Ankle-biting from the academy.

• Author: Hoskins, Lee

Ravi Batra, Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy, Palgrave Macmillan, 2005.

Professor Batra mounts a full frontal attack on Federal Reserve Chairman Alan Greenspan. Greenspan is accused of being an intellectual fraud who foisted failed policies on the world economy in order to help his wealthy friends on Wall Street and to retain his position of power. To Greenspan bashers this is literary red meat. But it is a tough dish to swallow. Nefarious motives are assigned to Greenspan because he seems to change his views over time. This seems more of a character assassination on the part of Batra than a fraud by Greenspan. In addition, the evidence of policy failures does not stand up to examination.

The book is highly readable and a curious mix of biographical information, innuendo, and economic analysis. The story begins in 1981 when President Reagan appointed Greenspan to chair a commission on Social Security reform. In 1983 Congress passed and the President signed into law a bill aimed at improving the solvency of the Social Security system by increasing payroll taxes and reducing benefits. According to Batra, this is a Greenspan financial fraud: "Thus, the payroll tax hike became a massive fraud, when its surplus revenue was repeatedly used to pay for the tax cuts of people who were in the same opulent class as Mr. Greenspan himself. In hindsight, the Social Security legislation was just a sham designed to cover the federal shortfall so the pro-wealth tax cuts of 1981 could be preserved" (p. 35). The truth is that Greenspan just chaired a bipartisan committee (eight Republicans and seven Democrats) that, after much struggle and compromise, put forth a set of recommendation to Congress. If there was a fraud, it was committed by Congress, not Greenspan.

Greenspan is also accused of intellectual fraud. Batra argues that "...Greenspan repeatedly used his genius to alter his arguments, theories, and opinions to rise to the seat of power and remain there as long as possible. This amounts to intellectual fraud on a grand scale" (p. 74). Support for this position is pure supposition on the part of the author. Batra identifies changes in Greenspan's positions and asserts such changes were the result of base motives. No hard evidence is presented that Greenspan tried to influence elections or bias policy to help his "wealthy friends." The evidence against Greenspan (listed in a summary table, p. 120) is...