Larry Summers: not enough of a jerk (with added link)

by John Quiggin on August 3, 2013

In the controversy over who should replace Ben Bernanke as Chairman of the US Fed, a fair bit is being made of the fact that Larry Summers is (to put it politely) a jerk. Without denying this, I’d like point out that, when it really mattered, Summers was thoroughly outjerked by the genuine article, Rahm Emanuel.

The occasion was the decision on a stimulus package needed immediately after Obama’s inauguration. Emanuel’s brilliant strategy was to go for as small a stimulus as possible, declare victory on the economic front, then turn to the main game of cutting a deal with the Republicans on health care reform. We all know how that turned out, 1 and anyone who recalled the Great Depression could easily have foreseen it. I can recall how stunned I was that Obama failed to take the obvious opportunity to nail Bush and the Repubs for the crisis, and switch to a single-minded focus on economic recovery.

The Keynesian analysis done inside the White House by Christina Romer and outside by Paul Krugman showed that what was needed was a stimulus of at least $1.7 trillion. Based on his subsequent commentary, it’s clear the Summers understood and agreed with this. If he had lived up to his reputation, Summers would have pushed this through the White House by demonstrating, beyond any doubt, that Emanuel was the kind of fool he is famed for not suffering gladly. Instead, he first made Romer reduce the estimate to $1.2 trillion, then dropped it from his brief without telling her, giving Obama a range from $600 billion to $800 billion.

Summers is great at saying the unsayable when it comes to things like shipping toxic waste to poor countries or making baseless speculations about genetics and gender. But when it really mattered, he couldn’t come up to scratch.

Note: Out of laziness, I omitted the link to the piece by Noam Scheiber, on which I relied. I’ve added it now.


  1. Fans of 11-dimensional chess might want to make the case that Obama deliberately threw the 2010 election to the Tea Party, foreseeing that the resulting hubris would drive the Repubs mad, and therefore lead to their ultimate destruction. But I can’t impute such subtlety to Emanuel. 

{ 212 comments }

1

Tim Worstall 08.03.13 at 8:49 am

“baseless speculations about genetics and gender.”

His point about genetics and gender was that there’s more male variation. Which ain’t baseless nor speculation. Simply a fact.

2

Chaz 08.03.13 at 10:23 am

Well said. Any economic adviser who said $600 billion was the right amount of stimulus should be thrown straight out. It’s probably the greatest harm any Democrat did during Obama’s first term.

3

Kevin Donoghue 08.03.13 at 10:37 am

Tim, even Summers knew that what he said about females wasn’t a fact; he called it “purely academic exploration of hypotheses.”

4

Eli Rabett 08.03.13 at 11:09 am

Remember this was in the penumbra of the Geithner tax mess which cost Obama dearly on the economic policy front in January 2009. The whole thing was a disaster from a to b.

5

Metatone 08.03.13 at 12:03 pm

I formulated this (perhaps simplistic) summing up on the European Tribune:

It’s hard not to be reminded of Niall Ferguson when you look at Summers’ career.
Some solid academic work back in the mists of time.
Skilled at rhetoric, has a certain kind of intelligence.
Somewhere along the line his own estimation of self got to the point where it was impossible for him to consider ideas or data from anyone else as valid.
Long descent into really bad decision making.
All enabled by Harvard, too.

6

Metatone 08.03.13 at 12:08 pm

Isn’t this the trend in mainstream economics though? Saying the unsayable when it picks on the powerless, but quiver like jellies in front of the right wing noise machine?

(e.g Freakonomics, Bryn Caplan, Paul Ormerod, Tyler Cowen, etc.)

7

Marc 08.03.13 at 1:14 pm

Rahm was taking the position that a larger stimulus could not pass congress. Since the stimulus in question barely passed congress – after being watered down – there is real evidence to support his view. This was certainly the stated ground of the argument at the time – not “what is the best legislation”, but “what is the best legislation that can pass?”

8

LFC 08.03.13 at 1:24 pm

Metatone:
It’s hard not to be reminded of Niall Ferguson when you look at Summers’ career.

I bet Summers is a better tennis player, though. ;)
Ferguson prob better at whatever Ferguson played as a schoolboy (rugby? soccer? cricket? golf? none of the above?).
Plus Ferguson, his apologies notwithstanding, hates on Keynes; Summers doesn’t, I think, despite his failure to stand up for Keynesianism when the chips were down. (How many hackneyed metaphors can I squeeze into one sentence?)

9

Barry 08.03.13 at 1:33 pm

I’ve noticed that when people say that Summers is brilliant, they always use as ‘evidence’ some private matter. They never use his record of public accomplishments, perhaps because those range from evil to blunders.

If it weren’t for the fact that once you’re ‘in’, you can only fail upwards, Summers would be a minor footnote, known only to his Harvard students – as a prime a-hole.

10

Dan 08.03.13 at 1:36 pm

I didn’t realize that hypotheses weren’t allowed to be true.

Seriously though, does anyone actually deny that there are differences in variation between the sexes? I thought all of the controversy surrounded how much of the gender gap in academia could be ascribed to those differences.

11

adam.smith 08.03.13 at 1:42 pm

@Metatone – all of those economists _are_ right-of-center (not sure about Ormerod, but I suspect), in their views so they don’t really make sense as an example of giving in to right wing views. They just hold them. As for mainstream, going by where they’ve published, Quiggin is probably more of a mainstream economist than any of those except Levitt.

@Marc – no one has ever been able to explain to me why aiming low was a good political strategy wrt stimulus. So you say “our economists say we need 1.7trillion in stimulus” people freak and you agree to whittle it down to 1.2trillion. And if things don’t work out great, you can rightfully say – well, we told you we needed 1.7 trillion. Anchoring matters in a debate – since no one, especially in the public, had any conceptions of what these numbers really meant, the first number thrown out by the WH was crucial. And even for Congress, I just don’t buy the idea that positions there were firm and sophisticated enough to have an a-priory upper limit on stimulus.
But I do think that Summers deserves more of the blame here indeed: Rahm was at least doing his job – which is exactly to give Obama advice on political feasibility. Maybe he was doing it badly, but I’m pretty sure he believed in his own advice. Summers job was to give advice on the economics and he refused to give the advice he knew was right. That seems far worse.

12

LFC 08.03.13 at 1:49 pm

Barry @9
How do you know what Summers’ students think of him?

13

jonnybutter 08.03.13 at 2:00 pm

Rahm was taking the position that a larger stimulus could not pass congress.

This is an extremely stupid way to bargain, unless your goal is an ulterior one (e.g. seeming ‘moderate’ or ‘very serious’, etc.). I wish I could blame the recurrent appearance of this kind of stupidity in the first years of the Obama administration only on Rahm E. Alas, Obama himself is to blame in the end.

14

William Timberman 08.03.13 at 2:11 pm

For all sorts of complex reasons, brilliance and the kind of social skills that turn going along to get along into a high political art form are rarely packaged together. Even when they are, they’re as likely to burden us (WJ Clinton) as astonish us (FD Roosevelt) — which may be why brilliance always seems to come with sharp, even nasty edges, and going along to get along always reminds us of used-car salesmen, or radio preachers. (or the cultural equivalent thereof, for those who didn’t grow up in the US.)

I don’t know either Rahm Emanuel or Larry Summers, but their public personas seem to be of the same type: Type A. Their reputation for brilliance may well be earned, but it was political power that gave it its visible sheen in both instances. Frankly, I prefer the plodding of honest democracy.

15

JW Mason 08.03.13 at 2:12 pm

Actually, as Felix Salmon points, deferring to the powerful while pissing on those under him, is pretty much constitutive of Summers’ jerkiness.

16

Omega Centauri 08.03.13 at 2:17 pm

jonnybutter, Yes, that seems to be the signature of Obama, knowing there will be opposition, aim low, then course correct by going even lower. At first I thought it was some sort of 11D chess move, but we’ve yet to see him spring a surprise on his enemies. Its apparently just a strong personality trait.

17

Barry 08.03.13 at 2:20 pm

LFC 08.03.13 at 1:49 pm
“Barry @9
How do you know what Summers’ students think of him?”

I’m making a guess. And adding inthe alternate universe factor of what Summers would be like, given that he was not successful. Read Felix’ post, linked above.

Summers is widely rumored to be a ‘kiss up, kick down’ sort of guy.

18

Ronan(rf) 08.03.13 at 2:27 pm

I always thought he was a dead ringer for Jon Lovitz. I’m surprised he’s so disliked, he can’t really be *that* bad

19

adam.smith 08.03.13 at 3:11 pm

FWIW, I’ve heard and read a pretty large number of accounts that Summers, at least as university president, was very popular with Harvard students. I don’t think that says much about his qualities as a university president – chumming with students isn’t exactly the hard part of running a university – but I don’t see why there’s a need to make up or assume bad things about Summers. It’s not like there’s a dearth of known factual reasons to oppose him as Fed chair.

20

Anarcissie 08.03.13 at 3:12 pm

Summers is not just a jerk. Those who have not read it should take a look at How Harvard Lost Russia. If that’s too long for you, try MathBabe’s summary of the article and some of the results of its publication. That Summers continues to be spoken of favorably and to be suggested as a possibility for high office is astonishing, given his career, even in the Byzantine corruption of contemporary American politics. Someone should look into it.

21

Billikin 08.03.13 at 3:18 pm

“The Keynesian analysis done inside the White House by Christina Romer and outside by Paul Krugman showed that what was needed was a stimulus of at least $1.7 trillion. Based on his subsequent commentary, it’s clear the Summers understood and agreed with this. If he had lived up to his reputation, Summers would have pushed this through the White House by demonstrating, beyond any doubt, that Emanuel was the kind of fool he is famed for not suffering gladly.”

We cannot take Summers after the fact at face value. The fact that he did not push for a stimulus of $1.7 T indicates that he did not think of it first, even if he more or less agreed with it. For someone who, by his own admission, thinks that the world is full of idiots, to be one-upped by someone he considers a lesser is painful.

22

ezra abrams 08.03.13 at 3:20 pm

backin the 1990s, a woman questioned the wisdom of clinton/rubin/summers deregulation
http://www.atimes.com/atimes/Global_Economy/KL04Dj01.html

http://henryckliu.com/page211.html

http://www.softpanorama.org/Skeptics/Financial_skeptic/Casino_capitalism/Corruption_of_regulators/brooksley_born_and_three_marketers.shtml

I think the front page article todays N Y Times about the state of philosophy is relevant – philosophy sounds like male economists on steroids, people who have no concept of how badly they are behaving simply to pound their chests
(I assume youall have heard that the mayor of San Diego was fired for sexual harassment; his defense ? he never received formal training, so he didn’t know what it was wrong to tell a coworker, you look hot, come to work without underwear)

In the case of econ and philosophy, we have this male attitude that confrontational style leads to truth; total nonsense.
In the non academic sphere, this is not allowed.
A related story comes courtesy, iirc, the UCLA chem dept: a young lady graduated, and was hired as a lab worker, shifting her formal status from student employed by the university to state employee
A bad accident occured, and because she was a state employee, OSHA could come in; and boy, did they hammer the university, which, to its credit, turned a pile of poop into a rose; they are now leaders in safety

23

anon 08.03.13 at 3:27 pm

Amazing. In order to recover from the ‘Great Recession’ the USA needed to spend
$1.7 Trillion. Because $600 Billion just wasn’t enough.

Do you people ever do any research?

Not even all the $600 Billion was able to be spent. Except, of course, for the Billions we American taxpayers had to vouch for that was spent in Europe and Asia. Including, it appears, Australia.

If the stimulus is such a wonderful idea can you guys at least spend YOUR OWN MONEY on it, instead of going into my wallet to fund stuff in your neck of the woods?

24

L 08.03.13 at 3:29 pm

I am curious–of all the questionable things Summers has done, the only thing that did him personal damage (or made him vulnerable) is that speech about women and science. And he always bounces back.

And it continues to be the thing people are the most outraged about. Even if other things he’s done and said are equally outrageous and likely caused more harm. Why did that stick when nothing else seems to? And how does someone like this get so far in life?

25

Substance McGravitas 08.03.13 at 3:41 pm

If the stimulus is such a wonderful idea can you guys at least spend YOUR OWN MONEY

If shenanigans in the US destroy the world’s economy then it makes perfect sense for the world to get paid. Now ante up, loser.

26

LFC 08.03.13 at 3:41 pm

adam.smith @19
FWIW, I’ve heard and read a pretty large number of accounts that Summers, at least as university president, was very popular with Harvard students.

From what I’ve heard, it would be more accurate to say he was popular with *some* students and much less popular with others. Summers did do at least one good thing as Harvard president, namely expanding financial aid in an effort to increase affordability for middle-income and low-income students. But his rather imperious style pissed off much of the faculty and his firing of a professor who was then serving as dean of the FAS (Faculty of Arts & Sciences) was the last straw. The faculty voted no confidence in him and he had to resign. (He’s still at Harvard, not as president of course but with a named-chair professorship.)

27

Marc 08.03.13 at 3:42 pm

In retrospect a larger spending package would have been wiser. But the counterfactual is difficult to prove. For example, the consequences of a political stalemate (the congress refusing to pass any spending) would have been far worse than having a smaller spending package. Or asking for more could well have backfired – there is a level at which a larger opening demand doesn’t get you more. It’s also the case that we didn’t know that the level of Republican obstruction would be so extreme *in the first few months of his term*. I was questioning the narrative in the opening post, because there is a difference between “I think that can’t be passed” with “I think that’s a bad idea.”

Obama got universal health care reform, a large stimulus package, and a lot of other major progressive goals enacted. They’re not as ambitious as I’d like, but he succeeded where a lot of others failed. So I’m inclined to give them rather more credit for gauging what is possible than their internet critics give them.

28

adam.smith 08.03.13 at 3:47 pm

I really don’t think there’s any secret to why Summers has been so successful.
1. He’s a very, very good academic economist, winner of a Clarkes medal, author of a large number of widely cited papers
2. He’s by all accounts very good in speaking the language of policy, picking up on discussion very quickly, summarizing the gist of complex debates succinctly, etc.
3. He’s knows how to dazzle people and is very good in cultivating friendships/relationships with influential people.

Even the combination of 1 and 2 is quite rare, adding 3. makes him one of very few, perhaps even unique in the US. Problem of course is that 2 and especially 3. aren’t actually very good reasons to appoint someone to office. But it’s not like there is no reason he is as successful as he is.

29

Bloix 08.03.13 at 3:51 pm

“the only thing that did him personal damage (or made him vulnerable) is that speech about women and science.”

Although the speech did him damage, it’s not what forced his “voluntary” resignation as president of Harvard. The Shliefer affair did that.

http://mathbabe.org/2012/03/11/why-larry-summers-lost-the-presidency-of-harvard/

http://www.institutionalinvestor.com/Article/1020662/How-Harvard-lost-Russia.html?ArticleId=1020662&single=true#.Uf0mb-DR7Lg

http://www.bostonmagazine.com/2006/05/the-crimson-coup/

http://www.thecrimson.com/article/2006/2/10/tawdry-shleifer-affair-stokes-faculty-anger/

30

LFC 08.03.13 at 3:56 pm

clarification of comment @25: Summers didn’t fire the prof from the university (which wd have been impossible in any case); he removed him as dean of the faculty.

31

adam.smith 08.03.13 at 3:56 pm

@LFC – well yes, I know he royally pissed of faculty and I think that’s a big red flag for his leadership qualities – but I’ve never heard that his fights at that level affected student views of him. This is really a minor point – my general interest in this is that I think the whole “how could anyone like evil, dumb Summers” narrative isn’t helpful. I think it’s a better idea to consider what exactly is wrong with the system that elevates someone like him to so many different positions of power than to personalize this by turning Summers into Jabba the Hut.

@Marc – for health care specifically, the main credit there goes to Pelosi, with some for Obama personally. After Scott Brown won MA, Rahm wanted to can health care and pass a small, face-saving bill – so no, he’s not necessarily very good at gauging what’s feasible. But as I said – at least he did his job. Summers job was to advice on the economics. And he didn’t, because he wanted to be seen as “reasonable” by the policy folks in the WH.

32

P O'Neill 08.03.13 at 4:01 pm

Reading Krugman another context issue presents itself — 2009 was also the time when influential people were claiming that high inflation was just around the corner because of all the monetary stimulus that was taking place. They were thus the enablers for any argument that reduced fiscal stimulus was needed since there was already so much coming from central banks. It wasn’t just Summers v Rahm or whoever. It was Summers/Romer versus op-ed pages, screamers on CNBC, much of Congressional Republicans, and academia (John Cochrane, Greg Mankiw, etc).

33

LFC 08.03.13 at 4:06 pm

adam.smith @29
I agree.

34

JW Mason 08.03.13 at 4:09 pm

I think it’s a better idea to consider what exactly is wrong with the system that elevates someone like him to so many different positions of power than to personalize this by turning Summers into Jabba the Hut.

Why can’t we do both?

35

fgw 08.03.13 at 4:22 pm

Dan@10
My understanding of the science is that deleterious mutations on the single X chromosome in males means there is no question that genetically determined below average intelligence in males is more common than in females. What is less clear is if there is any cosmic fairness: whether variation above average in males has a genetic or environmental basis. Could be it is easier to break a brain than improve on it, as far as the genetics go. Beyond the contribution of the X, the neurobiology of sexual differentiation in the brain seems to me pretty rudimentary.

36

john c. halasz 08.03.13 at 4:36 pm

Not only was the stim-pak too small, it was very poorly designed, with Obama’s campaign “middle class” tax cuts, cash for clunkers, home buyers credit and the like. And then it was proclaimed that unemployment would top at 8%. And then there was the “stress tests”. But I don’t blame Summers for all that. The cossacks work for the Czar. And look at the rest of the crew. No, Obama got exactly what we wanted.

37

Bruce Wilder 08.03.13 at 4:37 pm

When Obama was about to re-appoint Ben Bernanke in 2009, I thought it remarkable that the controversy turned so much on questions of professional expertise and alleged personal qualities, of integrity or persuasiveness (“consensus-builder”) for example, and so little on the man’s policy commitments or views, or even a critical evaluation of his conduct in the position.

I thought re-appointing Bernanke was bad policy and bad politics, certain to contribute to the ratification of Bush2 policies. I’d read his essays on the Great Depression, and knew him to be a fairly extreme conservative, who really, really wanted to run the Great Depression again, but — this time — preserve the plutocracy in place, and prevent the New Deal.

As a (then) partisan Democrat, I thought it bad form, in general, for a Democrat to appoint Republicans or conservatives to the Federal Reserve Board of Governors, for the same reasons it is a bad idea to appoint Republicans and conservatives in the Defense Department — it tends to confirm them in their control of the institutions, and pretty soon, there’s no progressive, liberal or Democratic backbench, who can even argue with them, effectively. That that ancient wet noodle, Alan Blinder, still has his name trotted out, is an indication of just how weak the centre-left’s backbench is. Janet Yellen isn’t just the “best qualified person”, she’s the only person with even a hint of a left sensibility, who is remotely qualified.

Quiggin’s thesis here — that the Bad Angel of Obama Nature, Rahm Emmanuel, corrupted Larry Summers, preventing him from doing his professional duty in arguing for a fiscal stimulus of sufficient size — is a clever rhetorical variation on the old clichéd formula: “he’s a jerk, but he’s our jerk.” But, it still leaves us failing to face the reality of fundamental political desiderata.

I don’t think for a moment that Larry Summers wanted a large fiscal stimulus, and all that would go with it, anymore than I think Rahm’s supposed assessment of what could be passed thru Congress was divorced from Rahm’s political goals. Larry Summers made a technically well-calculated assessment of what would make the economy stagnate in pretty much the way it has, while the grifters in the financial sector worked their way back toward nominal solvency, with the proceeds of predatory activity.

