Even Greenspan publicly conceded his laissezfaire ideology had failed.

Evidence

Imputations of a generational shift in the American po liti cal environment were not solely the province of the Left. David Brooks wrote in the New York Times that “we’re in for a Keynesian re nais sance,” predicting the onset of a “Gingrich revolution in reverse and on ste roids.” Peggy Noonan, a former speechwriter for Ronald Reagan, observed in the Wall Street Journal that “something new is happening in America” and foresaw “the imminent arrival of a new liberal moment.” Her newspaper’s editorial page grimly anticipated “the restoration of the activist government that fell out of public favor in the 1970s” and “a period of unchecked leftwing ascendancy.” Economists long known for their orientation toward laissezfaire economic policies called for vigorous stimulus policies to counteract the downturn. In an iconic moment, Alan Greenspan delivered a prepared statement before the House Committee on Government Oversight and Reform acknowledging that “those of us who have looked to the selfinterest of lending institutions to protect shareholders’ equity, myself especially, are in a state of shocked disbelief.” Under intense questioning from Henry Waxman, Greenspan admitted that he had “made a mistake in presuming that the selfinterest of organizations, specifi cally banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the fi rms.” Asked whether his ideology had led him to make erroneous decisions, Greenspan said: “What I’m saying to you is, yes, I’ve found a fl aw. I don’t know how signifi cant or permanent it is. But I have been very distressed by that fact.” The fl aw had destabilized “the model that I perceived is the critical functioning structure that defi nes how the world works, so to speak.” Waxman continued: “In other words, you found that your view of the world, your ideology was not right, it was not working.” “Absolutely, precisely,” Greenspan replied. Even the public icons of the free market seemed to be renouncing their established convictions before the nation’s eyes. — Angus Burgin, The Great Persuasion, 541

Categorization

• XREF: Connects to the Mont Pèlerin Society arc — Greenspan’s testimony is the public repudiation of the very doctrines the MPS spent decades institutionalizing; echoes the broader financial-crisis reporting.