Wednesday, October 07, 2009

Larry Summers

Ryan Lizza has a long profile of Larry Summers, chief of Obama's Council of Economic Advisors, in the New Yorker. His combination of broad experience in government, combined with solid economics credentials and a famously quick mind makes him the most influential force on Obama's economics team, but it's not a team of shrinking violets or yes men (or women).

It's a friendly portrait. Even the blunders Summers made are portrayed in a relatively favorable light, and I found him impossible not to like. The most famous of these blunders, the occasion where he told a meeting a feminist scholars that they shouldn't reject the hypothesis that women might be less successful in science and math because of inferior talent, is hardly an expression of prejudice. Rather, it's a statement that all reasonable hypotheses should be evaluated. It was, of course, the wrong thing to say to the wrong group of people, and was ultimately a significant factor in his being forced out of the Harvard presidency.

Summers, who some fault for his role in the deregulation of the financial industry, seems to have realized long before many others that a crisis was building. He was a vigorous critic of the "efficient market hypothesis" and the quasi-mystical economics build on it - "There are idiots," he wrote, and as it turned out, many of them were running the financial industry, and more were neglecting their jobs of regulating it.

I strongly recommend the article to anyone interested in economics, the Obama White House, or the Panic of 2008.