Larry Summers is not a philosopher-king, by virtue of his academic training and background, and the size of the necessary fiscal stimulus was never an academic truth waiting to be told. It was a always a disputed political choice. And, Larry Summers decided long along, who he wanted to work for, or was willing to work for, in politics. (As did Rahm. And, Obama.) (And, it ain’t you and me, bub.) I don’t want Larry Summers to get the Fed Chair job, because I know he will go on working for the same folks he served, when he acted to repeal Glass-Steagall, prevent derivatives regulation, and deep-six a large enough fiscal stimulus.

When I say a “large enough” fiscal stimulus, I mean a fiscal stimulus that would be large enough to halt and reverse the trend of public goods disinvestment, and which would be large enough to sustain the level of economic activity about depression levels, while vigorous regulatory activity forcibly shrunk the financial sector and large amounts of toxic debt were written off.

When judicial appointments are made, it makes a certain amount of sense, even in our post-Federalist-Society loss of innocence, to inquire into the individual’s integrity. The role is to be a fair arbiter, and requires acquiescence in the legitimacy of legally enacted policy, not necessarily to one’s liking. And, I suppose, there is, often explicitly, some attribution of an analogous technical judiciousness to the role of Fed Chair or Fed Governor. The conventional economic analysis of central bank control of interest rates or money supply or unemployment rate is remarkably ascetic; it is a priestly doctrine, for a priestly caste performing what seems to amount to religious rituals. They might as well be flamens augering for the old Roman state religion. But, underneath the dignified rigamarole, there is a standard, grubby political grabbing and shoving over the distribution of income, wealth and power.

I know, in general terms, for whom Larry Summers would play, in the Rugby Game called the Federal Reserve. Shouldn’t that be disqualification, enough? And, isn’t it about time to shed some of our illusions about Obama and company?

38

Bruce Wilder 08.03.13 at 4:42 pm

L @ 23: And how does someone like this get so far in life?

Nepotism.

39

Anarcissie 08.03.13 at 4:45 pm

@32 — Indeed, (2) might yield important information toward answering (1). But we wouldn’t be turning Summers into anything, just recognizing what he is, and how he’s connected, as they say.

40

Zb 08.03.13 at 4:52 pm

Taking a generous view of Summers’ actions, he said some things that were open to misinterpretation that outraged people and led to his losing one of the top academic posts in the world. That’s a bad outcome of misinterpreted speech, but, when the Fed chair is misinterpreted, billions of dollars can disappear. Isn’t that enough to make him a bad candidate for the office?

41

mud man 08.03.13 at 5:03 pm

Not a geneticist, but: The mismatch between the X and Y chromosome means that crossovers, an important source of gene-shuffling, are not possible in the usual way, which means that clusters of genes are less likely to break up, which means that such genes are less selected for/against individually. That is to say, for sex-linked traits, females can evolve faster than males. Does that help explain women’s enhanced sociability? Hmmm.

Personally, I rather suspect the issue has to do with aggressiveness (or anti-sociability) rather than intelligence in any useful sense of that bedraggled word.

42

James Wimberley 08.03.13 at 5:13 pm

“Jerk” is not a disqualification for a good number of professions: general, professor, pundit, reporter, footballer, financial trader. For others it is: GP, social worker, priest – and central banker.

43

Main Street Muse 08.03.13 at 5:18 pm

“I can recall how stunned I was that Obama failed to take the obvious opportunity to nail Bush and the Repubs for the crisis, and switch to a single-minded focus on economic recovery.”

This will be Obama’s legacy – his failure to address the failures of our financial sector. I, like OP, was stunned that he would head down the healthcare route when there was a fire burning the house right in front of him. But why put out a fire when you can fan flames elsewhere?

Way to waste a good crisis, to paraphrase the mayor of Chicago…

44

Cranky Observer 08.03.13 at 5:20 pm

= = = Zb @ 4:52
That’s a bad outcome of misinterpreted speech, but, when the Fed chair is misinterpreted, trillions of dollars and entire nations can disappear. Isn’t that enough to make him a bad candidate for the office? = = =

Adjusted that a bit.

45

Cranky Observer 08.03.13 at 5:28 pm

= = = anon @ 3:27 pm
Amazing. In order to recover from the ‘Great Recession’ the USA needed to spend
$1.7 Trillion. Because $600 Billion just wasn’t enough.
[...]
Not even all the $600 Billion was able to be spent. = = =

Just in our metro area (~6 million) there are hundreds of transit, road, and general clean-and-fix needs that could be funded tomorrow with $100 million. But they couldn’t be funded by the stimulus package because the majority of them were operations and maintenance work, not engineered capital investment. O&M projects were and are almost impossible to fund because they are seen by the Teabaggers (and, to be fair, to a certain extent by Obama as well) as “wasteful” and “make-work” – as if it were possible to ‘waste’ stimulus money other than by burying it in jars. Also, too, getting some of the needed work done would have required taking a few reasonable steps to ensure that existing employees with union contracts didn’t get screwed, and we absolutely and utterly cannot have any federal project these days that respects the sanctity of a fair collective bargaining agreement.

Cranky

You know who else respected the sanctity of a fair collective bargaining agreement? John Galt. It is in the book; look it up.

46

LFC 08.03.13 at 5:54 pm

Zb @38
As was mentioned upthread, the remarks about women and science were perhaps a contributing factor but not the proximate cause of his resignation. See comments 25, 28.

47

Gene O'Grady 08.03.13 at 6:08 pm

Lest anyone think it’s all about gender, many of the comments on Summers, particularly “kiss up kick down” apply equally to Condi Rice at Stanford.

While I enjoyed #35’s comment, it should be said that flamines didn’t augur in ancient Rome, and the likelihood of a member of one of the Roman aristocratic priesthoods arguing in favor of Roman religion is minimal.

48

Bruce Wilder 08.03.13 at 6:26 pm

adam.smith: I think it’s a better idea to consider what exactly is wrong with the system that elevates someone like him to so many different positions of power than to personalize this by turning Summers into Jabba the Hut.

JW Mason: Why can’t we do both?

What’s wrong with the system is that the system pretends opposing interests don’t exist and that politics isn’t about economic choices, choices about the distribution of income, wealth and power. The GFC of 2008 is portrayed as analogous to a weather event, a storm, which creates an emergency, and we are all in the same lifeboat together, and we need good, brave people to take the tough decisions to make the best of a bad situation, and rescue everyone, when the sky is falling, etc.

Economics, especially macroeconomics, is too abstract to enable anyone to understand the choices that are being made, as those choices are being made, and this is by design. Jabba the Hut is given his reputation, in anticipation of his usefulness. Bernanke, for example, groomed himself for a particular job, and was hired to do that job, by people, who knew the job would have to be done, and I don’t mean Fed Chair, I mean “rescuing” the world from a repeat of the Great Depression.

Larry Summers Jabba the Hut did his part to bring about the GFC of 2008, rationalizing and legitimizing deregulation, etc. I can almost hear some fool dismissing this as a “conspiracy theory” even as I write.

I don’t think Larry Summers took that particular job from strong conviction, though I think Ben Bernanke may have taken his, from something like personal conviction. I think our problem with Larry Summers starts from the fact that he took the only jobs on offer; he never had an alternative on offer, certainly not one which paid millions. Larry Summers has said some “brilliant” things that were not conformist with the usual Chicago-brand idiocy or particularly right-wing. There’s “ketchup economics” and the stuff he wrote about vulture capitalists breaking implicit contracts. But, the Left isn’t funded and doesn’t fund. And, a Jabba’s got to eat.

A conservative defense of rentier interests pays better and is less cognitively tasking. Steering the economy toward stable stagnation from financial crisis is not necessarily easy, but infinitely less chaotic and scary than taking apart an insolvent and dysfunctional financial system. I think Jabba did a remarkably precise job, in a technical political economy sense, even though I think the goal was fundamentally wrong.

Lots of other people, I suspect, think the goal was right, or better than the highly disruptive alternative I would recommend. Whether you call him, Jabba, or Larry, it is still remarkably hard to write clearly about the political choices, as genuine choices.

49

marcel 08.03.13 at 6:30 pm

mudman wrote:

Not a geneticist, but: The mismatch between the X and Y chromosome means that crossovers, an important source of gene-shuffling, are not possible in the usual way, which means that clusters of genes are less likely to break up, which means that such genes are less selected for/against individually. That is to say, for sex-linked traits, females can evolve faster than males. Does that help explain women’s enhanced sociability? Hmmm.

I too am no geneticist however: given that male mammals inherit their X chromosome from their mother, they will be perhaps one generation behind females in evolved traits unless the most evolved females preferentially produce females.

50

adam.smith 08.03.13 at 6:37 pm

@JW Mason 32 – because a misdiagnosis of the problem leads to a misdiagnosis of the causes. Summers is neither without talent nor without charm.
To put it in very broad strokes, I think the “Summers is an incompetent jerk” leads you towards an analysis that boils down to corruption&nepotism. A more complex assessment of Summers skills and flaws leads you towards an analysis more aligned with Chris Hayes’s critique of US meritocracy. I think the latter is hugely more convincing. It’s also much harder to fix, which I find plausible.

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adam.smith 08.03.13 at 6:47 pm

@Bruce – the part that smells a lot like conspiracy theory to me is not that Summers role in deregulating contributed to the GFC – that part is plausible, and can plausibly be explained by his close ties to the Rubin/Goldman-Sachs nexus – but that he willfully engineered the stagnating economy post 2008. What makes it conspiratorial is not just the ability you attribute to Summers to plan and execute a gigantic scheme to benefit his bank buddies (that’s a bit much evil genius for me…), but also the role of other players. So what’s with Christie Romer? Was she in on this? If so with what motive? Or was she too dumb to see through it? If not, why doesn’t she expose Summers now? Or is she too scared to speak about it now (as a tenured professor at Berkeley…)? How about Jared Bernstein who was in on most of the same meetings, too? None of this makes any sense to me.

52

Bruce Wilder 08.03.13 at 7:10 pm

Gene O’Grady: flamines didn’t augur

Are you sure? I think that assertion might rest on an exceedingly fine distinction between augurium and auspicia. I thought the flamines did take the auspices on ritual occasions, and took the English verb, “augur” as close enough for the point I was making.

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The Raven 08.03.13 at 8:01 pm

I wonder if perhaps we are blaming Summers for not pushing his boss in a direction his boss did not want to go. Is Summers the right target or just the easy one?

54

Bruce Wilder 08.03.13 at 8:49 pm

adam.smith @ 49: “the part that smells a lot like conspiracy theory to me is . . . that he willfully engineered the stagnating economy post 2008. What makes it conspiratorial is not just the ability you attribute to Summers to plan and execute a gigantic scheme to benefit his bank buddies (that’s a bit much evil genius for me…), but also the role of other players. So what’s with Christie Romer? Was she in on this? . . . . “

First notice that I did not say that it was a “conspiracy”. My complaint about “conspiracy theory” interpretations of arguments, which like mine, do not actually involve conspiracies, is that people use “conspiracy theory” as a kind of psychological defense mechanism, to deny the truth of what is being asserted.

If a master economist, in a matter that has his full attention, calculates a fiscal stimulus amount, which results in the economy stagnating, I do not imagine that he misplaced the decimal. I think the result ought to be taken as a fair proxy of his intention, especially if contemporary expert opinion indicates that the amount chosen was equivalent to targeting slow, stagnate “growth” — that is, slow growth in GDP accompanied by falling median wages.

You want to know how things were discussed in the room with Obama, Summers, Romer, Bernstein, Emmanuel, whoever else? Pretty much the same way all economics is discussed — lots of flaky, abstract, nearly meaningless code phrases, punctuated by pious declarations and homey, stupid metaphors. Economics is such a weak and undisciplined form of alcemy, that it actually is surprising to think that any kind of practical, calculated chemistry can be done deliberately in its name, but stranger things have been known to happen.

I cannot imagine dissent leaking in, let alone real dispute breaking out, though I guess there was some. Christy Romer brought a more conventional textbook view to the table, though, frankly, she’s not in the same intellectual league as Summers, and no doubt knows it, but she’s also pretty conservative in her views, and would not have been fundamentally opposed to the goals or approach. Her objection to a smaller stimulus would not have been an objection to stagnation in service to a corrupt financial sector; her objection would have been to Summers’ judgment about how much risk there was, of the economy stalling, and falling back into deflation and crisis. The potential stall was the frame of criticism adopted by Krugman, Mark Thoma and quite a few other soi disant liberals.

Elsewhere, Christy Romer has expressed full-throated praise for the stop-go macro policies of the 1950s, and criticism of expansionary Keynesian policy implemented under Kennedy-Johnson in the 1960s, which substantially reduced the poverty rate. Jared Bernstein was the only one in the room, who was even a little bit of an odd duck, and he only a little. Obama’s economic advisers, extending even to figures like Goolsbee, are uniformly neoliberal. These people don’t need to conspire; they form a band well-rehearsed in playing the music to which they march.

My objection is to language and narratives that do not identify what they have agreed on. When we do not like the policy and its all-too-predictable results, I do not think we should excuse their choices, as a “mistake”, just because we are too lazy, or too frightened to face the implications. We ought to try to figure out, in plainer language than academic economics allows, what they are trying to do, and not accept their PR as fodder for our speculation.

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Gene O'Grady 08.03.13 at 9:30 pm

Sorry, Mr. Wilder, that part of my comment was essentially a joke, the serious part being that no Roman priest would have argued for Roman religious beliefs

On the other hand, the flamines had so many taboos that they didn’t usually intersect with the more politically desirable colleges like augurs and pontifices.

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JW Mason 08.03.13 at 10:05 pm

So Brad DeLong, predictably, does not like this post. He says:

how is Summers supposed to have overruled Orszag, Geithner, Emmanuel, Reid, Conrad, Baucus, and Obama?

Like much of the pro-Summers stuff we’re seeing lately, this seems more than a little disingenuous. The criticism of Summers’ role in the stimulus debate is not that he tried to make the case for a larger stimulus, and failed. The criticism is that he prevented the case from being made at all.

Here’s Scheiber:

When Romer showed Summers her $1.7-to-$1.8 trillion figure late the week before the memo was due, he dismissed it as impractical. So Romer spent the next day or two coming up with a reasonable compromise: $1.2 trillion. In a revised document that she sent Summers over the weekend, she included the $1.2 trillion figure, along with two more limited options: about $600 billion and about $850 billion.

At first, Summers gave her every indication that all three figures would appear in the memo he was sending the president-elect. But with less than twenty-four hours before the memo needed to be in Obama’s hands, Summers informed her that he was inclined to strike the $1.2 trillion figure. Though Summers, like Romer, believed more stimulus was almost unambiguously better, he also felt that a $1.2 trillion proposal, to say nothing of $1.8 trillion, would be dead on arrival in Congress. Moreover, since Obama’s political operatives were convinced that any stimulus approaching a trillion dollars was hopeless, Summers worried that urging more than this amount would stamp him and Romer as oblivious in their eyes. “$1.2 trillion is nonplanetary,” he told Romer, invoking a Summers-ism for “ludicrous.” “People will think we don’t get it.”

Romer was uneasy with this. She felt that $1.2 trillion was itself a pragmatic middle ground. … But Romer was reluctant to second-guess Summers on political questions in light of his imposing government résumé. She protested, but dropped the matter when Summers held firm.

Obviously, you can argue that a larger stimulus could not have passed Congress, and — less plausibly IMO — that even proposing a larger stimulus would have backfired somehow and risked derailing the whole process. But that’s not what this was about! This was about what numbers Obama would see, from his own economics team. And Summers’ concern here was not about the political risks from putting out a bigger number in public, he was worried about the risks to his own reputation from offering a bigger number to the president. Could he have sold a bigger stimulus, if he’d wanted to? There’s no way to answer such questions in advance, you push as hard as you can and see how far you can get. But Summers wouldn’t push because he was scared it would make him look bad.

In other words, Summers was balancing the risk that a too-small stimulus would lead to economic catastrophe, against the risk that if he pushed for more and lost, it would hurt his reputation as the smartest guy in the room. And he decided the second risk mattered more.

There’s no other way to read Scheiber’s account of the debate. And yet somehow DeLong takes it as evidence for the pro-Summers side.

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Brad DeLong 08.03.13 at 10:15 pm

Everybody who was in the room whom I have heard from–Geithner, Orszag, Romer, Summers himself, Bernstein, Krueger, Sperling, Furman–says that the ARRA was larger because of Summers: that if he had not been there the ARRA would have been smaller. (I haven’t heard from Emmanuel or Obama.) They all say that Summers was trying to propose the largest ARRA that the dominant players would accept–and that’s what Noam Scheiber and Michael Grunwald say as well.

Now comes John Quiggin to say that Summers and Romer should have by mere will alone overruled Reid, Orszag, Geithner, Emmanuel, Conrad, Baucus, and Obama. If you are going to maintain that, you need to show up with a quote from someone, somewhere saying “if Summers had argued for a larger ARRA we would have gone to bat for a larger ARRA”. But nobody says that. Nobody has said that in 5 1/2 years.

“Green Lanternism” is the doctrine that if policymakers simply wish for things hard enough, they will happen, and that every failure to get their preferred policies through is because they didn’t wish hard enough because they really did not want to win.

Green Lanternism is an infantile disorder.

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JW Mason 08.03.13 at 10:25 pm

Now comes John Quiggin to say that Summers and Romer should have by mere will alone overruled Reid, Orszag, Geithner, Emmanuel, Conrad, Baucus, and Obama.

I think this is a mischaracterization of what John Q. (and many others) are saying, on two counts.

First, Reid, Conrad and Baucus don’t come into it. The criticism is about Summers’ role in debates within the White House. Note that John Q. writes “pushed it through the administration.” He does not write, “pushed it through Congress.”

Second, the criticism is not just that he failed to deliver a larger stimulus, but that he deliberately refrained from even trying to get one, because he wasn’t willing to risk his own reputational capital. I’m sure you don’t agree with this claim either, but you still can see it’s a different one.

Summers was trying to propose the largest ARRA that the dominant players would accept

This is actually a really bad thing to do, though. It suggests you are more worried about losing the argument than about getting the best possible outcome.

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JW Mason 08.03.13 at 10:26 pm

(Oops, actually the OP says “pushed it through the White House.” Same thing.)

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Metatone 08.03.13 at 10:32 pm

@JW Mason, I fear if we read between the lines of Brad’s post it’s looks like Larry has told him a very different story about what happened in the meetings… so I doubt this discussion will go anywhere constructive, since we’re working from different premises…

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Metatone 08.03.13 at 10:33 pm

Worth noting that all sane economic policy has foundered on GOP opposition – does that make economics as a whole infantile Green Lanternism?

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JW Mason 08.03.13 at 10:52 pm

I fear if we read between the lines of Brad’s post it’s looks like Larry has told him a very different story about what happened in the meetings… so I doubt this discussion will go anywhere constructive, since we’re working from different premises.

I disagree. First of all, in his post, Brad specifically cites Scheiber as someone John Q. should have read. So he seems to accept his account as having some validity.

Second, in any case, this is a public debate about the public actions of a public official. I don’t think we need to give special deference to that kind of private information. Not to mention that someone’s account of their own actions is always going to be self-serving to some degree.

Third, it seems to me that even if you accept everything DeLong says as true, Summers still comes out looking bad. Even if he had a strong basis for thinking he could not get the administration to propose a stimulus of the size needed, he could not know exactly what was possible. So his duty was (a) to ensure that Obama and his political staff were fully aware of the economic arguments, and (b) to push for as large a stimulus as possible, even if that meant taking a position that he did not expect would prevail.

Imagine a family member of yours died of cancer. Afterwards, the oncologist came to you and said, “You know, early on I was discussing some experimental treatments, and we agreed they were the best chance. I never suggested them, but I still think they might well have worked.” And you say, “What the hell? Why didn’t you tell us?” And the doctor says, “Well, I didn’t think the patient would agree. So I decided to guess what treatments she would accept, and offer her the most effective out of those. Anyway, she did a lot better with the treatment I gave her than she probably would have with someone else.” And suppose that was true. Would you feel the doctor was justified?

Well, that’s basically Brad’s defense of Summers here.

