On Larry Summers...

I see that Sheryl Sandberg is writing--corectly--that Larry Summers has "[been] a tireless advocate for girls' education... fought for social security benefits for women working in their homes, better enforcement of child support obligations, and an expansion of child care tax credits..." in addition to being "a supportive and deeply caring mentor for [her] and many other women who had the opportunity to work for him" and the Harvard Economics professor who "helped us the most" when Sheryl started her new student organization: Women in Economics and Government.

All this is true.

And it is also true that, as one of us once said as we ran out of a building, "being Larry's friend is never dull."

But as important, I think, is that the upsided to putting Larry in high federal office right now is so very great.

1. Larry is--in Paul Krugman's words--a "a force of nature -- and also very, very smart. He would get things moving from day minus one..."

2. You can bring him up to speed on anything in fifteen minutes. And if you can be interesting enough to keep his attention for half an hour, he will start throwing out hypotheses and what-ifs and suggesting connections you would never have thought of.

3. If you do a piece of something for him excellently--a link in a chain, say--he will do his damnedest to make sure that all other links in that chain are done equally excellently.

4. If he thinks you know more about something than he does, he will listen to you very patiently and then trust and act on what you have told him.

5. Very good people want to work for Larry because he will, if he thinks you can handle it, push you forward into the limelight and give you more responsibility than you thought you could handle. It's the Bob Rubin style of management. There is the story Frank Brosens tells: '"Frank, could I see you for a minute?" [Bob] Rubin had followed partner Frank Brosens out of a management committee meeting. The meeting had been a triumph. Brosens had presented a compelling case for a bold commitment to arbitraging Japanese equity warrants.... Brosens had made the entire presentation but, as a learning experience, he had invited Zachary Kubrinick to sit in on the meeting as an observer. Brosens... could hardly believe Rubin had been so impressed that he would leave the meeting to compliment him immediately. Brosens was right; Rubin was not rushing to compliment him.... "Frank," said Rubin in his soft, relaxed voice, "you and I both know that, as young as he is, Kubrinick knows all that you know about Japanese warrants and he could have made the case equally well. You really should have let him make the case--and get the experience of coming before the management committee. By not taking the credit, you become more effective. If you do right by people, they win and you win. Frank, always go out of your way to share credit"...' Larry operates the same way.. In world of of bureaucratic, administrative, and academic snakepits that is more often kiss-up-kick-down control-the-access steal-the-credit, Larry's way of operating is very refreshing--and can be far more effective than the workings of those who use their great powers of social perception for evil or aggrandizement.

These are, I think, the skills we want in high federal office right now. Why? Because the situation is unclear and confused enough that we want really smart people serving as intellectual coordinators and traffic cops as the Obama-Biden administration assembles its policies. I am reminded of Keynes's reflections on Leon Trotsky:

Notes: Keynes on Trotsky: Granted his assumptions, much of Trotsky's argument is, I think, unanswerable. Nothing can be sillier than to play at revolution if that is what he means. But what are his assumptions? He assumes that the moral and intellectual problems of the transformation of Society have been already solved--that a plan exists, and that nothing remains except to put it into operation.... [But a]n understanding of the historical process, to which Trotsky is so fond of appealing, declares not for, but against, Force.... We lack more than usual a coherent scheme of progress, a tangible ideal. All the political parties alike have their origins in past ideas and not in new ideas and none more conspicuously so than the Marxists. It is not necessary to debate the subtleties of what justifies a man in promoting his gospel by force; for no one has a [true] gospel. The next move [must be] with the head...

Comments

[Ken Houghton]

So, following up to your previous post, Summers for CEA and Rubin for SEC?

[Neal]

The best people for now are the ones who aren't bound by the constraints of ideology. Smart people, unafraid to move in a different direction. Larry Summers, for sure.

[tjallen]

I believe everyone is aware of the speed we need to move. Every day is interest lost, compounded.

So it is all well-and-good to have the academics, the thinkers, the big brains, the analysts, but who and where are the doers? I have the impression a couple doers are being held-over from the previous administration (Bernarke in situ, and Paulson in some capacity).

I also see that many doers are (or were) in financial engineering, on Wall St, or in Connecticut, and are not held in as high a regard right now - their political capital has deflated.

