Larry Summers: The Good, the Bad, and the Ugly

Well, Larry is out, and I won’t miss him. Larry was, hopefully, the last of the shameless Wall Street Democrats—at least, the last of the shameless Wall Street Democrats to be considered for a top position in the Obama Administration this year. To a great extent, Larry was pilloried for, in effect, being too much of an Obama guy, and since Obama tends to rely too heavily on a handful of people he trusts implicitly, it’s probably good to force in a little new blood. It’s also probably good for the Fed not to have someone as chair who will be regarded as the president’s boy. And it’s certainly good not have a chair of the Fed with the record of bureaucratic bungling, favoritism, and deceit that Summers racked up at Harvard, particularly in the case of Andrei Shleifer, for which he receives remarkably little criticism in the press.

Despite all his brilliance, Summers had a stunningly bad record as president of Harvard. He started his term by trying to roll Cornel West for not working hard enough, an abysmal assault on political correctness. Was Cornel really the “worst” tenured professor at Harvard? Weren’t there a few senile alcoholics hiding in the woodworks of the Classics Department, perhaps, or a mystical mathematician starving himself to death in the manner of Kurt Gödel? I’ll bet there were. But West’s self-congratulatory, Bad Brother on the River Charles act rubbed Summers and his gaggle of tough-minded hard-nosers the wrong way, so Larry came down on Cornel like a ton of bricks, or a ton of Larry Summers.

I don’t think West is much of a scholar. But in the real world, the real real world, that doesn’t matter. Harvard didn’t hire him for scholarship, but for street cred. William Faulkner, while serving as writer in residence at the University of Virginia, said that he felt that his job consisted of putting on something tweedy and walking across campus twice a day so that people could nudge each other and say, “there he is.” Okay, Cornel West is no William Faulkner, but their role at the two universities were similar.

It was dumb to take a punch at blacks, but, as John Calvin* will tell you, getting tough with women is insane. Larry leaped into this snake pit in full Larry Summers, full of bluster, brag, and bounce—“I would like nothing better than to be proved wrong, yada, yada, yada, yada, yada, yada, yada, yada, yada,” which is Larry Summers for “I would like nothing better than to be proved wrong, but I won’t be, so shut the fuck up and do it my way.”

Larry had half a leg to stand on, or maybe a quarter of one, because there are substantially fewer women in the top of the top “tail” of the standard math and science tests. But when you have half a leg to stand on, it’s best not to tell a bunch of high-powered women what they don’t want to hear. Nancy Hopkins, an MIT biologist in attendance at Larry’s speech, said she left to avoid either fainting or puking, which is apparently how she judges the validity of a thesis.

But Summers’ blundering assaults on the all but impregnable fortresses of academic political correctness were trivial compared with his involvement in the case of Andrei Shleifer, a brilliant young Russian-American economist who became Summers’ protégé at Harvard in the eighties. Shleifer joined the Harvard Economics Department in 1991 and headed up the Harvard Institute for International Development. The Institute administered $40 million in federal funds in connection with an economic assistance program intended to assist the former Soviet Union in its transition to capitalism and democracy. As a member of the Clinton Administration’s economic team, Summers assisted both Harvard and Shleifer in obtaining the federal contract.

In 1999, Shleifer won the massively prestigious John Bates Clark Medal, awarded to the outstanding economist under 40, but in 2001 he was in federal court, charged with violating the federal contract. Among other things, Shleifer and his wife were investing in Russian corporations at the same time he was giving the Russians economic advice, which the terms of the federal agreement prohibited. In 2004, a federal judge ruled that both Harvard and Shleifer might be held liable for violating the agreement, with Shleifer but not Harvard potentially liable for treble damages, up to $105 million.

Luckily for Shleifer, Larry Summers became president of Harvard in 2001. The case never went to trial. In 2005, Harvard and Shleifer reached an agreement with the government. Harvard paid $26.5 million, while Shleifer only had to pony up $2 million. Not only that, Shleifer retained his post at Harvard. When questioned about the matter at a faculty meeting, Summers said that he had recused himself from the case from the beginning and therefore wasn’t well enough informed to comment, a statement that a lot of people didn’t find convincing. Some may have wondered whether Shleifer was less worthy of Harvard tenure than Cornel West.†

Afterwords
Will Larry prove to be the last of the Citigroup Democrats? Don’t bet on it.