As Sen. Elizabeth Warren has stated on numerous occasions, “Personnel is policy.” Platforms, policy statements, and rhetoric are nice, but the people who are in charge of implementing policies are more influential. In judging personnel, as well as candidates or elected officials, past actions are more important than words.

There is perhaps no better example of this than Larry Summers, who is a senior adviser to Sen. Joe Biden’s presidential campaign. Everyone seems to agree that he is brilliant, politically nimble (or some might say shifty), and a consummate bureaucratic infighter. He is known for his boundless self-confidence and his vindictive retribution against those who oppose or expose him. He is well-connected, particularly to powerful Wall St. elites, and has numerous proteges who are or have been in powerful positions in government and the financial industry.

Summers recently announced that he would not take a job in a Biden administration. This was likely due to the strong resistance to him from progressives, which may have led Biden to decide that Summers should not be part of his administration. Nonetheless, Summers is still likely to be, either directly or through this proteges, an informal and potentially influential adviser to Biden. Summers is also known to covet the job as Chair of the Federal Reserve, a position he previously tried to get. Because it is technically not in the Biden administration but is a presidential appointment at the independent Federal Reserve, this position may not be ruled out by his statement. So, Summers, his influence and his potential to play a major role in a government entity, cannot be ignored. [1]

As background, his resume includes:

  • Harvard economics professor (1983-1991)
  • Chief Economist and Vice President of Development Economics at the World Bank (1991-1993)
  • S. Treasury Department (1993 – 2001 under President Clinton) as Undersecretary for international affairs (1993-1995), Deputy Secretary (1995-1999), and Treasury Secretary (1999-2001)
  • President of Harvard University (2001-2006); faculty member (2006-2008)
  • Simultaneously, Managing Director, D.E. Shaw (private equity firm) and highly paid speaker, typically for Wall St. firms (2006-2008)
  • Director, National Economic Council (2009-2010 under President Obama)
  • Harvard faculty member (2011 – current)
  • Simultaneously, Managing Director, D.E. Shaw (private equity firm) (2011 – current)

In his time at the U.S. Treasury, Summers pressured the former Soviet Union and Third World countries to rapidly adopt free market economies and privatize public assets. These efforts repeatedly proved to be disastrous. Financial crises in Russia, Mexico, and East Asia were the result. Typically, inflation soared, workers’ wages fell, government services were cut, oligarchs became rich and powerful, and in Russia, Putin took dictatorial power after the supposed transition to democracy was a total disaster and democratic governance was completely discredited. [2]

As Summers was driving U.S. Russia policy, his close friend and Harvard colleague, Andrei Shleifer, got a government contract and engaged in insider trading based on it. Shleifer headed up a Harvard-based project in Moscow that was the lead contractor for USAID in helping with Russia’s economic transition. According to federal prosecutors, Shleifer and his wife were making investments based on insider information they got through the USAID project. The case was finally settled in 2004, when Summers was president of Harvard, and Harvard paid a $26.5 million settlement and Shleifer paid $2 million but retained his tenured professorship at Harvard. This was one of the issues that led to Summers departure as Harvard’s president.

Summers also promoted trade agreements that benefited Wall St. financial businesses and large, multi-national corporations, at the expense of American workers. For example, he advocated for admitting China to the World Trade Organization and promoted the North American Free Trade Agreement (NAFTA). He also opposed reviving enforcement of antitrust laws, despite the clear growth in size and market power of huge corporations, and ignored the need to address climate change.

Summers aggressively opposed regulation of derivatives (financial instruments / investments based on or derived from other financial instruments such as mortgage-backed securities, options to buy or sell securities, credit default swaps, etc.). Through his efforts and those of his cronies regulation of derivatives by the federal government was banned by the Commodity Futures Modernization Act of 2000. It also banned states from regulating them.

Predatory lending practices (where borrowers had a high risk of default) proliferated under Summers’ deregulation of financial markets. “The interaction of predatory subprime lending with unregulated and opaque derivatives such as credit default swaps was the single most important cause of the 2008 financial collapse.” (page 23) [3]

Summers returned to Harvard as President in 2001 after George W. Bush won the 2000 presidential election. My next post will present a summary of his performance at Harvard and his return to government under President Obama.

