Summers Fights for the Wealthy (?)
Posted on June 6th, 2012 in Uncategorized | 15 Comments »
The NYT reports that Larry Summers appeared today on MSNBC’s “Morning Joe” and called for the extension of the Bush-era tax cuts, which dramatically lowered taxes for people making more than $250, 000 a year.
“The real risk to this economy is on the side of slow down,” he said on MSNBC’s “Morning Joe” news program. “And that means we’ve got to make sure that we don’t take gasoline out of the tank at the end of this year.”
The Times argues that those comments contradict the policy of the Administration Summers worked for until relatively recently, which the Romney campaign will almost certainly use against Obama this fall: “Even the Obama administration’s top economic adviser has called for the preservation of these tax cuts.”
So….regardless of the merits of Summers’ argument, it’s a bit odd of him to go out and make it in public. But then, anyone who’s ever hired Summers has learned the hard way that this man is not a team player. Is it possible that he’s gunning for a slot in a potential Romney administration? (Given the subsequent update below, this remark now seems off-base.)
Update: Wait! The WSJ reports that Summers did not specifically call for the extension of the tax cuts, and that he has issued a statement saying that he opposes the move.
In a statement released later in the morning, Mr. Summers said: ”I fully support President Obama’s position on tax cuts. I have often said and continue to believe that promoting demand is the most critical short run priority for the American economy. Extending the high income tax cut does little for demand and poses substantial problems of fairness and fiscal prudence.”
The NYT piece, updated minutes before this post, does not mention Summers’ statement, which, if I were Larry Summers, would seriously irritate me.
Update 2: Summers’ walk-back doesn’t matter! As this Google search shows, the story-spread in significant part by FoxNews stations around the country—is that he backs the extension of the Bush tax cuts.
15 Responses
6/6/2024 11:41 am
What is particularly misleading, of course, is identifying Summers as a “Harvard economist” without mentioning that he is making most of his income (and, indeed, spending most of his time) consulting for Shaw and other Wall St and Silicon Valley companies.
6/6/2024 12:14 pm
But that, of course, is the point of the modern Harvard-it’s a place whose employees make money elsewhere.
6/6/2024 1:02 pm
Richard,
As I’m sitting here in my office, working on a paper that’s been languishing for a few months while I’ve been busy teaching my class, grading my final, doing final oral examinations for Ph.D. students, prepping research talks, reading senior theses, as well as doing my administrative work (I’m “dept. chair” equivalent currently) and, yes, admittedly, doing some outside Harvard consulting, I can’t help but wish you’d stop making up crap about the place.
If you want to bash Summers for his visible outside-Harvard life, and have good reasons and backing to do so, go ahead, please. (As we’ve discussed, his relationship with the Minerva Project deserves some scrutiny. I’m also all in favor of questioning the role of past/present/future government officials in industry positions — the revolving door with Wall Street is well worth pointing out again and again.)
If you want to make broad-brushed strokes about “modern Harvard”, have the courtesy to present a pointer or two to back up your claims and concerns.
6/6/2024 2:12 pm
Michael-with all due respect, haven’t you provided one or two pointers in your own comment?
I’ve also written about the outside activities of Skip Gates and Niall Ferguson on this blog.
I’ve also written about Drew Faust’s nice-work-if-you-can-get-it on Staples’ corporate board.
And I’m not even looking for this stuff. Imagine if one were. Which of course raises the question of transparency; I don’t mean to be snarky (truly), but looking at your Harvard website, your bio, your CV, your wikipedia page, and a Google search, I can’t find any mention of your outside-Harvard, for-profit activities. Economists at Harvard have famously gotten into trouble for pursuing such outside activities and keeping them secret. So have professors at the Kennedy School and the business school. On such a meticulously detailed CV—very impressive, and I mean that sincerely—those outside activities seem kind of an odd and deliberate omission. Why not list them?
What I’m trying to do is raise the larger issue of how academics use their status as intellectuals and the hard-earned reputation of their universities for personal profit in work outside the university, and whether that has become such a widespread and ubiquitous phenomenon that it is deeply compromising academia. On a perhaps less grand note, it raises the question of how the undergraduate experience at Harvard is shaped by the incessant profiteering they see going on all around them. On one level, this just affects their access to too-busy professors. On another level, it affects their view of the world, and that issue seems worth considering, particularly given the role of Harvard graduates (and Harvard professors) in the financial crisis. What message does it send when the president of Harvard cashes in by signing up for a corporate board, as if her $800, 000 university compensation and all-expense paid lifestyle isn’t enough? What message does it send when the former president of Harvard makes millions of dollars giving speeches to big banks and working for a hedge fund after having helped cause the financial crisis through the repeal of Glass-Steagall?