So who and where are the left/liberal/Democratic doers, because especially in the markets, we need action, not just analysis.

tja

[andres]

Sorry Brad, but I cannot agree. As Dean Baker and others have pointed out, Larry Summers either did not predict the consequences of the burst house price bubble, or if he did, he failed to go public with them. Neither he nor Robert Rubin nor any of the other people in Clinton's Treasury (including whatshisname the former ass deputy assistant Treasury secretary) predicted that the coming house price correction would lead to a complete financial collapse.

For Treasury, I want someone who knew in advance of the potential for financial disaster that the mortgage lending bubble embodied, and who will not be lured into a false sense of complacency once the financial system is stabilized after the bailouts. My pick would be someone like Nouriel Roubini. As I keep emphasizing over and over again, the Obama team needs long-term reformers rather than just people who will let the system function well and then watch impotently as the Republicans destroy everything when they're back in power.

[andres]

Oops. That should have been deputy assistant Treasury secretary without the ass to precede it. That was just a typo, no offense intended.

[David in NY]

One far from events hears that Summers is not a good manager of people. I think that one may hear this mostly from people who were at Harvard when he was. I'm not sure what this means, and it seems inconsistent with some of what Brad says, but I think it's at least a concern. I also share the concern that Summers and Rubin were not all that good at forseeing the effects of globalization or the rise in housing prices.

[james]

What would be so wrong with inviting Sam Bowles and/or Bob Pollin to DC to give a completely different slant on where we should be headed and how to get there?

[james]

BTW, Happy Birthday to all my fellow Marines out there.

[Uncle Jeffy]

Many years ago (1979 or 1980) I attended a two-part NSF "Chatauqua" seminar presented by Larry Summers in Memphis, TN. He was not only the smartest guy in the room, by several light-years, but the smartest guy I've encountered - in person or via the printed word - in my life. After 8 years of idiots, incompetents, and kleptocrats, we need lots of really smart guys in this administration. Larry would be a great start.

[yoyo]

Brad, Summers was behind the deregulation that got us where we are now. I know he's been backtracking lately, but that seems like a serious problem to me.

[Robert Waldmann]

Well last time I talked to Summers he was asking about physics, because he was helping his daughter with her high school physics homework. Doesn't sound sexist to me (really he isn't).

I've never held his interest for half an hour or, certainly, convinced him that I know more about something than he does.

Oh and two small points

1) Summers is not Rubin
2) Geithner is not Trotsky

[PeonInChief]

I've already pointed out, but will point out again, that being the smartest guy in the room, or the universe for that matter, is irrelevant. It doesn't matter how smart he is if he's simply spouting the ruling conventional wisdom in service of the banking/financial elite. I see nothing that indicates he sees any problem with these people, and would rather have a less brilliant person who did see what was wrong with the deregulation scheme from the beginning--or at least in the middle.

What I would like to see is someone who says, "We don't have a problem as bad as Cuba's in 1991, but we should look at what they did to hold everything together. We wouldn't have to do the same things they did, but we should examine their approach." But I don't see that even on the radar of the people around Obama.

[Matt]

Ah! But L. Summers has a bit of baggage. The question is whether it is trivial or incidental baggage. And you also worked with, and have often praised, T. Geithner. As you said the other day, the bench is very deep.

As a new graduate student--and oddly, new to economics (I had one class in the subject)--I turned down an RA position with Summers. What an idiot I was.

[Timothy Burke]

Brad, my impression is that #4 on your list (he will listen carefully if he thinks you know something he doesn't) is a rare event, and that Summers tends to misestimate how often he *ought* to listen carefully for this reason.

I think that's an important shortcoming at this moment because rooms full of the smartest guys in the rooms did not really see the current economic crisis coming in the manner that it has arrived. Maybe what we need is someone who has a bit more humility in the face of the curves and turns that reality can throw at us, and a bit more modesty about the limits and value of his own expertise.

[lnthga]

Summers may very well be the smartest person in the room when the room is full of economists. However, an economist who assumes he is the smartest person in the room when there are physicists or even biologists present is going to get laughed at. (After all, even Professor DeLong's colleague Morris Zap admitted that guys who can build an atomic bomb or cure cancer should get paid more than him.) Although it is a well-paid field, economics is way down in the academic pecking order. Thus, the difficulties that Summers' arrogance is supposed to have raised with the Harvard faculty need not imply that he would have trouble with his fellow economists at the Treasury department. Just a hypothesis.

[David T]

"we want really smart people serving as intellectual coordinators and traffic cops as the Obama-Biden administration"

As long as they all re-read The Best and the Brightest before they report to work.

[a]

"...also very, very smart."

