Why We Should Banish Larry Summers From Public Life
By Naomi Klein - April 19th, 2009
Published in The Washington Post
I vote to banish Larry Summers. Not from the planet. That wouldn't be nice.
Just from public life.
The criticisms of President Obama's chief economic adviser are well known. He's
too close to Wall Street. And he's a frightful bully, of both people and
countries. Still, we're told we shouldn't care about such minor infractions.
Why? Because Summers is brilliant, and the world needs his big brain.
And this brings us to a central and often overlooked cause of the global
financial crisis: Brain Bubbles. This is the process wherein the intelligence
of an inarguably intelligent person is inflated and valued beyond all reason,
creating a dangerous accumulation of unhedged risk. Larry Summers is the
biggest Brain Bubble we've got.
Brain Bubbles start with an innocuous "whiz kid" moniker in undergrad, which
later escalates to "wunderkind." Next comes the requisite foray as an economic
adviser to a small crisis-wracked country, where the kid is declared a
"savior." By 30, our Bubble Boy is tenured and officially a "genius." By 40,
he's a "guru," by 50 an "oracle." After a few drinks: "messiah."
The superhuman powers bestowed upon these men -- and yes, they are all men --
shield them from the scrutiny that might have prevented the current crisis.
Alan Greenspan's Brain Bubble allowed him to put the economy at great risk:
When he made no sense, people assumed that it was their own fault. Brain
Bubbles also formed the key argument Greenspan and Summers used to explain why
lawmakers couldn't regulate the derivatives market: The wizards on Wall Street
were too brilliant, their models too complex, for mere mortals to understand.
Back in 1991, Summers argued that the subject of economics was no longer up for
debate: The answers had all been found by men like him. "The laws of economics
are like the laws of engineering," he said. "One set of laws works everywhere."
Summers subsequently laid out those laws as the three "-ations": privatization,
stabilization and liberalization. Some "kinds of ideas," he explained a few
years later in a PBS interview, have already become too "passé" for discussion.
Like "the idea that a huge spending program is the way to stimulate the
economy."
And that's the problem with Larry. For all his appeals to absolute truths, he
has been spectacularly wrong again and again. He was wrong about not regulating
derivatives. Wrong when he helped kill Depression-era banking laws, turning
banks into too-big-to-fail welfare monsters. And as he helps devise ever more
complex tricks and spends ever more taxpayer dollars to keep the financial
casino running, he remains wrong today.
Word is that Summers's current post may be a pit stop on the way to the big
prize, Federal Reserve chairman. That means he could actually make "maestro."
Mr. President, please: Pop this bubble before it's too late.
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