The rise of "economic populism" around the world has come from years of low growth that have "seriously impaired" the global economy, former Fed Chairman Alan Greenspan said Thursday.
Once known as the "Maestro" of the American economy, the 90-year-old Greenspan said in a speech that the "surprise electoral wind of Donald Trump" in the U.S. and the Brexit vote in Britain are the two most glaring examples of a movement that is taking the world by storm.
"Populism is not a structured economic philosophy such as capitalism, socialism or communism," he told an audience at the Economic Club of New York. "But it's a cry of pain by the populace for some leaders to arise to take charge and lessen their pain."
The global economy is still struggling to recover from the financial crisis and the Great Recession that ended in 2009.
While the U.S. has maintained growth since then, GDP has never exceeded 3 percent for a single year and has been on its slowest growth path since the Great Depression.
Greenspan's successors on the Fed have tried to push growth through years of basement-level interest rates and by expanding the central bank balance sheet to $4.5 trillion through three rounds of bonds buying known as quantitative easing.
Asked to evaluate the Fed's actions, Greenspan demurred.
Instead, he placed blame for much of the slowness on social programs, which he said has been taking away money that could be spent on investment. Spending on programs like Social Security now takes up 13 percent of GDP, compared with 5 percent in 1965, he said.
"Entitlements are drowning out the funding of ultimately what is required to engender productivity growth, and as you know productivity growth is basic for all economic activity and especially standard of living," Greenspan said.
Fixing entitlement issues — he mentioned Social Security specifically — requires political will that he does not believe exists in Washington.
"The political system has demonstrated unequivocally in the existing structure that (it) is unable to handle this problem," Greenspan said.