Aggh. Sometimes smart people do dumb things, and very, very smart people do the dumbest things. Smart people who are too sure of their intelligence tend to make bigger mistakes than dumb people because they can't admit they might be wrong, and so they wager larger sums than others.

Has Summers ever shown the ability to admit he was wrong?

[zackboston]

While I believe what you say about Mr. Summers, my short experience of him was different. He came to the graduate school of education at Harvard when he first became president and gave a decidedly ignorant and condescending talk about getting back to "reading writing and arithmetic." Then, during a Q & A period in which a young woman of color grad student asked him an intelligent question about the achievement gap, instead of answering her, he insulted her and waved his hand and acted as though she had asked a question that was beneath his consideration.

When challenged by the audience to take her question seriously, he gave a nonanswer that was worse than his direct insult.

Mr. Summers may be smart in certain ways and knowledgeable, however I worry about the effect of his personality on efforts to create change. First, I worry that he doesn't know what he doesn't know. You can't be smart and effective if you don't know that you don't know.

Second, in dialogue, this incident made me suspect that he feels no compunction about putting down people who don't think like him. That he treats "enemies" (who after all should make us sharper and more articulate through laboring with them) with disdain. That's one strategy, however, it is one that limits opportunities for widening conversations and collaboration (except among the supercompetitive --- read mostly white guys --- who groove on this kind of verbal battling). I just have to say that we need to ask our smart and able people to stop being rude and uncivil. Being smart is no excuse for not growing civility.

Finally, I got the distinct impression that he has a mental habit of failing to consider the possibility that he is mistaken.

I don't like Larry Summers' politics but these personality habits are even more alarming for me in a democracy and they are part of the accummulation of microagressions that leads to lack of opportunity for outsiders, women, people from low incomes and people of color.

The only solution I can think of is to have Larry be co-chair with someone he respects who can also manage his lack of humanity towards others.

I am sure he is kind to people he considers colleagues, but I believe that how people treat those who they believe to be "less-advantaged" than them tells a lot more about their character. And Larry failed so badly and without remorse when I saw him up close and personal. And I can never forgive him for how he put that young woman down --- that kind of put down haunts people and has consequences way beyond the few moments in that room.

[krisnee]

With apologies to the host:
1. Most economists did not get this crisis until it hit them in the face. Mr. Summers was one of these "most economists".

2. The primary job of economists, especially ones involved in policy like Mr. Summers is to think about and anticipate such crisis. Clearly this was a failure of the profession (with notable exceptions). It is a strange world in which someone like Mr. Summers is considered "smart" despite such a failure. Similarly, not until very long ago, many of the same people who now blame Mr. Greenspan, considered him one of the best Fed Chairs ever.

3. In addition to these attributes, from all accounts Mr. Summers is a bullying and arrogant individual with poor people skills. A good treasury secretary needs to be able to manage people well (the job is too big currently for a single individual to do it all, if ever). This is at least as important as any perceptions of smartness. Clearly, there are doubts about Mr. Summers abilities in this regard.

4. The current treasury secretary is a crook. It would be nice to have a future treasury secretary to whom such a taint does not attach in the slightest. Unfortunately, Mr. Summers used his position at Harvard to shield his friend involved in dodgy dealings. It is not clear how impartial he would be in dealings that involve people whom he is close to/has interests in, and who are in the financial sector. I think the likelihood of such conflict of interest on his part is probably low, but this should be a consideration.

[bigTom]

We need at least one high placed person on the economics team, who is not purely an economist, but has has an active interest in something like physics, biology, or ecology. This crisis is not just purely about artificial man-made economies failing. It is about man-made economies failing at least partially because fundamental physical limitations were being approached, and all the economics that were guiding the process, ignored such limitations. When (or if) we start climbing out of this slump, resource limitations and how we deal with them are going to be the key determinant of where we go from then on out. We need someone with explicit expertise in this area to be a respected part of the team. I don't know if Larry qualifies on that account. I also think we have at least one prominent economist who forsaw the severity of the credit crisis ahead of time.

[Sock Puppet of the Great Satan]

"Professor DeLong's colleague Morris Zap admitted that guys who can build an atomic bomb or cure cancer should get paid more than him."

Paging Senators Bayh and Dole, paging Senators Bayh-Dole...

[Barkley Rosserr]

If the choice is indeed between Summers and Geithner, I, for one, would prefer Geithner. He seems in his September, 2006 talk in Hong Kong to have foreseen that serious trouble was coming. He also seems to have done very well as the point man in terms of carrying out policies in this crisis, with reportedly good people skills.