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Brad DeLong 08.03.13 at 11:19 pm

Metatone is wrong. I am working off of Michael Grunwald’s “The New New Deal”, rather than off of Scheiber (which seems less thorough) or off of Larry’s and Christy’s recollections.

>In retrospect, the stimulus has taken on an aura of inevitability…. But Obama’s Beltway veterans thought nothing was inevitable. They remembered President Clinton’s ill-fated $19 billion stimulus…. In September, after Lehman Brothers failed, Majority Leader Reid had failed to move $56 billion through the Senate…. So Rahm kept pressing Schiliro: How much can we get? Schiliro told him $400 billion seemed doable. What about $600 billion? Yeah, maybe. “Beyond that, it got shaky,” Schiliro says….

>At one stimulus meeting after the ugly jobs report, Romer piped up: “One of the things we ought to put on the table is that this thing is much too small. It needs to be bigger, at least $800 billion….”

>To Romer’s surprise, Summers immediately replied: “I agree.” “Nobody objected, so Larry took that as license to run,” Romer says. “Our feeling was: We’ve got to hit this with everything we’ve got.” That feeling was the driving force behind a fifty-seven-page “Executive Summary of Economic Policy Work”…. “The rule that it is better to err on the side of doing too much rather than too little should apply forcefully to the overall set of economic proposals,” Summers wrote….

>The memo did include several caveats about a larger package: It might not be politically feasible. It could conceivably unsettle the bond markets. And the bigger the stimulus got, the harder it would be to keep timely, targeted, temporary, and wise. Summers only included four options for recovery plans, from $550 billion to $890 billion, and some liberals have accused him of providing intellectual cover for inadequate stimulus…. But his memo doesn’t read as a call for caution…. “Insufficient fiscal impetus,” Summers wrote, “could put recovery at risk, with catastrophic consequences.” It’s a call for action….

>Stage-managing the meeting, Summers had assigned Romer to open with an overview of the emergency… She began with the most memorable sentence she’s ever uttered, a line that Obama’s aides have repeated ever since as a reminder of the mess dumped in his lap: “Mr. President-Elect,” she said, “this is your holy-shit moment.”… The only comparable collapse had ushered in the Depression…. Romer’s cheery demeanor made her awful news sound somewhat less awful—“like swallowing a pill in applesauce,” Axelrod says—but she laid out two potentially catastrophic scenarios. The death spiral could spin out of control, shredding the banking system and starting a depression, or we could muddle our way through a Japan-style lost decade…. They were confident that fiscal stimulus could make things better, filling the “output gap” between actual production and the economy’s potential production at full capacity.

>But the current gap was almost unfathomable, over $2 trillion over the next two years. Romer’s advice was to attack it with overwhelming force. Government wouldn’t be able to plug the entire hole, even with Keynesian multipliers magnifying the impact of every dollar, but she argued for the biggest stimulus in history, somewhere between $800 billion and $1.2 trillion worth of jet fuel…. Rahm looked like he was about to pass a kidney stone….

>It later became clear that Romer’s ugly analysis, while based on the most current data, was way too rosy…. Orszag… would have preferred to start smaller, closer to $600 billion. Geithner… also seemed uneasy about the incoming tide of red ink. He thought the financial rescue would be the real key…. No one voiced strenuous objections to Romer’s numbers.

>“Yeah, there was sticker shock. It’s like, boom! But nobody was saying, whoa, whoa, no, no, it can’t be $800 billion,” Biden told me. “Everybody kind of forgets: We had just lost a couple trillion dollars. It wasn’t like it got picked up here and moved over there. It was lost! Lost! We all knew this was absolutely critical.”

>Summers hadn’t mentioned Romer’s $1.2 trillion figure in his fifty-seven-page memo, which later prompted widespread criticism that he had tried to shrink the stimulus by surreptitiously limiting the policy menu. It also came out that Romer had suggested in one draft that it would require $1.8 trillion to fill the output gap, which Summers had declared “non-planetary”… triggering more accusations that Summers had withheld information from Obama. But that was a bum rap….

>The memo also made it clear that even an $850 billion stimulus would close “just under half the output gap,” insufficient to “return the unemployment rate to its normal pre-recession level.” As one White House economist told me, “whatever you think of the president, he knows how to multiply by two…”. Romer had no issue with the deletion of her $1.8 trillion figure, which was less a proposal than an illustration of the scope of the problem…. “Even I knew $1.8 trillion was non-planetary,” Romer says. She did think her $1.2 trillion figure should have been in the memo, but it was never a major topic of discussion, and she did mention it to the president-elect. In any case, she didn’t feel like Summers was undermining or censoring her; she felt like Summers was on her side, a fellow maximalist, similarly worried about undershooting rather than overshooting.

>Orszag, more of a minimalist, later complained to colleagues that Summers had orchestrated the entire Chicago meeting to advance his “make-it-big” agenda. “I kept saying: Look, guys, there’s no danger of doing too much. It’s like worrying about how much weight I should lose,” says the bulky Summers. “There’s no danger that I’m going to become anorexic.” Larry was the pill without the applesauce…. The main reason he kept the $1.2 trillion option out of his memo was that it didn’t seem like a real option. Rahm had told him there was no way Congress would go over $1 trillion. Pelosi didn’t even want to go past $600 billion…. A trillion was a psychological Rubicon. “It just wasn’t going to happen,” says Phil Schiliro, Obama’s legislative chief. “Nothing I had seen in my time in Washington led me to believe that was a workable proposition.”… Getting a bill done quickly would be impossible if congressional eyes were popping out of sockets…. Most of Obama’s advisers also assumed that if more stimulus was needed in the future, they could always go back to the Hill and get it.

That is the best description of what went down that we have. If you want to play on some Gamma Quadrant planet where something else happened, go ahead.

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Alex 08.03.13 at 11:28 pm

“Green Lanternism” is the doctrine that if policymakers simply wish for things hard enough, they will happen, and that every failure to get their preferred policies through is because they didn’t wish hard enough because they really did not want to win.

This debate, however, was a bargaining process. We know a few things about that. Anchoring is important, as is loss-aversion. I am unaware of a theory of bargaining in which it is *easier* to start out with a lower ask and work upwards (and I used to regularly top our chart as a phone fundraiser). It’s probably true that there was some level that would have been ridiculous, but setting the bounds of the respectable is just the point.

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adam.smith 08.03.13 at 11:32 pm

@Bruce 53
So on the one hand
If a master economist, in a matter that has his full attention, calculates a fiscal stimulus amount, which results in the economy stagnating, I do not imagine that he misplaced the decimal.

But on the other hand
You want to know how things were discussed in the room with Obama, Summers, Romer, Bernstein, Emmanuel, whoever else? Pretty much the same way all economics is discussed — lots of flaky, abstract, nearly meaningless code phrases, punctuated by pious declarations and homey, stupid metaphors. Economics is such a weak and undisciplined form of alcemy, that it actually is surprising to think that any kind of practical, calculated chemistry can be done deliberately in its name, but stranger things have been known to happen.
so on the one hand “master economists” are able to precisely estimate the long-term effects of interventions in an incredibly complex system, on the other hand they’re undisciplined alchemist. I’m sorry, but you’ll have to pick. Are economists evil geniuses or hapless blunderers?

I also find your characterization of Christie Romer both offensive and bizarre (and oddly buying into the whole “Summers is _so_ brilliant narrative), considering that one of them actual has the academic credentials and expertise to estimate the size/impact of stimulus packages – and it’s not Summers. I don’t think there is a more highly respected macroeconomist in the US than Romer.

If you want to frame this as a failing and condemnation of neoliberal macro, OK. But that doesn’t _seem_ to be what you’re saying (and frankly I don’t think your language helps to clarify much here because I still don’t know what you’re actually are trying to get at). Because you seem to say that neoliberal economists _had_ all the right answers, but willfully didn’t apply them. But then again you say they didn’t conspire. So I mainly remain confused.

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Brad DeLong 08.03.13 at 11:39 pm

The thing was already anchored. As Grunwald writes:

>Rahm kept pressing Schiliro: How much can we get? Schiliro told him $400 billion seemed doable. What about $600 billion? Yeah, maybe. “Beyond that, it got shaky,” Schiliro says. “I mean, even $300 billion was mind-boggling. We were talking about magnitudes of hundreds of billions of dollars more than anybody had been talking about.” Almost anybody. The economic team had settled into Obama’s chaotic Washington transition offices at the corner of Sixth and E, taking over a section of the eighth floor…

It had already been anchored in the low hundreds of billions when the economic team arrived in DC…

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adam.smith 08.03.13 at 11:49 pm

BTW. lest what I write is interpreted as a defense of Summers, I agree with everything JW Mason says @61.
As for Brad De Long, I recommend he first read this:
http://krugman.blogs.nytimes.com/2009/10/05/the-story-of-the-stimulus/ or any of a series of Krugman posts on this
and then refers to
http://delong.typepad.com/sdj/2009/05/this-is-getting-damned-annoying-will-i-ever-be-allowed-to-disagree-with-paul-krugman-again-about-anything-niall-ferguson-e.html

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Chaz 08.04.13 at 12:11 am

Brad,

How firmly was it anchored? What famous and powerful people had committed themselves to a position of stimulus in the low hundred billions? You might have a preliminary discussion by a few congressmen and advisers and such, but had most congressmen already formed hardened opinions on what size stimulus was appropriate?

I don’t understand how Rahm and Schiliro can be guessing feasibility and basically doing whip counts on a matter when the treasury secretary and the president’s economic advisers haven’t even given Congress their advice. If Summers advocated $1.7 trillion, and convinced Obama to force Geithner, Orszag, etc. to publicly push for it too, shouldn’t that be enough to move the anchor, or put down a bigger anchor, or whatever? Aren’t those the people congressmen (Democratic ones anyway) would look to when they’re forming their opinions? They seemed to defer pretty strongly to Paulson’s opinion on TARP.

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Ben 08.04.13 at 12:15 am

Christ.

Quiggin: “Summers has a reputation for swinging his dick around for doing what he thinks is right, and didn’t do so in a crucial instance. He intentionally pulled himself back. His reputation fails on its own merits.”

Scheiber: “Part of why he pulled himself back in that crucial instance had to do with Summers managing his own image.”

DeLong: “Summers probably increased the size of the stimulus from what it would have been otherwise. Quiggin’s an idiot! Why didn’t he read Scheiber?”

That’s not anything remotely responsive to the arguments here, Brad. But it is condescending. No wonder you and Summers get along.

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Neil Levy 08.04.13 at 1:00 am

Tim Worstall and others: Summers did not just say that there is more variation in male than in female capacities. He said that these differences were not due to socialisation (almost certainly false) and that as a result there are “”issues of intrinsic aptitude.” That’s not “stating a fact”; it is speculating and the speculation is false.

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Sebastian H 08.04.13 at 1:19 am

“If a master economist, in a matter that has his full attention, calculates a fiscal stimulus amount, which results in the economy stagnating, I do not imagine that he misplaced the decimal. I think the result ought to be taken as a fair proxy of his intention, especially if contemporary expert opinion indicates that the amount chosen was equivalent to targeting slow, stagnate “growth” — that is, slow growth in GDP accompanied by falling median wages.”

This assumes that economics is a good science–and that is a horrible assumption. But the rest of the thread seems about right, and reminds me of one of the most important lessons my mother taught me: beware of the overly charming, that kind of charm is a skill that is learned to cover up serious problems.

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David 08.04.13 at 3:59 am

Brad DeLong and several others to the contrary, we among the great unwashed masses have always had the very firm impression that Obama (and company) never even tried to get a larger stimulus considered. Nothing in this thread suggests otherwise. And I am increasingly convinced that “politically feasible” is a total weasel phrase meaning we don’t care and we’re not going to try. We never know, do we? Because we never see them trying.

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jonnybutter 08.04.13 at 4:00 am

Marc @27

Obama got universal health care reform, a large stimulus package, and a lot of other major progressive goals enacted. They’re not as ambitious as I’d like, but he succeeded where a lot of others failed. So I’m inclined to give them rather more credit for gauging what is possible than their internet critics give them.

Apples and oranges Marc. Look at the very different situation Obama faced as compared to earlier Dem presidents: an exhausted Reagan revolution 30 years on; relatedly, succeeding the (arguably) worst president in the post war period; and of course the giant financial crash. If ACA eventually does break the spell of our stubborn health care dysfunction, then Obama will deserve some credit – Pelosi too, but Obama as well. But it’s not a sure thing even now and is many years off if does happen. If, in the 2009 situation, the dems *didn’t* get something sort of major- and remember they almost didn’t get ACA – you would have to wonder what perfect alignment of planets they require to get something accomplished.

It’s not only Obama I blame, but him and the type of dem he exemplifies – the type who lost the ideological war but doesn’t realise it because he doesn’t think it even *is* a war. When my non-American friends ask me what the hell the deal with American politics is, I tell them that US voters have two, and only two, choices: conservative and reactionary. It’s like the old saw, ‘We play ANY type of music: Country AND Western’. Every voting choice – including not voting, in some cases – can, and often does, make things worse in some way.

..re-appointing Bernanke

I rest my case.

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Billikin 08.04.13 at 5:12 am

Here you have something that is most likely a once in a lifetime event. Why in the world should anyone think that any estimate of the requisite amount of stimulus should be correct? Surely the thing to do is to enact stimulus measures that remain in effect until certain goals of recovery are met.

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John Quiggin 08.04.13 at 5:14 am

My source was Scheiber, via Mark Thoma. My responses to Brad mostly have been anticipated in earlier comments, but I’ll spell them out anyway.

* Any economic adviser has the responsibility to advise their employer of the facts. In this case the facts were that a stimulus of the magnitude seen by the political advisers as the upper limit would be unlikely to produce a substantial recovery. There are various conceivable political responses to that, from foreshadowing the need for a second round of stimulus, to making a full-scale effort to blame the previous Administration, and spending a lot of time talking about your determination to do the most possible to promote recovery. The response actually chosen by Emanuel & Obama was too disastrous to be explained by stupidity alone, and while I doubt some of the claims about their brilliance, these aren’t stupid guys. Clearly Summers failed to convey the facts, leading them to think they could declare the problem solved once the stimulus went through.

* In Summers particular case, it’s his supporters who are advancing a ‘green lantern’ theory. No one much (at least no one who claims to be left/liberal) is arguing that Summers’ policy views are preferable to Yellen’s or that, in any relevant sense, he’s a better economist. The argument, whether its phrased in terms of ‘gravitas’ or ‘experienced in crises’ is that Summers is the kind of guy who can see what needs to be done and push it through, overriding the inevitable opposition. To get that done, you need to be willing to be something of a jerk at the right moment. Summers does it at the wrong moments.

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Collin Street 08.04.13 at 6:02 am

If I hired someone to give me advice in some technical matter, and I follow his advice and it doesn’t work, and it turns out that the reason his advice didn’t work was because he’d ignored his professional judgment and essentially told me what he thought I wanted to hear, I would never willingly work with that person again.

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JW Mason 08.04.13 at 6:16 am

The hilarious thing here is that in Brad’s brief for Summers in the FT (paywalled, sorry), the whole case comes down to a preference for “creativity” over “consensus.” And then he shows up here and starts going on about how what was so great about Summers in the stimulus debate, was that he *didn’t* challenge the consensus about what was politically feasible. I mean, Phil Schiliro had said $1 trillion was impossible. Phil Schiliro, for god’s sake. What was Summers going to do, disagree with him?

Also, from the Grunwald passage above:

nobody was saying, whoa, whoa, no, no, it can’t be $800 billion,” Biden told me.

So the guy DeLong praises for his “out of the box thinking” was careful to pick a number that wouldn’t make anyone say, whoa, whoa, no.

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John Quiggin 08.04.13 at 6:25 am

I thought I was a political junkie, but I’d never heard of Phil Schiliro. I guess part of my problem is that his job doesn’t even exist in a Parliamentary system, so I was (to push my own research barrow) unaware of my unawareness.

My understanding of the inner workings of the WH comes from the West Wing, spoiled for me now that I realised Josh Lyman is Rahm Emanuel. But who is Phil Schiliro?

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JW Mason 08.04.13 at 6:35 am

Well, that’s sort of the joke. He’s actually not that important. But he is the person Brad keeps citing, to back up his claim that Summers knew with certainty that there was no chance of a stimulus significantly above $800 billion. Brad is bringing up Summers’ unwillingness to challenge even a moderately powerful person as if it were a defense of him, when really it just reinforces your point.

80

John Quiggin 08.04.13 at 6:46 am

The problem I have with Grunwald’s account, as summarised by Brad is that it makes Obama and Emanuel out to be incredibly stupid. They get advice saying that the policy they are about to adopt, given the political constraints, is unlikely to prevent catastrophic economic consequences from the financial crisis. So, they get the bill through and then decide the best use of the next year is to stop talking about the economy and work on a long-term fix for the health system.

I’m not Obama’s greatest fan, and I think Emanuel isn’t intelligent in any useful way, but this seems unbelievably dumb. It seems to me that Summers cannot have conveyed to them, either in the early meetings, or in his subsequent two years as Director of the National Economic Council, how bad things were likely to be.

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Anarcissie 08.04.13 at 12:32 pm

Bad for whom? In spite of the prior disastrous mismanagement of the economy, the powerful accumulated more power, the rich more wealth, and the proles for the most part kept quiet. Summers, Emanuel, and Mr. O could congratulate themselves on a job well done.

82

John Protevi 08.04.13 at 12:57 pm

Neil Levy at 70 is correct, though we shouldn’t forget the Summers also entertained the hypothesis that the relative lack of women in high-powered science positions is due to their reluctance to work the long hours required for advancement.

Although the whole piece is worthwhile, I thought folks here would enjoy the last two grafs of this Inside Higher Education piece about the controversy:

The newspaper quoted Steven Pinker, a psychology professor, as saying that the Summers talk was “masterly” and that “All his claims were well supported in the scientific literature.”

But the Globe quoted Elizabeth Spelke, another psychology professor, as saying: “I disagree point for point. There is not a shred of evidence for the biological factor, based both on my own research and my reading of other people’s research.”

http://www.insidehighered.com/news/2005/02/18/summers2_18#ixzz2b0JYlEpA

83

Robert Waldmann 08.04.13 at 12:58 pm

I am a student of Summers. Also a bit of a challenge as I tried the patience of a sanitario (not Summers). He is, in fact, brilliant. I have only private evidence so you won’t count it. But he is definitely not kiss up/ knick down. He is most aggressive in pubblicità & with other top economists. Not so had at all alone in his Office with students. Now on knick not kiss up Summers I have public proof. See Summers on youth non employment (will be’ Clark and Summers). The point is that Martin Feldstein is full of it. The papere were written when Summers was a graduate student. His advisor was Martin Feldstein.

Summers kicks up like a black belt.

84

Ed Kazarian 08.04.13 at 1:55 pm

Leaving aside the misogynist trolls and Quiggin’s argument with DeLong, the minor point I’d add to this is that if we’re discussing ‘jerk’ behavior of the sort that leads one to casually make blatantly sexist comments or suggest dumping toxic waste on impoverished nations, it’s worth recognizing that this sort of thing typically presumes: 1) a power differential where the speaker perceives himself to enjoy a substantial advantage, and 2) an institutional situation where he at least thinks that everyone else around is likely to go along with him (Summers has famously gotten that calculation wrong on a number of occasions, but his persistence suggests that he’s had a lot of experiences where it’s been more or less right).

In such a context, saying something ‘jerky’ requires pretty much zero personal courage on the part of the speaker.

Note that neither of those conditions typically apply when one is involved in the kinds of discussions that must have surrounded the stimulus package. There, Summers was presumably facing a bunch of other people who were, in relation to him, in no way at an institutional disadvantage and could not otherwise be easily dismissed as lesser beings. Thus, is it really so surprising that he ends up either wimping out, trying to preserve his own status in the crowd by not fighting too much, or whatever actually happened?

To put the same point more concisely, there’s nothing about the kind of jerk we know Summers to be that would lead one to expect him to be a forceful advocate of any position in a situation where such advocacy would have required actual courage.

