Alan Greenspan, the enigmatic chairman of the Federal Reserve who presided over two decades of American economic expansion but whose low-interest-rate policies are now blamed for inflating the housing bubble and exacerbating inequality, has died at the age of 100. For working people in this country, his legacy is a complicated one.
Greenspan took the helm of the Fed in 1987, a time when a pint of milk cost 45p and the average house price was three times annual earnings. By the time he stepped down in 2006, those figures had shifted dramatically. The cost of living had climbed, wages for the majority had stagnated, and the gap between the super-rich and everyone else had become a chasm. Greenspan’s mantra was flexibility: low interest rates to stimulate growth, deregulation to free markets. But for the mill workers of Lancashire and the call centre staff of Glasgow, the benefits of that flexibility proved elusive.
His tenure saw the dot-com boom and bust, followed by a relentless drive to keep money cheap. That policy pumped up asset prices but did little for the pay packets of ordinary workers. Unions argue that his focus on controlling inflation through interest rates came at the expense of full employment. The result: a labour market that delivered for Wall Street but not for the high street.
Greenspan’s views on regulation were equally controversial. He was a staunch believer in the self-correcting nature of markets, a faith that led him to oppose tighter oversight of derivatives and subprime lending. That deregulation laid the groundwork for the 2008 financial crash, a disaster that wiped out savings and pensions for millions of British families. In his 2007 memoir 'The Age of Turbulence', Greenspan conceded that his free-market ideology had been flawed. For those who lost their homes and jobs, it was a case of too little, too late.
Yet it would be unfair to paint Greenspan solely as a villain. The 1990s, under his watch, saw a period of strong growth and low unemployment. But even then, the benefits were unevenly distributed. Adjusted for inflation, median household income in the US barely rose during his final years. In the UK, where his policies were mirrored by the Bank of England and Treasury, the story was similar. The real economy of factories, shops and building sites did not keep pace with the financial economy.
Greenspan’s death marks the end of an era. It forces a reckoning with the economic orthodoxy he personified: the belief that what is good for the markets will trickle down to the kitchen table. That idea has been challenged by the rise of populism on both sides of the Atlantic, by the surge in union activism, and by a government that now talks of levelling up. But the structures Greenspan helped build remain: the primacy of central banks, the deregulation of finance, the prioritisation of inflation targets over jobs.
For the families in Redcar who saw their steelworks close, or the miners of Yorkshire whose pits were shut, Greenspan’s ideology was a distant force that shaped their lives. His death is not just a moment for obituaries; it is a moment to ask whether we are still living in his shadow, and whether a different path is possible.
The Bank of England has already signalled a shift, focusing more on employment and inequality. But the task is immense. Wage growth for the bottom half of earners in the UK has been glacial for decades. The cost of housing, energy and food has soared. The legacy of cheap money is a generation struggling to get on the property ladder.
Alan Greenspan is dead. The economic model he championed is not. The question now is who will bury it.