Summers is probably smarter than him in some absolute sense, but he seems to have been wrong about a lot of stuff, too pro-deregulation, and amazingly enough given some famous papers by DeLong-Shleifer-Summers-Waldmann, not aware of the bubbles or their significant threat. I know Brad is his good friend, but I have seen him in action and have heard accounts from some inside, high up people at Harvard. And all that jibes with the sense that his "people skills" could be a lot better, and that he does not seem all that inclined to think he is wrong about things. So, I think temperamentally, Geithner would be better.

[nattybumpo]

OK, Summers was clearly a failure as president of Harvard, and if that was all we knew about his ability to manage a large organization, then it would suggest that he doesn't have the temperament or people skills necessary.

But, we have other evidence as to how well he will manage the Treasury department. In fact, he has already been Treasury Secretary, and he did a good job.

It may be that the culture of the Treasury Department is significantly different from the culture of Harvard. Summers is apparently ill-suited to the culture of Harvard, but that doesn't mean he is ill-suited for the culture of Treasury. On the contrary, he has already proved himself there.

Brad is right. We need the best for the job, and Summers is the best. He is the best, not just because he is brilliant, but also because he has a lot of real world experience managing crises in the Treasury department.

[Ajay]

Economists amaze me! This is the guy you want in a progressive administration?

The Larry Summers World Bank Memo
Not all office memos cause as much uproar as this one.
DATE: December 12, 1991
TO: Distribution
FR: Lawrence H. Summers
Subject: GEP
'Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Least Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I've always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.
3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under 5 mortality is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.
The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

[otto]

Why are we not pushing Krugman instead?

[Ragout]

"Not all office memos cause as much uproar as this one."

A good explanation of the memo's context can be found here: http://harvardmagazine.com/2001/05/toxic-memo.html

Summers wasn't proposing to box up toxic waste and force it on poor countries. Summers was just arguing that growth and trade are good things even if they lead to more pollution. What's so controversial about that?

[AcademicLurker]

Re: Summers being the smartest guy in the room & etc.

Someone needs to ponder these words of wisdom from BitchPhD's kid:

"It's not how smart you are, it's how dumb you aren't."

[Jon Chinn]

Economists are dime a dozen. Many will soon need work. Can we not hire someone without the misogynist baggage of Summers? I mean, did you read what he said - women are not hard wired for mathy and science? The man is a jerk at the least. We can do far better. Brad Delong is a better choice than Summers!

BTW, Summers is an ideological deregulator. You know, the kind of economic idiot who got us into this mess. He failed to see, or else kept he his mouth shut about, the looming economic disaster of 2008. So he is a jerk, not prescient, not indispensable, not even a rarity. Why would we even consider such a dereg. conservative? We want change, not a wall street establishment figure.

[Ajay]

Ragout: It is surprising (in fact astonishing) because everything in the world can not be reduced to a numbers game. That is what is different about progressives, there are many aspects to creating policies, not just counting numbers. Of course I will ignore the issue that most economic number calculations only partially cover the many many complications involved in estimating social good.

[Steve Ward]

You haven't mentioned the Brooksley Born issue, a real disaster for Summers, Rubin, and Greenspan. When she comes out of the cold, as she probably will if there is a Senate confirmation hearing for Summers, it may be very embarrassing.

Washington Post had a good article on this.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/14/AR2008101403343.html?nav=rss_world

Tiny URL version http://tinyurl.com/4z52k4

[macheath]

Brad, you're chickening out. Forget what Summers said about women, or his misguided humor in the World Bank memo. He, along with Rubin and Greenspan, is directly responsible for one of the single biggest mistakes that helped lead directly to the financial crisis we are in--the failure to regulate derivatives. As another poster points out, there are heavily documented stories that Summers was one of the leads in stopping Brooksley Born and the CFTC from regulating derivatives in 1997, and then was part of recommending to Congress that CFTC be permanently stripped of regulatory authority over derivatives. Supposedly, the market would take care of this.

On a day when AIG gets another $150 billion and growing to make good on this so-called "insurance", and we don't even know what's really out there in the market, to push an architect of deregulation of derivatives as Treasury Secretary seems ridiculous.

And please--is Summers the only person in the entire United States who can step in and work effectively at Treasury?