[1]      Kuttner, R., 8/7/20, “Did Summers jump, or was he pushed?” The American Prospect (

[2]      Kuttner, R., 7/13/20, “Falling upward: The surprising survival of Larry Summers,” The American Prospect (

[3]      Kuttner, R., 7/13/20, see above



Big businesses and their executives have failed us in the coronavirus pandemic, but nonetheless they are standing at the public trough getting more bailout money than anyone else. This sounds just like what happened in 2008.

Big corporations and their so smart executives didn’t see the business opportunity and respond to the pandemic when it appeared in late 2019 in China. They could and should have seen what was coming and increased the production of ventilators and personal protection equipment (PPE). This was a great opportunity for them to make a profit and garner good publicity but with their short-term, finance-focused mentality, they totally missed the opportunity.

Corporate executives have failed to push back on the Trump administration and the right-wing movement in their disdain for science and expertise. At times, they have promoted it, for example in climate change denial. In the case of the coronavirus, shortly before Trump made his dangerous call for the country to get back to normal by Easter, he had been on a conference call with financial executives who apparently told him that ending social distancing would be good for the financial markets.

Corporate executives – supposedly leaders – have failed to stand up for rational policies and preparedness. In doing so, they have aided and abetted the right-wing anti-government, anti-knowledge, anti-truth movement. By doing everything they can to avoid paying taxes, corporate executives have undermined government capacity to respond to public health crises, among other things.

Lessons that were learned during the Ebola outbreak in 2014 have been ignored and undermined by the Trump administration and its enablers in Congress. They have weakened our public health system and undermined our global health security, including eliminating the key position that coordinates U.S. global health efforts. [1] The Trump administration ignored the plans the Obama administration gave them, developed based on the Ebola outbreak, on how to respond to a public health crisis.

The right-wing movement reflexively opposes government policies and programs, both because it wants unbridled, unregulated opportunities to make profits at any cost to the public good, and because they don’t want to take the chance that any government action would appear to be valuable or successful. They don’t want voters to ever get the sense that government does important things that serve the public interest. [2]

Deregulation, particularly of the financial industry and financial standards, has undermined the financial stability of multiple corporations and industries. There are many financially unstable corporations in the U.S. that are likely to be in or on the brink of bankruptcy without government assistance in the face of the coronavirus pandemic. This is the result of big banks making high-risk loans, vulture capitalists’ leverage buyouts (with high-risk loans), and corporations using virtually all their profits and even borrowed money to buy back stock and pay dividends (which enriches executives and wealthy shareholders). The systematic weakening of the regulation of the big banks since the 2008 crash, including the undermining of the Dodd-Frank law’s financial safeguards put in place after that crash, have contributed significantly to this dangerous situation. [3]

For example, over the last decade the airline industry has spent 96% of the cash generated by profits to buy back its own shares of stock. Therefore, it failed to build a reserve against tough times and is now standing at the public trough asking for a bailout of $50 billion. Coincidentally, the six biggest U.S. airlines spent $47 billion over the last ten years buying their own stock, endangering the financial stability and future of the corporations. [4]

A corporation buying its own stock boosts the price of its shares, which enriches big stockholders and executives. In 2012, for example, the 500 highest paid executives at public U.S. corporations received, on average, $30 million each in compensation with 83% of it based on stock options and stock awards. Therefore, a boost in the price of the corporation’s stock enriches these executives substantially. [5]

Over five decades, corporate executives have outsourced their supply chains to foreign countries, notably China, while ignoring the risks and hidden costs of being dependent on global trade. They did so to increase profits by dramatically reducing labor costs. The coronavirus pandemic has brought the risks and hidden costs of globalization home to roost. Manufacturing operations in China and other countries have shut down due to the pandemic, which has also made the shipping of goods problematic. Foreign governments, especially authoritarian ones like China, are controlling exports, including of critically needed supplies to respond to the pandemic. As a result, corporations dependent on global operations to produce goods for export to and sale in the U.S., don’t have products to sell and consumers can’t get things they need, including critical health care supplies and drugs.

