aspects of our existing social safety net would be reauthorized by large majorities
of Congress, were they subject to renewal. I do not doubt that, with time
and changing economic circumstances, the consensus will evolve, but probably
within relatively narrow bounds.
Social safety nets exist virtually everywhere, to a greater or lesser extent.
By their nature, they inhibit the full exercise of laissez-faire, mainly through
labor laws and income redistribution programs. But it has become evident
that in a globally competitive world, there are limits to the size and nature of
social safety nets that markets can tolerate without severely negative economic
consequences. Continental Europe, for example, is currently struggling
to find an acceptable way to scale back retirement benefits and worker
protections against job loss.
*I am also coming around to the conclusion that the success of five- and ten-year economic
forecasts is as much dependent on a forecast of the degree of the rule of law as on our most sophisticated
econometrics.
504
TH E DE LPH IC FUTU RE
As awesomely productive as market capitalism has proved to be, its
Achilles' heel is a growing perception that its rewards, increasingly skewed
to the skilled, are not distributed justly. Market capitalism on a global scale
continues to require ever-greater skills as one new technology builds on another.
Given that raw human intelligence is probably no greater today than
in ancient Greece, our advancement will depend on additions to the vast
heritage of human knowledge accumulated over the generations.
A dysfunctional U.S. elementary and secondary education system has
failed to prepare our students sufficiently rapidly to prevent a shortage of
skilled workers and a surfeit of lesser-skilled ones, expanding the pay gap
between the two groups. Unless America's education system can raise skill
levels as quickly as technology requires, skilled workers will continue to earn
greater wage increases, leading to ever more disturbing extremes of income
concentration. As I've noted, education reform will take years, and we need
to address increasing income inequality now. Increasing taxes on the rich, a
seemingly simple remedy, is likely to prove counterproductive to economic
growth. We can immediately both damp skilled-worker income and enhance
the skill level of our workforce by opening our borders to large numbers
of immigrants with the vital skills our economy needs. On the success
of these seemingly quite doable reforms involving education and immigration
will likely rest popular acceptance of capitalist practice in the United
States for years to come.
It is not an accident that human beings persevere and advance in the
face of adversity. Adaptation is in our nature, a fact that leads me to be
deeply optimistic about our future. Seers from the oracle of Delphi to today's
Wall Street futurists have sought to ride this long-term positive trend
that human nature directs. The Enlightenment's legacy of individual rights
and economic freedom has unleashed billions of people to pursue the imperatives
of their nature—to work toward better lives for themselves and
their families. Progress is not automatic, however; it will demand future
adaptations as yet unimaginable. But the frontier of hope that we all innately
pursue will never close.
505
ACKNOWLEDGMENTS
When I left the Federal Reserve in January 2006, I knew I would miss working with the best
team of economists in the world. The transition into private life was eased—and made much
more exciting—by the new team that coalesced around the creation of this book.
Some of the more important contributors to this effort are former Fed colleagues. Michelle
Smith, Pat Parkinson, Bob Agnew, Karen Johnson, Louise Roseman, Virgil Mattingly,
Dave Stockton, Charles Siegman, Joyce Zickler, Nellie Liang, Louise Sheiner, Jim Kennedy, and
Tom Connors each filled in gaps in my recollection and provided insights that helped move the
writing along. Ted Truman was generous with his time and shared notes and photos from our
many trips abroad together. Don Kohn offered valuable reactions to and criticisms of portions
of the manuscript.
Lynn Fox, for several years the Fed's communications chief, proved a resourceful researcher,
a font of stories and ideas, and an adroit editor of some of the early drafts. David
Howard, a former deputy director of the Fed's Division of International Finance and like me a
recently minted retiree, brought to bear his expertise to backstop me on a number of key technical
discussions; he is both a sharp-eyed critic and a tough debater.
Friends and professional acquaintances took the time to provide essential insights, anecdotes,
and information. Martin Anderson shared memories about the Nixon and Reagan years.