Here's the link to the Times story:

http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html

[techwomen]

When Joe Biden made a poorly worded comment that could be interpreted as racist, he was quickly forgiven because Barack Obama and Jesse Jackson vouched for him.

What makes me doubt Mr. Summers ability to treat women fairly is the deafening silence of his female peers. Despite the fact that Mr. Summers must know many of the top women in economics and many women prominent in politics and government, the only people who've spoken out on his behalf are fairly junior people who no one would describe as his peers.

Fact is that if Mr. Summers had female peers who he regularly talked with he would have known in advance of his comment that what he had to say would cause a huge firestorm. If he still wanted to say it, that's certainly his right. But the fact that he was surprised suggests that he doesn't get much feedback from female peers.

Those who know Larry Summers can take away two different interpretations from this controversy. One is that the PC police got Mr. Summers. The other is that maybe they and Mr. Summers need to ask themselves if they really are as free of bias as they think they are.

[me]

"He was not only the smartest guy in the room, by several light-years, but the smartest guy I've encountered"
Just like the guys running Enron, huh? No wonder he got on so well with Ken Lay.
http://en.wikipedia.org/wiki/The_Smartest_Guys_in_the_Room

"A good explanation of the memo's context can be found here: http://harvardmagazine.com/2001/05/toxic-memo.html"
Perhaps someone who can believe seventeen more impossible things before breakfast than the average economist is not the person who should have a job in a context where grounding in reality has been sorely lacking recently.

The misogyny thing is overblown. Not because it was misogyny, but because it wasn't. It just wasn't leftist politically correct: he challenged the antiquated blank slate view and the notion of initial identity of the sexes. Heresy. I'm afraid anecdotes about an abrasive manner don't really cut it with respect to this, since he's an Official Enemy of Purity.

[me]

The Harvard article just sounds like excuse making to me. Passing the buck to an inferior. If the quote was taken out of context, why hasn't the full memo been published?

[EconProf]

Why would Summers want such a position again? Been there, done that. Clearly, as one of the most liberal of the world's living economists, Summers doesn't appear to be leftist enough for this crowd of wacko posters -- evidently people with non-analytical degrees who think they have a real college education (or think they can think). The "critical thinking" skills is a sad excuse to disciplined analysis. But why should I be surprised. You have to study a real discipline like economics to have any intellectual discipline. Sorry to tell you folks, but a person without a degree in math, physics, econ, or other scientific discipline just wasted their time in college. And that goes for most of what's taught in psych and bio, too, unfortunately.

Now, about his Harvard tenure. Summers made major, major improvements in that institutions. When he arrive, there were far too few freshmen seminars for first year students to gain that vital experience. Study abroad was by far the lowest subscribed to among the Ivies. The core curriculum had lost its way, too. Financial aid and legacy admission policies was moving the composition of Harvard's student body toward Princetonian preppiness levels. And Summers made himself accessible, even visiting all the quads to meet and talk with students. All this was trashed because he dared to engage in academic debate in search of truth rather than pamper the politically correct ad hoc believers that anything that ought to be true must be true (academia's version of truthiness). No need to model and test anything, I guess. And Summers also committed the mortal sin of questioning the need for non-disciplines such as [fill in the blank]-studies as majors. Let other colleges have 150 different majors, concentrations, and minors -- Harvard sticks with a couple dozen because of Summers. Thank you for helping save Harvard, Dr. Summers.

[me]

"Clearly, as one of the most liberal of the world's living economists, Summers doesn't appear to be leftist enough for this crowd of wacko posters -- evidently people with non-analytical degrees who think they have a real college education (or think they can think)."
All hail the mighty Priesthood of Dismal Scientism!

C'mon EcoPro, make an argument rather than bleating about the nerve of these non-economists to criticize one of the true faith. Mussolini made the trains run on time. The ability to administer well is only a part of what makes him suitable for office relative to other candidates. He is a representative of the people (which leaders of industry are, of course, even if they like not to think so), not a bishop of economics. Perhaps you could make some suggestions? BTW, is he the most leftist economist on the planet in the way Obama is/was the most leftist member of the Senate?

[EconProf]

C'mon EcoPro, make an argument rather than bleating about the nerve of these non-economists to criticize one of the true faith. Mussolini made the trains run on time. The ability to administer well is only a part of what makes him suitable for office relative to other candidates. He is a representative of the people (which leaders of industry are, of course, even if they like not to think so), not a bishop of economics."

