ECONOMISTS: Super-capitalist at the CEA

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Ever since he served as principal economic adviser to Richard Nixon in the 1968 campaign, Alan Greenspan has resisted countless offers to join the Administration. He has preferred to remain an outside critic—consulting when asked, praising and needling as he saw fit. His reputation surely did not need whatever prestige—or damage—would accrue from a high job in a Government preoccupied with impeachment. He earns more than $300,000 annually as head of Manhattan's Townsend-Greenspan & Co., an economic consulting firm that has some 100 blue-chip corporate and Wall Street clients. He has earned the respect, too, of fellow economists of all persuasions, including his colleagues on TIME'S nine-member Board of Economists. Erudite and witty, with a fine mastery of business statistics and a knack for calling economic turns well in advance, Greenspan, 48, impresses even liberal Keynesians who dispute his supercapitalistic views.

So an obvious question emerged last week after President Nixon named him to succeed Herbert Stein in September as chairman of the Council of Economic Advisers: Why did Greenspan finally accept? Greenspan replies that the inflation-ridden economy is in much worse shape than it has been since the Administration began pressing him years ago, and the time has come to switch from critical spectator to committed participant. "What is at stake is so large," he says, "that if anyone has the possibility of making a contribution, he should. It's one of the rare instances when the issue of patriotism comes up."

Big Sacrifice. There were other inducements. Federal Reserve Chairman Arthur Burns, Treasury Secretary William Simon, Presidential Economics Adviser Kenneth Rush and Presidential Assistant Alexander Haig all prevailed upon Greenspan to accept. To avoid conflicts of interest and satisfy the Senate Banking Committee, which is expected to approve his appointment, Greenspan will place all stock he owns in his firm in a blind trust over which he will have no control. Thus he faces a big financial sacrifice that will not be offset by his $42,500 salary at CEA. Profits earned by his firm while he is away will be lost to him forever—distributed to employees and charities.

Greenspan entertains no fanciful notions about what he can accomplish in his new advisory role. "I'm not sure what can or has to be done," he says with characteristic candor. But he does know that a drop in crude-oil prices would do wonders to ease world financial imbalance. And, as a sharp foe of controls, he enthusiastically supports the Administration's anti-inflationary policy of laissez-faire. He will press hard for reduced Government spending aimed at balancing the budget in fiscal '76. To Greenspan, budget deficits are the incendiary fuel of inflation; they force the Government to compete with private business for borrowings, thus forcing up both the money supply and interest rates.

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