Justice Stephen Breyer helped sharpen my thinking on intellectual property and other matters
of law. Ambassador James Matlock provided recollections of Gorbachev's Soviet Union. With
UK prime minister Gordon Brown, I have enjoyed wide-ranging discussions on globalization
and the British (and Scottish) Enlightenment. Former president Bill Clinton provided insights
into his thinking on economic policy issues; former White House adviser Gene Sperling helped
fill in my understanding of the Clinton years.
My especial thanks to Bob Rubin, former secretary of the treasury, who was very forthcoming
with his recollections of events we shared. His deputy and eventual successor, Larry
Summers, helped our joint understanding of the evolving complexity of globalization during
the Clinton presidency and since.
Bob Woodward provided transcripts of extensive interviews with me conducted during
my tenure at the Fed—a gesture that showed not only generosity but also sympathy for a nov
ACKNOWLE DGM E NTS
ice author. Daniel Yergin's excellent The Commanding Heights (coauthored with Joseph Stanislaw)
refreshed my memory of many events in which I participated or witnessed. Michael
Beschloss read the entire manuscript in draft; his thoughtful insights and adroit editorial suggestions
made me appreciate why his own books are so good.
Fact checking and research were the domain of Joan Levinstein and Jane Cavolina, with
contributions by Lisa Bergson and Vicky Sufian; Mia Diehl expertly orchestrated our photo
research.
This project would have gotten nowhere without Katie Byers, Lisa Panasiti, and Maddy
Estrada—my highly organized and highly patient assistants. I marveled at Katie's rapid, error-
free transcription of my barely decipherable handwritten prose, often water-soaked. This book
came into existence several times over under her fingertips.
I could not have chosen a better editor for this book than The Penguin Press's Scott Moyers.
He is a wizard of organization and remarkably knowledgeable over a wide range of subjects.
Throughout many months of writing, Scott was encouraging, judicious, thoughtful, and deft; in
the bargain, he is the son of former Federal Reserve Board employees. Scott's able assistant,
Laura Stickney, managed to keep the disparate members of the book team focused on our common
goal—no easy feat. The Penguin Press's president and publisher, Ann Godoff, supported
the project with wonderful enthusiasm. The production team—Bruce Giffords, Darren Haggar,
Adam Goldberger, and Amanda Dewey—shepherded this volume into print with skill and
patience.
My constant guide in the mysterious realm of book writing and publishing has been Bob
Barnett. As is true of many books centered on Washington, The Age of Turbulence would not
have happened as easily without his help.
Peter Petre has been my collaborator in the writing. He taught me the age-old art of narrating
in the first person. I had always viewed myself as an observer of events, never as part of
them. The transition was a struggle and Peter was patient. He was my window to the reader,
with whom he has had vast experience during two decades as a Fortune writer and editor. He
took special care in getting the autobiographical sections to come alive.
Very few first-time authors can boast of having a muse who is a beautiful, brilliant journalist
and an accomplished author herself I can. Andrea Mitchell, my wife, is my number one
ally and closest friend. On this project, she has been my astute counselor and most discerning
reader, and her suggestions have helped shape the book. She is, and always will be, my
inspiration.
But the final read and draft were mine. There are errors in this book. I do not know where they
are. If I did, they wouldn't be there. But with close to two hundred thousand words, my probabilistic
mind tells me some are wrong. My apologies in advance.
507
A NOTE ON SOURCES
The discussions of economics and economic policy in The Age of Turbulence rely on data drawn
almost entirely from publicly available sources: Web sites and publications of government statistical
agencies, industry groups, and professional associations. U.S. government sources include
the Bureau of Economic Analysis and the Census Bureau, both of the Department of
Commerce; the Bureau of Labor Statistics and other units of the Department of Labor; the
Congressional Budget Office; the Office of Management and Budget; the Office of the Comptroller
of the Currency; the Social Security Administration; the Federal Deposit Insurance Corporation;
the Office of Federal Housing Enterprise Oversight; and, of course, the Board of
Governors of the Federal Reserve. International sources include the International Monetary
Fund, the World Bank, the Bank for International Settlements, the Organization for Economic
Cooperation and Development, and the statistical agencies of other governments, such as China's
National Bureau of Statistics and Germany's Federal Statistical Office, as well as central
banks.
