The debate over who should succeed Ben Bernanke as chairman of the Federal Reserve has exposed a number of divides within the Democratic Party: Men versus women in a party that gets the majority of its votes from women, but whose economic policy barons are mostly men; hawks versus doves on monetary policy; enthusiastic bank regulators versus more cautious ones. But most of all, the debate has split insiders versus outsiders. The bulk of observers regard Fed vice chairman Janet Yellen as the obvious, sensible choice. By contrast, former Treasury secretary Lawrence Summers’ candidacy is being boosted by a much smaller group of people composed largely of insiders who’ve worked closely with him over the years. If it were put up to a broad vote of Fed watchers, Yellen would win in a landslide. Summers’ big advantage is that “people who’ve worked closely with Lawrence Summers and are enthusiastic about him” is a group that includes the president of the United States and most of his top advisers.
On its face, the fact that those who know Summers best are most enthusiastic about him should carry some weight. Ezra Klein, channeling the pro-Summers insiders, explained that his backers simply deny the characterization of him as the more bank-friendly candidate. In fact, they see him as a “strong supporter of aggressive bank regulations” who’d be more “informed, confident, and engaged” than Yellen, Klein wrote. And of course they speak highly of his brilliance. The economist Brad DeLong, a friend of and co-author with Summers who also worked with him in the Clinton administration, has made this case at some length.
It’s tempting to conclude that these people must know what they’re talking about. Tempting, but wrong.
I don’t know Summers, but I have met him and can testify to his genuinely amazing intellectual skills as an on-his-feet debater about big ideas. It’s something I first experienced as a student journalist at Harvard when Summers was president of the university. While nobody who was there at the time would dispute his brilliance, another thing nobody would dispute is that he was a terrible university president. Terrible in exactly the most predictable ways. The problems were not only foreseeable, but foreseen. Until, that is, the search committee tasked with filling the vacancy received assurances from Summers’ close friends and colleagues.
The key actor was Robert Rubin, Summers’ mentor at the Treasury Department, who assured the search committee that Summers’ “rough edges” had been smoothed out by government services. “Rubin made us confident we weren’t getting a bull,” as a member of the search committee told the Boston Globe at the time. Soon after Summers was ensconced in office, he installed Rubin on the six-person governing board of the university.
But Rubin was wrong.
Summers almost immediately got into controversy, dressing down the distinguished intellectual Cornel West for being excessively engaged in outside activities. Never mind that Summers himself managed to earn tens of millions of dollars in consulting and speaking fees in side gigs while on the Harvard payroll. West decamped to Princeton, taking fellow black philosopher Anthony Appiah with him. And rather than marshaling faculty support for a controversial-but-important potential expansion into the neighborhood across the Charles River from the main campus, Summers managed to gratuitously alienate many of his colleagues. Some of this was about university policy, but much was simply about manners. As Harry Lewis, dean of Harvard College at the time, recalls, humanities scholars in general “came in for dismissive treatment” from a president who seemed not to respect them personally or the fields they studied.
And then, of course, there were Summers’ infamous comments on women in science. In the middle of a running controversy over the declining rate at which women were obtaining full professorships under his watch, he decided to meander well outside his own field of scholarly expertise and muse that women were simply less likely to possess the intellectual capacity to do high-level quantitative work. To some extent, his friends have tended to exaggerate the role of this controversy in undermining his position at Harvard, making him out to be a victim of the PC thought police. But the backlash came in the context of a much broader alienation of the faculty. Caroline Hoxby, at the time one of the more politically conservative Harvard professors, denounced him at a 2006 faculty meeting. “Every time, Mr. President, you show a lack of respect for a faculty member’s intellectual expertise,” she said, “you break ties in our web. Every time you humiliate or silence a faculty member, you break ties in our web.”
In contrast to the way he alienated many of his colleagues, Summers was consistently supportive of his friend Andrei Schleifer, whose stewardship of the Harvard Institute for International Development ended with the university paying out a $26.5 million settlement for defrauding the American government by simultaneously steering federal aid dollars while his wife profited off Russian investments.
The fact that Summers was a bad university administrator doesn’t mean that he’d be a bad Federal Reserve chairman. But it does show that Summers’ friends have a habit of vouching for him when they shouldn’t. Summers turned out to have exactly the flaws Rubin promised the search committee he didn’t have anymore.
Another parallel that strikes me is it was never clear why Summers wanted the Harvard job in the first place. As of 2001 he was an extremely well-regarded economist with no particular background in academic administration or association with any university reform agenda. It just seemed like the most prestigious job he could plausibly get, and so his friends set about to get it for him. Similarly, Summers hasn’t written or spoken extensively on monetary policy in over two decades. It’s telling that when the job of vice chair of the Fed opened up and Yellen was appointed, nobody had considered Summers a contender for the job. If offered, he surely would have declined and regarded the position as beneath his dignity.
But just as it turns out that universities do well to pick leaders with a record of success in academic administration, there’s a lot to be said for picking central bankers to run your central bank. The conceit within the Summers fan club seems to be that the job is presumptively his, and only shrill over-the-top critics have a problem with that. But nobody is entitled to one of the most powerful jobs in America. Summers’ biggest boosters are those who know him well and are blown away by his intelligence. But these same friends have a track record of badly overestimating his suitability for jobs that require other qualities.
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