Michael, you’re getting mad at me, which is fine, but shouldn’t you really be getting angrier about these issues?
6/6/2024 3:05 pm
Richard,
You’re not looking very hard. It’s on page 1 of my CV on my home page. Look under Recent Employment, at the end I have an area labelled “Consultant” and list companies I’ve worked for. (Admittedly, I appear to have let the CV on my home page get out of date, or somehow copied an older version in, so some more recent ones are listed are on my most recent CV. I’ll update my home page with my current CV after you verify.)
“What I’m trying to do is raise the larger issue of how academics use their status as intellectuals and the hard-earned reputation of their universities for personal profit in work outside the university, and whether that has become such a widespread and ubiquitous phenomenon that it is deeply compromising academia.”
This is an interesting question. Please note this question does not single out Harvard, as your past several posts have done.
My main objection is you’re conflating a whole bunch of different things into the same heading of “outside work”, and prejudging the answer to the question you’ve set.
“What message does it send when the president of Harvard cashes in by signing up for a corporate board, as if her $800, 000 university compensation and all-expense paid lifestyle isn’t enough?”
Well, see, here’s what I mean by pre-forming the answer to your question. You’ve determined this is cashing in. I’m not clear. I’ve found several of my consulting gigs have been interesting, enlightening, challenging, educational, worthwhile experiences. I’ve learned a lot from doing them. Maybe she just thought this was an exciting opportunity? Note your answer here is very different than the one I finally got you to give just yesterday, where you explained that your concern was that the President’s job was simply so demanding in terms of time (and, though I’m not sure you phrased it this clearly, was so “tied” to the world’s view of Harvard) that any outside work was simply not suitable. Here, your beef seem to be the money.
“What message does it send when the former president of Harvard makes millions of dollars giving speeches to big banks and working for a hedge fund after having helped cause the financial crisis through the repeal of Glass-Steagall?”
This is an example of where I think you’re doing an apples-to-oranges comparison which is unfair to the rest of your argument. I’ve made clear that I understand Summers is a special case. To be clear, in my mind, it is precisely because it’s not really his “Harvard reputation” he’s profiting off of, but his time in government, which raises ethical issues independent of his association with Harvard. Since you’re citing the repeal of Glass-Steagall, I assume you recognize the distinction between the cases. Again, to be clear, I don’t have a blanket issue with Harvard economists consulting for companies.
“Michael, you’re getting mad at me, which is fine, but shouldn’t you really be getting angrier about these issues?”
If I’m “angry” (not really) it’s because instead of looking carefully at the fundamental question you’ve raised, which I’d be interested in reading about, you’re taking cheap shots and making weak arguments. Take it as a compliment that I expect better of you.
And you shouldn’t take your side of the argument as a given. I’ve heard several people sing the highest of praises for Stanford, for example, because of the ways professors there are involved in the economy outside the university. Isn’t part of the university’s mission — along with the very important roles of teaching both undergraduate and graduate students and producing research — is to otherwise promote good (economic and otherwise) in the US and the broader world?
Your broader question of the relationship between how professors move between academia and business is a perfectly fine one. If you think your last posts have been raising this larger issue, I think you’re incorrect, and you could do a better job.
6/6/2024 4:22 pm
Michael-
Apologies for missing that part of your CV; this always happens when I’m multi-tasking.
I think Stanford is an excellent place for examining these issues, and have been meaning to read the recent New Yorker article on its relationship with Silicon Valley. Are the people who praise it to you computer scientists, by any chance? Because—not to be cynical, but to be realistic—they would.
But I focus on Harvard because Harvard’s “brand”—a term that Derek Bok told me he deplored, but is widely used around campus with no sense of irony whatsoever—is the most powerful in higher education, and so the opportunities its professors have for outside work are, I believe, unparalleled. As you point out, this phenomenon is hardly unique to Harvard. It’s just highly concentrated there. (No pun intended.)
Various points: It may be true that Drew Faust finds service on Staples board enjoyable. (And I don’t think I’ve contradicted myself at all on my objections to her role in that capacity; there are more than one of them.) That really isn’t the issue. The question is whether it’s appropriate for university presidents, especially ones with no experience in the business world, to sit on corporate boards. I think it’s highly problematic, and that the job of a university president is sufficiently large that her allegiance should be to one institution and only one institution.
(By the way, in this case, in this election year, I also think it’s a political move for Faust to join Staples board; is she trying to kiss up to Mitt Romney…just in case? Don’t think the people around her, including the Harvard Corporation, haven’t thought about it.)
