Larry Summers thinks the world is headed toward economic crisis and he's unhappy about the lack of action so far:
“The fire department is still in the station. Somebody should be proposing something somewhere,” Summers said. “I’m very disappointed in the response.”
"Somebody" should be doing "something somewhere"? That strikes me as a little vague for a brilliant economist to be suggesting in public.
Unlike many progressives, I'm not a Summers hater. He really is a brilliant liberal economist with a lifetime of policy experience, and it would be stupid to disregard him over a few minor disagreements of priority and emphasis. Still, if he doesn't have any good ideas to present, who does?
But there's nothing in the rest of his remarks aside from providing a few billion dollars to the World Bank.¹ That's fine, but obviously not the stuff of crisis response. So should we stop the Fed's austerity policy—which was Summers' idea in the first place? Focus on a weaker dollar? Increase tariffs on China? Reduce tariffs on China? What?
¹In fairness, see here for more, although it's basically just a few routine reform proposals.
This is the closest thing we'll ever get to an admission that he doesn't know what to do because so many traditional economic signals are sending opposite messages that shouldn't normally happen.
And of course, Cladia Sahm called him out on Twitter.
Monetary policy via central bank rate cannot be the only lever you have. Everyone knows it's a kludgy tool that helps everyone which means helping the wrong people, too, and it comes with a lot of collateral damage.
This is pretty obvious, isn't it?
Larry is still whining that Biden isn't kissing his ass enough. Larry is a Very Serious Person with Big Opinions and Stuff, and needs to be deferred to.
So he's saying he's out of the loop, and Someone Needs To Do Something To Loop This Very Serious Person In, or Bad Things Will Happen.
Don't say Larry didn't warn you!
"Larry is still whining that Biden isn't kissing his ass enough. Larry is a Very Serious Person with Big Opinions and Stuff, and needs to be deferred to."
Exactly. That's all this is about.
Summers is pissed he got left out of the Administration so he uses his media contacts to do exactly what is being described here and sadly Kevin basically falls for it. What we're seeing with inflation is not just a modest rise which he predicted (and one could argue was running too low for too many years) but the result of events such as the Ukraine-Russian War, drought, supply-chain problems as the result of the pandemic, bird flu that simply raising interest rates isn't going to cure overnight (although it's starting to as the rate has ultimately declined since last spring) along corporate consolidation and monopoly taking advantage of the situation to raise prices.
Spot on.
I agree with Kevin that he is very smart. But he is both incredibly arrogant and insecure.
Capital hasn't given the orders yet, Larry. Be patient, you'll know when to shill.
To a large extent what was needed to save the country from the consequences of the covid economic crash has already been done. The US and other countries basically printed trillions of dollars (borrowing by either the government or private enterprise is what actually creates money) and gave it to all the people. This is a demand-side remedy that would not have been considered at all before the New Deal time. Even Republicans did it when they were in control in the Trump administration. There was an almost instantaneous bounce back. Now we are having inflation for several reasons, some related to an excess of money and to other covid-related problems, but also because of the Ukraine invasion and disruption of oil and gas supply. Of course there is confusion - things are not running steadily as they were 2010-2020.
But this will pass. The country has had inflation before and it didn't kill us. When rationing ended after WW II there was some serious inflation, but it ended without the Fed raising interest rates and the country went on to have a kind of economic golden age. The idea that the Fed controls everything is just a fantasy which has continued to be held by economists despite the evidence. The Fed didn't prevent the inflation of the 70's and it hasn't prevented current inflation.
but inflation did not threaten to usher in fascist rule before in America so it might well kill us.
Call me old-fashioned, but I believe that one should figure out what the problem is before trying to fix it.
Nothing we can do. Ukraine can't beat Russia any faster, we can't switch over to renewables faster than we are, and climate change will only stress agricultre worse every year.
Also no, Summers is not at all a "liberal" economist. Lol
"Something somewhere" is this year's "repeal and replace."
IOW: It's terrible what we have now, and I can't tell you what I would do, but put me in charge and I promise it will be be bee-yoo-tee-ful.
"Something somewhere" is the unspoken promise of all the Biden-haters. Whatever the situation, they're full of vehement condemnation. But it's hard to find anybody with specific alternatives that would be an improvement. That includes:
...the price of gas
...the Afghanistan pullout
...the Ukraine conflict
...crime
...fentanyl
...etc.
