I realize this is extremely counter-intuitive, but that's why I bring it up.
Prodded by a comment by someone at EPI, I just went back and read through Summers' collected columns at the FT. I looked at them when he first started, and the first few seemed so utterly jejune that I've skipped over them ever since. But he not only got better, I found it jarring how different some of the ideas he expressed were from anything I would previously have associated with Summers. A couple of these columns sound like they could have been written by somebody on our side.
If I properly understood a call-out in my Monday FT, all of these Summers columns are currently available for public access. (Usually you can only access them if you are a web subscriber). If so, here's an example of two columns that I thought sounded remarkably good:
The six principles of regulation: http://www.ft.com/cms/s/0/6e0613d4-2fef-11dd-86cc-000077b07658.html
A strategy to promote healthy globalization: http://www.ft.com/cms/s/0/999160e6-1a03-11dd-ba02-0000779fd2ac.html
(If they aren't available, give me a head's up and I'll post them)
And here's an excerpt from a third, just to give you a feel for how different this sounds then what you'd normally associate with Larry Summers -- and how much it sounds like someone you'd actually like to have advising Obama:
<quote>
The crisis has also reminded us of the lessons of the technology bubble, Japan's experience in the 1990s and of the US Great Depression -- that finance-led growth is problematic. The wealth and income gains from the easy availability of credit were highly concentrated in the hands of a fortunate few. The benefits also proved temporary. In retrospect, the fact that 40 per cent of American corporate profits in 2006 went to the financial sector, and the closely related outcome -- a doubling of the share of income going to the top 1 per cent of the population -- should have been signs something was amiss.
Therefore we need to reform tax incentives that encourage financial risk taking, regulate leverage and prevent government policies that give rise to a toxic combination of privatised gains and socialised losses. This offers the prospect of a prosperity that is more firmly grounded and more inclusive. More fundamentally, short and longer-term imperatives come together with respect to policies that seek to ensure that any future prosperity is inclusive. The policies that are most effective in helping to support demand are those that help households struggling either because of low incomes or because they have recently lost part of their income. Recent events also remind us that individuals can become impoverished or lose health insurance through no fault of their own. This reinforces the need for people to have basic health and retirement security protection regardless of what happens to their employers.
All of these considerations suggest that the pendulum will swing -- and should swing -- towards an enhanced role for government in saving the market system from its excesses and inadequacies.
<unquote>
One last idea from one his columns that I want to mention is that, because Summers is still a conventional economist who worries about the long-term soundness of government finances (i.e., what happens after our stimulus has worked, and prevented depression, and sparked recovery, and inflation and the government deficit are both worries again), Summers specifically makes the argument that the best use of massive monies right now would be in investments in things that have huge front end costs but which save the government and/or the private sector money in long run. Which is why national healthcare restructuring is for him the perfect investment for this moment in time.
The fact that he published all of this in the FT, which is a terrible outlet for influencing the progressives who most oppose him, makes me think this isn't disguising chaff, but that he's actually changed his mind, as academics are allowed to do; the thing they fear most is being ridiculed for being wrong. And the current consensus among cutting edge economists is entirely on our side about all the big issues, e.g., that massive government spending is necessary; that deregulation was a profound failure; that it is essential that healthcare and pensions should be government organized; and that the growth of inequality is a very corrosive thing. Summers also has a great excuse in his phrase "the pendulum has swung" -- he obviously feels its not his fault to be have been so wrong, rather it was an objective change in the external world. Perhaps he feels the empirical world has simply disproven what were perfectly sound theories except that they were wrong and now it's time to come up with new theories that take the results into account. And that the best strategy to prop up his reputation for brilliant arrogance is to get out in front of the new stuff rather than defend the old.
I don't mean to say that he's still not a prick and all that and that any of this would cancel out his past bad deeds. But like Volcker, it could be that at this conjunction, it's not bad for our side for him to be near the levers of power. It could even be very good. Much to my enormous surprise and with the emphasis on "could."
Michael