Greenspan Tells Grads Honesty is Best Policy

Economic times are good and likely to get better, Federal Reserve Chair Alan Greenspan told the Class of 1999, their families and alumni in his Commencement address on June 10.

In a half-hour speech that could have passed for a crash course in introductory economics--replete with terms like "comparative advantage" and "capital assets" as well as stories from economic history--Greenspan outlined the ways in which new technologies have led to growth.

But Greenspan emphasized that all economic success is build upon the character of the people.

"National well-being, including material prosperity, rests to a substantial extent on the personal qualities of the people who inhabit a nation," he told the crowd which filled the sunny Tercentenary Theater and overflowed onto the Widener Library steps.

Greenspan has been known to move markets with passing comments on the economy, but during his half-hour address, he steered clear of making predictions or giving counsel.

"I had planned to offer you some useful investment advice but, regrettably, in the end, was dissuaded," Greenspan said.

"My staff informed me that those of you who in recent years have been paying Harvard tuition or have contributed to the endowment fund, must by now have little left to invest," he quipped.

Around three dozen students carrying red balloons walked out of the speech in silent protest of Greenspan's economic policies, which they said disadvantaged poor Americans. Protest organizers had expected as many as 100 students to leave.

But in his speech, Greenspan--who referred to himself as an "old, idealistic central banker"--said that while recent economic growth was remarkable, he also wished that it benefited all Americans more equally.

"Expansion of incomes and wealth has been truly impressive though regrettably the gains have not been as widely spread across households as I would like," he said.

Still, he argued, economic times are good for most Americans thanks to innovations that have made companies more efficient.

"Standards of living rise when incomes created by the productive facilities employing older, increasingly obsolescent technologies are marshaled to finance the newly produced capital assets that embody cutting-edge technologies," Greenspan told the audience--which included Vice President Al Gore '69, whose daughter Kristin C. Gore '99, graduated earlier in the day.

While Greenspan said new information technologies have allowed businesses to better meet customer needs, he also said these new economics rely more and more on trust and ethics.

"Without mutual trust and market participants abiding by a rule of law, no economy can prosper," Greenspan said.

"It is decidedly not true that nice guys finish last," he added.

Greenspan said ethical conduct can lead to happiness as well.

"Material success is possible in this world and far more satisfying when it comes without exploiting others," he said.

"The true measure of a career is to be proud that you've succeeded without leaving a trail of casualties in its wake," Greenspan added.