My Bet: Larry Summers will be Chosen Treasury Secretary

Everyone speculating on President-Elect Obama’s most likely choice for Secretary of the Treasury has the same two names:    Larry Summers and Tim Geithner.   I have known them for a long time, and worked with both in the Clinton Administration.   Either one would be excellent.  Geithner is now way ahead in the Intrade odds: 45% to 27% as of November 14.     But my bet is that Obama will go with Summers.   For one thing, Geithner is needed at the New York Fed, where he has been one of the key players managing the financial crisis.

They are both said to have baggage that might disqualify them.   I disagree.   Some say Geithner is tarred by association with the Bush Administration, because he has been working with it on the crisis.    But his position is non partisan, and some continuity in managing this crisis is desirable.   More to the point, it was in the Clinton Administration (under Larry Summers) that Geithner rose from obscurity to prominence.    Some say that Obama should not choose either of them, precisely because they are associated with the Clinton Administration and he campaigned for change.   But that is the most absurd argument of all.   We need somebody experienced in this job.  The sort of competence these two showed at the 1993-2001 Treasury, especially at crisis management, and the track record of that Administration, is what we want to change to, not what we want to change from.    All the economic indicators improved during the Clinton Administration, as surely as they have worsened since then:  employment, growth, inflation, budget balance, poverty, and so on.

Most sensationally, Summers is said to be tainted by his time as President of Harvard.    Too much has already been said about this.   But I will make just a couple of observations.    First, although Summers may not be Mr. Personality, and he will never be elected to high office nor chosen to head offices for women’s rights or the environment, he has all the most important qualities for the Treasury job.   Despite a tendency to say what he thinks, I don’t think he committed any true faux pas or became involved in any mini-scandals during 8 years in the government — no easy feat.   (The closest he came to a faux pas, or what counts for one in the media, was a statement that the argument for abolishing the estate tax was based on greed rather than efficiency — a statement that he quickly retracted without bothering to try to explain what he had meant, having already by then become familiar with the rules of political brouhahas.)    In his time in Washington, he learned how to get along with politicians across the spectrum, from socialists to the far right.   It’s true that he wasn’t able subsequently to get along with the full range of faculty in the Harvard English Department, but that is a tougher task. Finally, I continue to be surprised at how the press describes Summers’ ill-fated and ill-considered (but “off the record”) remarks regarding explanations for the lack of women in academic science departments.  He is most often reported as having suggested that women generally have less aptitude for science than men.    I link to the text of his remarks here,  and urge readers to make up their minds for themselves.   But I don’t read his speculation about the various hypotheses quite the way most people have assumed.   To me the outrageous line in the remarks was, rather, the suggestion “that no economist who had gone to work at the President’s Council of Economic Advisers for two years had done highly important academic work after they returned” !

Originally published at Jeffrey Frankel’s weblog and reproduced here with the author’s permission.

8 Responses to "My Bet: Larry Summers will be Chosen Treasury Secretary"

  1. Teresa   November 17, 2008 at 11:28 am

    “Despite a tendency to say what he thinks, I don’t think he committed any true faux pas…”Um. As a woman, I would beg to differ. What Larry Summers has said about the role of women in the sciences is one of the biggest “faux pas” anyone can make who has ambitions of becoming a leader on the national stage. I’m sure Mr. Summers is an able man, but we shouldn’t be rewarding boorishness and misogyny. It is a poor lesson for our sons as well as our daughters.

    • Anonymous   November 18, 2008 at 12:47 am

      It would be nice if at least a few people who express strong anti-Summers views would bother to learn something about his actual record. For example, when he was chief economist at the World Bank, he was obnoxious (and highly successful) about pushing poor countries to move aggressively to educate their girls. This was HIS HIGHEST PRIORITY at the World Bank, and it was not a priority that anybody before or since cared much about. Based on those two years alone, I think Larry Summers has accomplished more actual good for the women of the world than all of his detractors put together.If you want an actual informed discussion of his record, by a woman who actually knows, see this post by blogger Sheryl Sandberg on Arianna Huffington’s website:

  2. Anonymous   November 17, 2008 at 1:45 pm

    Summers received a vote of “no confidence” from the entire Harvard faculty. And he is an arch-deregulator whose ideology is quite culpable for the current financial tsunami. He would be an appalling choice.

  3. Guest   November 17, 2008 at 2:31 pm

    I think a better strategy for Obama would be not to pick his permanent Sec. Of Treas.; but rather to pick a six-month man, then the long term man.Why?There is a painful amount of conflict of interest up and down the ranks of the treasury. Someon like Volker could come in, clean house, make some tough choices, then go.As for who next? I would hope it would be someone from the Treasury or Acedemia. I have had my fill of ex business elites settling scores and playing favorites with tax dollars.

  4. John E.D.P. Malin   November 17, 2008 at 3:41 pm

    Pick Larry Summers for Treasury. We need a bold, outrageous Jewish mind clever in mathematical calculations to steer our nation over this mess, or we will be in it for three more years, if not a decade.Do we wish to destroy a whole generation of wealth creation in U.S.?

  5. Female PhD Biochemist, A Real Scientist"   November 17, 2008 at 4:55 pm

    I like the idea of a “six-month man.” That’s surely as good as it gets!

  6. bchristie   November 17, 2008 at 10:19 pm

    Continuity or Change? Either Summers or Gaithner at Treasury will signal a constraint on change and an affirmation of the continued corporate looting of the treasury wherein the banks’ windfall is hoarded and used for corporate profit, executive bonuses, and stockholders’ dividends, rather than for the public purpose for which it should have been intended, and on bad terms “negotiated” by the bankers’ own law firms, paid by Treasury, to the detriment of the public interest. What would these guys do differently than Paulson?That these men have “experience” is in this context a great big negative! The need is to move AWAY from the old failed policies of the corporatist “free markets” ideology that exploits such words to privatize profit and socialize debt, all to the detriment of the nation as as corporate pirates raid the commonwealth, and TOWARD public regulation and control of the nation’s economy in the interests of the nation, not the financial elite.

  7. Anonymous   November 21, 2008 at 9:21 am

    Have critics of Summers actually read his statement linked to in the above article? The standard deviation among males is higher than that in women (for various traits). This implies an imbalance in the sex ratios near both the upper and lower extreme tails of the distribution. This is an empirical observation. Absence of mean difference (or very small mean difference) need not imply absence of discrepancy near tails of distributions.