85

prasad 08.04.13 at 1:56 pm

For anyone who wants to re-litigate gender, there’s a Pinker/Spelke debate on Youtube.

86

Omega Centauri 08.04.13 at 2:17 pm

The gender things is really off-topic, but I wanted to add the one recent revelation I thought interesting. Someone did a study where they looked at the academic records of those students deemed capable of having a successful STEM career. The bottom line was that the males, were mostly one trick ponies good at STEM but mediocre elsewhere, and the females mostly well rounded good students. Their conclusion: the men had no choice STEM or bust, while the women could choose other paths if they so desired.

87

Barry 08.04.13 at 3:07 pm

Bruse Wilder: “When Obama was about to re-appoint Ben Bernanke in 2009, I thought it remarkable that the controversy turned so much on questions of professional expertise and alleged personal qualities, of integrity or persuasiveness (“consensus-builder”) for example, and so little on the man’s policy commitments or views, or even a critical evaluation of his conduct in the position.”

That’s because our elites don’t want a real policy debate.

88

JW Mason 08.04.13 at 3:21 pm

There’s one other kind of obvious point that hasn’t come up here yet, which is that the number that Summers decided in December was the largest achievable – $800 billion — is pretty much exactly the size of the stimulus Obama signed in February.

So for Brad’s story to work — “the thing was already anchored” — you have to believe that everyone played their hands perfectly, that there is literally nothing that could have happened in the intervening two months to create space for a bigger bill. AND you have to believe that Summers was so amazingly prescient that he could foresee exactly how the debate would play out before it even started.

Brad may be comfortable with both those beliefs. But to me, there’s a more parsimonious explanation for the fact that Summers got pretty much what he asked for. Which is that his choice of framing had an important effect on the outcome.

89

Ronan(rf) 08.04.13 at 3:25 pm

If the choice really was between a bigger stimulus vs healthcare reform, is there not a reasonable argument that healthcare reform was the more important priority, in terms of dealing with l/t structural debt but also in the here and now (providing a way for a substantial amount of very sick people to get coverage) ?

90

Brad DeLong 08.04.13 at 3:36 pm

John Quiggin writes: “John Quiggin 08.04.13 at 6:46 am
The problem I have with Grunwald’s account, as summarised by Brad is that it makes Obama and Emanuel out to be incredibly stupid. They get advice saying that the policy they are about to adopt, given the political constraints, is unlikely to prevent catastrophic economic consequences from the financial crisis. So, they get the bill through and then decide the best use of the next year is to stop talking about the economy and work on a long-term fix for the health system. I’m not Obama’s greatest fan, and I think Emanuel isn’t intelligent in any useful way, but this seems unbelievably dumb. It seems to me that Summers cannot have conveyed to them, either in the early meetings, or in his subsequent two years as Director of the National Economic Council, how bad things were likely to be.”

This is why we are all waiting for Mike Grunwald’s next book, for he is reputed to be ghosting Tim Geithner’s memoirs.

Remember: Obama is not listening only to Summers–Summers is only one of three. Peter Orszag of OMB and Tim Geithner of Treasury do not funnel their advice to Obama through the NEC. Orszag is out there telling Obama that history tells us that the economy bounces back quickly–within two years–after a shock, and that by election day 2010 the big issues are likely to be exploding health care costs, the uncontrolled long-run deficit, and the possibility of inflation, and that Obama needs to get ahead of the curve. Geithner is out there telling Obama that Keynesian economics really doesn’t work, and that there is much more stimulus in bailing-out the banks and convincing markets that you are calm and sober than in budget-busting stimulus bills. Axelrod is out there telling Obama that deficit reduction and fiscal austerity poll really well, but that Keynesian big-government spending and rising debt do not.

And, most of all, there is Obama: he picks Axelrod, Geithner, and Orszag and listens to their advice on issues of macroeconomic forecasting because he believes in it. Remember that even today Obama’s first choice for Fed Chair is Geithner, his second is Summers, Romer is nowhere, and Yellen is in the mix only because the Democratic Party is in her corner.

To say that because Obama believed and followed (or led) Axelrod, Geithner, and Orszag rather than Romer and Summers it must be the case that “Summers cannot have conveyed to them… how bad things were likely to be” is indeed the High Green-Lanternism.

91

Rich Puchalsky 08.04.13 at 4:00 pm

“To say that because Obama believed and followed (or led) Axelrod, Geithner, and Orszag rather than Romer and Summers it must be the case that “Summers cannot have conveyed to them… how bad things were likely to be” is indeed the High Green-Lanternism.”

No, it’s really not. I mostly agree with Brad Delong this time, but he’s getting more and more eager to throw these dismissive phrases around as Summers takes flak, and he’s really using the wrong one. Wanting the executive to stop pre-bargaining with himself in conflicts with Congress is not Green Lanternism of any kind.

This is a case where “the cossacks follow the Czar” would be appropriate. When Obama took the direction he did, it really seems improbable that it was because of simple ignorance — as if no one ever told him that we needed more stimulus. Pitching it as that Summers needed to be more of a jerk in order to overcome infighting within Obama’s advisors also is, I think, not convincing — Obama’s decision is highly characteristic of all of his decisions. I don’t think that it really makes much difference to anyone outside whether Summers should have really pushed a higher stimulus number and failed, or never brought it up, as long as Obama never would have taken the risk of trying to push for it. We might think better of Summers if he had, but the public policy consequences would be the same either way.

But the basic point is that Obama chooses his advisors to give him advice that he already agrees with. It’s his decision about which political direction he wants the executive branch to push for. Summers may seem like a pretty horrible advisor, but that’s why Obama wants him, and I don’t see what difference anyone else would make.

92

William Timberman 08.04.13 at 4:00 pm

The sound of one hand washing the other is deafening. Never mind the merits, suspect the process. (Laymen have no other rational choice, as they have no reliable way to look over the wall erected by the brilliant. A pity, that is, but it’s one of the little pities, which important people should have no trouble brushing off the table as they do with the usual crumbs.)

93

Rich Puchalsky 08.04.13 at 4:06 pm

Hit submit too soon — and the Chair of the Fed isn’t an “advisor”, of course: I was talking about the previous case. Insofar as Summers would have independent power, he seems like he’d probably be awful, but that has nothing to do with whether he can out-jerk his way through political infighting. And I have no idea whether anyone who’d currently get the position would be substantially less awful.

94

Bruce Wilder 08.04.13 at 4:30 pm

adam.smith @ 65

Yes, I’m trying, but failing to make my point. I realize that.

The conversation has gone merrily along, without questioning the premise of the “right” stimulus number, or the relationship of “right” to the broader policy response to the aftermath of financial crisis.

Anarcissie @ 81 has the big picture, right, imho.

95

bianca steele 08.04.13 at 4:31 pm

The gender thing is OT but the issue wasn’t only what Summers said caused unequal results. It was that he said what caused unequal results. He was there to say welcome to Harvard, we’re glad to support your important work. Instead he said I spent an hour looking at your papers and I solved the problem myself and the rest of you are wasting your time. He assigned winners and losers. Is it part of being the smartest guy in the room that you’re.expected to redifine how science works?

@Collin Street
The idea for very serious people seems instead to be that he tells you what you want to hear and has the chutzpah to call it expert opinion, and the reputation to get away with it.

96

Barry 08.04.13 at 4:42 pm

Robert, you and Brad fit the theme I noticed befre, and pointed out – virtually all of the evidence that Summers is brilliant. Omes from these sort of ‘you had to be in the room ‘ anecdotes. The evidence that he’s a major league screw-up/flat-out evil b@stard is public record. And the people who support this secret brilliance theory never account for the public record.

97

Barry 08.04.13 at 4:43 pm

(crap – my f-ing iPad ignored my corrections)

98

Main Street Muse 08.04.13 at 5:20 pm

From Anarcissie @81 “Bad for whom? In spite of the prior disastrous mismanagement of the economy, the powerful accumulated more power, the rich more wealth, and the proles for the most part kept quiet. Summers, Emanuel, and Mr. O could congratulate themselves on a job well done.”

Yes… All those brilliant minds in that room scrambling to figure out the best way to manage the crisis and this is the best they could do? The middle class is dying.

And can someone PLEASE explain to me Obama’s fascination with Geithner? Geithner, the man who came from NY Fed, who failed to regulate (as is part of the job of the Fed) Wall Street in any meaningful way, who counseled the president to go easy on the bankers because the sector was so very fragile. We went very easy on the bankers, and the end result is that the sector remains corrupt and predatory and quite lucrative for bankers.

NOT what we need to reignite the economic engine of America. (Witness Goldman’s gains in the area of metals, thanks to Goldman’s hoarding of metals.)

99

Barry 08.04.13 at 5:36 pm

Main St, if you think of the situation as being like the UK (or at least the way that itwas), where the people who get to make decisions come from the same small set of schools, and deliberately rotate between the government and private interests, it makes sense.

100

Main Street Muse 08.04.13 at 5:40 pm

To Barry @98, if you look at that way, it is understandable. But in that the economy of the United States seems to be growing only minimum wage jobs, it does not make sense ( at least to me, in that I am not from that tiny, claustrophobic, inbred world you speak of.)

101

Michael Sullivan 08.04.13 at 6:19 pm

Well, I have to give Brad some props, even though I think he’s hanging hard onto the butt-end of this argument. He’s the only one I’ve seen trying to make a case for Summers that doesn’t rely on a bunch of vaguely sexist code-speak masquerading as an argument, a very easy path for most of the old boys club since the two best known superior (to me, and to most dems or those on the left) candidates for the job (Yellen and Romer) are women.

102

Chaz 08.04.13 at 6:26 pm

I think JQ goes too far in his last post. Obama has a whole council of advisers that included Romer, and he should have been talking them. Having them go only through Summers is ridiculous. Taking economic advice from OMB above people who have “economic adviser” in their job title is also pretty ridiculous. Plus the world’s most widely read economic columnist was out there shouting more stimulus; if no one in Obama’s crew noticed that and bothered to ask about it then there’s no excuse.

Summers should have given different advice but the fact that he was the only non-clueless person even asked is the real source of the problem. You shouldn’t have a system that depends on one guy saying the exact right thing at every chance. And there is also a strong possibility that Obama would have gone for Orszag’s idiocy instead of good advice from Summers and Romer. After all, later on Romer and Summers (I think?) actually did push for more stimulus, and instead Obama started babbling about deficit reduction spending cuts. It’s pretty clear what kind of twit the president is.

103

Mark Field 08.04.13 at 6:30 pm

It seems to me that it would be useful to both sides in this debate to have a bill of particulars against Summers. That way everyone could focus on those specified issues. Here’s my first crack at it:

1. Summers was part of the 1998 Asian crisis team. The solution to that crisis was poor — the high dollar policy has meant a large and continuing US trade deficit which has had a number of spillover effects: Chinese currency manipulation; increasing the wealth disparity in the US as export jobs are lost; etc.

2. Summers was very wrong about deregulation in the late 90s. This includes things like the repeal of Glass-Steagall, but also includes his derivatives debate with Born. Summers likely had a technically correct point about jurisdiction in that dispute, but in the service of a policy which led to lax regulation generally.

3. Summers was wrong in his criticisms of Rajan in 2006 (? date is off memory).

4. Summers comes across to many as abrasive and arrogant. This seems to have been a factor at Harvard and in his ill-advised off-the-cuff comments about female scientists. This would be less important, but the Fed has traditionally operated collegially and his personality seems like a poor fit for that body.

Anybody want to add or detract from this?

104

Mark Field 08.04.13 at 6:33 pm

Ok, I forgot a key item: whether Summers gave good advice to Obama in the transition about the size of the stimulus. The details of this are a bit unclear to me, because there seems to be lots of conflict in the stories, but a plausible reading is that he personally reduced Romer’s recommendation from 1.7 trillion (the correct number) to 1.2 and perhaps further.

105

roger gathman 08.04.13 at 8:35 pm

I don’t at all understand delong’s point. His support for Summers is exactly Green lanternism – he admits that Yellen is equally as good, but somehow, in this dire time of crisis, we need a man, a real man, a Zorro, a brilliant man… etc., etc. Interesting that he can’t see his own defense of Summers is what I would call Superbrilliantmanism. And that he pretends, playing defense, that you can’t expect Summers to have changed anything… That is pretty cheeky. It is like the Summers supporters who respond to the criticism of Summers deregulatory spree in the 90s by saying, forget the nineties. Then they say, he rescued Asia in the nineties.
But of course Superbrilliantman follows a kind of multidimensional logic that confounds mere mortals.

106

Brad DeLong 08.04.13 at 9:00 pm

RE: “The basic point is that Obama chooses his advisors to give him advice that he already agrees with. It’s his decision about which political direction he wants the executive branch to push for. Summers may seem like a pretty horrible advisor, but that’s why Obama wants him, and I don’t see what difference anyone else would make.”

Largely correct, but Summers is toward the left of Obama’s economic policy advisors, with only Romer further out, and with Orszag, Geithner, Emmanuel, Axelrod, and Obama further right. To say that the stimulus was too small because Larry Summers wanted it too small is a bum rap–as bum a rap as that Janet Yellen lacks “gravitas”…

107

bob mcmanus 08.04.13 at 9:25 pm

Everytime Summers becomes prominent in DC, Republicans win elections. 1998 => 2000, 2009 => 2010.

Simple enough, Summers at the Fed in 2014 will, with plausible deniability, just like 2010, engineer the economy to give Republicans the White House in 2016.

And only crazies like me will even be able to talk about it. The rest of you will be arguing with DeLong about how “Left” Summers really is, and how nothing is nobody’s fault, except for the evil sexist racists of the Enemy. Can’t be helped, I suppose.

108

bob mcmanus 08.04.13 at 9:36 pm

I mean, the way political science is done is that you look at what happens, who benefits, and don’t worry so much about rhetoric, intentionality, or agency. Because they are so much smarter than you, and geniuses at lying.

Obama needed a Republican Congress in 2010 to switch to cutting spending and making the Bush tax cuts permanent. He got everything he wanted.

(Though of course not what he might have said, but Jesus, never pay any attention to what these monsters say. Never. Watch what happens.)

109

john c. halasz 08.04.13 at 9:42 pm

JQ @ 80:

“Incredibly stupid”? Well, in one sense, sure: deal with the economic crisis effectively, when you have high initial polls, and you would build a popular base for further needed reforms. But then I think academic economists tend to be extraordinarily naive about the relations between policy and power, not just how sausages are made, but for whose consumption, since they are virtually trained up in learned helplessness by the idea of “pure” economic theory, operating technocratically, without any notion of ideology.

But more specifically, just consider who these people are, Obama and his “adviser” cronies, and how they got to where they are. They are products of sheer hype, live and die by hype, believe only in their own hype, and, of course, crave the “resources” to back and promulgate their hype. After all, they are the meritocracy and who else should they listen to?

So I suppose it all depends on what one means by “useful” intelligence. “Useful” for what and who? Consider that one of Obama’s earliest key patrons in the “meteoric” rise of his political career was Penny Pritzker, just confirmed as his new Commerce secretary. And the latest news from Mayor Rahm is that he and his cronies are currently trying to talk *down* Chicago’s bond rating to deal with unions and other stake-holders in trimming the city’s budget. As a native Chicagoan, though currently self-deported, nothing of this has surprised me.

Just one small footnote to the original “stimulus” deal, which other commenters have overlooked. The House of Representatives originally passed a $900 bn package, which Obama spent considerable time negotiating down with Rep. Sen. Susan Collins, (who’s voice makes my skin crawl, as the epitome of stupidity), to ensure “bipartisan” support, though her vote failed to “materialize” anyway for the final $787 bn deal.

110

mrearl 08.04.13 at 9:43 pm

Well, let’s not overlook temporal context. It was Transition, a two-month-plus period when most of those guys–in Obama’s or any other incoming administration– didn’t know exactly how they stood with respect to each other or the boss and no roles were absolutely in concrete, except maybe Rahm’s. In that situation, there’s only so far most of us would go in telling the boss what we have reason to believe he doesn’t want to hear and otherwise being an outlier.

So the boss is often going to get less than frank advice. Now, if he was a smart boss, he’d have a bunch of other guys in the adjacent room, and after he got done with Larry and them, he’d call in the other guys and say, “You understand you will have no role in my administration and don’t aspire to it, unlike the folks that just left. So shoot me the straight skinny: How damn bad is this economy and what’s it take to fix it? Don’t worry about Congress, I’ll worry about that.” (In fact, if he was a very smart boss, John Quiggin would have been in that adjacent room.)

That’s rarely how it works, and that’s not how it worked here. In any event, looking at all of what’s discussed above most favorably to Summers, what in any of it recommends him to be Fed Chairman?

111

adam.smith 08.04.13 at 9:51 pm

@bob – I don’t think Summers deserves or claims any credit for this, but the US growth rate was >4% between 98 and 2000 and unemployment in 2000 was at 4%, the lowest in a long time.
Al Gore shouldn’t have lost the elections (and, as I’m sure others will point out, he didn’t by most standards), so that’s a rather silly theory.

112

bob mcmanus 08.04.13 at 10:06 pm

111: I don’t do that kind of stuff. I’m really stupid, so I just look at what happens, who is in charge, and who benefits. Mechanisms and means, causes, agency are all beyond me.

I read Sophocles Oedipus Rex the other night, after watching the Pasolini version. Always everything is all my fault, the sovereign says. The people agree. Also the Mandate of Heaven.

The obverse, as a lefty peasant, I just say “Give us good jobs and prosperity, or we will burn shit down and take your stuff.” Politics is so simple, really. Liberals lose because they won’t say it.

But hell. I’d really rather read. Back to Castoriadis and Claude Lefort.

113

Ed Kazarian 08.04.13 at 10:29 pm

Oh for the love of God, De Long. Can you just stop already?

Summers’ expressed policy positions are, for the purposes of this exercise, far less significant than his record as an institutional actor, which is at best highly problematic.

But beyond that, his record as a manager and as someone who repeatedly makes the kind of utterly unacceptable public statements which we have all discussed should be flatly disqualifying by itself — especially when there are other candidates who are not in any clear way significantly worse than he is. Nobody–nobody!–who repeatedly expresses or strongly implies clearly prejudicial views, especially outside of the context of a scientific or scholarly discussion where the merits of such views are in the course of being carefully examined, deserves to hold a leadership position of any sort. At some point, the willingness to say lazy, bigoted nonsense that is furthermore utterly unnecessary and superfluous to any point that needs to be made has to become unacceptable, tout court. Otherwise we’re just arguing that if some people (the old boys club, natch) think you’re smart enough, the fact that your very presence in a room implies gross disregard for a lot of other people (naturally, not members of the old boys club) is something we can just overlook.

And yes, that’s the argument you’re making. Over and over again. It’s frankly grotesque and you should stop.

114

Omega Centauri 08.04.13 at 11:18 pm

To be honest, if we had a functioning government, staring with a too low by half stimulus wouldn’t be a problem. Just add the missing half during the midcourse correction. So one possibility is that people like Summers, maybe even Obama, thought they could start low, then correct as necessary. Perhaps they hadn’t realized just how disfunctional the governmnet they were about to nominally head was.

The other thing that irked me, was the quality of the stimulus. Economists know that different types of spending have different multipliers. For God’s sake, if the size of stimulus is capped at too low a value, go all out for quality! But, we saw that that didn’t even happen. I don’t even remember anyone else than myself (a lowly blog commenter), even making the case. It was all a case of buying off whatever constituency could be bought off by ineffective stimulus spending.

115

Rich Puchalsky 08.04.13 at 11:26 pm

re Mark Field’s list @ 103: I don’t know of a case in which Larry Summers has been right about anything ever in his life, outside of some of his academic work presumably. As far as I can tell, his is a standard elite career of failing upwards.

Let’s go over his wiki entry quickly, because it’s convenient:

1. In academia, one of his well-known assertions is that “unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back”. OK, so he’s on the road to neoliberal usefulness to the powers that be. He then serves both GOP and Democratic pols in various ways.

