Lawrence Summers

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Lawrence Summers
Lawrence Summers

Assumed office 
January 20, 2009
Preceded by Keith Hennessey

In office
July 1, 2001 – June 30, 2006
Preceded by Neil L. Rudenstine
Succeeded by Drew Gilpin Faust
Derek Bok (acting)

In office
July 2, 1999 – January 20, 2001
Preceded by Robert Rubin
Succeeded by Paul H. O'Neill

Born November 30, 1954 (1954-11-30) (age 54)
New Haven, Connecticut
Political party Democratic
Alma mater Massachusetts Institute of Technology
Harvard University
Profession Academic, economist
Signature Lawrence Summers's signature

Lawrence Henry "Larry" Summers (born November 30, 1954) is an American economist and the Director of the White House's National Economic Council for President Barack Obama.[1] Summers is the Charles W. Eliot University Professor at Harvard University's Kennedy School of Government. He is the 1993 recipient of the John Bates Clark Medal for his work in several fields of economics and was Secretary of the Treasury for the last year and a half of the Bill Clinton administration. Summers also served as the 27th President of Harvard University from 2001 to 2006. Summers resigned as Harvard's president in the wake of controversy over a talk in which he speculated that women may statistically have lesser aptitude for work in the highest levels of math and science. Summers has been criticized by some liberals for the centrist economic policies he advocated as Treasury Secretary and in later writings.[2]


[edit] Family and education

Born in New Haven, Connecticut, on November 30, 1954, Summers is the son of two economists, Robert Summers and Anita Summers, who are both professors at the University of Pennsylvania, as well as the nephew of two Nobel laureates in economics: Paul Samuelson (sibling of Robert Summers, who, following an older brother's example, changed the family name from Samuelson to Summers) and Kenneth Arrow (Anita Summers's brother). He spent most of his childhood in Penn Valley, Pennsylvania, a suburb of Philadelphia, where he attended Harriton High School.

At age 16, he entered the Massachusetts Institute of Technology (MIT), where he originally intended to study physics but soon switched to economics due to his strong interest in the matter (S.B., 1975). He was also an active member of the MIT debating team. He attended Harvard University as a graduate student (Ph.D., 1982), where he studied under conservative economist Martin Feldstein. In 1983, at age 28, Summers became one of the youngest tenured professors in Harvard's history. Summers has three children (older twin daughters Ruth and Pamela and son Harry) by his first wife, Victoria Perry. In December 2005, Summers married English professor Elisa New, who had three daughters from a previous marriage. He currently owns two houses, one in D.C. and one in Brookline, Massachusetts.

[edit] Career

[edit] Academic economist

As a researcher, Summers has made important contributions in many areas of economics, primarily public finance, labor economics, financial economics, and macroeconomics. Some of Summers' early papers concluded that corporate and capital gains taxes are an inefficient form of taxation.[citation needed] Cutting the capital gains tax rate, Summers found, could help the economy grow.[citation needed] Later, while working in the Reagan and Clinton White Houses, Summers was able to lobby successfully for cuts in both corporate and capital gains taxes.[citation needed] One of Summers' prominent findings in labor economics is that unemployment insurance and welfare payments are a major contributor to unemployment, and therefore should be scaled back. [3]

Summers has also worked in international economics, economic demography, economic history, and development economics. His work generally emphasizes the analysis of empirical economic data in order to answer well-defined questions (for example: Does saving respond to after-tax interest rates? Are the returns from stocks and stock portfolios predictable?, Are most of those who receive unemployment benefits only transitorily unemployed?, etc.) For his work he received the John Bates Clark Medal in 1993 from the American Economic Association. In 1987 he was the first social scientist to win the Alan T. Waterman Award from the National Science Foundation. Summers is also a member of the National Academy of Sciences.

Official portrait as Secretary of the Treasury

[edit] Public official

Summers was on the staff of the Council of Economic Advisers under President Reagan from 1982-1983. He also served as an economic adviser to the Dukakis Presidential campaign in 1988.

[edit] Chief Economist at the World Bank

Summers left Harvard in 1991 and served as Chief Economist for the World Bank until 1993.

[edit] 'Dirty Industries'

In December 1991, while at the World Bank, Summers signed a memo written by staff economist Lant Pritchett, which was leaked. The memo apparently argued that free trade would not necessarily benefit the environment in developing countries. An aside to the memo, leaked to the press, sarcastically suggested that "I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that . . . I've always thought that under-populated countries in Africa are vastly underpolluted." [4]

[edit] Service in the Clinton administration

In 1993 Summers was appointed Undersecretary for International Affairs and later in the United States Department of the Treasury under the Clinton administration. In 1995, he was promoted to Deputy Secretary of the Treasury under his long-time political mentor Robert Rubin. In 1999, he succeeded Rubin as Secretary of the Treasury.