The risks of global supply chains shouldn’t have come as a surprise to smart corporate executives. In the 1930s, when dealing with the Great Depression, economist John Maynard Keynes argued for the globalization of ideas and arts, but the retention at home of the manufacturing of goods. [6]

The bottom line is that corporate executives exacerbated the coronavirus pandemic by:

  • Failing to respond to the emergence of the coronavirus in a timely and effective manner,
  • Failing to support preparedness for a public health crisis and a knowledge-based response when the coronavirus hit,
  • Supporting deregulation of finances that have made their own corporations and our economy more vulnerable to economic stress, and
  • Outsourcing global supply lines making their own corporations and all of us more vulnerable to disruptions in global trade.

[1]      Warren, E., retrieved from the Internet 4/5/20, “Preventing, containing, and treating infectious disease outbreaks at home and abroad,”

[2]      Krugman, P., 3/28/20, “COVID-19 brings out all the usual zombies,” The New York Times

[3]      Warren, E., retrieved from the Internet on 4/5/20, “My updated plan to address the coronavirus crisis,”

[4]      Van Doorn, P., 3/22/20, “Airlines and Boeing want a bailout – but look how much they’ve spent on stock buybacks,” MarketWatch (

[5]      Lazonick, W., Sept. 2014, “Profits without prosperity,” Harvard Business Review (

[6]      Prestowitz, C., & Ferry, J., 3/30/20, “The end of the global supply chain,” The Boston Globe


In 2019, corporate spending on lobbying the federal government grew to a nine-year high of $3.47 billion (yes, Billion).

The health industry spent a record $594 million on lobbying in 2019 as it fought against various proposed reforms of our health care system. Roughly half of this money was spent in opposition to controls on drug prices. As a result, proposals from both the Trump administration and Congress have stalled. [1]

The health industry also lobbied heavily against bipartisan legislation to control surprise medical bills. These are typically bills for services delivered by out-of-network providers that aren’t covered by insurance when patients had no idea this was occurring. New players in this industry, private equity vulture capitalists who have bought emergency medical providers and physician staffing services, opposed this legislation with a $54 million ad campaign funded by “dark money,” i.e., money whose actual source was obscured. As a result of this ad campaign and all the lobbying, despite bipartisan support in Congress and support from the Trump administration, this legislation to limit the dollar amount of surprise medical bills has stalled.

Trade and tariff actions were the target of lots of corporate lobbying; 1,430 lobbyists reported lobbying on trade issues, a record high. The giant corporations with huge resources are lobbying for exemptions from tariffs, while smaller businesses, without the resources to engage in major lobbying campaigns, will probably suffer from the tariffs. One example of lobbying on trade issues is that the Semiconductor Industry Association succeed in getting the Trump administration to reverse its ban on the sale of computer chips to the Chinese corporation, Huawei. [2]

The communications and electronics industry spent a record $435 million on lobbying in 2019. Amazon, Apple, and Facebook all set new records for lobbying expenditures in response to concerns in Congress about their business practices and antitrust investigations in Congress and the Department of Justice.

Corporations are spending huge sums on lobbying because they know there will be a high return on their investment. Success in lowering taxes or tariffs, or in allowing higher prices and revenue, will result in higher profits generally well in excess of the amount spent lobbying.

One argument against allowing huge corporations to exist is that they have huge resources to pay for lobbying and to use to pursue legal actions that skew the balance of power in our society and overwhelm the voice of the people and the public interest.

[1]      Evers-Hillstrom, K., 1/24/20, “Lobbying spending in 2019 nears all-time high as health sector smashes records,” Common Dreams and the Center for Responsive Politics (

[2]      Evers-Hillstrom, K., 1/24/20, see above


Since the late 1970s, a concerted effort has been made by right-wing, wealthy elites to promote a new brand of “free market” capitalism, which I refer to as plutocratic economics. [1] Their broad, well-funded initiative was successful in reversing and undermining the progressive, managed capitalism that was put in place in the 1930s and 40s in response to the failure of the largely unregulated markets that led to the Great Depression.

After 40 years of experience with these plutocratic policies, the results are in: they don’t work. Wealthy elites (the plutocrats) have benefited substantially, but the consequences for the economy, workers, and the middle class have been very negative.

The plutocrats’ basic argument is that markets work and government doesn’t. They assert that government is inherently incompetent, in part because it and its regulators have been “captured” by the special interests they were supposed to regulate. [2]

The wealthy individuals and large, often multi-national, corporations pushing plutocratic economics invested in politicians, academicians, think tanks, and advocacy organizations to promote their theories, rationales, and policies. Academicians and think tanks were hired and funded to give a scholarly veneer and rationale to what otherwise would have been seen for what it was – a raw power grab. The resultant public policies greatly benefited the self-interest of the wealthy elites and corporate executives.