2. World Bank, 1991. “There are no… limits to the carrying capacity of the earth that are likely to bind any time in the foreseeable future. There isn’t a risk of an apocalypse due to global warming or anything else. The idea that we should put limits on growth because of some natural limit, is a profound error and one that, were it ever to prove influential, would have staggering social costs.” This is staggeringly wrong.

3. In the Clinton administration, he helps to work against doing anything about global climate change, pushes for capital gains cuts, tells California thats its energy crisis is due to too much regulation when it’s actually due to market manipulation, and encourages the partial repeal of Glass-Steagall. The first and last of these have such disastrous effects extending to the current day and beyond that I almost left out the middle of the sentence. But be assured that there is a fractal quality to his tenure here: you can examine it in more and more detail and find more and more failures.

4. As Deputy Secretary of the Treasury, he takes an important in assuring the non regulation of derivatives, helping to cause numerous financial crisis. From Born to Ragan, etc.

5. He fails as Harvard President via intemperate remarks, shielding cronies from being dismissed because of financial misdealing, and losing $1 billion on a gamble on swap positions.

6. On Obama’s National Economic Council, he revises Romer’s calculation of $1.8 trillion to $500-900 billion. The stimulus is too low with ongoing bad effects.

I’ve left off the Asian crisis mentioned above. But this is the record that would make him a wonderful Chairman of the Fed. Nothing better illustrates the kind of clueless elite that we now have.

116

Anarcissie 08.05.13 at 1:37 am

@115 — From the point of view of the ruling class, there is another disadvantage to hiring Summers. While most r.c. types seem to rather admire his thuggy qualities, a lot of proles hate him already, and more will as they get to know him — and not just the hippies. Now, the proles have been getting punched in the face for quite a while, and I think most people — even r.c. types — realize that at some point they are going to break out. Whether that will be the sort of scene alluded to in 112 (‘burn shit down and take your stuff’) or something else, no one knows, but something really unpleasant will happen, and there is every reason not to hasten that day, at least for those r.c. types who are not ready to take that final plane ride into the sunset. Summers is aggressively nasty enough to be the final straw. At this time I think they might want to put some more pallid agent in that post to do their bidding.

117

Herschel 08.05.13 at 1:55 am

If the stimulus is such a wonderful idea can you guys at least spend YOUR OWN MONEY on it, instead of going into my wallet to fund stuff in your neck of the woods?

This kind of comment always puzzles me. In what sense did any of the meager stimulus measures involve going into your wallet? Did you get a Stimulus Invoice from the government, demanding immediate payment? No? Didn’t your taxes actually go down, as most of our taxes did during the period when the stimulus money was being allocated and spent? Those lowered taxes were actually part of the stimulus! On what do you base your complaint of being plundered? And which of us “guys” do you mean who should spend our “own money”? Aren’t we all in this together? It’s the same framework of law that determines what belongs to me and what belongs to you, and what is spent by the state.

118

david 08.05.13 at 2:13 am

So, I hadn’t heard the World Bank there are no limits to growth thing, nor the California’s problems are regulations thing. For the former, in 1991, that’s the sort of thing a blowhard might say to sound really smart, but it turned out to be all confidence and tough boyish attitude and no sense. For the latter, that is shockingly stupid and/or evil, as anybody paying the slighted bit of attention would have known the system was being gamed. I don’t know if they are true, or out of context, but I hope to find out. Either would weigh heavily against.

119

CS Schmidt 08.05.13 at 3:05 am

Totally agree with Anarcisse @ 116. Larry is just too dangerous. Bernanke, Geithner, Sperling, et.al., are smooth, calm, vaporous, effortlessly confusing and disheartening us rubes…With Larry, the fist just starts to come out of the glove, and that’s just too risky…

Though part of me sure would like to see him in there. Reading Delong’s (BTW I may not agree with you all the time but I sure appreciate your public interaction!) apologias a year from now will be golden!

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mrearl 08.05.13 at 3:25 am

Puchalsky at 115, graph 3: He actually said the California electricity price dust-up was due to too much regulation? I taught a course unit on that subject about a year after the fact, after a good bit of research, and I can tell you such a statement would be profoundly stupid.

Come on, really? Back that up with a source, because it’s borderline idiocy. I hadn’t known Summers was a borderline idiot.

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Neil Levy 08.05.13 at 3:34 am

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John Quiggin 08.05.13 at 3:35 am

I hadn’t heard about the California electricity issue before, but a quick Google produces this, which contains lots of circumstantial detail, but (AFAICT) no on-the-record quotes. This piece was from 2008, when Summers was being considered as Treasury Secretary.

http://www.thedailybeast.com/articles/2008/11/12/larry-summers-and-enron.html

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Neil Levy 08.05.13 at 3:35 am

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John Quiggin 08.05.13 at 3:36 am

Neil: SNAP!

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Chris Mealy 08.05.13 at 4:15 am

Brad, last time around you were boosting Bernanke. We get it already, you’re a centrist or whatever. Not everybody else is.

126

Omega Centauri 08.05.13 at 4:18 am

The sort of non-highbrow explaination for the California electricty thing (2001 -not 1991) was it was half deregulated. The utilities were still required to deliver all the juice the end customers wanted, -at the old negoitated price, but independent generators could charge whatever the market would bear. So it was a case of being a middleman caught between greedy suppliers, and customers who were insulated from your costs, but that you were obligated to satisfy. Naturally, at some point when supply/demand got out of wack, the suppliers had a field day.

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Rich Puchalsky 08.05.13 at 4:23 am

“Come on, really? Back that up with a source, because it’s borderline idiocy. I hadn’t known Summers was a borderline idiot.”

It’s really hard to know what’s incompetence and what’s ideology — very similar to George Bush Jr., and substantially a product of the same time and place and class.

But here’s a few. First, Summers set up the conditions for Enron in the first place –a quote from a report by Public Citizen:

Summers’ letter marked a departure from previous Working Group consensus and indicated a sea change in the Clinton administration’s policy, suggesting the administration would not oppose Enron in its pursuit of legislation to further deregulate the energy trading business. Following passage of the Commodity Futures Modernization Act of 2000, sponsored by Gramm and not opposed by the Clinton administration, Enron and other energy traders were allowed to operate unregulated power auctions that greatly enhanced their ability to manipulate deregulated electricity and natural gas markets.

Then when his action had consequences, here’s the quote from Eichenwald’s book _Conspiracy of Fools_: “Governor,” Summers said, “this is classic supply and demand. The only way to fix this is ultimately by allowing retail prices to go wherever they have to go.” Governor Davis had already told Summers and Greenspan that market manipulation was going on, and they shrugged and said maybe so but it didn’t matter.

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Lee A. Arnold 08.05.13 at 4:38 am

Lawrence Summers deplores the general bashing of economics that has come out in this crisis, but he ought to consider that this general bashing is his own best defense against criticisms of him for Fed chair.

Remember that almost all of the economics profession is guilty of repeated and astonishing stupidity, no matter how brilliant they are touted to be. Hayek mistook “spontaneous order” for a god-principle; Milton Friedman wanted to repeal U.S. Social Security and stop government funding of the National Parks system; Robert Lucas pecksniffed that Keynesian hydraulics is nonsense. They too were presumed to be “brilliant”, “important” economists. This list of idiocy goes on and on.

Really economics as it stands is partly a religion, with a “belief” in “markets” and “incentives”, almost entirely preached by professors seeking tenure protection and employing discursive methods little better than medieval scholastics using the “latitude of forms”. Here is a typical quotation, this one as it happens is attributed to Summers: “What’s the single most important thing to learn from an economics course today? What I tried to leave my students with is the view that the invisible hand is more powerful than the [un]hidden hand. Things will happen in well-organized efforts without direction, controls, plans. That’s the consensus among economists. That’s the Hayek legacy.”

There is no excuse for gibberish like that. 1/2 of economics should concern itself with the reduction of throughput costs by central control, whether in business firms or government. It is fully 1/2 of growth because it has to be. The subject is barely broached by studies of contract games in “institutional economics” much less made a dent in macro, where it will no doubt be stoutly resisted because it won’t be mathematisable. AFTER you understand why markets and centralizing institutions are two different but equal sources of growth, THEN you consider the “good” that needs to be produced, THEN you apply the rubrics of market failure or gov’t/management failure (i.e. the ineptly-named “public choice theory”). There is no scientific finding that truly establishes an automatic preference for markets; it is a belief.

Economics is guilty of a default intellectual prejudice toward the neoliberal political ideology (and toward the welfare of its financiers), guilty of unjustified intellectual hubris, and guilty of continuous, embarrassing fatuity. Summer’s pecadillos on economics stand out because more of his foibles got into the press, but, with a few individual exceptions, please try to remember that we get this stuff from almost all of them: we are dealing with an entire profession of clownish high-paid scholastics who comprise a bane and a blot.

Obama ought to pick Yellin for an entirely different reason: to give women more incentive to refute the statistics on science achievement which Summers appeared to think are final. Economists, I keep reading, believe in incentives. And women are smarter than men to begin with, except for the fact that they keep marrying these idiots.

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Rich Puchalsky 08.05.13 at 4:52 am

Oops, I see, looking back above, that I mistyped Raghuram Rajan’s name as Ragan.

But I wanted to add more about the comparison to Bush Jr. I assume that most people would reject it, because “everyone knows” that Bush is very stupid and “everyone knows” that Summers is very smart. But Bush was smart enough to get two terms as President, and within his top-level field of endeavor was even more successful than Summers. They share the same quality of failing at everything substantive that they do, impressing the people who they need to impress anyways, and being blithely incapable of correcting their beliefs to reality. This is the world that our supposed meritocracy is set up to enable, and Bush’s stupidity and Summers’ intelligence actually function in pretty much the same way as public explanations for why they keep getting away with what they do.

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Gene O'Grady 08.05.13 at 5:03 am

Back in 1998-2002 I was involved in trying to use the California energy deregulation to the benefit of my employer (we would have succeeded, if it had been honest, in setting up a win-win situation with our provider). I went off to a very high charged meeting (at UC Berkeley, for what it’s worth) and came back with a whole lot of plausible sounding predictions for our energy future. My boss, very conservative, very intelligent, an ex-policeman, said, “Well, Gene, that’s deregulation theory, but it won’t work out tht way.” Beating Summers and Krugman and the whole gang.

As the Enron scam got going I was reading the carts of how much power was available and how much happened to be off line, and it was pitifully clear that the numbers were only possible if the fix was on. Gave me a healthy scepticism of explanations from economic theory.

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Bruce Wilder 08.05.13 at 5:17 am

I think Summers knows about the con. He’s been in on the con for a long time. He’s corrupt, not naive.

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Bruce Wilder 08.05.13 at 5:20 am

Rich Puchalsky @ 128

I thought I said that @ 38 in one word: nepotism

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Rich Puchalsky 08.05.13 at 5:35 am

People who think that they’re in on the con are almost always being conned. At any rate, it doesn’t matter to any of us whether his unshakable beliefs (in 2011, he said that he
wouldn’t have done anything differently about bank deregulation) are sincere or corrupt. They work the same either way.

As for nepotism — you’re going to have to say more than one word. I don’t even exactly agree on nepotism as the main cause for Bush Jr’s success. Not everyone who starts out with really good familial advantages has the talent to go so far and screw so many people’s lives up.

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JPL 08.05.13 at 11:31 am

In any case, one thing I think most of these people mentioned– Summers, Yellen, Romer, Obama, Bernstein, DeLong, Quiggin, (I’m not so sure about people like Geithner and Orszag) etc.– would agree on is that the main problem at the current moment is the nature of the Republican Party, with the malign influence of the plutocrats and their creation of the racist Tea Party monster. And it’s difficult to have a productive public debate on this “political” problem when the mainstream media outlets (esp. NPR & PBS) are absolutely incapable of registering accurately this overwhelming reality, of the degeneration of this Republican party and the parts of our society that support them, into utter madness. Words from the mouths of Republicans, and economists and supreme court justices playing for team Republican, have become meaningless. This is a problem that must be solved; I suggest that we start solving the problem of plutocratic influence by solving the problem of racism. To wait for the racists to die off is a cop-out; I want to eliminate racism as an idea once and for all.

(Sorry for being a bit off topic, but there has already been a long thread; I don’t want to change its direction, just to provide a sort of reminder.)

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Tim Wilkinson 08.05.13 at 11:35 am

Rich – it doesn’t matter to any of us whether his unshakable beliefs (in 2011, he said that he wouldn’t have done anything differently about bank deregulation) are sincere or corrupt. They work the same either way.

True up to a point: it’s not necessary to determine exactly where any particular stooge belongs on the true-believer/self-deceiver/bullshitter/liar spectrum. But it does make a difference that the entire top echelon of the economics profession is riddled with corruption, rather than ubiquitous cock-up.

This stuff has been discussed up to a point here: http://crookedtimber.org/2010/10/04/larry-summers-and-his-role-in-recent-us-policy/ : ##102-3 provide some kind of rubric for analysing the current state of academic economics – as it actually impacts on the real world.

One point I tried to get across on that thread (@29) was that the concept of conflict of interest has been more or less abolished. Declaring interests – in the most unobtrusive and anodyne way possible, of course – is regarded as settling the matter. Failing to declare them is regarded as a merely technical infraction, and a defence of oversight or misunderstanding generally accepted without question. That’s when there’s even the pretence that interests should be declared at all – the Harvard authorities, for one example, don’t even make (or at least actively sustain) that pretence (see Ferguson, ‘Larry Summers and the Subversion of Economics’): after all, outside income is a purely personal matter and nobody else’s business.

But that kind of thing is fairly obvious to anyone who actually wants to look. More subtly and perniciously, any complaint about conflict of interest is treated as merely preliminary to the question whether there’s evidence of conscious bias; that is whether the conflict of interest can be shown to have actually eventuated in material corruption. That means conflict of interest per se no longer has any significance at all.

Of course the whole point of the concept of conflict of interest is that evidence of actually operative bias – which may not even be conscious – is generally impossible to obtain. That’s especially so because once one moves beyond the sui generis category of c of i, which is a matter of professional probity, one moves into allegations of outright fraud, in which case quasi-criminal standards kick in. Once that happens, it’s generally not enough to show circumstantial evidence of illicit influence, even where the issues are sufficiently clear to cut to permit even that (and they often aren’t because we’re talking about nods and winks and knowing on which side one’s bread is buttered – and we haven’t even got into the ‘revolving door’ with its anticipatory corruption and deferred bribery). One may be able to show: (1) dubious or ordinarily-inexplicable statements or actions; (2) which benefit another party; (3) which party had previously provided benefits; but when fraud allegations are at stake, there’s likely to be the further requirement to demonstrate that these three are causally related in the right way. And when just about all that causation occurs inside someone’s head, that’s going to be tricky to say the least.

http://mathbabe.org/2012/03/11/why-larry-summers-lost-the-presidency-of-harvard/ is worth a read in this connection. Two points:

1. Summers’s chum Shleifer had obvious conflict of interest, but was only disgraced – in the eyes of some, not including Larry of course – once a judge determined that he was involved in a fraud conspiracy (that’s ‘conspiracy’, as in ‘conspiracy theory’).

2. Summers’s remarks about conflict of interest: he doesn’t understand these strange, arbitrary technicalities. Given the corruption and degradation of the whole idea of CoI, and no doubt the efforts of lobbyists to have concrete rules watered down, this could even be true up to a point: it’s so hard to know exactly how much money one can get away with pocketing these days, isn’t it.

Summers said conflict-of-interest “issues,” in his Washington experience, were “left to the lawyers.” He said he was sensitive to “ethics rules,” but testified that “in Washington I wasn’t ever smart enough to predict them . . . things that seemed very ethical to me were thought of as problematic and things that seemed quite problematic to me were thought of as perfectly fine. . . .”

And just in case anyone is seriously suggesting that the whole business was just a matter of Holbo/Chesterton ‘adaptive preference formation': that really won’t wash. An advisor doesn’t need to water down ‘recommendations’ in order to show appreciation of the (ahem) ‘political realities’. A simple addendum acknowledging those political realities would suffice. ‘Recommendations’ is scare-quoted because the role of expert advisors is not really to make recommendations, but to provide an indications of options and the likely outcomes, or to answer factual questions such as ‘what size of stimulus would be required to restore the economy to healthy growth’ or whatever.

Emanuel’s bullying of Romer (‘what are you smoking?’ – source: New Yorker) makes it pretty clear that this was a case of fixing the evidence around the policy. Summers was clearly playing a politicised role analogous that that of the head of the UK Joint Intelligence Committee, John Scarlett, in relation to Iraq War intelligence.

Just to nail down the point for anyone who hasn’t got it yet, read and digest this passage from the New Republic piece:

…since Obama’s political operatives were convinced that any stimulus approaching a trillion dollars was hopeless, Summers worried that urging more than this amount would stamp him and Romer as oblivious in their eyes. “$1.2 trillion is nonplanetary,” he told Romer, invoking a Summers-ism for “ludicrous.” “People will think we don’t get it.”

Romer was uneasy with this. She felt that $1.2 trillion was itself a pragmatic middle ground. She also believed the president-elect should deeply grasp all the trade-offs he faced, and in this she wasn’t alone. Peter Orszag, the incoming budget director, agreed in retrospect that the figure should have been included in Obama’s memo even though Orszag personally opposed the larger number. “I think there’s a basic principle that if a senior member of the economic team wants something presented to the president, it should be presented—with the pros and cons,” he said. “I do not think it’s the role of the economic team to play politics.”

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Rich Puchalsky 08.05.13 at 2:40 pm

“But it does make a difference that the entire top echelon of the economics profession is riddled with corruption, rather than ubiquitous cock-up.”

I don’t know if “corruption” is the right word for a quasi-religious belief system. If, instead of saying that he had the math to prove that deregulation was best, he started to say that he believed in prosperity theology, would that really be any different? I mean, prosperity theology is lower-class, while neoliberal economics is upper-class, but if you get past that, both are equally unfalsifiable, both equally well lead to prefect congruence of behavior and justification so that ideally the most cynical con man is indistinguishable from the most perfect believer.

I understand the point that conflict of interest is now like racism — just as people will say that they can’t be called racist unless you can show that they actually burned a cross on someone’s lawn, they’ll say that they can’t be said to have a conflict of interest unless you catch them pocketing a industry bribe to change their academic results. But remember that if Summers doesn’t understand conflict of interest regs, as the article you linked to quotes him as saying, it’s because the whole concept of conflict of interest never really made sense under neoliberalism. It’s like insider information — they don’t really understand why it’s wrong to trade on it. It’s part of how the market corrects the value of assets, right? I mean, information getting into market valuations is what the whole thing is about. And for conflict of interest, of course the most skilled advisors get the best-paying jobs, and of course people want to hire advisors who know the most about that area, and it’s ridiculous to ask people not to use their expertise as they move from job to job. After all, their expertise is good for society.

It certainly matters that the upper echelon of economics is dominated by people who hold to an unfalsifiable quasi-religious belief system that’s evolved to perfectly support their personal wealth and bad societal influence. But calling it corruption makes it seem like an individual rather than social problem. Would Yellen actually be any better, if she got the Chair of the Fed position? Or would the actual public policy from any of the people permitted to get it be more or less indistinguishable, because only people who believe in certain things are permitted to get those positions?

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William Timberman 08.05.13 at 2:59 pm

Rich Puchalsky @ 136

The belief system tends to follow the structure for new adherents, and vice-versa for those who’ve already prospered from both. It’s never — or almost never — dependent on individuals, except perhaps at critical inflection points, the closeting of the President with a group of upper echelon economists to discuss stimulus packages being one of those points. Even there, though, they drag the structures and belief systems into the room with them, like the figures in black in the background of a bunraku play.

Imagining a truly new alternative is never an option, because even the supposedly brilliant participants, like Mr. Summers, wouldn’t be able to calculate its outcomes as well as those of the status quo — or so they think. The adept practitioner never willingly gives up the advantage of his expertise. And still we continue to advertise capitalism as the natural home of the great risk takers. Amazing….

