- The Washington Times - Friday, April 25, 2003

In a surprising, but most welcome announcement, President Bush told a group of financial reporters Tuesday that Federal Reserve Chairman Alan Greenspan "should get another term."
The announcement was surprising for two reasons. First, Mr. Greenspan's current four-year term as chairman, which is his fourth, doesn't expire until June 20, 2004, 14 months from now. Second, various "senior administration officials" have recently been quoted in the press always anonymously, of course strongly hinting that Mr. Greenspan's failure to fully embrace the White House's tax-relief plan during congressional testimony in February had damaged, and perhaps destroyed, his chances for reappointment. Well, nobody in the White House is more "senior" than Mr. Bush. The president has now clearly demonstrated that total fealty to White House policy is not the sine qua non qualification for continued service as a powerful federal policy-maker. And outside the Oval Office, no federal official is as powerful as the chairman of the Fed.
The announcement was most welcome because of Mr. Greenspan's hard-earned and much-deserved stature as the world's most indispensable economic policy-maker. Under Mr. Greenspan's leadership, the Fed has successfully resolved several major worldwide economic crises, beginning with the October 1987 stock-market collapse, proceeding through Asia's 1997-98 contagious currency crisis and culminating in the aftermath of September 11.
Inarguably, Mr. Greenspan has brilliantly no hyperbole there overseen the largest and fastest-growing economy in the world since his arrival at the Fed during the summer of 1987. In fact, without Mr. Greenspan at the helm, it is most unlikely that the U.S. economy would have expanded rapidly enough to have accounted for two-thirds of global growth since 1995. Echoing the conventional economic wisdom, the new York Times' Paul Krugman himself vehemently argued in early 1996 that Mr. Greenspan's perceived technology revolution was incapable of generating a long-term, sustainable increase in productivity. Fortunately, Mr. Greenspan utterly rejected this thesis.
Resisting the temptation to slam on the monetary brakes, Mr. Greenspan undertook a brave experiment and allowed the U.S. economy to reach its own limits. To say his view was vindicated is an understatement. From 1996 through 2000, the U.S. economy grew by an average annual rate of more than 4 percent; economywide inflation, measured by the GDP deflator, averaged 1.7 percent per year; and the unemployment rate fell below 4 percent.
Notwithstanding the stock-market bubble, about which Mr. Greenspan presciently warned in his famous December 1996 "irrational exuberance" speech, those growth rates represented the production and consumption of actual goods and services and generated significant gains in wages and salaries. Moreover, considering the extent of the stock-market collapse, the subsequent recession proved to be relatively mild. Despite legitimate concerns about the "jobless recovery" itself the consequence in part of the ongoing productivity revolution it's worth noting that the unemployment rate is still below 6 percent. Prior to Mr. Greenspan's grand experiment, an unemployment rate of 6 percent was considered to be "full employment."
As readers of this page know, we do not always agree with Mr. Greenspan. However, let there be no misunderstanding: Mr. Greenspan's experienced and extremely well-regarded hand at the monetary-policy lever makes him the ideal chairman at present, and to borrow a favorite phrase among economists as far as the eye can see.

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