Thanks! This is a question that voters ought to be asking before they go to the polls. Who's proposing concrete solutions? Who's just shrieking "Bad bad bad!" and "Trust me!"
For that matter, who has deliberately blocked all legislation ... and then taken the credit for its benefits when the other party passes it? Who has several times in the recent past and maybe next week shut down the federal government out of pique? Who is just not in touch with reality?
(sigh) Dr Summers made some stupid remarks about women long ago and now he's a persona non grata for everything, even stuff he got a Nobel prize for. If we applied this standard universally, nobody would ever give credibility to ANY man.
And the reverse would most likely apply, too. This black'n'white thinking (is that racist?), good guy-bad guy dichotomy (is that sexist? misogynistic?) needs to stop. Maybe I'm crazy, but didn't Americans used to be able to use a little, ya know, "nuance"?
“Stuff he got the Nobel prize for.” When was that exactly?
“ Maybe I'm crazy, but didn't Americans used to be able to use a little, ya know, ‘nuance’?” No. Thanks for asking!
This is a bit unfair to everybody who is not Larry. Everyone says something stupid at some time. Larry (sorry, DOCTOR Summers) was President of Harvard and he was giving a speech and this is the occasion he used to say something stupid.
A brilliant man would not make that mistake. Anyway, brilliance in academia is a rhetorical trick: You speak first and you speak loudest (it helps to be a big, heavy, imposing presence like Larry) and it matters not whether your ideas are worth anything--your are brilliant.
If you go an actually read the transcript of what Summers said in that forum, he doubled down on the stupid in two ways. First, he said something to the effect of, 'I must be right about this [i.e., women not being as capable as men], because if that wasn't true, then there would be this whole bunch of talent left on the table, and why wouldn't institutions just go out an hire this talent? That would be crazy not to do!' Ummm, yeah. For any of us working in academia (and I would hazard a guess that it's true in the 'real world', too, but I can guarantee it exists in the academic world), the concept that a department or school would do something really stupid because 'that's the way it's always been done', or 'I am following the lead of my peers', or 'Back when I was at Princeton, this is the way we did it ...', or 'Grand Old Man X told me this was the best hire to make ...' is pretty darn commonplace. If Summers didn't believe that elite schools wouldn't be actively stupid about these things, he really wasn't paying attention.
The second attitude he displayed that drove me up a wall was, 'I must be right, since I've thought about this a little bit. Yeah, there might be people who've studied this a lot, but hey, they weren't Larry Summers. My little bit of thinking is worth a whole lot of their thinking.' (Again, anyone in academia is going to be familiar with this particular line of thought.)
Now in this particular case, Summers is talking about economics, so his half hour of thought is worth more than months and months of whatever thought I could put to it. But as others here keep pointing out, he hasn't exactly described what he's thinking particularly well, other than to say everyone else is wrong. He might be right, but he isn't being particularly helpful.
'I must be right about this [i.e., women not being as capable as men], because if that wasn't true, then there would be this whole bunch of talent left on the table, and why wouldn't institutions just go out an hire this talent? That would be crazy not to do!'
So he really made the argument that folks use to MOCK economists?
“A hundred-dollar bill is lying on the ground. An economist walks past it. A friend asks: ‘Didn't you see the money there?’ The economist replies: ‘I thought I saw something, but I must've imagined it. If there had been $100 on the ground, someone would've picked it up.’”
That's revisionist nonsense.
When is the last time you heard anyone bring this up? I mean, aside from D00d's apologists? Srsly, you're the only ones still talking about that. It makes me think I should say something tacky, so that decades from now I can use it as a decoy just like Larry.
Because the fact is, people just disagree with him. He has been demonstrably out to lunch on a couple things, and reasonable people can disagree about the rest.
Larry just feels entitled, and isn't getting the ego service he feels he's entitled to.
It it weren't so funny to watch, I'd suggest someone give him a lollipop and an acrylic sheet engraved with "America's Favorite Economist, Emeritus" or something. But as-is, he's just another butthurt jerk who was left out on music-chairs day at the White House and thinks we still need to hear about it.
The policy recommendations seem fairly obvious. First the world bank and imf hand out low interest loans for projects that replace oil with solar and wind for the production of electricity. This has the bonus advantage of weakening the Saudis. (See previous article.)
Second, low interest loans to increase food production.
"So should we stop the Fed's austerity policy—which was Summers' idea in the first place"
Yes. And I bet Summers even agrees with this. But he will never publicly admit he was wrong, so instead he proposes someone do SOMETHING.