On the political front, the plutocrats use multiple strategies to achieve their policy goals. They employ lobbyists who work to convince policy makers to support their policies. They place supporters (often former corporate employees) within the government bureaucracy (a.k.a. the revolving door). They make campaign contributions and “independent” expenditures on behalf of candidates to elect supportive individuals and to buy access to elected officials. They promote trade policies and a type of globalization that undermines American workers. They got U.S. policy makers to choose trade policy options that put the interests of multi-national corporations and investors first and those of workers last. [3]

Proponents of the plutocratic economics promised that markets and businesses would regulate themselves for the good of all, that markets would be more efficient without government regulation, and that social goals could be more effectively achieved by using market forces. They also argued that social programs that supported low income workers and families were inefficient, unnecessary, and provided disincentives to work hard and make positive contributions to our economy.

In concert with their economic and political theories, the plutocrats pushed to reduce progressive taxation, eliminate government regulation and anti-trust enforcement (which had limited the size and marketplace power of corporations), and dramatically weaken public programs that provide support for workers and a safety net (including the minimum wage, unemployment benefits, unions, and welfare payments to the poor). Their trade policies allowed U.S. multi-national corporations to ship five million jobs overseas over the last 20 years. As a result, multi-national corporations now have a smaller portion of their global workforce in the U.S. than the portion of their sales that are in the U.S. [4]

The plutocrats and their hired experts developed rationales for their policies based on economic theories and assumptions about markets that were not supported by actual experience (and have since been disproved by actual experience). For example, they assumed ideal and efficient markets where perfect information was available to buyers and sellers, where prices were set solely by supply and demand, where sellers and buyers were numerous and no one had any marketplace power, and where there were no significant externalities, such as pollution. Supply-side economics is a classic case of an economic theory with no actual evidence for it and with substantial evidence refuting it today. It claims that cutting taxes, particularly on the wealthy and businesses, will 1) stimulate economic growth and 2) do so to such an extent that government tax revenue will actually increase. Despite multiple experiences where tax cuts have been enacted and have not produced the promised effects, the plutocrats still use supply-side theory to justify tax cuts, as they did successfully with the December 2017 $150 billion a year tax cut.

It is important to note, that despite the rhetoric, markets under plutocratic economics are NOT actually free markets. All markets require rules to function, such as rules about ownership of property including patents, copyrights, and other protections for intellectual property; laws governing contracts and courts to enforce them; standards for what constitutes unfair competitive practices; laws and courts to determine liability for accidents and harm from products; and standards for credit, debt, bankruptcy, financial transactions, and investments.

The issue for policy makers is how the markets’ rules balance the power and interests of various parties. The bottom-line questions are who makes the rules and who benefits. For 40 years, plutocratic economic policies have put returns to shareholders (i.e., primarily wealthy investors) and, by implication, corporate executives, ahead of the interests of workers and also of investment in a company’s future. As a result, compensation for workers has been flat while their productivity has continued to grow. Overall, the result of these plutocratic policies has been dramatic growth in income and wealth inequality, leaving the U.S. with the most unequal income distribution of any rich democracy. [5]

Future posts will 1) summarize the evidence that plutocratic economic policy has failed, 2) discuss the politics of plutocratic economics and how the plutocrats have reacted as the failure of their policies has become clear, 3) review the harm that plutocratic economics has done to our democracy, and 4) identify progressive policies that are needed to reverse the harmful effects of plutocracy.

[1]      Technically, among policy wonks and economists, this form of capitalism has been labeled neoliberal economics. This is confusing because liberal in the economic world means something quite different than liberal means in common political usage. Although this is a bit of an oversimplification, liberal in economics refers to individualism – an every person for him or herself approach.

[2]      Kuttner, R., 6/25/19, “Neoliberalism: Political success, economic failure,” The American Prospect (

[3]      Kuttner, R., 6/4/19, “Warren’s astonishing plan for economic patriotism,” The American Prospect (

[4]      Tyler, G., 1/10/19, “The codetermination difference,” The American Prospect (

[5]      Tyler, G., 1/10/19, see above


President-elect Trump received a lot of good publicity for his claim that he saved 1,100 jobs at a United Technologies / Carrier (UT/C) plant in Indiana. Although the focus of his claim and effort – to keep good, middle income jobs in the US – is laudable, the facts of this case and the implications for the larger, systemic policy issue are not very favorable.

