The Strategy of Monetary Policy: Larry Summers from 1991
Reihan Salam: How Partisan Demographics Shape Policy Thinking

On Larry Summers...

Ezra Klein writes:

The case for Larry Summers: There’s a problem with reporting on the Fed chair race: Janet Yellen’s supporters will talk on the record. Larry Summers’s supporters, by and large, won’t. That’s in part because his key supporters are concentrated in and around the Obama administration, and they stay out of the media almost as a matter of course. But their reticence has led to a real imbalance…. The case for Yellen is clear, and made often…. The case for Summers is largely being made behind closed doors…. This post is the product of numerous conversations with Summers’s supporters who, to my continuing frustration, typically refuse to be quoted even when they’re just saying nice things about their former colleague….

And, indeed, there is only one quote--from me, back in 2008.

What's the matter, guys? If you really do think he would be the best Fed Chair, say so and say why on the record. And none of this whispering to Al Hunt that Janet Yellen lacks "gravitas": not true and not helpful, capisce?

Of this quote, Ezra Klein writes:

The case for Larry Summers: He’s really brilliant. Yes, you’ve heard this before. But it’s worth fleshing out what people mean when they say it. In 2008, Brad DeLong — who favors Summers for the Fed — wrote a blog post about working with Summers that tracks closely with the testimony I’ve heard from others:

You can bring him up to speed on anything in fifteen minutes. And if you can be interesting enough to keep his attention for half an hour, he will start throwing out hypotheses and what-ifs and suggesting connections you would never have thought of.

Summers rubs a lot of people the wrong way. But the part of Summers that rubs people the wrong way — or at least one part of Summers that rubs people the wrong way — is exactly what his admirers love about him. The experience of taking an idea to Summers, they say, is the experience of having the smartest person you’ve ever met focus intensely and seriously on what you just told them and then give you 10 reasons you never thought of for why it’s idiotic or won’t work or needs revision. And those 10 points are good points. And if you absorb them, and integrate them, you end up with something much better. The people who enjoy that process quickly come to rely on it as a necessary step in their work.

Some people hate the Summers experience. But those who don’t find it exhilarating, even addicting. It breeds a loyalty far stronger than what’s typical in government. Summers’s supporters don’t just like him. They think he’s special, a once-in-a-generation mind that makes the minds around him better.

That’s not to say he’s smarter than Yellen, of course. What Summers has is an unusually aggressive, outward facing, broad intelligence. The disagreement between the two camps is whether the better guide to how Summers will perform at the Fed is the many people who don’t enjoy the Larry Summers experience or the many people who do enjoy it.

What I wrote back in 2008:

Brad DeLong : On Larry Summers...: I see that Sheryl Sandberg is writing--corectly--that Larry Summers has:

[been] a tireless advocate for girls' education... fought for social security benefits for women working in their homes, better enforcement of child support obligations, and an expansion of child care tax credits...

in addition to being:

a supportive and deeply caring mentor for [her] and many other women who had the opportunity to work for him

and the Harvard Economics professor who "helped us the most" when Sheryl started her new student organization: Women in Economics and Government.

All this is true.

And it is also true that, as one of us once said as we ran out of a building, "being Larry's friend is never dull."

But as important, I think, is that the upside to putting Larry in high federal office right now is so very great.

  1. Larry is--in Paul Krugman's words--a "a force of nature -- and also very, very smart. He would get things moving from day minus one..."

  2. You can bring him up to speed on anything in fifteen minutes. And if you can be interesting enough to keep his attention for half an hour, he will start throwing out hypotheses and what-ifs and suggesting connections you would never have thought of.

  3. If you do a piece of something for him excellently--a link in a chain, say--he will do his damnedest to make sure that all other links in that chain are done equally excellently.

  4. 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.

  5. Very good people want to work for Larry because he will, if he thinks you can handle it, push you forward into the limelight and give you more responsibility than you thought you could handle. It's the Bob Rubin style of management. There is the much-repeated story Frank Brosens tells: '"Frank, could I see you for a minute?" [Bob] Rubin had followed partner Frank Brosens out of a management committee meeting. The meeting had been a triumph. Brosens had presented a compelling case for a bold commitment to arbitraging Japanese equity warrants.... Brosens had made the entire presentation but, as a learning experience, he had invited Zachary Kubrinick to sit in on the meeting as an observer. Brosens... could hardly believe Rubin had been so impressed that he would leave the meeting to compliment him immediately. Brosens was right; Rubin was not rushing to compliment him.... "Frank," said Rubin in his soft, relaxed voice, "you and I both know that, as young as he is, Kubrinick knows all that you know about Japanese warrants and he could have made the case equally well. You really should have let him make the case--and get the experience of coming before the management committee. By not taking the credit, you become more effective. If you do right by people, they win and you win. Frank, always go out of your way to share credit"…' Larry operates the same way… In world of of bureaucratic, administrative, and academic snakepits that is more often kiss-up-kick-down control-the-access steal-the-credit, Larry's way of operating is very refreshing--and can be far more effective than the workings of those who use their great powers of social perception for evil or aggrandizement.

These are, I think, the skills we want in high federal office right now. Why? Because the situation is unclear and confused enough that we want really smart people serving as intellectual coordinators and traffic cops as the Obama-Biden administration assembles its policies. I am reminded of Keynes's reflections on Leon Trotsky:

Notes: Keynes on Trotsky: Granted his assumptions, much of Trotsky's argument is, I think, unanswerable. Nothing can be sillier than to play at revolution if that is what he means. But what are his assumptions? He assumes that the moral and intellectual problems of the transformation of Society have been already solved--that a plan exists, and that nothing remains except to put it into operation.... [But a]n understanding of the historical process, to which Trotsky is so fond of appealing, declares not for, but against, Force.... We lack more than usual a coherent scheme of progress, a tangible ideal. All the political parties alike have their origins in past ideas and not in new ideas and none more conspicuously so than the Marxists. It is not necessary to debate the subtleties of what justifies a man in promoting his gospel by force; for no one has a [true] gospel. The next move [must be] with the head...