As Senator Elizabeth Warren has stated on numerous occasions, “Personnel is policy.” The people who implement policies are the ones who ultimately determine what the policy is; their actions are more important than their or anyone else’s words.
Larry Summers is a classic example of this. My last post summarized his resume and his disastrous performance in President Clinton’s Treasury Department. It also noted that he is currently a senior adviser to Senator Joe Biden’s presidential campaign and that he may well aspire to a senior post under Biden if he is elected president. [1] Here are some additional reasons Biden needs to reject Summers and his policies.
After serving as Treasury Secretary under President Clinton, Summers returned to Harvard as its president in 2001 after George W. Bush won the 2000 presidential election. At Harvard he:
- Alienated faculty members by denigrating many of them, including the whole sociology department,
- Questioned the scholarship of Cornel West (a high-profile black professor),
- Also questioned the ability of women to succeed in math and the sciences, and
- Commandeered investment decision making, despite Harvard’s well-paid and highly successful money managers. Summers’ investment mistakes cost Harvard roughly $1.8 billion and had serious effects on its budget. [2]
As a result of all of this, and after a no-confidence vote by the faculty, Summers resigned as Harvard’s president in 2006. In 2008, before returning to the government, Summers earned $600,000 as a Harvard “University Professor”, $5.2 million from the private equity firm D.E. Shaw, and $2.7 million from speaking fees, largely from financial corporations. Clearly, Wall St. was the butter on his bread.
In 2009, Summers returned to the federal government as head of the President Obama’s Economic Council. As the Obama administration formulated its response to the Great Recession from the 2008 financial collapse (for which Summers bears significant responsibility), he pushed to reduce the size of the economic stimulus, to minimize the support for state and local governments, and for the budget deficit to be kept as small as possible. As a result, the recovery was slowed and high unemployment persisted. Summers promised substantial spending to provide foreclosure relief for homeowners and a reform of bankruptcy laws so that underwater homeowners could reduce the principal on their mortgages. However, he did not deliver on this rhetoric and seemed much more focused on rescuing the banks than homeowners. He also opposed a financial transaction tax, which would have generated needed revenue and curbed short-term trading that can destabilize financial markets, even though in 1989 he had co-authored an academic article arguing for such a tax. [3]
To summarize, no single person bears more responsibility than Larry Summers for Democrats’ support for Wall St. deregulation, outsourcing of jobs to foreign countries, fiscal austerity at home and abroad (even in the face of recessions and economic hardship for the masses), and privatization of public assets and responsibilities both in the U.S. and internationally. [4] Summers’ consistent policy prescription has been to apply free market theory (which benefits his cronies in the financial industry, wealthy individuals, and large multi-national corporations), even when this was inappropriate for the situation. Other economists and policy makers raised concerns about Summers’ policies, but he persisted even after they led to disaster after disaster.
For example, Summers’ catastrophic policy decisions or miscalculations led to:
- The 2008 financial collapse whose key triggers were his blocking of regulations on the financial industry and of all regulation of derivatives,
- The slow recovery and enduring high levels of unemployment from the 2008 Great Recession due to his prioritizing of support for financial corporations while minimizing support for homeowners, workers, and the economy as a whole, and
- Hyper-inflation, economic hardship for workers, and the discrediting of democracy as an effective form of government in Russia and Third World countries due to his policies demanding rapid privatization and free marketization.
Although Summers’ rhetoric has turned more progressive lately as he jockeys for a role in the Biden campaign and in the government if Biden wins, he has denounced wealth tax proposals from Senators Warren and Sanders in the presidential campaign, which are supported by many progressives. Moreover, his actions speak louder than his words and he has consistently supported deregulation and policies that benefit wealthy individuals and corporations – including his own work in the financial industry.
If you believe that:
- Economic inequality is a problem that the U.S. needs to address,
- The financial industry should be regulated so it doesn’t crash our economy again and again,
- Consumers should be protected from dangerous, predatory financial products,
- The world should be protected from destructive free market privatization and speculation, and
- Workers should be protected from trade treaties that benefit large multi-national corporations and drive a race to the bottom for workers,
then Larry Summers is NOT your man – and he shouldn’t be Biden’s man either. Personnel is policy and if Summers is influential in Biden’s campaign or administration these issues will NOT be tackled through any significant policy initiatives.
I encourage you to keep an eye out for Summers and his policies. If they appear to be gaining traction with Biden or his administration if he’s elected, please be ready to object.
[1] Kuttner, R., 8/7/20, “Did Summers jump, or was he pushed?” The American Prospect (https://prospect.org/blogs/tap/did-larry-summers-jump-or-was-he-pushed/)
[2] Kuttner, R., 7/13/20, “Falling upward: The surprising survival of Larry Summers,” The American Prospect (https://prospect.org/economy/falling-upward-larry-summers/)
[3] Kuttner, R., 7/13/20, see above
[4] Dayen, D., 5/13/20, “Dr. Jekyll, or Mr. Biden?” The American Prospect (https://prospect.org/politics/dr-jekyll-or-mr-biden/)
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