and happiness. Once basic needs have been met, you don´t get happier as you get more - you have a brief spike in happiness as you reach a new level, and then happiness drops down to the baseline. Rather than the absolute level of material prosperity, your RELATIVE prosperity, (relative to your peers), becomes more important to your level of happiness. Take that as point one.

Second, overall happiness in the U.S. is low right now, in part because there is a large disperity between low income households and high income households. The disperity is caused by a shortage of highly educated individuals in certain fields. The fastest way to increase the number of highly educated people available, and therefore decrease the premium paid for their education, is to loosen the barriers to immigration for highly educated people. This will lower the incomes of the highest paid segment of the population, decreasing the wage disperity - and thereby increasing the overall level of happiness in the U.S. (Greenspan does not make this argument. He discusses relative wealth and happiness, and he discusses the shortage of highly educated people and how to alleviate it. If his claims are correct, however, my argument follows from his.)

I find this interesting becuase immigration and employment protection are two of the most sensitive issues in the country right now. Many people who are unhappy because they feel that their relative level of wealth has declined, want to limit immigration, so that ¨foreigners don´t steal our jobs.¨ Other groups prostest the WTO and World Bank as primary drivers of globalization, which is ¨stealing jobs from the poor around the world,¨ as well as from workers at home.

The irony is that, at least in the U.S., we don´t have any real worries about our absolute level of wealth. Most of us know where our next meal is coming from. It´s our relative level that decreases our happiness, and the best way to fix that is to encourage immigration, and discourage job protection. Those very people who don´t want immigrants stealing their jobs would be happier if we had more immigration.

There are many more small ironies to be found in ¨Age of Turbulence,¨ if you know where to look. A worthwhile read.
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