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Lee A. Arnold 08.05.13 at 3:01 pm

Ans. It will be more or less indistinguishable.

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Wonks Anonymous 08.05.13 at 4:20 pm

“Fans of 11-dimensional chess might want to make the case that Obama deliberately threw the 2010 election to the Tea Party, foreseeing that the resulting hubris would drive the Repubs mad, and therefore lead to their ultimate destruction.”
Andrew Gelman hypothesized instead that Obama was seeking to imitate Reagan’s first term in contrast to Carter’s. A weak initial recovery which strengthened just before the election, as opposed to a stronger recovery which turned into a downturn.
http://andrewgelman.com/2010/11/05/2010_what_happe/

I don’t know about that, but I do agree with Gelman that Ferguson has clearly abandoned “serious” academic pursuits for pop-pundit stardom. Summers really shouldn’t be compared to him.

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politicalfootball 08.05.13 at 6:06 pm

From Rich’s link in 133:

Of course, one of the other big questions was what, if anything, Summers would have done differently in terms of regulating the banking system. The answer – not much. “I’ve been more cautious than many about constraining financial innovation,” he said, adding that he didn’t believe the financial crisis had its roots in “new-fangled financial instruments” but rather in a simple real estate bubble.

This isn’t some minor point; he’s saying that, even with the benefit of hindsight, he would sink the economy all over again. Clinton himself has explicitly apologized for his lenience toward those new-fangled financial instruments, and Delong has acknowledged his own error in not understanding, until it was too late, how badly financial institutions had handled the risk associated with derivatives.

Delong has written much about Summers that I haven’t read, but I’d be curious to know if he’s tried to justify Summers’ lack of repentance. I assume his defense would be that Summers is lying for political reasons. In which case, I would suggest that he reflect a bit on how Rich’s wisdom applies to him:

People who think that they’re in on the con are almost always being conned.

Is there some liberal defense of Summers that doesn’t have, as a key component, an assertion that liberals should be in on the con; that liberals should recognize that Summers is merely pretending to be an idiot?

My guess, for what it’s worth, is that in 1998 or so, Summers was one of the rubes. I refuse to believe, though, that he’s still that ignorant. But so what? If he’s willing to pretend to be that stupid in public, what makes us think he would stop if named Fed chair?

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politicalfootball 08.05.13 at 6:10 pm

I don’t know about that, but I do agree with Gelman that Ferguson has clearly abandoned “serious” academic pursuits for pop-pundit stardom.

Ferguson is another one like Summers or Scalia – people with a reputation for genius who have a long history of saying incredibly stupid things.

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Shelley 08.05.13 at 6:17 pm

And I’ll never forgive Rahm for keeping Howard Dean (who more than anyone contributed to the 2008 Obama victory) out of any public position in the administration.

Dean, the most honest man in politics.

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politicalfootball 08.05.13 at 6:17 pm

just as people will say that they can’t be called racist unless you can show that they actually burned a cross

Cross-burning is now exempt, too. You’re not a racist if you lack malice in your heart when you are burning the cross.

Rutledge recalls his astonishment the next day when the talk turned to racial persecution in a town with two black families. “There wouldn’t have been a racist thought in our simple-minded minds,” he says. “That’s how unaware we were.”

A long pause follows when Murray is reminded of the event. “Incredibly, incredibly dumb,” he says. “But it never crossed our minds that this had any larger significance. And I look back on that and say, ‘How on earth could we be so oblivious?’

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politicalfootball 08.05.13 at 6:19 pm

Dean, the most honest man in politics.

Which, even if true, isn’t saying much.

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Barry 08.05.13 at 6:23 pm

Wonks Anonymous: “I don’t know about that, but I do agree with Gelman that Ferguson has clearly abandoned “serious” academic pursuits for pop-pundit stardom. Summers really shouldn’t be compared to him.”

And WTF has Summers done which is a serious academic accomplishment?
The difference between Summers and Ferguson is that Fergus went into pop-BS for several tens of thousands of dollars/gig, while Summers went into service to large scale financial frauds for a lot more money.

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Marc 08.05.13 at 6:46 pm

I think that Brad is making a limited but important point: the bill of particulars in the OP about the role that Summers played in the scope of the stimulus is not correct. The OP is the equivalent of saying that Romney was advocating for higher taxes on the rich than Obama was: he wasn’t, whether you like Obama or not, or whether you think Obama raised them too much or too little. There are plenty of other reasons not to choose Summers, well-discussed here, but I think that Brad is substantively correct on the point that he is making.

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politicalfootball 08.05.13 at 7:07 pm

I think that Brad is making a limited but important point: the bill of particulars in the OP about the role that Summers played in the scope of the stimulus is not correct.

I think that’s a fair characterization of Delong’s argument here, and (like you) I think Delong makes a strong case.

He has argued elsewhere that liberals ought not be contemptuous of Summers. He is incorrect about that.

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Tim Wilkinson 08.05.13 at 9:38 pm

Rich – But it’s not just a matter of a quasi-religious belief system. Let’s take the simile literally: does anyone suppose that the history of the catholic church is adequately explained by a ‘religious belief system?’. For those high up enough in the hierarchy, the system is malleable, leaves room for manoeuvre, and is blatantly ignored or ‘finessed’ – when necessary. The religious dogma is fine for keeping the masses in line (and has been adapted to that end – perhaps most notably in the invention of purgatory, which resolves important incentive issues), but exists alongside a system of authority, with all its special dispensations, excommunication, etc.

Summers is high up enough not to be a mere consumer of dogma. Indeed, on the previous Summers thread linked above, it was noted that Summers’s academic work seemed to be at odds with his policy advice, though I’m not really in a position to cpnfiorm this. But specifically, how does neoliberal superstition account for Summers’s behaviour in the instant case? He very evidently didn’t arrive at a low figure for the stimulus on the basis of some misguided theory, and AFAICT he accepted that the figure he was providing was too low in technical terms. Instead, he told Obama what he wanted to hear, under cover of being ‘realistic’ about ‘political realities’.

calling it corruption makes it seem like an individual rather than social problem – not really; pointing out the corruption immanent in a system, and examples thereof, isn’t tantamount to some ‘a few bad apples’ apologia. It’s a corrupt, and corrupting, system, in which absolutely everything is for sale including the rules of the game, and this should be pointed out loudly at every opportunity. The genteel taboo against actually mentioning the sheer scumbagness of those in the key positions (cf. ‘conspiracy theory of history’) is crippling. What else is left? Disputing the truth of certain theoretical claims?

Not only is that incapable of inspiring much enthusiasm, it’s extremely complicated, rapidly gets bogged down in intractable disputation, and is as a matter of fact not generally done well. And it ignores all the discretionary decisions which aren’t actually clearly determined by existing dogma, like Summer’s figure for the stimulus, and innumerable other examples such as those mentioned in the Ferguson article not linked above for fear of moderation: http://chronicle.com/article/Larry-Summersthe/124790/ .

Those who get to the top level don’t just have to accept the market orthodoxies, they have make the right calls in particular cases, even when those issues are underdetermined by neoliberal ‘theory’. And the common factor between the theoretical orthodoxies and the correct decisions in specific cases is of course what’s good for finance and big business. This goal, and not just a free-floating adherence to neoliberal nostrums, has to be posited as a conscious or unconscious mental structure, or we can’t make sense of these peoples’ behaviour.

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Brad DeLong 08.05.13 at 10:41 pm

Tim Wilkinson commits an error. He writes:

“Just to nail down the point for anyone who hasn’t got it yet, read and digest this passage from the New Republic piece: ‘…since Obama’s political operatives were convinced that any stimulus approaching a trillion dollars was hopeless, Summers worried that urging more than this amount would stamp him and Romer as oblivious in their eyes. “$1.2 trillion is nonplanetary,” he told Romer, invoking a Summers-ism for “ludicrous.” “People will think we don’t get it.” Romer was uneasy with this…. Peter Orszag, the incoming budget director, agreed in retrospect that the figure should have been included in Obama’s memo even though Orszag personally opposed the larger number. “I think there’s a basic principle that if a senior member of the economic team wants something presented to the president, it should be presented—with the pros and cons,” he said. “I do not think it’s the role of the economic team to play politics.”'”

At least one reason that Orszag thought that the $1.2B numbers should have been in the memo would have been that it would have eroded Romer’s credibility with Obama: Orszag’s complaint is that Summers’s omission of $1.2B was par of how “Summers had orchestrated the entire Chicago meeting to advance his ‘make-it-big’ agenda.” Orszag is not a process Nazi: he is very result-oriented, and his objection was that he thought Summers had kept Romer from getting the rope she needed to hang herself with Obama.

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LFC 08.05.13 at 11:08 pm

Barry @145
And WTF has Summers done which is a serious academic accomplishment?

Unlike Barry, I take seriously the comments (above) of people who seem to be in a good position to know, that Summers *does* have serious academic accomplishments. To claim that he doesn’t is not credible. It detracts from whatever real criticisms one wants to make.

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Tim Wilkinson 08.05.13 at 11:28 pm

I wonder what error Brad DeLong thinks I made (apart from being a process Nazi of of course), and in what way he might imagine it to be relevant? Orszag’s comment, as reported, was a good summary of the key issue, and included for that reason. I wasn’t appealing to him as an authority on the issue of whether economic advisors should or should not be fixing their opinions around the policy.

Also, I don’t know on what evidence BD is basing his claim that Orszag’s “objection was that he thought Summers had kept Romer from getting the rope she needed to hang herself with Obama.” That assertion doesn’t occur in the excerpts from Grunwald posted on DeLong’s blog, which is where the quote about the ‘make-it-big’ agenda comes from – though even the latter is not a direct quote from Orszag, and in fact isn’t presented there as a complaint about the omission of the 1.2B figure.

This last point suggests that Brad Delong may have made a bit of an error himself – or more generally an inaccurate statement. Maybe he has some other source to back up the claim that Summer’s omission was seen as a cunning ruse to increase the level of stimulus?

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Suzanne 08.05.13 at 11:57 pm

Adding to #70: Let us not forget this choice example of the rigorous scientific analysis that Summers brought to his remarks on degrees of intellectual aptitude:

http://www.boston.com/news/education/higher/articles/2005/01/17/summers_remarks_on_women_draw_fire/?page=full

‘”In his talk, according to several participants, Summers also used as an example one of his daughters, who as a child was given two trucks in an effort at gender-neutral parenting. Yet she treated them almost like dolls, naming one of them ”daddy truck,” and one ”baby truck.”‘

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Wonks Anonymous 08.06.13 at 12:10 am

To elaborate on the difference between Ferguson & Summers, saying outrageous things is now part of Ferguson’s “brand” or business model. Making liberals outraged gets him more attention, sells more books, results in more speaking fees and fame. Summers is in a different sort of status game, where having masses of Fox News watching fans doesn’t help much. Saying outrageous things may raise his status among the subset of economists who like it when Steve Landsburg does likewise, but Summers would like to be more than just an economists’ economist (or an “econotroll” economist), sitting atop Harvard or the Fed or a high position in a presidential administration would trump that.

Nobody asked, but I personally prefer Yellen. To me the question is not “Is Summers too terrible to be head of the Fed”, but “Is Yellen the obviously qualified pick” and the answer to the latter is yes. She has the best predictive record there, is in line for the spot, and we have a better idea of what she’d do there. My evaluation of what Summers has indicated he’d do also makes me prefer Yellen, but I’ll acknowledge being less qualified than Delong to judge such things.

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Barry 08.06.13 at 1:17 am

Barry @145
” And WTF has Summers done which is a serious academic accomplishment?”

LFC : “Unlike Barry, I take seriously the comments (above) of people who seem to be in a good position to know, that Summers *does* have serious academic accomplishments. To claim that he doesn’t is not credible. It detracts from whatever real criticisms one wants to make.”

I must have missed those comments above.

My deeper point is not an original one; it’s that the evidence of Summer’s ‘brilliance’[1] is always some private anecdote, but his public record is one of screwing everything up and failing upwards.

[1] Modulo the fact that he’s a professor at an elite university, but at the level being discussed, such as him vs Yellen, that’s just an entry-level credential.

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Bruce Wilder 08.06.13 at 1:43 am

Well, sure, if your standard for sincere embrace of a “quasi-religious belief system” is prosperity theology, then, sure, it is going to be damn hard to see how sincere, idealistic, but naive belief differs from the con, because your standard of comparison for a sincere, idealistic belief is, itself, an elaborate con.

Cons work by simulating some of the emotionally salient features of sincere beliefs, relationships and roles. Prosperity theology reproduces some features from the template of evangelical Protestantism. Neoliberal economics reproduces some features from the template of liberal economics. What’s broken in the con is the implicit trust. There’s doubt, because honest mistakes do not necessarily break the bond of trust, but the whole point of the con is to profit from breaking trust at an opportune moment.

I’m not a religious person anymore, and the whole question of “falsifiable” applied to religion raises issues I am not qualified to address. I will affirm that I think religion can be in touch with reality without being a scientific enterprise, and leave it at that.

On economics, I have a better feel for the deep roots of neoliberalism as a system of rhetorical elaboration and the social construction of reality. You say, “unfalsifiable” in relation to the economics of neoliberalism, and I think that’s an important insight into how economics has become corrupted. I would use a different term, “incommensurable”, but I think we’re looking at the same thing. Economics as an academic field of inquiry is really not trying to become a secular religion, but the academics have arrived at a kind of truce among themselves, in which they agree to frame their major disputes in incommensurable terms. This truce maintains the legitimacy and authority of doctrines and persons, who would otherwise be discarded, and the rotting of those well-past-their-sell-date doctrines feeds the ritualized “debate” between conservative libertarians and neoliberals, which generates our punditry and mass media economic commentary.

Having nothing they can measure in common, they never have to reconcile their opposing points of view, or let alone get right with reality. That’s a lethal error in a college of science. And, they resist mightily all attempts to insist on the kind of operationalization, which would make some sense of, say, the efficient markets hypothesis. You cannot get Krugman to admit that macro has to model money — that’s just as crazy as asserting that EMT proves that financial markets are “right”.

The civil religion thing, I think, is a left-over from the Cold War, when patriotism was tied to opposition to godless communism, and the “Free World” got tied to “free markets”. Hayek, Rand, Friedman all got a lot of mileage out of anti-communist hysteria. When the threat of communism receded, a lot of the motivation for the elite in managing the economy fairly and effectively receded with it. Elites sought to capture more of the economic rents — the portion of income power holds discretion to distribute, and to profit from breaking the bonds of trust.

I don’t think that it is accidental that one of Larry Summers’ most famous papers, titled Breach of Trust described how vulture capitalists can profit by breaking implicit contracts, a paper he co-wrote with Andrei Schleifer, the economist whose fraud case, involving profiting from Russian privatization while advising on the American dime, he had Harvard pay for, more than a decade later.

Would Janet Yellen be substantively better? I don’t know her. By reputation, she’s significantly less greedy than Summers, so there’s that.

I’m troubled by the advice on the size of the stimulus narrative scenario, not because of Summers’ alleged role, but because the whole idea of political choice seems to sink beneath the waves of inside-politics-minutiae. Neoliberalism, as an ideology, tends to make conflict, and institutionalized governance of conflict, disappear from view. I don’t see people getting at why Summers and/or the other advisors, economists and non-economists, would want a smaller stimulus. Why would Obama want a smaller stimulus? Why did Romer want a larger stimulus? I want answers that admit that it is a political choice touching on the distribution of income, wealth and power, involving conflicting interests.

And, I feel the same way about appointments to the Fed’s Board of Governors, including Chair. Neoclassical economics came up with a highly ascetic rationalization for what it is, a Central Bank does, which largely obscures why or how conflicting interests might be at stake, or affected by their discretion. They’re just technically good or bad, and everyone, apparently, is equally affected by their successes or failures. With that kind of framework, how is anyone, any educated person exercising their responsibility as an informed citizen, going to assess what the difference might be, between Bernanke, Yellen or Summers?

I suppose you can take that as a kind of social problem, in that anyone “qualified” is going to be a ripe sonabitch, intent on protecting plutocratic rentier interest. I see that there’s a complementary problem of an emptiness to economic doctrine, born not, imho, of an obsolete faith in “free markets”, but in incommensurable disputes.

If, by some miracle, we got a “competent” Fed Chair, who had some genuine idea of a Public Good in institutional governance, what would it look like. Given the economics, which colleges have taught and the Media echoes in propaganda, would we recognize the positive qualitities of this putative ideal Chair? What would be the frame of public interpretation of her actions? And, the interpretations of the proximate results?

I, personally, think that the Fed should be pressing a wholesale reorganization of the Financial Sector, erecting little Glass-Steagall walls inside the major universal bank holding companies, to protect insured deposits and the payments system from derivatives and commodities speculation. That might require driving some major banks into reorganization, if not insolvency. In international affairs, I think it would be helpful for the Fed Chair to say outloud that Deutsche Bank is insolvent and pretending otherwise by pressing depression-level unemployment rates on Spain, Portugal and Greece, is unacceptable. If the Fed has to intervene to give Greece cover so that it can exit the Euro, they should do it. These are the kind of huge, scary moves that I think circumstances require. I’m less concerned about the socialization of “qualification” than the socialization of “seriousness”, which makes such radical responsiveness to reality within the realm of “responsible” behavior, for people in powerful positions in a time of continuing crisis.

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LFC 08.06.13 at 1:58 am

To Barry @154
Re comments above:
see Robert Waldmann @83, adam.smith @28

Also, you are playing fast and loose w “brilliance” vs “serious academic accomplishment.” The evidence of the latter in Summers’s case is public at least to those who can understand technical economics (which i can’t), not “private” and “anecdotal” as you claim. No one gets tenure, esp not at an ‘elite’ university, without public evidence of academic accomplishment.

The issue is not whether his professorship is an ‘entry-level credential’ for the Fed job. I’m not generally a fan of Summers, as I’ve made clear upthread re his Harvard presidency (and World Bank presidency too, for that matter). The pt is when you say all the evidence of his academic accomplishment is private, not public, that is false, silly, and muddies the waters. Plus, you don’t even need the claim in order to make a case vs Summers for the Fed.

The whole public/private distinction you are making is, imo, a distraction from the real issues. If he’s failed at his policy jobs, then just say that. Don’t go into all these contortions about “private” evidence of brilliance or accomplishment vs “public” evidence of failure. IMHO, it’s not the most effective way to make the case.

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Rich Puchalsky 08.06.13 at 2:00 am

Tim Wilkinson: “But it’s not just a matter of a quasi-religious belief system. “

I don’t really mean to dispute the different variations that people are giving of the same basic idea. I’d thought that my use of prosperity theology as an example would show that I didn’t mean to imply that the belief had nothing to do with the enrichment of elites.

Really it does everything at once. It’s a belief system that serves oligarchical long-term goals, corrupts technocracy, enriches both individual members of the elite and their class generally, and protects individuals in the elite from the consequences of failure. Look at Enron as a standard case. Larry Summers’ belief that market manipulation could not possibly be important served the elite goal of selling off public assets, as well as justifying the override the advice of the regulators in his workgroup, allowing Enron to make a lot of money, allowing Larry Summers to earn political points towards future jobs, and finally protecting him from any consequences for his role.

And like all the best belief systems, it doesn’t matter whether people actually believe it, as long as they can articulate it. Larry Summers can, I’d assume, explain to anyone why unemployment benefits cause unemployment and why it should be reduced. His defense of the dogma doesn’t require that he believe it or that we believe it — only that we understand that he’s presenting it as belief, and that he’s “very smart” and protected by the elite so it’s useless to waste time arguing with him.

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mds 08.06.13 at 3:06 am

Suzanne @ 152:

‘… Yet she treated them almost like dolls, naming one of them ”daddy truck,” and one ”baby truck.”

As I type this, my son is asleep in his bed with Baby, Momma, and Dadda Monster Truck. Thanks be to the Flying Spaghetti Monster that I’m nowhere near as brilliant as Larry Summers is, or the cognitive dissonance would be painful.