Much of Summers's tenure at the Treasury Department was focused on international economic issues. He was deeply involved in Clinton administration's effort to bail out Mexico and Russia when those nations had currency crises.[5] Summers forced the Korean government to raise its interest rates and balance its budget in the midst of a recession, policies criticized by liberal economists such as Paul Krugman and Joseph Stiglitz.[6] According to the book The Chastening, by Paul Blustein, during this crisis, Summers, along with Paul Wolfowitz, pushed for regime change in Indonesia.[6]

As Treasury Secretary, Summers led the Clinton administration's opposition to tax cuts proposed by the Republican Congress in 1999. [7] Also during his stint in the Clinton administration, Summers was successful in pushing for capital gains tax cuts.[citation needed] During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation.[8] Under the advice of Kenneth Lay, Summers urged Davis to relax California's environmental standards in order to reassure the markets.[9]

Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass-Steagall Act): "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said.[10] "This historic legislation will better enable American companies to compete in the new economy."[10] Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass-Steagall Act.[11]

[edit] President of Harvard

He left the Treasury Department in 2001 when George W. Bush became President and returned to Harvard as its 27th President, serving from July 2001 until June 2006. He was Harvard's first Jewish president, and received praise from Harvard's Jewish community for his support. [12]

A number of his decisions at Harvard attracted public controversy.

[edit] Cornel West affair

In an October 2001 meeting, Summers criticized African American Studies department head Cornel West for missing three weeks of classes to work on the Bill Bradley presidential campaign, and complained that West was contributing to grade inflation. Summers also said that West's rap album was an embarrassment to the university, and that West needed to do more scholarly work. West denied the accusations.[13] West, who later called Summers both "uninformed" and "an unprincipled power player" in describing this encounter in his book Democracy Matters (2004), subsequently returned to Princeton University, where he taught prior to Harvard University.

[edit] Sexism allegations

In January 2005, at a Conference on Diversifying the Science & Engineering Workforce sponsored by the National Bureau of Economic Research, Summers described three hypotheses for explaining the higher number of males in high-end science and engineering positions. Summers claimed that he was adopting an "entirely positive, rather than normative approach" and that his remarks were intended to be an "attempt at provocation."[14] It was the second hypothesis, termed "different availability of aptitude at the high end" by Summers, that drew allegations of sexism.

According to Summers, the preponderance of males in high-end science and engineering positions could be explained by the following: first, that more men than women were willing to make the commitment in terms of time and flexibility demanded by high-powered jobs; second, and controversially, that there were differences in the intrinsic abilities of men and women at the extremes (3.5 to 4 standard deviations above the mean), as shown by higher variance in aptitude, abilities, or preferences relevant to science and engineering among men (see Gender differences); and third, that the discrepancy was due to discrimination or socialization.[14] He also stated his view that the order given reflected the relative importance of each of the three hypotheses.[14]

An attendee made Summers' remarks public, and an intense response followed in the national news media and on Harvard's campus.[15] Nancy Hopkins, a biologist at MIT, walked out during the talk in disgust.[15] It was claimed that Summers perceived sexism cost him the job of Treasury Secretary in Obama's Administration.[16]

[edit] Summers' opposition and support at Harvard

On March 15, 2005, members of the Harvard Faculty of Arts and Sciences, which instructs graduate students in GSAS and undergraduates in Harvard College, passed 218–185 a motion of "lack of confidence" in the leadership of Summers, with 18 abstentions. A second motion that offered a milder censure of the president passed 253 to 137, also with 18 abstentions.

The members of the Harvard Corporation, the University's highest governing body, are in charge of the selection of the president and issued statements strongly supporting Summers.

