Q & A: Lawrence H. Summers

At a special Forum organized by the Belfer Center on April 5, Director Graham Allison welcomed Larry Summers home to Harvard.  On behalf of the community, Allison expressed “gratitude for Larry’s service to the nation and pride in having him back as a colleague.” A superstar economist who won the coveted John Bates Clark Medal in 1993 before he turned 40, Summers has spent almost as many years in public service as he has teaching at Harvard. As Chief Economist for the World Bank, and Under Secretary, Deputy Secretary, and then Secretary of the Treasury in the Clinton Administration and most recently as chief economic adviser to President Obama, Summers has been a pivotal player in shaping the U.S.  economy for three decades. A member of the Belfer Center’s Board of Directors, he will be co-director (with John Haigh) of the Mossavar-Rahmani Center for Business and Government. Here are excerpts from David Gergen’s recent interview with Summers at the Kennedy School’s JFK Jr. Forum (the webcast can be viewed at the Institute of Politics website).

Gergen: The deficit commission came in with a proposal for $4 trillion in deficit reduction over 10 years… Is it time for the Administration to come up with a proposal?

…It’s not the time to slash spending immediately. We’ve still got 9 percent unemployment. Aggregate demand in the private sector is not what it needs to be for the economy to grow and create jobs. So no one should be rushing to cut government spending and cut the deficit right now. At the same time, no one can look at the forecasts out five to 10 years and think that this has any high probability of being sustainable…. So I think there’s no question that its’ incumbent on everybody to do what they can to find a solution.

It’s really a political judgment, not an economic judgment, what the best way to do that is. One of the things you learn when you go from a university to Washington is that at a university the idea is to figure out what the best policy is, and you say what is the best policy, and you try to persuade everybody else it’s the best policy, and you try to win the argument. In Washington it’s very different. Some of it is about what the best policy is, l but everyone wants to feel that they have had an important impact on the policy. Everyone wants to show their constituencies that they have pushed it in the right direction. So even if you know exactly what the right compromise is at the end of that process, and even if you could figure it out, announcing it prematurely can doom it.

…Professors always want a plan; they want to lay out a detailed plan. If there’s every a choice between having a five-page fact sheet and a 30-page blueprint, the academics advising any president are always in favor of a 30-page blueprint.  So I had very much that bias in each of the areas we faced. But this president, doing it his way -- which is to talk about principles, to consult with others, not to have a cymbal and drums White House announcement -- actually has been the most productive president legislatively, certainly in the last 40 years, and perhaps in the last 70 years.

Gergen: You’ve managed to express your preferences while avoiding headlines. Very deft.

The first experience I had in Washington was working for Marty Feldstein during the Reagan Administration, during which time you served as White House communications director, and I watched you very carefully and learned a great deal during that time. I have not always been successful in every position I’ve held in avoiding statements that would make headlines. So perhaps a painful experience has on occasion been instructive.

Gergen:  What is your advice to the business community about this growing gap that exists between the business elites and the public?

I ask myself what I worry about in the United States in 2030: Some people worry about deficit accumulation and debt. Some people worry about a rising China and what it will do to us. I worry most about what increased inequality and reduced opportunity will do to the legitimacy of our system.

There is something deeply troubling about the fact that even after the economy recovers, one in six men in the united states between 25 and 54 will not be working. If one looks at what has happened to the top 1 percent, relative to the other 99 percent, and what has happened to the top 1 percent of that top one percent, the figures have to be deeply disturbing….  Probably for the first time in American history, over the last generation the gap between the prospects for the children of the well off and the children of the less well off has widened.

So I think it’s going to be incumbent on the business community to reassure their public that they are citizens of the United State as well as citizens of dollars, that they have a stake in what happens in the United States. I think there’s going to be a need to relegitimize public institutions, starting from the public schools.

Gergen: You are the only person I’ve ever heard of whose had a prominent role in two films nominated for Academy Awards in the same year. One was The Social Network and the other was Inside Job. You probably were happier with one than the other, but I’m just curious what you thought about them.

I liked The Social Network, better than I liked Inside Job. I’m told that the Winklevii [twins], when asked about it, said it was fairly accurate but Larry Summers was not nearly as nice to us as he was in the movie. I’ve read on occasion that I can be arrogant. And if that is so, I probably was on the occasion of my visit with the Winklevii. But I thought Harvard’s student discipline procedures were already vexed enough without taking a role in intellectual property disputes among different students.

On Inside Job,  the first thing to say is I only wish, and my children only more wish, that the estimates of my financial position in that movie were remotely close to being correct. And that is not the only egregious error of fact that is contained in that movie.