Unfortunately, you are correct about the "faith" and "bishop" part w/r.t. conservative economists that Bush employed. However, center-left economists like Krugman (attacked continuously by the wingnuts) and slightly more left Summers, are not of that "born again" Chicago Economics ilk.

You are also correct that economists as managers. most economists wisely run in the opposite direction when leadership positions open. Hence, my "why would Summers want the position again." But Treasury has risen from unimportant to the most powerful in the cabinet in one short year, rivaling even the chairman of the Fed in power. Summers is the unique economist experienced and qualified for this position in these desparate times.

[Ragout]

"If the quote was taken out of context, why hasn't the full memo been published?"

Maybe because Summers saw the memo as pretty innocuous and it took him a long time to realize that people would find it objectionable? And just what is so objectionable about it? Ajay says that Summers believes that "the world can be reduced to a a numbers game." But Summers' memo doesn't say anything remotely like that: it's about balancing health considerations with more narrowly economic ones. Maybe Summers concluded that whatever he did, lots of people would read nasty stuff into the memo that isn't really there.

[FredMullen]

The Nation
Economics
U.S. Economy

The Summers Conundrum
By Mark Ames
November 10, 2008

We all know in the backs of our minds that Barack Obama's incredible victory will eventually be followed by disappointment. But does it have to come so soon, and hit so hard? The answer will be yes, if Lawrence Summers is named treasury secretary in the president-elect's cabinet, as many observers believe will be the case. Summers was one of the key architects of our financial crisis--hiring him to fix the economy makes as much sense as appointing Paul Wolfowitz to oversee the Iraq withdrawal. And when you look at the trail of economic destruction Summers left behind in other crisis-stricken countries who sought his advice in the past, then "terror" might be a more appropriate word than "disappointment."

The conventional wisdom is that Summers is the "centrist" choice--Fareed Zakaria ("I think Summers is an extraordinarily brilliant guy") and David Gergen ("Larry Summers would be superb at this job"), two titans of centrism, both weighed in Sunday on the Stephanopoulos show in favor of Summers. And yet so far the debate over Summers has been largely confined to two outrageous moments in his career: his 1991 World Bank memo calling Africa "UNDER-polluted," and his more recent declarations, while serving as president of Harvard, about women's genetic inferiority in math and science. By themselves, these two incidents might be dismissed as merely provocative in a maverick-moron sort of way, as many of Summers' supporters argue; but in the context of Summers's track record, in which he oversaw the destruction of entire economies and covered up cronyism and corruption, his Africa memo and sexist declarations aren't exceptions but rather part of a disturbing pattern.

From the start, Summers has been on the wrong side of Obama's supporters. In 1982, while still a graduate student at Harvard, Summers was brought to Washington by his dissertation advisor Martin Feldstein, the supply-side economist, to serve on Ronald Reagan's Council of Economic Advisors. Those first years in the Reagan administration were crucial in the right-wing war against New Deal regulation of the banking system and financial markets--a war that Reagan's team won, and that we're all paying for today. Although Summers eventually identified himself with the Democratic Party--albeit the right wing of that party--nevertheless, as the New York Times's Peter T. Kilborn wrote in 1988:

He worked for 10 months as a top analyst in President Reagan's Council of Economic Advisers when his mentor, Martin S. Feldstein, was running it, and his colleagues don't recall him venting anti-Reagan heresies then....

"One of the ironies of this business is that Summers's economics are quite close to Feldstein's," said William A. Niskanen, who was a member of the Feldstein council.

It's ironic if you expected Summers to be a liberal Democrat--but par for the course in the context of Summers's real record. Some fifteen years after Summers's stint in the Reaganomics war room, he reappears as one of the key villains fighting to suppress the regulatory efforts of a top official, Brooksley Born, who was trying to call attention to the dangers of the unregulated derivatives, such as credit swap defaults, which today are considered the key to the current economic crisis.

But let's return to the Summers timeline. After his stint in the Reaganomics brain trust, he returned to Harvard to serve as one of the university's youngest professors. In 1988, he was Michael Dukakis's chief economic advisor, but when that campaign failed to bring Summers to power, he turned to America's great rival, the former Soviet Union, to try out his economic experiments. In 1990, Lithuania, a restive Soviet republic seeking independence, hired Summers to advise on that country's economic transformation. Poor Lithuania had no idea what it got itself into. This was Summers's first opportunity to tackle a country in economic crisis and put his wunderkind theories into practice. The results were literally suicidal: in 1990, when Summers first arrived, Lithuania's suicide rate was 26.1 per 100,000 and falling. Just five years after Summers got his hands on Lithuania's economy, life became so unbearable under the economic transition that the suicide rate nearly doubled to 45.6 per 100,000, worse than any other ex-Soviet republic in transition. In fact, it was the highest suicide rate in the world, suggesting something particularly harsh and brutal about the economic transition in that country as opposed to the others, where suffering and pain were common. Things got so bad that in 1992, after just two years of Summers-nomics, the traumatized Lithuanians voted the communist party back into power, the first East European nation to do so--even though just a year earlier Lithuanians actually died on the streets fighting communism.

