Tangentially related to this blog’s purpose, because the actions of the Fed chair have economic consequences that cannot be overcome at the state and local level, and because Larry Summers has contributed to a lot of misery in Southern California .
Like so many malefactors in American politics that simply refuse to die, the Larry Summers Machine has again sprung back to life to promote Summers, instead of Janet Yellen, for chair of the Federal Reserve. We had the argument that Yellen “lacks the gravitas” to be chair, which Yglesias correctly translated from Washingtonian as “lacks the penis”. We now have the argument that if it isn’t to be Summers, it shouldn’t be Yellen either because their rivalry has “consumed both of them”, as the New York Times put it.
But what I really want to address today is the strange argument, advanced by Brad DeLong among others, that Summers should be Fed chair because he’s really, really smart. First, we should note that this is only a solid argument for Summers if you think Yellen’s intelligence is significantly inferior. But even that is not what I really want to get at.
Larry Summers is a polarizing figure. So let’s pretend we’re not talking about Summers. Let’s pretend that we’re talking about Person X. And let’s suppose that I told you that Person X’s record included the following:
- Argued against the Clinton Administration participation in the Kyoto Protocol.
- Fought the Commodity Futures Trading Commission (CFTC) and testified in July 1998 that there was “no clear evidence of a need” to regulate derivatives – the financial instruments that at that very moment were torpedoing Long-Term Capital Management and would help tank the entire world economy ten years later.
- Championed the repeal of the Glass-Steagal Act, which also contributed to the 2007-2008 financial crisis.
- Told Gray Davis that there was no collusion or price manipulation during the 2000-2001 California energy crisis, and advised the state that the problem was strong environmental regulations preventing quick construction of new generating capacity.
- Signed off on (if not promoted) plans for a university to invest in interest-rate swaps, which cost the university hundreds of millions of dollars due to the 2007-2008 financial crisis (which was, remember, caused in part by Person X’s previous actions).
- Argued against a larger stimulus package in 2009, dooming the country to a recovery that has been mediocre at best.
In light of this record, would you determine Person X to be brilliant? To be someone who should be given major control over the economy?
Now look. I don’t know Larry Summers. Maybe he really does have an amazing, broad intelligence that makes the people around him better. A lot of people whose work I respect, and who I think are intelligent, say that he does. I’m no economist, but his theoretical work with DeLong on fiscal policy in a depressed economy makes sense to me. But good God, at some point, don’t results matter? As one of the foremost philosophers of my childhood put it, stupid is as stupid does. Like National Review columnists who aren’t racists but keep writing racist articles, Larry Summers is a genius who just happens to keep giving stupid advice.
Looking at the Larry Summers resume over the last twenty years, it seems to me that he’s the neoliberal movement’s George W Bush. The latter has racked up an impressive record of callous disregard for human suffering, from mocking a Texas death row inmate to launching an unnecessary war on bogus pretenses, from operating a gulag in Guantanamo to putting the country on the path to legalized torture. Yet he still has his legions of defenders, ready to say it was all a big misunderstanding, ready to rise and proclaim him a good person. Likewise, despite a long list of questionable economic outcomes, there are still many people who rise to defend Larry Summers, to insist that he be given another chance at the economic helm.
The comparison between Summers and Bush can also be kicked up to a meta level. Part of the reason Bush holds so much appeal to many people is his own earnest belief in his own goodness. Regardless of how intelligent Summers may be, he unquestionably excels at projecting his sense of his own awesomeness. Like Bush, that’s one of the things that makes him so polarizing.
Problem is, in many jobs, that characteristic interferes with successful execution of responsibilities. DeLong says that “if he thinks you know more about something than he does, he will listen to you very patiently and then trust and act on what you have told him”. But the record would suggest that there is very little Larry Summers thinks you know more about than him.
That combination of intelligence and mindset might make for great theoretical work and academic debate, but it produces terrible results in the real world. As commenter Confabulator noted on DeLong’s post, Larry Summers is great in theory. In practice, not so much. With geniuses like Larry Summers in charge, who needs idiots?
Update: on DeLong’s post, commenter PeakVT made the same comparison to George W Bush; I likely read that and subconsciously assimilated it. Credit where credit is due!