Book review: ‘Age of
Greed’ by Jeff Madrick
By David Greenberg,
Published:
July 29, 2011
Once they’ve been carved out
and stamped, reiterated in books and taught to
schoolchildren, the units of historical time can seem as
natural and apparent as the continents and oceans on a map
of the Earth: the Progressive Era, the Gilded Age,
Reconstruction. We know that each of these names is a human
invention, each year dividing these periods a matter of
human choice. But we don’t notice the invention when
it’s happening; we never see anyone decide when an era
begins, or what to call it, or what qualities mark it as an
epoch.
What has defined our time — America since the 1960s?
Historians are now trying to figure it out. In “Restless
Giant,†James
T. Patterson placed prosperity and freedom at the
center of our fin de siecle journey. For Sean
Wilentz, it was “The
Age of Reagan,†a time of ascendant conservatism.
Daniel Rodgers calls it an “Age
of Fracture,†when old and widely shared verities
splintered into a jumble of irreconcilable premises.
Jeff Madrick, in his compelling new history, dubs it an Age
of Greed. Madrick is not a professional historian but an
accomplished economic journalist known for his essays in the
New
York Review of Books. Nor is he surveying all of
American politics since the 1960s, just the major changes in
business, finance and policymaking. Yet his book tries, like
the others, to define and explain the long era, creating a
larger framework by which future generations will understand
our time. Ambitious in its scope and frequently persuasive
in its arguments, “Age
of Greed†abounds with powerful men, ugly fights,
infamous scandals, twists and turns, and, true to the
book’s title, lots of shameless cupidity.
“Age of Greed†chronicles how Americans ended up with
the highly unregulated financial system that produced the
meltdown of 2008 and the fallout that lingers three years
later. What’s most novel about the book, which relies
heavily on other secondary accounts, is that unlike other
recent treatments of the financial crisis, it traces the
origins of the problem not to the Bush or Clinton or even
Reagan years, but all the way to the late 1960s.
Back then, in the heyday of the post-World War II economy,
a handful of bankers, businessmen, economists and
politicians began campaigning to discredit, repeal and, when
necessary, evade the controls that had governed lending and
borrowing since the New Deal. Steadily, they made inroads,
taking advantage of hard times, such as the
stagflation-plagued ’70s, as well as good times, such as
the tech-fueled ’90s. By 2008, as Madrick tells it, a
once-worthy regime of safeguards had ceased to meaningfully
police Wall Street or many other realms of American
business.
A 40-year march through the world of Eurodollar CDs,
greenmail and credit default swaps might strain a general
reader’s comprehension, let alone interest. To relieve the
tedium, Madrick breaks his story into 20 chapters, each a
biographical thumbnail of one or more key players. Laying
out these sketches in a strategic order, like a bridge
player setting down his cards, Madrick constructs a more or
less coherent tale out of his many political, financial and
business-world fragments.
At times the book can feel fractured. A chapter on Ronald
Reagan precedes a section on moguls Ted Turner, Sam Walton
and Steve Ross, and then it’s back to Jimmy Carter. But at
its best, Madrick’s panoptic view illuminates the big
picture of American financial history in a way that a
micro-study of Fannie
Mae or Bear
Stearns or the Federal Reserve never could.
Since history gets cloudier as time passes, the book’s
most fascinating chapters are the earliest. Madrick’s
capsule reviews of recent events — how Fed Chairman Alan
Greenspan or GE head Jack Welch deepened America’s
economic mess — are bound to feel familiar. More
revelatory are his discussions of the malign roles played by
people often left out of the history books. Walter Wriston
of Citicorp (now Citigroup), for instance, worked to
eliminate “Regulation Q†of the 1933 Banking Act, which
limited the rates paid on savings accounts. Corporate lawyer
Joe Flom, now little remembered except as a philanthropist,
masterminded the hostile takeover. (Never again will I enter
the Flom Auditorium at Washington’s Woodrow Wilson
International Center for Scholars, where I work this year,
with a clean conscience.)
The book’s slightly lurid title recalls the Reagan years,
when liberals seethed at a new culture that extolled an
unfettered market and rampant acquisitiveness. (Illustrative
of the zeitgeist was the way that Michael Douglas’s
“greed . . . is good†line in the 1987
movie “Wall
Street†— spoken by a villain and meant as an
indictment of him — was parroted without irony as a
watchword for the times.) Despite the title’s undertones,
however, Madrick is no polemicist or ideologue. He writes in
restrained, dispassionate prose, letting out only hints of
the outrage rumbling below. And yet he has a clear
interpretative slant. Unerringly critical of financial
adventurism and deregulation, he argues that his subjects’
relentless quest for personal wealth, enabled by politicians
who were either ideologically compliant (Reagan) or
politically timid (Carter), produced a society rife with
inequality and injustice.
The problem with the book’s title, actually, isn’t its
melodramatic oversimplicity — every author should be cut a
little slack in trying to sell books. What “Age of
Greed†elides, it seems to me — not only in its title
but also in its analysis — is the difference between those
rogues whose greed led them to run afoul of the law and
those whose greed the system has in fact smiled upon.
So, Madrick’s narrative rightly includes sordid
characters such as Ivan Boesky, Michael Milken, Ken Lay and
Sandy Weill — poster boys of financial malfeasance —
whose transgressions appalled almost everyone. Even Wall
Street’s defenders have sometimes claimed that
high-profile miscreants such as these men simply prove the
rule that by and large the system functions well.
More problematic are cases such as those of Welch or Flom
— men who amassed their fortunes by threading loopholes,
breaking with customs and violating unspoken codes of
behavior, but never technically committing crimes. It’s
fine and well to condemn these men as greedy, but greedy
people will inevitably flourish in a system rooted in the
profit motive. It’s naive to expect civic-mindedness, a
sense of social responsibility or even a human conscience to
restrain them when laws and regulations don’t.
If you believe in capitalism — as most of us do — this
stubborn truth points to one humane alternative. The
government needs to construct strict rules and revise them
often to clamp down on egregious practices as soon as they
start. It was possible, once, to stop the leveraged-buyout
craze before it wrought so much havoc or, years later, to
blow the whistle on collateralized debt obligations before
the crash. Bankers who invent and exploit these tools are
obviously avaricious by most definitions, but it’s the
government’s job to look out for those being victimized,
and for the economy as a whole.
The real scandal revealed by Madrick’s important book is
not the well-known tales of dastards such as telecom analyst
Jack Grubman or Internet stock promoter Frank Quattrone, but
the more elusive — and more consequential — story of how
the government came to abdicate this supreme responsibility.
David Greenberg is a professor of history and of
journalism and media studies at Rutgers University. He is a
fellow at the Woodrow Wilson International Center for
Scholars for the 2010-11 academic year
