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That indicates that Summers would resist any efforts to monitor, scrutinize, and criticize his control over the bailout if he is the Treasury Secretary. That promises to be a disaster. There's already far too little transparency and monitoring in the bailout plan, and Summers wants no one to be looking over the shoulder of Paulsen or anyone else.
There's also a danger of a conflict of interest, since Summers is a part-time managing director of the hedge fund D. E. Shaw & Co. Will he try to help his friends by continuing to bail out businesses? He also refuses to answer questions about the financial advice he has been giving Shaw.
I don't want anyone to think that I hate Larry Summers and regard him as a horrible person. He's a well-respected economist, seems to be regarded as a good teacher, and he did undertake some valuable actions at Harvard (such as increasing financial aid for the poor and trying to emphasize undergraduate teaching). I don't have a problem with Summers being an advisor to Obama, and he's not a free market ideologue on the scale of the Republicans.
A 2007 New York Times profile of Summers noted that “Clinton ended up embracing the centrist, business-friendly ideas of Summers and his mentor, Robert Rubin.”
But it added that now Summers “sounds, strangely enough, a little like Bob Reich.” It's good if Summers is rethinking some of his free market faith. But why do we need him if we can get Reich himself, or someone else who was right all along?
However, there are also good reasons to doubt that Summers' conversion is real. Summers played a central role in “negotiations over China's entry into the World Trade Organization,” which has been a disaster in terms of protecting human rights, the environment, and labor rights. And Summers doesn't seem to have changed his views much at all.
Back in April 2008, Summers was predicting that “There is a reasonable chance that from a financial market, Wall Street perspective, the worst has passed.” That doesn't sound like a smart economic prognosticator.
Just a few months ago, Summers declared: “Alan Greenspan had a tremendous record as Fed chairman.”
And in April 2008, Summers proclaimed, “Any honest Democrat will admit that we are now all Friedmanites.”
Larry Summers may be a Friedmanite, but I'm not. No one appointed by Obama to this essential position should be announcing how much he agrees with Milton Friedman, the intellectual godfather of the current economic disaster. And an endorsement from Henry Kissinger (“Henry Kissinger has said that Summers should be given a permanent White House job, a sort of fixer of flabby policy ideas”) scares the hell out of me.
Still, I find myself agreeing with Kissinger (shudder!) on this point. I think Summers should be an adviser to Obama, somebody who challenges old ideas (hopefully his own) and tries to come up with new ones. But that doesn't mean he should be running the show. Everyone agrees that he lacks the temperament. What he also lacks are genuinely new ideas. And that may be the most disturbing thing of all. We don't need the recycled, pro-business, free-market-is-god ideas of the Clinton Administration in a time of economic crisis. We need change, not more of the same. And Larry Summers is a lot more of the same.
At his best, Summers is a gaffe machine who actually exceeds Joe Biden's capacity to shove his foot down his larynx. At his worst, he's a conservative, domineering leader who alienates almost all of the people he works with. In neither case is he a good choice for the Treasury Department or any other major position.