FAS faculty were not unanimous in their comments on Summers. Influential psychologist Steven Pinker defended the legitimacy of Summers' January remarks. When asked if Summers' remarks were "within the pale of legitimate academic discourse," Pinker responded "Good grief, shouldn’t everything be within the pale of legitimate academic discourse, as long as it is presented with some degree of rigor? That’s the difference between a university and a madrassa. [...] There is certainly enough evidence for the hypothesis to be taken seriously."[17]

Summers had stronger support among Harvard College students than among the college faculty. One poll by the Harvard Crimson indicated that students opposed his resignation by a three-to-one margin, with 57% of responding students opposing his resignation and 19% supporting it.[18]

In July 2005, the only African-American board member of Harvard Corporation, Conrad K. Harper, resigned saying he was angered both by the university president's comments about women and by Summers being given a salary increase. (Some reports[who?] suggest Harper's support of Summers may have first started to erode earlier because of the Cornel West controversy.) The resignation letter to the president said, "I could not and cannot support a raise in your salary, ... I believe that Harvard's best interests require your resignation."[19][20]

During Summers' tenure, many Harvard alumni[who?] responded by writing letters and declining to donate in response to the various controversies. After the Harvard Corporation accepted Summers' resignation, some[who?] pledged contributions were canceled but other contributions were made in celebration of his resignation. Some donors[which?] were disappointed by the Harvard Corporation's failure to stand up to the college faculty but some donors[which?] were impressed by the decision. Ultimately, there has been no consensus amongst the alumni, students or faculty of Harvard University regarding Summers' tenure. Despite the negative controversies that his conduct and words often created, Summers led some initiatives[which?] at Harvard that have continued to benefit the University.

[edit] Support of economist Andrei Shleifer

Harvard and Andrei Shleifer, a close friend and protege of Summers, settled a $26M lawsuit by the U.S. government over the conflict of interest Shleifer had while advising Russia's privatisation program. Summers' continued support for Shleifer strengthened Summers' unpopularity with other professors:

"I’ve been a member of this Faculty for over 45 years, and I am no longer easily shocked," is how Frederick H. Abernathy, the McKay professor of mechanical engineering, began his biting comments about the Shleifer case at Tuesday’s fiery Faculty meeting. But, Abernathy continued, "I was deeply shocked and disappointed by the actions of this University" in the Shleifer affair.

In an 18,000-word article in Institutional Investor (January, 2006), the magazine detailed Shleifer’s alleged efforts to use his inside knowledge of and sway over the Russian economy in order to make lucrative personal investments, all while leading a Harvard group, advising the Russian government, that was under contract with the U.S. The article suggests that Summers shielded his fellow economist from disciplinary action by the University.[21] Summers' friendship with Shleifer was well known by the Corporation when it selected him to succeed Rudenstine and Summers recused himself from all proceedings with Shleifer, whose case was actually handled by an independent committee led by Derek Bok.

[edit] Resignation as Harvard President

On February 21, 2006, Summers announced his intention to step down at the end of the school year effective June 30, 2006. Former University President Derek Bok acted as Interim President while the University conducted a search for a replacement which ended with the naming of Drew Gilpin Faust on February 11, 2007. After a one year sabbatical, Summers subsequently accepted the University's invitation to serve as the Charles W. Eliot University Professor, one of twenty select University-wide professorships, with offices in the Kennedy School of Government and the Harvard Business School.[22] He also joined the D. E. Shaw Group in October 2006 as a part-time managing director.[23] Summers also has been authoring a column for the Financial Times.[24]

[edit] Post-Harvard career

President Barack Obama, on left, discusses with a group in the White House, including Larry Summers on far right (back to camera)

On October 19, 2006, he became a part-time managing director of the investment and technology development firm D. E. Shaw & Co.

Upon the death of his hero, libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled "The Great Liberator" arguing that "any honest Democrat will admit that we are now all Friedmanites." Summers wrote that while Friedman made real contributions to monetary policy, his real contribution was "in convincing people of the importance of allowing free markets to operate."[25]

Henry Kissinger once said that Larry Summers should "be given a White House post in which he was charged with shooting down or fixing bad ideas." [26]

In 2006 he was a member of the Panel of Eminent Persons which reviewed the work of the United Nations Conference on Trade and Development.

He is currently the director of the White House National Economic Council[1][27].

[edit] National Economic Council

In January 2009, as the Obama Administration tried to pass a fiscal stimulus bill, Oregon Democratic Representative Peter DeFazio criticized Summers, saying that he thought that President Barack Obama is "ill-advised by Larry Summers. Larry Summers hates infrastructure." [28]. DeFazio, along with liberal economists including Paul Krugman and Joseph Stiglitz, has argued that more of the stimulus should be spent on infrastructure,[29] while Summers has supported tax cuts.[citation needed]

Relations between Summers, President Obama's top economic adviser, and former Fed Chairman Paul Volcker have also been strained recently, as Volcker has accused Summers of delaying the effort to organize a panel of outside economic advisers, and has cut Volcker out of White House meetings and has not shown interest in collaborating on policy solutions to the current economic crisis. [30]

Summers has recently come under fire for accepting perks from Citigroup, including free rides on its corporate jet last summer.[31] According to the Wall Street Journal, Larry Summers called Chris Dodd asking him to remove caps on executive pay at firms which have received stimulus money, including Citigroup. [32]

