Steve Jobs and Alan Greenspan

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Dean Baker

Dean Baker is co-director of the Center for Economic and Policy Research

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October 6th, 2011 12:46 AM

Steve Jobs and Alan Greenspan

On the tragic passing of Steve Jobs, while still a relatively young man, it is interesting to juxtapose him to Alan Greenspan, one of the other iconic figures of our time. One made us rich, with a vast array of new products and new possibilities. The other made us poor with a long lasting downturn that could persist for more than a decade.

The two of them can be taken as symbols for the best and worst of modern capitalism. Jobs is the symbol of capitalism when it works. Again and again he broke through barriers, creating new products that qualitatively altered the market by making vast improvements over the competition.

Apple made personal computers a standard household product by developing a simple user friendly idiot-proof system that anyone could use. Jobs was a decade ahead of the Microsoft based systems, using menu driven computers in the mid-80s that were not matched by Microsoft until Windows was developed in the mid-90s. His later generation of computers continues to include features that make it far superior to the competition.

As we know, computers were only the beginning. The iPod changed the way people listened to music. The recently developed CD quickly followed the record on the dust heap of antiquated technologies. Vast amounts of music could be stored in a small handheld device instead of requiring massive bookshelves of records, as had been the case just twenty years earlier.

Then we had the iPhone that made smart phones a standard appliance featuring everything from video cameras to translation systems. And, of course there is the iPad, which, along with its competitors, is revolutionizing the way we read books and is largely replacing the laptop computer.

Jobs didn't do any of this by himself. He put together teams of great innovators. But the point is that he was able to recognize talented people and give them the means to make great innovations and bring them to the market. This is what a market economy is supposed to do.

By contrast, Alan Greenspan's vision was about getting rich. And plenty of people got very rich under the rein of Alan Greenspan, a disproportionate number of them on Wall Street. When we think of successful people in connection with Alan Greenspan we have to think of people like Angelo Mozilo, the CEO of Countrywide in its heyday as one of the leading pushers of subprime mortgages. Mr. Mozilo walked away with hundreds of millions of dollars while many of his customers faced foreclosure and his shareholders lost their shirts.

Richard Fuld, the CEO of Lehman Brothers is another hero of the age of Greenspan. Under Fuld' s rein, Lehman Brothers took the lead in packaging into mortgage backed securities (MBS) the loans hawked by Mozilo and his competitors in the subprime market. It apparently did not concern him that many of these loans were fraudulent and would inevitably blow up on both the homeowners and the purchasers of the MBS. Lehman also walked away with hundreds of millions of dollars as his company went down in flames.

And then there is Robert Rubin, another Wall Street multi-millionaire. After leading the charge for deregulation at Greenspan's side as Treasury Secretary, he took a top position at Citigroup. He pocketed over $100 million as Citigroup fell to near bankruptcy -- saved only by government bailouts - also done in by the subprime trash it marketed around the world.

The computer guru of Greenspan's world is Bill Gates, a man who got far richer than Steve Jobs. Gates' secret was not making great products -- the only ones praising his creativity at his funeral will be people on his payroll -- but rather in gaining control of markets. In other decades, the anti-competitive practices he pursued to win Microsoft a near monopoly in the computer market might have landed him behind bars. But in the age of Greenspan they made him the richest person in the world.

Unfortunately, we continue to live in the world of Alan Greenspan rather than the world of Steve Jobs. In spite of the remarkable innovations in technology over the last three decades, much of the country is poorer than it was 30 years ago. We have 26 million people who have the skills and desire to work, who can't find jobs or full-time jobs because of the mismanagement of the economy. We have people losing their homes and going homeless even though we have more than 14 million housing units sitting vacant.

This is economic stupidity of a high order. It is a world of unnecessary scarcity, where we have the ability to meet individual and social needs but are governed by people too timid or incompetent to take the steps needed to get the economy functioning right.

It is great to see people rising up in response to this absurdity in the Occupy Wall Street movement and its imitators around the country. Where this will end is anybody's guess, but at the moment it is our best hope for escaping the world of Alan Greenspan and moving toward a world that fosters the sort of creativity that Steve Jobs demonstrated in his too short life.

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