Is Larry Summers a Big Meanie? Does It Matter?
I'm actually a bit surprised we've not had more anonymously sourced stories about tensions on the White House economics team. But one point on these sorts of stories, and the embedded idea that economic recovery is substantially dependent on Larry Summers's interpersonal skills.
Imagine two worlds. In both worlds, the Obama administration pursues the exact same economic policy. But in one world, an external oil shock sends the price of energy hurtling skyward, which retards recovery. Voters feel economically stressed, and Democrats lose seats in the 2010 election. In the other world, the price of oil rises more gradually, the economy seems like it's gradually improving, and Democrats either hold the line or gain a couple of seats.
In the first world, you're going to read a lot of stories about how Larry Summers was a meanie who rendered the economic team dysfunctional and impeded the Obama administration's efforts to revive the economy. In the other, you're going to read a lot of stories about how the famously prickly Larry Summers managed to keep his ego in check and leverage his considerable brilliance to help the Obama administration save the American economy. But the relevant variable was not Summers -- it was the oil shock.
There is, in other words, a tendency for reporters to try to explain events through personalities. What you see in this article is that everything appears to be going well but some people don't seem to like Larry Summers very much. If everything stops going well, however, it's going to become very important that people don't like Larry Summers very much. But at the end of the day, this is Obama's administration, an economic team made of brilliant and persuasive adults, and an environment that is shaped by much more than just White House policy. So though these tales are interesting, it's not clear what they amount to.
June 9, 2009; 3:05 PM ET
Categories: Financial Crisis , Obama administration
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