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John Quiggin 08.06.13 at 5:13 am

“You cannot get Krugman to admit that macro has to model money — that’s just as crazy as asserting that EMT proves that financial markets are “right”.”

Is EMT a typo for EMH? Regardless, what does this mean? I can’t make any sense of it at all.

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JW Mason 08.06.13 at 5:50 am

ou cannot get Krugman to admit that macro has to model money

This is Steve Keen’s line. It’s plain ignorance. I am very far from being Paul Krugman’s biggest fan, but when you say he doesn’t model money, you’re just saying you don’t have any idea what you’re talking about. I expect better of you, Bruce.

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John Quiggin 08.06.13 at 11:03 am

I haven’t seen Keen push this line, but it’s clearly wrong. The whole point of Krugman’s babysitter story is that money (in this case, babysitting credits) can create a mismatch between desired demand and effective demand.

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Barry 08.06.13 at 12:41 pm

I always love seeing people criticize Krugman. My response now is to demand the name of:

1) Anybody who describes the real economy better.
2) Anybody who has shown willingness to learn and to admit mistakes better.

I’m not saying that there are none, but they’re rare on the ground.

(the joke is that I’m asking them to name the anti-Summers)

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Barry 08.06.13 at 12:50 pm

Bruce Wilder: “Would Janet Yellen be substantively better? I don’t know her. By reputation, she’s significantly less greedy than Summers, so there’s that.

We *know* that Summers is a corrupt person who had Harvard pay off the federal government for a crony’s crimes. We *know* that Summers was an intellectual and policy point person for the policies which caused the greatest financial disaster in the developed world since the Great Depression/WWII. We *know* that Summers repeatedly sticks his foot in his mouth, and has done so in public for twenty years now (i.e., he doesn’t learn) .

Those are facts, not opinions. And nobody has come up with *facts*, public facts, which show that Summers is good on anything. He has no redeeming features which can make up for those known crimes. And I’m not even counting the rest of his screw-ups – the man has left a swathe of destruction behind him.

Right then, right there, Summers is disqualified.

Unless you can show matching *facts* about Yellen, she’s clearly the better choice. And we can add in the fact that Yellen is a better economist than Summers.

This means you, Brad. Cough up. Facts, public facts.

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Barry 08.06.13 at 12:52 pm

LFC at 156: My point is that Summers’ only proven good accomplishment (being a econ professor at Harvard) is matched by Yellen, and would be matched by any candidate. That’s not impressive.

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Robert 08.06.13 at 1:04 pm

Summer’s work in academic economics includes the literature on “noise traders”. I like his paper, “The scientific illusion in empirical macroeconomics”. He’s done a number of interesting critical pieces.

Some of us think Krugman’s understanding of the economy is in spite of, not because, of his knowledge of economics. He frames the argument in macroeconomics as between freshwater and saltwater, that is, so-called new classical and new Keynesian schools. Post Keynesians mostly reject both, and arguably have a better empirical understanding of actually existing capitalist economies.

Having J. W. Mason on the other side worries me, but arguably Krugman does not understand money. (This is not to say that his models exclude money in all senses.) He has stated several times on his blog that, in the long run, money is neutral and that, basically, the loanable funds theory applies. Post Keynesians generally find this view mistaken. Furthermore, he was unwilling to admit that he was misrepresenting Keen in his cross-blog debate with him.

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JW Mason 08.06.13 at 1:20 pm

The whole point of Krugman’s babysitter story is that money (in this case, babysitting credits) can create a mismatch between desired demand and effective demand.

Right. Or just ask: What does the M in LM stand for?

I haven’t seen Keen push this line

Sorry, I was misremembering. What he actually says is that Krugman rejects endogenous, bank-created money and instead treats money as a quantity fixed by the central bank. So Keen has a valid criticism of Krugman, in my opinion.

Perhaps Bruce had something more like this in mind.

(As a completely OT but interesting aside, the whole endogenous vs exogenous money debate has become irrelevant since “money” as an analytic category has basically vanished from mainstream macroeconomics. Krugman draws an LM curve and talks about central banks setting the money supply because he’s still using the language that was current when he was in graduate school 40 years ago. But in contemporary discussions the central bank just sets the interest rate directly and money never comes into the story. (According to Mike Beggs, the current New Palgrave doesn’t even have an entry for “liquidity.”) It’s a kind of a remarkable transformation. So in fact, Bruce’s no-model-of-money criticism would be valid for most of today’s hotshot macroeconomists. It’s just not true of Krugman because he’s so far behind the times.)

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JW Mason 08.06.13 at 1:30 pm

arguably Krugman does not understand money. (This is not to say that his models exclude money in all senses.)

Robert’s comment appeared while I was writing mine. I agree that Krugman uses a simple quantity theory of money that has little relevance for modern economies. But the claim John Q. are responding to is the one in parentheses, that he doesn’t talk about money at all.

The funny thing is that Krugman’s quantity theory, naive and unrealistic as it is, is still better than what is taught today. Saying the central bank “sets the money supply” is not a very good description of how monetary policy operates, but at least it does reflect the idea that interest is determined by the supply and demand for liquidity. In the new theory the central bank sets the interest rate by magic, and there’s simply no story of where it comes from in an economy without a central bank.

Some of us think Krugman’s understanding of the economy is in spite of, not because, of his knowledge of economics. He frames the argument in macroeconomics as between freshwater and saltwater, that is, so-called new classical and new Keynesian schools. Post Keynesians mostly reject both

Yup. Arjun Jayadev and I have a newarticle in Economic and Political Weekly arguing that saltwater/liberal/New Keynesian macro has failed just as badly — and in fact laid the foundation for — the overtly austerian stuff.

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LFC 08.06.13 at 1:45 pm

Correction to my 156:
He was not World Bank president, but rather chief economist

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Wonks Anonymous 08.06.13 at 2:55 pm

Wolfowitz was World Bank president. I suppose that’s an even worse person to be lumped in with than Ferguson.

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Barry 08.06.13 at 3:15 pm

JW, I’ll read your paper (just in case it’s not obvious, I’m not an economist).

I start these things, however, with a serious question – which economist(s) is(are) better on how things have turned out in the past few years than Krugman?

It also relates back to my theme on the original topic waaaaay up top – I look first at public performance, and only then on alleged, anecdotal private performance.

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Popeye 08.06.13 at 3:26 pm

In academia, one of his well-known assertions is that “unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back”. OK, so he’s on the road to neoliberal usefulness to the powers that be. He then serves both GOP and Democratic pols in various ways.

Summers had no problem arguing the opposite position in 2010:

In the wake of the worst economic crisis in eight decades, at a time when eight million Americans have lost their jobs in the previous two years, there can be no doubt that the overwhelming cause of unemployment is economic distress, not the existence of unemployment insurance.

On the flip side, weren’t DeLong and Summers college roommates? This whole discussion in comments seems bizarre.

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bob mcmanus 08.06.13 at 3:42 pm

170: I read the Mason. It’s good, but you know, not news to someone who has kept up with Post-Keynesians.

which economist(s) is(are) better on how things have turned out in the past few years than Krugman?

The Marxians. The Post-Keynesians have good analysis and prescriptions, but haven’t a clue about the politics. They think they will convert DeLong and Krugman with the force of their arguments.

Dan Kervick who post for the Kansas City cell, had a great comment in a good post over at Yves Smith’s:

Now some rank-and-file Dems are true believers in the neoliberalism developed during the years in which Krugman, DeLong, Summers, Rubin and others have been dominating economic policy thought in their party. But most are not. They have genuinely progressive and egalitarian impulses but their policy attitudes are scrambled up in tangles of double-think. And what they always fall for are partisan heroes. If DeLong or Krugman effectively mock Bush or other prominent Republicans with some rapier thrusts of learned and satiric snark, the Democratic Devoted fall all over each other in their slavish admiration for their rhetorical champions. It’s unbelievably pathetic. Rank-and-file Democrats are emotionally incapable of making a break with three decades of economic destruction and plutocratic attack on the working poor, the unemployed and the middle class, because that would require them to acknowledge that their partisan heroes are not progressive, are servants of the plutocracy, and have done a bad job.

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Rich Puchalsky 08.06.13 at 3:44 pm

“If, by some miracle, we got a “competent” Fed Chair, who had some genuine idea of a Public Good in institutional governance, what would it look like.”

Let’s remember what the Fed looks like to a non-economist. It’s an immiseration machine. One main purpose of the thing is to keep unemployment high enough to keep inflation low, and it’s run in a context of neoliberals like Summers who simultaneously believe that unemployment insurance should be done away with. Against this is set the need to avoid runaway inflation, depressions and so on. So the people who run it are rather like Aztec priests, assuring us that we need to rip a few people’s hearts out because otherwise there will be catastrophe. Unlike the people who comfortably run the machine, each person in the lower-to-middle classes is always aware that they could randomly be one of the ones sacrificed.

So this is a manifestation of lesser-evilism, as are nearly all of our political arrangements. The only way that this is tolerated, long-term, is if it actually works at what it is supposed to do. The recovery from the Lesser Depression is skirting the line. The people who set it up already rejected a moral sense in which society should provide a safety net so that people don’t find job loss to be individually catastrophic, so the only definition of competence for a social arrangement like this is whether it actually works at avoiding the threatened social catastrophes.

I don’t think that any Chair of the Fed can be competent in this sense. Too many of the levers of social control that would be required to actually avoid systemic failure just aren’t in the Fed. So having Larry Summers there would provide a scapegoat, certainly, but no Fed chair could actually do any of the things that you say need to be done. Reorganizing the financial sector? That requires convincing or subduing the whole elite class, and I don’t think that any Fed chair could actually do it. In American history, it’s basically required a strong President who has to react to a radical movement that doesn’t believe in lesser-evilism.

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Jerry Vinokurov 08.06.13 at 5:17 pm

We *know* that Summers is a corrupt person who had Harvard pay off the federal government for a crony’s crimes. We *know* that Summers was an intellectual and policy point person for the policies which caused the greatest financial disaster in the developed world since the Great Depression/WWII. We *know* that Summers repeatedly sticks his foot in his mouth, and has done so in public for twenty years now (i.e., he doesn’t learn) .

Those are facts, not opinions. And nobody has come up with *facts*, public facts, which show that Summers is good on anything. He has no redeeming features which can make up for those known crimes. And I’m not even counting the rest of his screw-ups – the man has left a swathe of destruction behind him.

What’s amazing to me about all this is the sociology of the process, as it were. I mean, how bad would Summers have to be to stop failing upwards? He had the opportunity to make a call on a number of major economic policy issues of the last two decades, and so far it’s hard to come up with anything he’s gotten right. And don’t forget the fact that he was conflict-of-interested all over the place in the Schlieffer affair.

Ignore for the moment the question of whether he’s a “true believer” or a cynic or whatever. Those things don’t matter as much as whether he’s actually been right about stuff, and by and large he has not. And yet there seems to be literally no failure that could even conceivably disqualify Summers from advancing to yet another highly-placed position, and no failure that would keep his colleagues (Brad above and now Cass Sunstein) from pushing for his advancement.

This is why to most thinking non-economists, the field has no credibility. There appear to be no standards, and no amount of being wrong about things will ever disqualify you from politically influential positions if you’ve got the right connections. The institutional effect of economics as a profession is to promote people like Summers, who themselves promote policies that benefit the rich few at the expense of everyone else.

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Bruce Wilder 08.06.13 at 5:19 pm

JQ, JW Mason, Robert

I suppose I should explain my own comment, though Robert and JW Mason have done a more than adequate job of outlining a more defensible characterization of Krugman’s economics. My comment was:

You cannot get Krugman to admit that macro has to model money — that’s just as crazy as asserting that EM[H] proves that financial markets are “right”.

I intended that sentence to be read as a nearly hysterical screech, not so much as an expository proposition. The point of the screech is the utterly ridiculous and nearly inexplicable state of mainstream macro, and it serves as the peroratory for my point about the sterility of the dialectic in mainstream macro, among New Keynesians and between New Keynesians and the rest (New Classical, Real Business Cycles, non-macro Financial Economics, etc.) I attribute that sterility to the willingness of all parties to focus on analytics, without worrying about making the points in dispute, commensurable, that is, to make their controversies about things they could measure in common, an exercise, which would force them to try seriously to clarify, if not actually resolve, their disputes.

I did have in mind Krugman’s brief back-and-forth with Keen, in which Krugman did express his doubt about whether it was necessary to model money to get an analysis, which demonstrated the particular phenomenon Krugman thought needed to be explained. That’s not a blanket rejection of money, per se. If it is a blanket rejection of anything, it is a rejection of the need to operationalize. Krugman takes the position, which is common among macro theorists, that the job of the economist is to accumulate a quiver full of analytic models, and to develop “skill” at selecting the right model for the occasion. And, those models should be as simple as possible, in the circumstances, so, leaving out money when you can, makes sense to Krugman. In analytics, you want to reduce the model to the necessary and sufficient only.

That kind of analytics only, drawing-arrows-from-a-full quiver style encourages individual economists to adopt an ecumenical eclectism, when they don’t volunteer as victims of ideology. They can, as another commenter mentioned, believe in the neutrality of money in the “long-run only”, without seeing how utterly stupid that is, because they never have to reconcile one arrow with another, shooting them one at a time. They can insist, as Krugman sometimes does, that the distribution of income is unrelated to the problem of full-employment.

I paired Krugman to a remark about the Efficient Markets Hypothesis, because I wanted both to cast a pox on both houses, as it were. I think most non-economists recognize that turning the EMH into a proposition about financial markets — an assertion that financial markets are “efficient” and therefore financial market prices are “correct” (or cannot be credibly criticized as systematically “wrong”) — is kind of absurd. It is one of Quiggin’s Zombies, no?

The problem with taking the analytics of EMH and making it into a political proposition or assertion is the same methodological problem of failing to operationalize. The practical question is not whether financial markets are efficient in a qualitative degree (e.g. the types: “strong” “weak” EMH), but how efficient are actual financial markets? “How” as in measurable degree of efficiency, related to observable institutional design, analogous to how an engineer might conceive of, and measure the efficiency of a heat engine.

I think I’m obviously more sympathetic and admiring of Krugman, generally, and other commenters will be aware of my sympathies, and I’m counting on that to color interpretation of my casting a pox on both houses, in a way that doesn’t suggest that I’m signing onto some centrist idiocy. As Robert so artfully put it, Krugman’s “understanding of the economy is in spite of, not because, of his knowledge of economics”.

We stand today on the lee side of a great crisis, involving the malfunction of financial markets, and economists of the mainstream, that is, of conventional, establishment repute, seem to have substantial difficulty stringing together a coherent explanation, as a foundation for understanding policy alternatives and policy consequences, going forward.

In this thread, we are actually discussing the possibility that a Democratic President might appoint as head of the central bank, an architect of that crisis, and examining evidence of how that architect of collapse, framed a policy response. I’ve been trying to draw attention to the extreme poverty of our shared understanding of the crisis and the policy response, as essential context for the meaning of our varying interpretations of Summers’ role in advising Obama on a stimulus — a poverty I attribute, in part, to the sterility of economics.

I feel personally frustrated that I cannot articulate adequately how that sterility is limiting the discourse, and public commentary and understanding. We’ve re-run as a kind of natural experiment, the Great Depression, and, in a very important sense, proven that Friedman and Schwartz were wrong: it wasn’t “just” poor Fed policy in providing liquidity and preventing bankruns, after all. The institutional reforms of the New Deal, so deprecated by neoclassical economics, may have mattered after all. whocoodenode?

Christy Romer, a figure in the little drama we’ve been discussing, is the author of one of the most ascetic theories of the course of the Great Depression, one which seems, on the surface, to confirm monetarist ideas about what “worked” to bring the U.S. out of Depression. Her undoubted integrity is not in question, in the way Summers is, but the poverty of explanation still figures.

Enormous amounts of ink have been spilled on Quantitative Easing, a perfect illustration of the poverty of explanation and policy options.

Anyway, I apologize for the length of my apology. I should have stuck with “nepotism”.

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JW Mason 08.06.13 at 5:56 pm

the job of the economist is to accumulate a quiver full of analytic models, and to develop “skill” at selecting the right model for the occasion. And, those models should be as simple as possible, in the circumstances, so, leaving out money when you can, makes sense

I think you’ve got this exactly backward. What you’ve described here is how economics (or any social science, really), *ought* to operate. The way it really does operate is just the way you say it ought to, with a single consistent methodology and assumption set for all problems.

Do you think this is Krugman?

Economics is a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world. … Good economists are scarce because the gift for using “vigilant observation” to choose good models … appears to be a very rare one.

It’s not, it is Keynes.If only it really worked like that. Instead, we just get one Euler equation after another.

And now I really have to take a break from CT for a while and try to get some work done….

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politicalfootball 08.06.13 at 6:03 pm

Thanks be to the Flying Spaghetti Monster that I’m nowhere near as brilliant as Larry Summers is, or the cognitive dissonance would be painful.

The thing that amazes me about Summers is that smart people who have some experience with him personally and attest to his brilliance – DeLong, Krugman and Yglesias are recent examples – have no way of accounting for the incredibly stupid shit that he says. It’s like it doesn’t exist.

He wants to be Fed chair, but he doesn’t think that financial derivatives are at the root of the bubble and subsequent crash? How is it possible to ignore that this is what he says? Is there anyone among his defenders who even addresses this?

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Barry 08.06.13 at 6:09 pm

“The thing that amazes me about Summers is that smart people who have some experience with him personally and attest to his brilliance – DeLong, Krugman and Yglesias are recent examples – have no way of accounting for the incredibly stupid shit that he says. It’s like it doesn’t exist.”

If the In Crowd ignores it, then it doesn’t exist, for their purpose. Only dirty hippies pay attention to that which is to be ignored.

“He wants to be Fed chair, but he doesn’t think that financial derivatives are at the root of the bubble and subsequent crash? How is it possible to ignore that this is what he says? Is there anyone among his defenders who even addresses this?”

There’s not a g*d-d*mned one of his defenders whose argument can’t be boiled down to ‘we know him, and he’s Kewl and Smart and Popular; don’t pay attention to those ugly skanks in the Reality Corner who talk about what he actually did’.

If there’s one benefit for me in seeing this, it’s that *any* Harvard recommendation for another Harvardite can and should be sh*tcanned immediately.

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Rich Puchalsky 08.06.13 at 6:47 pm

“And yet there seems to be literally no failure that could even conceivably disqualify Summers from advancing to yet another highly-placed position, and no failure that would keep his colleagues (Brad above and now Cass Sunstein) from pushing for his advancement.”

Cuss Sunstein’s article is particularly interesting in that regard, because it’s gone from refusal to address the hippies to denial. If the appointment had gotten railroaded through, well and good, but now that there’s opposition from people who the President in theory has to care about, we’re seeing a new side of Summers — he’s strongly in favor of regulation, and really cares about the people who’d be thrown out of work.

Look at the section called “Regulation Advocate”. Never mind what he actually did whenever we could see it. In “internal discussions, he was one of the most uncompromising advocates for financial regulation.” In his years at the Obama administration, “there was probably not a single day on which Summers wasn’t thinking about the plight of the unemployed and what the government might do to help”.

What I find most interesting about this rhetoric is the reflexive denials sprinkled through it. Even as we’re being assured we should believe not in what Summers says or does publicly, but in what he says privately, we also have to be told that “Of course, he supports the free-market system and wants to avoid unnecessary regulatory burdens.” Why, if we hadn’t been told that he supports the free-market system, we might have thought he was — a Commie! I really never imagined that one day people would be assured that Larry Summers favors the free-market system. But if you’re talking about regulations — which always, always is followed by the phrase “unnecessary regulatory burdens” in neoliberal-speak — then the only two alternatives are basically Very Smart Genius or Commie.

We’re also assured that he doesn’t wear his heart on his sleeve. He’s a tough guy, you see. Not like a woman.

180

Rich Puchalsky 08.06.13 at 6:51 pm

Damn, did autocorrect really change Cass to Cuss? Sorry.