Professionals at dozens of organizations, associations, and companies responded helpfully
to requests for information and data: the Aluminum Association, the American Iron and Steel
Institute, the American Presidency Project, the American Water Works Association, the Association
of American Railroads, the Can Manufacturers Institute, the Center for the Study of the
American Electorate, the Conference Board, the European Bank for Reconstruction and De velopment,
Exxon Mobil Corporation, the Food Marketing Institute, George Washington High
School, Global Insight, the Heritage Foundation, JPMorgan Chase, the Juilliard School, the
National Bureau of Economic Research, the National Cotton Council of America, the NYU
Leonard N. Stern School of Business, the Securities Industry and Financial Markets Association,
Standard & Poor's, the U.S. Senate Historical Office, the U.S. Senate Library, Watson Wyatt, and
Wilshire Associates. The Web sites of CNET, Gary S. Swindell, Intel, Wired, and WTRG Economics
were also useful.
The autobiographical sections of The Age of Turbulence draw on a wide variety of sources,
both contemporary and historical, published and unpublished, as well as discussions with acquaintances
and friends whose names may be found in the acknowledgments.
A NOTE ON SOURCES
Oral historians Erwin C. Hargrove and Samuel A. Morley interviewed me at length in
1978 about my initial years of public service as chairman of the Council of Economic Advisors;
in writing chapter 3 ("Economics Meets Politics"), I used the unpublished transcript of that interview,
as well as the edited version that appeared in their book. I also drew upon my notes
for speeches and meetings during my decades as a private consultant, and upon articles and
essays I wrote for publication during those years. My scripts for the Public Broadcasting System's
Nightly Business Report, on which I appeared regularly in the 1980s, were another useful
source.
Chapter 3 and chapter 4 ("Private Citizen") are also informed by congressional testimony
I gave as chairman of the CEA, as well as by testimony I gave as chairman of the National
Commission on Social Security Reform. The development of my thinking on economic
and public policy may be traced in the transcripts of the hundreds of speeches and congressional
testimonies I gave as chairman of the Federal Reserve Board. Speeches and testimony
are available online via FRASER, the Federal Reserve Archival System for Economic Research
, on the Federal Reserve Web site
, and by way of Freedom of Information Act requests from the
Fed. I sometimes cite verbatim deliberations within the Fed; these are drawn from transcripts of
Federal Open Market Committee meetings, which are available through 2001 on the Federal
Reserve Web site. All quotations from congressional hearings are in the public record, which
may be accessed via the Web site of the Government Printing Office
, the Library of Congress, and other avenues.
During my tenure at the Federal Reserve, I made it a practice not to appear on television
and rarely did on-the-record interviews with journalists; however, I regularly gave background
interviews. Chapters 5 through 11, which cover my career at the Fed, draw on many sessions
over the years with Bob Woodward, transcripts of which he generously made available for this
project. The transcripts were the basis for Maestro, his book about me and the Fed. The narrative
in chapter 7 ("A Democrat's Agenda") of discussions with Paul O'Neill during his service
as treasury secretary was helped by the accounts in The Price of Loyalty, the book on which he
cooperated with journalist Ron Suskind. Similarly, my recollections of meetings and experiences
with Bob Rubin and Larry Summers in chapters 8, 9, and 10 benefited from Secretary
Rubin's memoir written with journalist Jacob Weisberg, In an Uncertain World.
My remembrances of the collapse of centralized planning and the growth of global capitalist
markets (chapter 6, "The Fall of the Wall"; chapter 19, "Globalization and Regulation";
and elsewhere in this book) were enhanced by Daniel Yergin and Joseph Stanislaw's seminal The
