The Problem with Summers

Lots of reports flying around that Larry Summers is in line to be Obama’s Treasury Secretary. I think that this could be a mistake.

I have tremendous respect for Summers. He is often pilloried as a green eyeshade centrist, but in many ways he is very progressive: he fought very hard against the regressive Republican tax proposals, for example. And many of the things he is attacked for boil down to tentative musings (which is ironic because he’s very opinionated). Those who call him a sexist are really just distorting the context of his remarks.

But that in and of itself it a problem: as someone once said of Dean Acheson, Summers will be the smartest guy in any room he walks into, but not smart enough to hide it. And in the context of finance, which will require good Congressional relations (less so than foreign policy), that could be a real problem.

More important is Summers’ close relationship with (some would say protection of) Andrei Schleifer. Schleifer is another brilliant economist who seemed to think that his brilliance allowed him trade tens of millions of dollars of Russian stocks while directing the pace and direction of Russian privatization. The US government sued Schleifer and Harvard University (where Schleifer holds a professorship and which held the USAID contract under which Schleifer worked) for fraud. Harvard settled the lawsuit and paid several million dollars to the government.

And who was President of Harvard when the university decided to settle the lawsuit? Larry Summers. It is not unreasonable speculation that Harvard settled the lawsuit the way it did in order to protect the friend of the President. It’s also not unreasonable to suggest that this, not anything about public statements, was the cause of Summers’ downfall from the Harvard Presidency.

Maybe this is all unfair to Summers. But it’s the last thing in the world that a new Obama Administration wants being replayed in the news if Summers is nominated. This is especially true given that a lot of the financial crisis is perceived as being about favors being done for powerful people, and insider deals made in Washington.

It might be something else if Summers had been cleared, or if he was the only or sole candidate for the job. But he’s not. Don’t go there.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.