Bailout

Things for which we owe Larry Summers some gratitude

By Felix Salmon

I did enjoy reading John Cassidy on Larry Summers:

There are things not to like about Summers, one of which is the fact that he appears to hold the Fourth Estate in contempt. At the same event where he failed to thank his boss, a speech to the Economic Policy Institute, a journalist asked him what he would miss most about being in the White House. ?Reporters like you,? he replied with a chuckle. Doubtless, Summers thought he was being amusing. Still, reporters need to get over it. After all, we aren?t the only folks Larry considers intellectually beneath him. Such a category would include most members of President Obama?s cabinet and their top policy advisers; many of his colleagues in the White House; virtually all foreign officials; ninety per cent of the Harvard faculty; and a similar proportion, or possibly higher, of his fellow academic economists.

Cassidy goes on to criticize Summers on quite a lot of other fronts too, before saying that ultimately we have to judge him on whether he guided Barack Obama in the right policy direction. His conclusion there: Summers noticed the “glaringly obvious” fact that there was a crisis going on, and did something about it. After that, “the Obama Administration has made a series of policy errors for which Summers must share responsibility”.

Essentially, the only good thing that Cassidy can find to say about Summers is that he was “largely right” in terms of identifying and responding to the crisis. What Cassidy fails to note is that Summers had already identified the crisis and said what should be done about it before he joined the Obama team. In many ways, his crisis-related policy prescriptions, which he laid out quite pompously in the pages of the FT before getting tapped by Obama, were his very public job application — and he wound up being passed over for both of the jobs he was applying for.

Obama always knew, pretty specifically, what policies were needed to respond to the crisis — and in many cases those policies had already been enacted by the Bush administration. Summers was chosen because he believed in those policies; it’s simply not the case that the policies were enacted because Summers was chosen.

Which brings Cassidy’s list of “things for which we owe Summers some gratitude” down to absolutely nothing.

Full post as published by Macroprudential on December 16, 2010 (boomark / email).