Fresh off his success in Lithuania, Summers moved to the World Bank, where he was named the chief economist in 1991, the year he issued his famous let's-pollute-Africa memo. It was also the year that Summers, and his Harvard protégé Andrei Schleifer (who worked with Summers on the Lithuania economic transformation), began their catastrophic "rescue" of Russia's crisis-ridden economy. It's a complicated story involving corruption, cronyism and economic devastation. But by the end of the 1990s, Russia's GDP had collapsed by more than 60 percent, its population was suffering the worst death-to-birth ratio of any industrialized nation in the twentieth century, and the financial markets that Summers and Schleifer helped create had collapsed in what was then the world's biggest debt default ever. The result was the rise of Vladmir Putin and a national aversion to free markets and anything associated with Western liberalism.

But that's not all. Summers, through Schleifer, was also tainted with some of that country's corruption, which resulted in a US Justice Department lawsuit against Schleifer and others. While Schleifer was being paid by US taxpayers to advise the Russians on capital markets in the 1990s, his wife, Nancy Zimmerman, bought and traded Russian equities for a Boston hedge fund she ran--they even used Schleifer's US taxpayer-funded offices to run Zimmerman's Moscow-based hedge fund operations.

How close were Larry Summers and Andrei Schleifer? According to former Boston Globe economics correspondent David Warsh, Summers and Schleifer "were among each other's best friends," and Summers taught Schleifer "as an undergraduate, sent him on to MIT for his PhD, took him along on an advisory mission to Lithuania in 1990, and in 1991, shepherded his return to Harvard as full professor, where he was regarded, after Martin Feldstein and Summers, as the leader of the next generation."

In 2000, the Justice Department sought $102 million in damages from Schleifer, one of Schleifer's Harvard associates and Harvard University in a conflict-of-interest suit resulting from Schleifer's role as the lead US adviser to Russia's economic reforms--questioning the way Schleifer and his wife profited from his position. Schleifer's Harvard team in Moscow was funded by USAID in a no-bid contract, and supported by Summers as soon as he moved into the Treasury Department in 1993. So Schleifer benefited from his relationship with Summers twice: first, by getting a choice contract as the US government's man in Moscow in the 1990s when Summers was in power in the US government, one that benefited his wife's hedge fund (earlier this year, Portfolio suggested that the Schleifers' hedge funds made them billionaires ). Then after Schleifer returned to Harvard to face the lawsuit, Summers, now president of Harvard, presided over a controversial settlement that all but let his protégé off the hook. Thanks to pressure by Summers, Schleifer kept his chair at Harvard, where he continues to teach today.

Summers's other favorite man in Russia was Anatoly Chubais--who consistently ranks at the top of Russia's " most hated man" polls. Chubais was executor of the Russian government's privatization program, in which state companies worth tens of billions of dollars were handed over to insiders for a fraction of their worth in blatantly rigged auctions. Summers praised Chubais as a "demigod" and called Chubais and his free-market cohorts "the dream team." In September 1998, after Russia's capital markets collapsed, along with billions in US-taxpayer-backed loans, Chubais boasted to a Russian newspaper, "We swindled them." By "them," he meant the Western and American aid institutions that funded his reforms.

In light of all of the corruption, cronyism and devastation that have marked his career, Summers' statements about an under-polluted Africa or intellectually-inferior women no longer seem like provocative eccentricities but part and parcel of the Summers shtick. And now there's talk that President-elect Obama may hand the keys to national treasury to Summers--meaning that he'll be in charge of overseeing a trillion-dollar taxpayer bailout of the entire financial industry, a process already rife with conflicts of interest, cronyism and corruption--as detailed by Naomi Klein.

The bailout, as currently implemented, threatens to devastate America's economy much as Russia's and Lithuania's were devastated before. The idea that this is exactly the right time and place to put Larry Summers in charge of our economy's future is so frightening that it makes the Sarah Palin vice presidential choice seem almost quaint by comparison. Let's hope the rumors are wrong.

