Does Larry Summers have too much baggage to be Treasury Secretary?

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My thinking is no. But since it’s a question that a lot of people may be asking over the next few days, it is worth exploring. Summers was an awfully controversial guy a couple years ago. And the things that made him controversial will all be revisited if he has to sit through a Senate confirmation hearing.

Here’s a quick run-through of the Sins of Larry:

1. He’s a loose cannon. Summers has a long history of saying what’s on his mind, regardless of whether others might find it offensive. The thing about women and science was only the most infamous. There was also that memo he signed about exporting toxic waste to the developing world. And here’s a story Summers himself told on his occasional boneheadedness as Harvard president, recounted in by Thomas Neff and James Citrin’s You’re in Charge — Now What?:

A student came to see me and said she was from the choir. I asked, ‘Why is it important for the university to have a choir?’ I was asking because I truly wanted to understand the reason, but the student took my questions as a challenge to the existence of the choir.

Still, Summers behaved perfectly respectably during his last stint as Treasury Secretary. He is capable of keeping his mouth shut if the job requires it. What’s more, he seems to have a habit of promoting the careers of people who are willing to contradict him and take him on (Andrei Shleifer and Tim Geithner spring to mind). Also, Washington wonks aren’t quite the delicate flowers that Harvard students and professors are, and having somebody running Treasury who is willing to challenge the existence of long-established financial and economic institutions might be a really good idea over the next couple of years.

2. He’s loyal, to a fault. One of the main things that turned Harvard’s faculty against Summers was the case of his protege Shleifer. Shleifer ran a Harvard-affiliated, USAID-funded office in Moscow in the 1990s that advised the Russian government on economic reform. The U.S. government later sued Harvard and Shleifer, charging that the operation was overrrun by conflicts of interest. Summers recused himself from direct dealings with the case, but in his epic dissection of the saga for Instititutional Investor, David McClintick charged that Summers did try to shield Shleifer. Harvard and Shleifer lost the suit, and Harvard had to pay $26.5 million in damages and Shleifer $2 million. I can’t get as worked up about this as some people (if we could force Harvard to give the government even more money, maybe Barack Obama wouldn’t have to raise your taxes), but I also know and like Andrei Shleifer, so I’m really not the best judge.

3. He’s a callous right-winger. Summers’ academic mentor was conservative economist Marty Feldstein, and he worked for Feldstein at Ronald Reagan’s Council of Economic Advisers in the early 1980s. Paul Krugman worked there too, so that really isn’t saying much. For most of the 1980s, in fact, Summers was an outspoken skeptic of financial markets and their ability to set prices rationally and steer investment wisely. As he rose to positions of power in Washington in the 1990s, though, he became a leading defender of the Washington consensus–the idea that free financial markets, free trade and fiscal discipline would bring prosperity to the world. Lately Summers has been partially reconsidering that stance in his columns for the Financial Times. If you’re favorably disposed to him, as I am, you could say he’s been pulling a Keynes: “When the facts change, I change my mind.” But I guess if you’re not so favorably disposed, you could call him a closet right-winger, a closet left-winger, or a slave to fashion.

Anyway, I’m sure Larry Summers would make a very good Treasury Secretary. Again.

I’m not so sure, though, that the President-elect is going to want to spend his transition period and the early days of his administration dealing with the inevitable public hassle that would be attached to a Summers appointment.

Update: Oh, and by the way, I forgot to gratuitously mention that he used to go out with Laura Ingraham

Update 2: The headline for this post on the homepage is “The Pros and Cons of Larry Summers.” I’ve mostly written about cons here, so I’m thinking maybe I ought to mention The Big Pro: Summers is really, really smart. He melds his academic brilliance with Washington experience and savvy in a way that no one else can. And he’s been positively bursting with creative, helpful ideas over the past few months. Like this one.

Update 3: More on Summers here.

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