In fact, only about 730 jobs that were slated to move to Mexico were kept in the US. The other 350 research and development jobs at the facility were never slated to move to Mexico. Meanwhile, another UT/C plant in Indiana will close and roughly 700 jobs will be lost. [1]

UT/C responded to the President-elects’ strong-arming because it has $56 billion in federal contracts it didn’t want to jeopardize and it received $7 million in taxpayer-funded subsidies from the state of Indiana, where Trump’s vice president, Mike Pence, is Governor. [2]

We do need to change the mindset and incentives that make it not only acceptable but a preferred and successful business strategy to ship American jobs overseas. We need to do this through systemic changes in policies. However, what Trump is doing isn’t policy-making and it doesn’t change the underlying market incentives. Furthermore, it’s a drop in the bucket in terms of jobs. [3]

Many economists have been very critical of Trump’s actions because they undermine the rules, predictability, and consistency on which companies and our economy rely. These economists, including former Treasury Secretary Lawrence Summers, argue that the resultant uncertainty could lead to reduced investment, fewer jobs, and slower economic growth. [4]

Trump’s ad hoc, company-by-company approach reflects the arbitrary and capricious use of the personal power of the President’s bully pulpit. While it can affect individual company’s actions – through effects on stock prices, public opinion, federal government contracts, etc. – it is driven by random, autocratic whims. The result is a bullying style of ad hoc capitalism that reflects a personal agenda and a person who wants corporate America to be beholden and deferential to him. [5]

The likely result is that corporations and their senior executives will work to curry favor with Trump by contributing to his re-election campaign and taking other actions that will please him. This is pay-to-play crony capitalism and plutocracy; it is not how a democracy is supposed to work.

My next post will present some systemic, policy-based approaches that we should be taking to counter incentives for offshoring American jobs.

[1]       Nichols, J., 12/8/16, “Chuck Jones is a better president than Donald Trump will ever be,” Common Dreams (

[2]       Greenhouse, S., 12/8/16, “Beyond Carrier: Can Congress end the green light for outsourcing?” The American Prospect (

[3]       Reich, R., 12/7/16, “The Art of the Autocrat,” Common Dreams (

[4]       Greenhouse, S., 12/8/16, see above

[5]       Reich, R., 12/7/16, see above


Most of the presidential candidates agree that past trade treaties have had negative effects on US workers and that future trade treaties need to take a different approach. This would appear to be bad news for the Trans-Pacific Partnership (TPP) and other trade agreements that are in various stages of negotiation and ratification. Bernie Sanders has been a long-standing opponent of the TPP, Hillary Clinton has recently converted to opposing it, Donald Trump appears to oppose it but with bluster and little substance, Ted Cruz has not been clear on where he stands, and John Kasich supports the TPP.

Support for the arguments against recent trade treaties has recently come from an unlikely source, Clyde Prestowitz, who served in a senior position in President Reagan’s Department of Commerce and as President Clinton’s vice chairman of the Commission on Trade and Investment in the Asia-Pacific Region. [1]

Prestowitz writes that after the 2001 agreement that let China join the World Trade Organization, our trade deficit with China soared from $80 billion to $370 billion. The best estimates are that imports from China have cost the US about 2.5 million jobs. This occurred despite assurances to Congress and the public that this agreement would dramatically reduce the trade deficit with China and create US jobs. These assurances were given by very senior members of the Bush administration including the Secretary of Commerce and the US Trade Representative.

The results of the US-Korea Free Trade agreement of 2012 are similar. Our trade deficit with Korea increased from $13 billion to $28 billion, costing the US roughly 90,000 jobs. However, the same promises of a reduced trade deficit and US job growth were made in promoting this trade deal.

Prestowitz concludes that “None of the trade agreements have eliminated [the trade deficit], or even reduced it, as promised, and none of them have come close to achieving other promised benefits.”