Speaking of this issue not being limited to Harvard, I have written both recently and some time ago about Ruth Simmons’ long service on the board of Goldman Sachs, for which she was entirely unqualified-which, of course, Goldman knew, it’s why they wanted her—and which contributed, in some very small way, to the financial crisis. (A stronger board might have put a brake on Goldman’s risky and reckless behavior.)
Simmons basically refused to talk to the press when she resigned from the board in 2010, saying something about how Goldman was “taking too much time. Well, um, yes.(But it took her 10 years to realize that.) During that decade of “too much time,” she became a millionaire four times over thanks to Goldman. But in the end, Brown’s reputation was damaged by her Goldman buckraking, and there were no benefits to the university-as opposed to Simmons personally-that I’m aware of.
But, you will say, Harvardians can benefit by learning from their contact with other institutions, companies, etc., and that the university should be engaged with the outside world, for that is how it grows; no university should be an island.
These points are obviously true, but they also are so broad that they can be used to justify anything; one thing that’s clear is that they are virtually always used to justify activities for which Harvard people get well-paid. (“But my experience consulting for the Russian government makes me a better teacher! I have real-world experience.” You will remember the reference.)
So intellectual growth can not be the only rationale for outside work. Otherwise, you know, you could say that that’s why you work for, oh, I don’t know, a Libyan dictator? Because you learned a lot.
I admit, my posts may not be doing the best job of raising this issue-they’re meant to be provocative (of discussion and debate) more than exhaustive—but other than maybe Harry Lewis and/or Richard Thomas, I don’t see anyone at Harvard raising this issue. Why not? Well, one reason might be that they have an economic self-interest in the status quo…while I write this blog for free. It’s economically irrational. But it does mean that everyone reading it knows that I’m writing this stuff because I believe it, not because I’m paid to.
6/6/2024 5:44 pm
Richard, you’ll enjoy this video for how Harvard’s top people very unironically discuss Harvard’s “brand”:
http://www.thecrimson.com/article/2012/3/28/making-the-harvard-brand/
6/6/2024 6:19 pm
Thanks, Richard, for bringing things back to focus more clearly on the issue. Again, I think the issue of what sort of work can and should be allowed or restricted for professors working at a university is an interesting theoretical and practical question. Perhaps it would be better for us to take it offline sometime.
To clarify some things for you, though, I do think the general issue has been raised at Harvard. In particular, as I’ve pointed out, conflict of interest rules have apparently been perceived as a necessity, leading to discussion on these sorts of issues, at least by some. I think that there’s more going on on these issues than you’re seeing. I do, however, agree that you and Harry Lewis are doing a service to bring them up.
The question of what kinds of rules are suitable is, I think, a challenging one. I note that while you feel my justification (you can learn) is too loose, you don’t suggest principles of your own?
I also want to be clear that I think your examples are, unfortunately, not as well thought out as they could be. For example, are you saying there’s a problem with Harvard economists consulting for the Russian government? Because my recollection wasn’t the consulting that was the problem; it was that the professor in question broke specific rules in a government contract, both consulting for the Russian government through a contract while at the same time making investments in related Russian businesses. That is, there were specific rules in place that were broken, the issue wasn’t the consulting itself. However, my memory may be wrong; please feel free to correct me.
Similarly, we can debate whether or not it’s OK for a Harvard professor to consult for Libyan dictator; perhaps it shouldn’t be. But I thought the actual issue for the case in question you raise was that the opinions expressed in the reports generated by the consulting in question appeared, on their face, laughable — the report stated that Libya was a popular democracy. So the issue wasn’t the consulting, it was the subsequent impression that the a professor accepted payment to say things that were lacking in factual basis.
With both these examples, in hindsight one can clearly argue that something went wrong. But a priori, what is wrong with the ability of Harvard professors to consult in this way (as long as they act within legal restrictions and professional ethical standards)?
Your use of these examples in this way, along with your previous examples (e.g., DGF), suggests to me that your framework is that Any-Professor-Consulting-Is-A-Bad-Thing, an increasingly common refrain among some (usually accompanied with a shout of “What are we paying them for!”). I think I’ve made clear that I don’t think that’s a suitable framework for multiple reasons. I welcome you to clarify your position.
[Finally, to answer your question: “Are the people who praise it to you computer scientists, by any chance?” Many computer science professors like it, but many also don’t, for various reasons. I think many students like the resulting opportunities. My take is the business people are the ones nearly universal in their praise, and I also thought politicians generally held it up as an example — “innovation” clearly leading to visible jobs, companies, revenue, etc. being particularly important from their viewpoint.]
