Why oh why can't we have a better press corps?
Larry Summers opens his speech at Johns Hopkins today:
Reflections on Fiscal Policy and Economic Strategy: [T]he observation that the economy is again ascending does not mean that we are out of a very deep valley.... [W]e are nearly 8 million jobs short of normal... $1 trillion [a year] – or $10,000 per family [per year] – short of the economy’s potential output... recent events in Europe have introduced uncertainty.... Shortfalls in output and employment stunt the economy’s future potential as investment projects are put off and as the skills and work habits of the unemployed atrophy. This last point is especially important... for the first time since the Second World War the typical unemployed worker has already been out of work for more than six months. And behind these statistics lie millions of stories of Americans who have seen the basic foundations of their economic security erode. Beyond the economic projections and equations we economists make lie the struggles of communities devastated by the impact of this recession. Whatever the judgments of groups of economists about the official parameters of the recession and the growing signs of recovery, for millions of Americans the economic emergency grinds on...
Writing for the fake newspaper that is the Washington Post, Dana Milbank covers Larry Summers. His opening:
Summers needs to take Explaining Econ 101: Millions of Americans are out of work, the budget deficit is in the trillions and Europe is flirting with economic collapse. Fear not, says Larry Summers, the chief economic adviser to President Obama. It is merely a "fluctuation." Summers delivered this dismissive judgment during a speech Monday morning to the Johns Hopkins School of Advanced International Studies. In a Q&A session afterward, a man in the audience asked about the debt crisis in Europe -- and the former Treasury secretary and Harvard president answered in a most curious way.
[M]y guess is that most of you, unless prompted, would not mention the move from a G-7 towards the G-20 as one of the most important things that happened last year," Summers said. "But I suspect that when historians look back at this time, after the precise details of this economic fluctuation have been forgotten, the establishment of a global forum that really does embody all the major economies in the world will be remembered as an important aspect of this moment.
It was vintage Summers: smart, esoteric -- and utterly unhelpful. Maybe he's correct, in an academic sense, that this era will come to be known not as a period of economic misery and human suffering but as the time when the Group of 20 large economies came to replace the Group of Seven (G-8, actually). Still, is that the message the White House wants to be putting out now? The Summers speech, SAIS Dean Jessica Einhorn told the students in her introduction, was arranged on "short notice" and would be "a most timely presentation." This hinted at big news.
What he delivered instead was a lot of econo-speak that could only baffle Americans worried about finding or keeping a job. He spoke of "the multiplier process" and "a range of catalyzing investments." He invoked the "liquidity trap" and "tail risks." He alluded to the "width of the confidence interval" and the need to "achieve the sustainability criterion." It was the language of the PhD thesis: "Conditions for fiscal policy to have an expansionary impact are especially likely to obtain... considerations militating in favor of sustainable budgets... the ultimate consequences of stimulus for indebtedness depend critically on the macroeconomic conditions"...
I don't know lots of things.
I don't know why Dana Milbank decided to misrepresent what Summers said so egregiously.
I don't know why Dana Milbank thinks that an address to the students and faculty of something that calls itself an advanced school cannot use big phrases like "liquidity trap" and "multiplier process" (which are the meat and fish of first-semester freshman macroeconomics) or "confidence interval" (freshman statistics) or "tail risks" (introductory finance). I don't know why Milbank thinks it is offensive every time Summers's vocabulary crosses the twelfth-grade level. (I would give him "a range of catalyzing investments," "achieve the sustainability criterion," and "conditions for fiscal policy to have an expansionary impact are especially likely to obtain... considerations militating in favor of sustainable budgets... the ultimate consequences of stimulus for indebtedness depend critically on the macroeconomic conditions"--if not for the fact that this is an audience of graduate students and their teachers.)
I don't know why Stanley Kaplan Test Prep Daily in its current incarnation is still publishing.
I do know that over at the real newspaper--the Financial Times--we can find Ed Luce and James Politi covering the same speech:
Obama adviser calls for new ‘mini-stimulus’: The Obama administration made a strong plea to Congress on Monday to grit its teeth and pass a new set of spending measures – dubbed the “second stimulus” by some economists – in order to help dig the economy “out of a deep valley”. The call for action, which was made by Lawrence Summers, Barack Obama’s senior economic adviser, who urged Congress to pass up to $200bn (£138.9bn) in spending measures, came at the same time as Mr Obama asked Capitol Hill to grant him powers to cut “unnecessary spending”.
The combined announcements was made amid rising concern that centrist Democrats, or those representing marginal districts, might vote against the spending measures, which include more loans for small businesses, an extension of unemployment insurance and aid to states to prevent hundreds of thousands more teachers from being laid off. It also comes at a time when last year’s $787bn stimulus is wearing off. Mr Summers argued that it would be a premature move at this stage in the cycle to move to fiscal discipline. “I cannot agree with those who suggest that it somehow threatens the future to provide truly temporary, high-bang-for-the-buck jobs and growth measures,” he said. “Spurring growth, if we can achieve it, is by far the best way to improve our fiscal position.”
Taken together, Mr Summers’s speech and Mr Obama’s announcement show an administration walking a fine line between the need to signal strong medium-term fiscal discipline and not jeopardising what they fear may be a fragile recovery. “The observation that the economy is again ascending does not mean that we are out of a very deep valley,” said Mr Summers...