So, he poses the question of why both political parties and numerous well-educated officials have persisted in making and supporting these trade agreements, as well as using the same old arguments to sell them to Congress and the public. He gives two answers. The first is that the real reason for these trade agreements is to strengthen the US’s geopolitical position, not to improve the economic welfare of its workers. As an example of this, Prestowitz, to this day, defends the North American Free Trade Agreement (NAFTA) with Mexico and Canada as an appropriate step to counter the growing geopolitical influence of China and other Asian countries.

His second answer is that many experts base their analyses on a theoretical and outdated model of trade and globalization. This model assumes full employment, fixed exchange rates, no flow of investments across borders, no transfers of technology, and no costs due to displaced workers losing one job and having to find another one. In reality, the US has rarely, if ever (depending on the standard you use), been at full employment. Exchange rates have been floating and not fixed since the 1970s and some countries, notably China, systematically manipulate the exchange rates for their currencies. The flow of investments, of financial deals and money, across borders is greater today than the flow of goods (traditional trade). China and Japan, among others, have made the transfer of technology to their countries a condition of allowing access to their workforces and markets. And we know how painful the displacement of workers has been. New jobs have been hard to find and, for those lucky enough to get a new job, the pay and working conditions are typically far worse than they were with their previous job.

Another answer, that Prestowitz doesn’t present, is that large, multi-national corporations have great power in Congress and our federal government. They are the main beneficiaries of these trade treaties. Through campaign contributions (largely by their senior executives), lobbying, and the revolving door between them and positions in the federal government (including the executive branch and Congress), they have tremendous influence on trade and other policies.

It is encouraging to see that when the public is paying attention, as it does during a presidential campaign, and when there is at least one candidate who presents a strong position and argument against the TPP and other trade treaties, that other candidates will forego their allegiance to corporate power (and money) and take a position in opposition to the TPP. It will be our job, as voters and constituents, to make sure that the next president follows through on his or her campaign commitment to oppose the TPP and to work to ensure that trade treaties benefit US workers and the US economy.

[1]       Prestowitz, C., 3/22/16, “Trading down and up,” The Boston Globe


In addition to the concerns about the Trans-Pacific Partnership (TPP) treaty raised in my two previous posts (see list below), it lacks provisions for addressing currency manipulation. This has brought criticism from many parties, including some in the corporate world. Although China (which is not a participant in the TPP) is the most notorious manipulator of its currency’s exchange rate, Japan and a number of other countries in the TPP have also manipulated their exchange rates. These countries manipulate the exchange rate between their currency and others to make imports more expensive and their exports cheaper. This has been a significant contributor to the positive balance of trade these countries have with the US and to our trade deficit.

Given the weakness of other arguments for the TPP, the Obama administration is promoting the TPP as a geopolitical response to the growing power of China. The administration says that the TPP will allow the US and the other TPP participants to balance China’s economic and hegemonic power in the region. However, China is already part of the World Trade Organization, has free trade agreements with half of the TPP participants, is the main trading partner of a number of them, and is currently negotiating separate economic partnerships with the others. So the TPP will have little impact on China’s growing influence.

Furthermore, China’s growing economic power is already clearly present even here in the US. It has negotiated the transfer to its shores of manufacturing and technology from the US in a number of areas, including wind and solar energy, high technology batteries, and the building of aircraft (from none other than General Electric).

China manipulates its currency to maintain a very favorable balance of trade with the US and it uses its holdings of $3.5 trillion of US dollar investments (primarily US Treasury bonds) as a strategic global investment fund. In short, China has a comprehensive, global trade and investment strategy that will move forward regardless of the TPP. [1]

Given the problems with the TPP:

  • Enshrining corporate power, particularly through the Investor-State Dispute Resolution tribunals,
  • Lack of effective and enforceable protections for workers and the environment,
  • Excessive patent and copyright protections, for example for prescription drugs,
  • Failure to prevent currency manipulation, and
  • Ineffectiveness as a counterbalance to China’s growing regional and global power,

and that it will have a miniscule impact on actual trade, it should be rejected. I urge you to contact your US Senators and Representative to encourage them to oppose the TPP.

You can find contact information for your US Representative at and for your US Senators at

[1]       Prestowitz, C., Fall 2015, “Our incoherent China policy: The proposed Trans-Pacific Partnership is bad economics – and even worse geopolitics as containment of China,” The American Prospect