181

Wonks Anonymous 08.06.13 at 8:14 pm

Has Summers ever advocated getting rid of unemployment insurance? Arguing that it increases unemployment on the margin (and he made that argument when we weren’t in a recession) is different from saying we should get rid of it. Here is an example of him making the causal argument, but not making any argument about what ought to be done:
http://econlib.org/library/Enc/Unemployment.html

182

Popeye 08.06.13 at 9:14 pm

Wonks Anonymous, when this issue came up a few years ago, Summers was out writing op-eds defending unemployment insurance (see my comment above).

183

bob mcmanus 08.06.13 at 10:01 pm

This thread needs some more dimensions. So…this brouhaha is completely about keeping Janet Yellen from becoming Chairperson.

1) C’mon, if Obama nominates Summers, there is no freaking way Senate Dems do not confirm. Give me a break
2) Apparently, Obama wants Summers very very badly. They are getting super pissed at the WH, and brinnging out the big guns.
s0 3) The only way Summers does not get the nom is if Summers withdraws against Obama’s wishes, either before or after he is nominated
4) There is no way, if Obama is publicly humiliated by the dirty hippies, that Obama then gives them a victory. Sorry Yellen, you lose.
5) So Kohn? Or someone much worse then Kohn or Summers? Obama is some kind of spiteful neo-liberal monster.

6) And all of this was totally predictable, by whoever among the biggest banksters. Summers being publicly promoted in order to prevent Yellen was probably the plan.

You are being played again.

184

bob mcmanus 08.06.13 at 10:05 pm

Since DeLong is so active and public a player, my bet is Christy Romer was the goal all along.

185

Tim Wilkinson 08.06.13 at 10:05 pm

I note that Brad DeLong has not responded to my #151, which was posted within an hour of his own comment directed at me (albeit in a suitably nose-holding third person). This leaves me to assume that he has no adequate response at his disposal.

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bob mcmanus 08.06.13 at 10:08 pm

3 in a row is too much, but think about it.

With Yellen in obvious line for the job, how exactly do you get Romer in the job in her place? What does Romer have that Yellen doesn’t?

It would be tough, but after Summers withdraws, it would quiet a large part of the identity and anti-bankster crowd.

Never mind what I think of Romer.

187

Bruce Wilder 08.06.13 at 11:26 pm

bob mcmanus @ 183: You are being played again.

Well, yes. That’s obvious. And, what’s remarkable is how obvious. Obama, apparently, is off his game. Quashing the Greenwald-Snowden brouhaha with a rare visit to Capitol Hill and Bush-style worldwide terror alert has been remarkably clumsy. And, letting a fight break out between supporters of Yellen and Summers! If this were the ol’ Obama, I would presume with Bob that he wants a third candidate, but I don’t see how he finesses this without cost to himself. Is this how the duck goes lame? Seems a bit early.

I know no one can give economic advice to Obama, but I wonder if he’s noticed that new Fed Chairpersons usually come aboard ship with their own crisis in tow. This Fed has several crises still in drydock.

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Rich Puchalsky 08.07.13 at 12:20 am

The “Summers did too defend unemployment insurance” bit is even more annoying. His defense, if you read his actual letter, rests on his previous academic work being done under conditions of full employment, not under recovery. Wow, it’s great that he wrote that unemployment insurance actually increases employment under some conditions in the encyclopedia article that he cites! Oh wait, he didn’t. His encyclopedia article is actually the worst-written, most simplistic piece on unemployment that I’ve ever read, full of fatuous one-way relationships that never change due to changes in conditions.

What his academic work seems to come down to is that if people have a choice, they don’t take really bad jobs. So you have to threaten them with starvation to get them to work, and giving them a social safety net makes them less desperate and therefore they stay unemployed longer. What brilliance! He must have been the first person ever to think of this.

And of course there’s no hint of morality anywhere in this. Even Sunstein’s defense says that he thought about “the plight of the unemployed”. But unemployment per se isn’t necessarily bad. If you’re unemployed because you’re holding out for a better job offer, and you have the resources to do this, then you end up with a better job at the cost of those resources. At full employment, lengthening the average period of unemployment comes down to a transfer of resources from the employing class to the workers — the first pays more in wages and taxes, the second gets better jobs. Summers just treats it as a cost, because the quality of life of workers figures nowhere in his calculations. But that, of course, is what social policy is about — it’s not that everyone needs a job because the Protestant Ethic demands that everyone have a job, it’s that people should have better lives: less ground down by accident, bad luck, and jobs that demand a great deal and pay very little.

189

Popeye 08.07.13 at 2:15 am

It just seems strange to me to feel so pained that Summers wrote an academic article 30 years ago that could be useful to those who argue that unemployment benefits should be cut, and then completely ignore the fact that Summers was on the right side when this issue was most recently in the news. I’m not saying he deserves a fucking medal or a Fed chairmanship or whatever, just please let go of the butthurt for two seconds.

190

LFC 08.07.13 at 2:28 am

Damn, did autocorrect really change Cass to Cuss? Sorry.

Virtually the only funny moment in this whole thread.

191

LFC 08.07.13 at 3:00 am

Popeye @171
weren’t DeLong and Summers college roommates?

Not that it really matters, but no. (For one thing, went to different universities as undergrads. For another thing, different ages.)

http://en.wikipedia.org/wiki/Lawrence_Summers#Family_and_education
http://en.wikipedia.org/wiki/J._Bradford_DeLong

192

Popeye 08.07.13 at 3:26 am

Right, DeLong was actually freshman roommates with Shleifer, who was an undergrad research assistant to Summers, who at the time was an econ prof in his mid-20s.

193

Chris Mealy 08.07.13 at 4:00 am

I don’t know a lot about Bezos’s current politics, but way back when it pretty much tracked whatever was in the Economist. Standard techno-libertarian stuff ,like this:

I think people should carefully reread the first part of the Declaration of Independence, because I think sometimes we as a society start to get confused and think that we have a right to happiness, but if you read the Declaration of Independence, it talks about “life, liberty and the pursuit of happiness.” Nobody has a right to happiness. You should have a right to pursue it, and I think the core of that is liberty.

Here in Washington State he’s backed charter schools and fought a state income tax (we don’t have one).

194

Chris Mealy 08.07.13 at 4:00 am

Oops!

195

Rich Puchalsky 08.07.13 at 4:00 am

“I’m not saying he deserves a fucking medal or a Fed chairmanship or whatever, just please let go of the butthurt for two seconds.”

I’ll remember for next time that you don’t want people to actually read whatever you keep citing. Don’t let me distract you from your really substantive comments.

196

Bruce Wilder 08.07.13 at 6:00 am

JW Mason: “I think you’ve got this exactly backward.”

I am making the distinction between analytical and operational models do a lot of work in my previous comment, without spelling out in detail what that work is.

197

John Quiggin 08.07.13 at 6:28 am

On Krugman’s macro being too old-fashioned to be wrong in the modern way, he sympathizes (though I’m sure he doesn’t agree entirely) with my view that “it all went wrong in 1958″

http://johnquiggin.com/2013/01/10/krugman-on-2013-vs-1958-macro/

198

PGD 08.07.13 at 8:39 am

Obama apparently originally wanted Geithner, who turned it down, and is now advising on the pick. (http://www.bloomberg.com/news/2013-08-02/geithner-said-to-advise-obama-on-choice-of-fed-chairman.html)

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Popeye 08.07.13 at 3:18 pm

I’ll remember for next time that you don’t want people to actually read whatever you keep citing. Don’t let me distract you from your really substantive comments.

This seems entirely unresponsive to what I wrote, but whatever.

200

Rich Puchalsky 08.07.13 at 4:45 pm

“This seems entirely unresponsive to what I wrote, but whatever.”

You want me to respond to your telling me to let go of the butthurt? OK. You’re a pseudonymous twit. On the day that you comment here without random insults, using your real name, then maybe I’ll take your minimal citation of something that you turned up with a 2 second Google search seriously enough to point out that of course Summers had to write that he supported unemployment insurance while he was working for Clinton and the GOP was making hay out of it.

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Popeye 08.07.13 at 5:56 pm

Summers was working for Obama in 2010. I don’t understand this “of course Summers had to support unemployment insurance when he was working in a Democratic administration” retort either, since the whole thrust of this discussion is that the Democrats are neoliberals who could care less about unemployment insurance, and that Summers is a political hack who only cares to serve his hedge fund masters. I guess “butthurt” hit close to him or something.

202

Rich Puchalsky 08.07.13 at 7:08 pm

“the whole thrust of this discussion is that the Democrats are neoliberals who could care less about unemployment insurance”

Except that they aren’t. The Democratic Party uncontroversially contains left-liberals, neoliberals, and a good number of whatever left-of-liberalism radicals exist within electoral politics, and represents interest groups such as unions that are decidedly not neoliberal — that’s because the two-party American system means that they have to take a range of people. There’s no way that Obama could say that he flatly opposes unemployment insurance. Also, no one that I remember reading said that Summers only serves hedge fund masters. Actually, in the same paragraph of mine that you originally responded to, I wrote that “OK, so he’s on the road to neoliberal usefulness to the powers that be. He then serves both GOP and Democratic pols in various ways.”

203

Brad DeLong 08.07.13 at 9:04 pm

Tim Wilkinson: 151: “I note that Brad DeLong has not responded to my #151, which was posted within an hour of his own comment directed at me (albeit in a suitably nose-holding third person). This leaves me to assume that he has no adequate response at his disposal.”

Don’t assume that other people are like you, and do nothing but click “reload” all day long. It makes you look even sillier.

Larry says that he took the $1.2T number out of the memo as a strategy for maneuvering inside the Obama administration to get a bigger ARRA–and that that was the right thing to do. Peter says that Larry took the $1.2T number out of the memo as a strategy for maneuvering inside the Obama administration to get a bigger ARRA–and that it was unfairly devious of Larry to stage-manage the debate like that. Christy says that Larry told her he wanted to take the $1.2T number out of the memo as a strategy for maneuvering inside the Obama administration to get a bigger ARRA–and that she is not sure whether that was the right decision.

Capisce?

And next time, please take a non-response as a sign either that I am off doing more worthwhile things than correcting your mistakes.

204

Bruce Wilder 08.07.13 at 9:48 pm

Summers blocked the authoritative advice of the Chairman of the Council of Economic Advisers that a larger stimulus was needed — a stimulus estimate, by the way, which was, itself, arguably small relative to need — from reaching the President, because Summers wanted a larger stimulus. Summers, the Saruman of center-left economics. That’s Brad DeLong’s contention.

Summers’ estimate of the size (and shape — let’s not forget Summers deprecating infrastructure investments) of what was needed became, pretty much, the actual stimulus, which became a political failure, discrediting later proposals for additional stimulus.

And, all this, is an argument in recommending Summers for yet another important job in which he can act corruptly and incompetently, not, as it would be in a just and accountable society, a sentencing recommendation.

I think Brad has lost track of the bounds of credibility. And, thank the deity for that.

205

Tim Wilkinson 08.08.13 at 12:55 am

Thank you, lord, for rudimentary white-hat-trolling techniques.

206

politicalfootball 08.08.13 at 1:47 am

I was hoping Professor DeLong would answer the question I stated in 140 and 177, but perhaps I didn’t include enough insults to get his attention. I’ll try again. (It’s entirely possible that Professor DeLong or someone else has answered my question somewhere, and if someone can link to that explanation, that would be cool, too.)

So let’s go through my premises and conclusion. I’ve literally never seen a counter-argument of any kind to this:

The premises:

-Summers was up to his neck in the decision-making that led to the lack of regulation of financial derivatives.
-That lack of regulation was a key, direct cause of the financial meltdown whose aftermath we are still experiencing today.
-Summers himself has offered no excuse, apology or reconsideration. In his view, he was correct to be skeptical of regulation of derivatives. He’d basically do the same thing again if he’d had the chance.
-Especially given the benefit of hindsight, this view is batshit crazy – entirely unsupportable.
-The Fed is highly influential in the regulation of derivatives.

The conclusion:

-Summers would be a terrible choice for Fed chair.

Are any of my premises incorrect? Does the conclusion not follow from those premises? I can imagine some potential counter-arguments, but as far as I know, nobody has attempted to make them.

Summers’ defenders argue that his record of public service qualifies him for the Fed chairmanship. Who among those defenders has actually addressed the obviously relevant portions of his public service?

207

JW Mason 08.08.13 at 2:08 am

Peter says that Larry took the $1.2T number out of the memo as a strategy for maneuvering inside the Obama administration to get a bigger ARRA

Where does he say that?

208

JW Mason 08.08.13 at 2:16 am

Brad DeLong writes:

I am working off of Michael Grunwald’s “The New New Deal”

He then quotes Grunwald:

Orszag… would have preferred to start smaller, closer to $600 billion. (His ellipsis.)

Now Brad asserts that Orszag wanted the larger number in the memo. Since this is the opposite of what Grunwald writes, evidently he is not working off Grunwald after all. What is he working off?

209

JW Mason 08.08.13 at 2:27 am

… on the other hand, to be fair, I have not read the book itself, only the bits Brad has excerpted. So I will grant Brad the benefit of the doubt that Grunwald does say this, until I have had a chance to read the thing.

210

david 08.08.13 at 3:43 am

So, thanks to this thread and knocking around, i’ve learned at least two things i didn’t know that seem to weigh heavily on this discussion:

1) summers was bad on the california crisis (ken lay is a great guy bad) in a way that suggest that when a crisis happens he favors the powerful

2) summers was anti-cramdown, in a way that suggests that when outside the box thinking is at hand he’ll find a way to favor the powerful

Also, it seems like all the defenses of the brooksley born and the is the stiumulus big enough screwups are of the 11th dimensional chess variety.

Not that i’m someone worth persuading of anything.

211

Tim Wilkinson 08.10.13 at 2:55 am

No, as one might expect Brad DeLong has already posted every scrap of text favourable to his position. There ‘s nothing in the book that confirms or even suggests that Orszag (a) wanted the 1.2bn figure in there to discredit Romer or (b) thought Summers had ommitted it so as to increase the size of stimulus (obviously). All that stuff seems to be Brad DeLong’s own invention, presented in such a way (the first name terms, lack of citation, agressively overconfident tone) as to suggest it’s based on inside knowledge.

Just a few highlights of what actually is in the book:

—–

Obama envisioned Summers as an adviser without management portfolio, the kind of White House position that Henry Kissinger once suggested should be assigned to him on a permanent basis. But Summers insisted that if he was going to accept a staff job, he wanted to run the National Economic Council, the “honest broker” role that was expected to go to the friendlier Jack Lew. That way he’d get his own staff, and a gatekeeper status he could use to control the policymaking process. “I mean, honest broker?” says one transition official. “That’s not exactly Larry.” Summers was a fighter, not a referee, and he even warned Obama that making colleagues feel validated was not his forte. One economist recalls that after reviewing one of his memos during the shadow transition, Summers urged him to make one option sound less attractive, the opposite of honest brokering.

the main reason he kept the $1.2 trillion option out of his memo was that it didn’t seem like a real option. Rahm had told him there was no way Congress would go over $1 trillion.

——–

“It is easier to add down the road to insufficient fiscal stimulus than to subtract from excessive fiscal stimulus,” Summers had written.

House Appropriations chairman David Obey, a prickly New Deal Democrat who kept a picture of FDR above his desk [sic], warned Obama’s economists that the Blue Dogs in his caucus would never agree to multiple deficit spending bills: “You damn well better know how much you need to get this job done, and you damn well better err on the high side, because you won’t be able to come back for a second kick at the can!” After a meeting with Jared Bernstein—who privately admitted to his union pals that the Obama proposal wasn’t big enough to restore full employment—the AFL-CIO’s chief economist warned in an internal memo: “There does not appear to be a Plan B. … [sic - TW] An inadequate fiscal effort following a heavily contested congressional battle will leave economic policymakers with very few alternatives.” Paul Krugman also predicted that if the initial stimulus failed to fix the problem economically, the whole concept of stimulus would be discredited politically.129
“In retrospect, that was prescient,” says Summers, who does not make this kind of admission often. “At the time, I didn’t agree. That was a mistake.”

[and re: how much of a 'mistake' that was - ]

Secretary Geithner often seemed to suggest that unless Obama pledged to reduce deficits to precisely 3 percent of GDP, investors would suddenly lose faith in the dollar. After staring into the abyss of the financial crisis for a year, Geithner wanted to avoid another disaster at any cost; a second stimulus that might shave a point off the unemployment rate didn’t seem worth even a small additional risk of potential chaos. Of course, fretting about market stability and tail risks was part of the treasury secretary’s job description, but Orszag made similar arguments, and even [sic] Summers sometimes echoed them.
“I understand that there’s a treasury secretary,” Romer complained during one of these discussions. “I’m tired of having three.”

Romer found the situation intensely frustrating. Eighteen months earlier, the vague prospect of 6.5 percent unemployment had seemed so terrifying that President Bush, Speaker Pelosi, and Leader Boehner had worked together to jam stimulus through Congress. Now the nation yearned for the halcyon days of 6.5 percent, Democrats controlled Washington, and a second stimulus wasn’t even worth discussing?
“There just wasn’t any appetite,” Gibbs says. “It wasn’t like we had a meeting and said: Hey, should we do more? It was just: No. We’d have conversations, but they’d last ten seconds. Can we get it done? No. End of conversation.”

———-

[re: that memo. Grunwald's foray into exegesis at eth end is distinctly over-generous to Summers - ]

The memo did include several caveats about a larger package: It might not be politically feasible. It could conceivably unsettle the bond markets. And the bigger the stimulus got, the harder it would be to keep timely, targeted, temporary, and wise. Summers only included four options for recovery plans, from $550 billion to $890 billion, and some liberals have accused him of providing intellectual cover for inadequate stimulus, overemphasizing politics at a time he should have focused exclusively on the scary economics. It’s true that Summers considered his job partly political; as he told an aide, if you’re going to join the circus, sometimes you’ve got to dress up like a clown. But his memo doesn’t read as a call for caution. The language is dry, but bureaucratic sirens are blaring on almost every page.
“Insufficient fiscal impetus,” Summers wrote, “could put recovery at risk, with catastrophic consequences.” It’s a call for action, and action now.

—-

[The memo as published by the New Yorker can be read at http://s3.documentcloud.org/documents/285065/summers-12-15-08-memo.pdf - and the context of the above quote is:]

From the perspective of raising demand and creating jobs there is a case for a very large program of stimulus. Considerations on the other side include:
• It may be possible to achieve some stimulus in other ways such as through financial
policy actions. However the forecasts all assume reasonably aggressive behavior on the
part of the Fed and likely are too optimistic about demand coming from the rest of the
world.
• An excessive recovery package could spook markets or the public and be
counterproductive. Given where the public discussion is moving and given the “flight to treasuries” present in markets at this point, we do not believe this should deter escalation well above $600 billion – a view shared by senior Federal Reserve officials. It does speak to the importance of accompanying recovery actions with strong measures to reinforce medium term fiscal credibility.
• The economy can absorb only so much “priority investment” over the next two years.
Inevitably as the quantity of fiscal stimulus increases its quality declines, and the package tilts more heavily towards tax cuts and other lower priority measures. On the other hand, insufficient fiscal impetus could put recovery at risk with catastrophic consequences.
• It is easier to add down the road to insufficient fiscal stimulus than to subtract from
excessive fiscal stimulus. We can if necessary take further steps. However, this is a key
moment to get ahead of the curve in responding to economic distress.

[Also, under the heading 'Needed size of fiscal stimulus':]

Notice that neither of these packages [i.e. 655bn & 880bn - TW] returns the unemployment rate to its normal, prerecession level. To accomplish a more significant reduction in the output gap would require stimulus of well over $1 trillion based on purely mechanical assumptions – which would likely not accomplish the goal because of the impact it would have on markets. [emph mine - TW]

BTW – political football – the technique is not to include insults – not overt ones anyway – but to invite them.

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Tim Wilkinson 08.10.13 at 2:56 am

(sp.: omitted)

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