George Greenspan. Wait, is that his name? No. Alan Greenspan, that’s it. Oh, how soon they (want to) forget.
Alan Greenspan testified the other day before the Financial Crisis Inquiry Commission — that august congressional panel that is even now vectoring in on the causes of the financial crisis that brought the nation and the world to the brink.
In his testimony, he talked about two numbers: 70 and 30, the percent of the time he got things right and got things wrong. I want to talk about his use of those numbers.
What I say is hogwash.
This is technocratic mumbo-jumbo, the kind of stuff technical people say when they’re faced with failure but can’t come out and admit it. Instead of fully admitting failure, they cloak contrition in technical sounding language that is meant to snow (or has the effect of snowing) their audience with pseudo-quantitative information that has the effect of creating credibility where there should be none.
70/30 is not credible in my opinion. Here’s why I say that.
Percent? What is he saying when he uses that word. Did he do a study of his decisions? Did he count them up and assess their success? What was his sample size? How did he define “success”? Show me.
70/30? Really. Where are the numbers that yield those nice tens of percents? Get serious; there aren’t any numbers. When asked, “Would you put [the financial crisis] in the 30 percent category?†Greenspan replied, “I don’t know.” I see… you don’t know. So specifically what does go into that 30 percent category?
He was speaking metaphorically, you’ll say. Qualitatively. I say, no. 70/30 is not a metaphor, and do I really need to point out that 70/30 is by definition quantitative?
No, I’ll tell you what 70/30 says. First of all, it says that you’re thinking in terms of tenths — clean, precise tens of percent. 70/30 means nothing if it doesn’t clearly differentiate the speaker’s point from, say, 60/40 or 80/20. Really? So just what is it in his history of decisions that yields 70/30 and not, say, 60/40? Nothing, I suspect.
This isn’t metaphorical. This isn’t qualitative. This is his usual technocratic mumbo-jumbo, and this time it’s designed to distract a nation afraid of numbers from the reality of what just happened.
Greenspan’s contrition would have been more credible in my mind if he had just said, “I made some errors but on the whole they were fewer than my successes.” But that’s not what he said. Because that’s not what he wanted to say. What he wanted to do was construct a narrative in which his tenure at the fed was one of fine-grained control over the levers of a complex system, to project that he was so in control of the financial policy apparatus, so measured in his assessment of the situation, that he can now step forward and state with confidence the percentages on his success/fail ratio to within tens of percent.
Pay no attention to the man in front of the curtain.