Copyright © 2008 The Nation

No to Lawrence Summers
We Need Real Change: Ask Obama's Transition Team to Appoint a Treasury Secretary That Did Not Help Deregulate Wall Street.

http://salsa.wiredforchange.com/o/1555/t/510/petition.jsp?petition_KEY=%0D494

[thorstein veblen]

I have a general negative impression of Summers. I don't know enough about his involvement in Russia or Lithuania to comment. I think he is ignorant not to realize that culture is a far greater reason for the advancement of women in the sciences than anything else -- otherwise, why would the % of women in top academic positions vary so much between cultures and fields.

I also remember him giving advice to Japan in the late 90s, saying they (our 12 year old son) really needed to "deregulate" like America. And that the big problem with Europe is that it's too difficult to fire workers... And defending the IMF's fiscal austerity policies during the 90s Asian financial crisis...

Here's an often overlooked Larry Summers quote: "I am much more concerned with promoting free trade than with labor or environmental standards."

Uncle's Paul Samuelson & Ken Arrow couldn't have been proud of that one...

And here's a funny excerpt from an interview while he was President of Harvard trashing area studies for not predicting the fall of the Soviet Union, and then he's asked how long he will be at Harvard, and his response proved a bit too rosy...

There is a question of balance between work in academic disciplines
and work in area studies. And there has been some tendency over time for area studies specialists to
be extrapolative in their thinking and therefore to
miss reallyi mportantc hanges.F ore xample,f ew if any
Sovietologistsp redictedt he fall of the SovietU nion, or
the Berlin Wall. Almost all academic Japan experts in
the early 1990s felt that the Japanese miracle would
continue and that Japanese economic growth would
far outstrip U.S. economic growth.
FP: Do you think that being the president of Harvard
is going to be your last job?
LS: I don't know. I haven't been here for even a
year. I'm certainly having a very good time learning
a greatd eal aboutm any differentf ields,r angingf rom
law and human rights to religion and genomics. I'm
having a great chance to be involved in shaping the
way someo f the brightespt eoplei n the world,o ur students,
learn about the world

[thorstein veblen]

Looking at Summers' old academic papers, it seems like taxes are always bad.

He's got a paper where he actually argues that dividend taxes reduce investment by lowering the rate of return on capital...

Oh, is that so? Last i checked firms had a choice between dividends, share buybacks, and reinvestment. If cutting dividends becomes more expensive, then firms should tend to either reinvest or buy back shares...

On the other hand, I give him props for putting down the RBC model...

[Gray]

Prof DeLong, I'm sure that it's true that Larry Summers is an intewlligent and effectivce manager. However, why do you ignore the real elephant in the room? It's also true that Summers has been an outspoken advocat for deregulation, right up until the point when the bubble burst. Sry, but imho such a serious lack of good judgment disqualifies him from playing an important role in the new administration at this time. It's simply too high a risk to expect a guy who stomped for laissez faire politics to do a successful turnaround now that the wind has changed.

[Gene]

As an outsider who had worked at the Treasury under Summers, I was puzzled by what happened to him at Harvard. It appears that his chief sin was that he hurt a lot of peoples' feelings. Perhaps if he had taken Barney Frank approach, talked with his opponents and been "uncharacteristically nice", he would have survived.

[Neil B]

Please Barack don't pick Larry Summers. He was part of the (ironic?) Clintonista faction backing deregulation. Get Paul Krugman in there somewhere!

[Nathanael NErode]

But Summers has made SOOO many stupid mistakes. He shoots his mouth off before doing research (which is what got him canned at Harvard). His economic arguments have been dead wrong year after year after year -- to his credit, he's recognized this and recanted most of them, just as he recanted his idiotic, sexist remarks at Harvard -- but we want someone who will be right the *first* time at Treasury

Let's go with someone with some diplomatic skills and some good instincts. That isn't Summers. Timothy Geithner, I think.

[Nathanael NErode]

For those who don't know, Summers retracted his sexist remarks about "innate" differences after being sent a wealth of references to research on the *actual* reasons there are fewer women than men in academia and the sciences in particular (the whole thing is very well researched, and there are a lot of well-understood social causes). Summers *should have* read that research *before* mouthing off ignorantly in a public speech. That was academically inappropriate behavior on Summers's part.

[aperson]

Uhhh, sorry, next time I'll read others' comments before I post.