6/6/2024 10:12 pm
Well, this is fascinating. What good questions to pin down and debate. I am sorry I have those books to write. But just a couple of comments.
I am pretty close to Richard’s view on the problem with Faust being on the Staples board. But again, with trepidation as a secularist claiming a spiritual metaphor, I think having the Harvard president serve on an office-supply company board cheapens the presidency, in the same way it would cheapen the papacy if the Pope accepted an offer to be a Director of Burger King. I am sure both would learn a lot from the experience and I am sure both would enjoy it and make new friends. It’s just not appropriate. Harvard is not just a corporation, it is an ideal in the world, an ideal of disinterested truth and integrity, and the president is the symbol of that ideal. That is, by the way, what was wrong with Summers’ women-in-science speech. It was not what he said; it was that he began it by saying, in so many words, “Now I am not going to be the Harvard president for the next hour. I am just going to be the provocative economist.” Impossible. When you are in public, you never stop being the Harvard president, and everything you say or do is identified with Harvard and is taken to represent what Harvard stands for. If you can’t deal with giving up your freedom of speech and action in that way, you should’t take such a job.
You are both wrong about the economist “consulting” for the Russian government, if you are referring to Andrei Shleifer. He was not a consultant; he was tasked BY HARVARD, AS A HARVARD EMPLOYEE to head the HIID effort in Russia. That is why Harvard, as well as he, had to pay fines to the US Government. What he did was corrupt, but it wasn’t corrupt because he was moonlighting from Harvard; he WAS Harvard while he was doing it. This is a tragic example of the price we pay when a professor disgraces us-not the $22 million (I think it was) Harvard had to pay, but the fact that Harvard closed down HIID as a result, an organization which, arguably, had huge benefit for the developing world.
Finally, why don’t more of us speak up? A great question. The answer that would reflect best on on the faculty is that we honor for others the same freedoms we ourselves enjoy, and if the failures we observe are only moral or ethical (with no actual rules being broken or crimes being committed) we find no reason to “get involved.” By this reasoning, censuring one person’s speech (even if not censoring it) would have a chilling effect on everyone’s. (Obviously I am not one who is so restrained; I am giving my respected colleagues, who think I am wrong to complain about the things I do complain about, their best shot here.) I think it is probably more complicated than that; more another time.
But I would just close by begging both Richard and Michael to keep a distinction in mind between having rules about what professors do, and having opinions. I never suggested that there should be a rule that would have prevented Professor Porter from consulting for Ghaddafi, and I noted that if some Public Health professors had been retained to eradicate polio in Libya, I hope they would have done it and taken as much money as they could in the process. I just wish someone who stands for the university had said that Harvard stands for liberty and against tyranny, and that Professor Porter’s act of intellectual prostitution did not represent the values of the university. Without that, the uniform the rest of us wear gets stained by his act, and American society, on which we depend for so much, will have reason to think that if you pay a Harvard professor enough, he will say whatever you want him to say.
6/6/2024 10:42 pm
Thanks Harry for chiming in and clearing up some of my mis-rememberings.
I should definitely say that, perhaps unsurprisingly (as you’ve convinced me on this long ago), I agree very much with your last paragraph. I’m not sure how one would go about setting rules about what consulting is appropriate or not in advance, without being too strict or too loose. But I do think it’s very appropriate, after the fact, for the University to chime in either privately or publicly and let a faculty member know when they’ve acted in a way unbecoming to their position. (Other sanctions, as well, may be appropriate when rules apply.) Your analysis here seems dead-on right to me.
6/7/2024 7:02 am
I want to know about Harry’s books he’s writing! Not just one, but two! Maybe more! What’s the subjects?
6/7/2024 10:03 am
I too agree with Harry’s last point.
Of course the easiest way to deal with these dilemmas is to be a Harvard Classics professor. It’s true the Boston DA’s office many years ago paid me $500 to watch “Caligula”. I would have gotten more if I’d expressed outrage and agreed to be an expert witness.
True I once did a One-Day University gig, and also once gave a talk about the fall of Rome for a Hedge Fund retreat, but generally speaking my consulting activities have been as ethically unproblematic as they are non-existent.
6/7/2024 11:42 am
RT, that’s a nice small essay for the Boston Globe right there (or some other venue): The ethical non-demands of a classics professor. The bit about Caligula and the DA’s office is priceless.
You must write it!
6/7/2024 12:49 pm
Not to mention talking about the fall of Rome to hedge funders… It sounds unusually self-aware of them!
6/7/2024 1:15 pm
Sure, that’s what they were betting on when I did it in the spring of 2008. Maybe, 11:42.