WASHINGTON – The spread of free markets is driving the world's living standards higher, Federal Reserve Chairman Alan Greenspan said Wednesday.
"Despite worrisome pockets of violence and destruction, commerce and wealth-building continues apace," he said in remarks prepared for delivery at New York University. Greenspan was accepting an honorary degree from his alma mater.
"On average, world standards of living are rising in large part because of the widening embrace of competitive free markets, especially by populous and growing China and India," he said.
A copy of his remarks was distributed in Washington.
Since the autumn of 2001, global gross domestic product per capita has grown more than 8 percent, Greenspan said. Growth in developing Asia, where many of the world's poor reside, has been considerably faster, he added.
Open and competitive markets have made the global economy more flexible and better able to withstand jolts from terrorism and other problems, Greenspan said.
Personal trust, he said, is a key to the smooth functioning of markets.
The wave of corporate accounting scandals that rocked Wall Street in 2001 dented that crucial trust, Greenspan suggested.
"Corporate scandals in the United States and elsewhere have clearly shown that the plethora of laws of the past century have not eliminated the less-savory side of human behavior," he said. "We should not be surprised, then, to see a reemergence in recent years of the value placed by markets on trust and personal reputation in business practice."
Greenspan, 79, will retire from the Fed on Jan. 31 after 18-plus years at the helm.
Fed policymakers on Tuesday boosted a key short-term interest rate to its highest level in 4 1/2 years to keep inflation under control.
Greenspan had received degrees in economics, including his Ph.D, from New York University.