On April 3rd, 2009 Summers came under renewed criticism after it was disclosed that he was paid millions of dollars the previous year by companies which he now has influence over as a public servant. He earned $5 million from the hedge fund D. E. Shaw, and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money.[33]

[edit] References

  1. ^ a b (24 November 2008). "Geithner, Summers among key economic team members announced today" (Official website). Newsroom. Office of the President-elect. Retrieved on 2008-11-24. 
  2. ^
  3. ^ Summers, Larry. "Unemployment". The Concise Encyclopedia of Economics. 
  4. ^ Office Memorandum from Lawrence M. Summers, Subject: GEP, the World Bank/IMFMIGA, 12 Dec 1991. This was an internal memo at the World Bank not intended for the public that highlighted the economic logic of dumping waste in less-developed countries.
  5. ^
  6. ^ a b Blustein, Paul (2001). "'The Chastening'". Public Affairs, New York. 
  7. ^
  8. ^ Krugman, Paul. "California Energy Memories". The New York Times. 
  9. ^ Gibney, Alex. "Larry Summers' Enron Problem". The Daily Beast. 
  10. ^ a b Labaton, Stephen (1999-11-05). "Congress Passes Wide Ranging Law Repealing Bank laws". New York Times. Retrieved on 2009-03-25. 
  11. ^ "Ten Questions for Those Fixing the Financial Mess". Wall Street Journal. 2009-03-10. Retrieved on 2009-03-26. 
  12. ^
  13. ^ "Some seek a scholar's return". Boston Globe. June 6, 2006. 
  14. ^ a b c
  15. ^ a b Summer's Remarks on Women Draw Fire, 2005 January 17
  16. ^ [1]
  17. ^ Psychoanalysis Q-and-A: Steven Pinker January 19, 2005
  18. ^ Poll: Students Say Summers Should Stay February 20, 2006
  19. ^ A Harvard Governor, Dissatisfied, Resigns July 29, 2005
  20. ^ Board Member's Letter of Resignation August 2, 2005
  21. ^ ‘Tawdry Shleifer Affair’ Stokes Faculty Anger Toward Summers February 10, 2006
  22. ^ Schuker, Daniel J. T. (July 7, 2006). "Summers Named Eliot Univ. Prof". The Harvard Crimson. 
  23. ^ Burton, Katherine (October 19, 2006). "Summers, Former Treasury Secretary, Joins D.E. Shaw". Bloomberg. 
  24. ^
  25. ^ Summers, Larry (19 November 2006). "The Great Liberator". The New York Times. 
  26. ^ Leonhardt, David (25 November 2008). "The Return of Larry Summers". NYT. 
  27. ^ Bohan, Caren (24 November 2008). "Obama taps Geithner, Summers". U.S. News (Reuters). Retrieved on 2008-11-24. 
  28. ^ DeFazio, Peter; Video Interview (January 2008). "DeFazio Slams Summers". 
  29. ^ Krugman, Paul (6 January 2009). "Stimulus Arithmetic (wonkish but important)". NYT. 
  30. ^ Schmidt, Robert; Julianna Goldman (5 February 2009). "= Volcker Chafes at Obama Panel Delay, Strains With Summers Rise". Bloomberg. =. 
  31. ^ Fitzgerald, Jay (11 February 2009). = "Larry Summers Jet Ride Called Part of Larger Problem". Boston Herald. =. 
  32. ^ Soloman, Deborah; Mark Maremont (14-15 February 2009). [= "Bankers Face Strict Pay Cap"]. Wall Street Journal. pp. 1, above the fold. =. 
  33. ^ Zeleny, Jeff (3 April 2009). "Financial Industry Paid Millions to Obama Aide". The New York Times. Retrieved on 4 April 2009. 

[edit] External links

Business positions
Preceded by
Stanley Fischer
World Bank Chief Economist
Succeeded by
Michael Bruno
Government offices
Preceded by
Robert Rubin
United States Secretary of the Treasury
Succeeded by
Paul O'Neill
Preceded by
Keith Hennessey
Director of the National Economic Council
January 20, 2009
Succeeded by
Academic offices
Preceded by
Neil L. Rudenstine
President of Harvard University
Succeeded by
Derek Bok, acting

NAME Summers, Lawrence
SHORT DESCRIPTION Former US Secretary of the Treasury
DATE OF BIRTH November 30, 1954 (1954-11-30) (age 54)
PLACE OF BIRTH New Haven, Connecticut
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