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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.

By Ezra Klein  |  June 9, 2009; 3:05 PM ET
Categories:  Financial Crisis , Obama administration  
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Comments

a tendency for reporters to try to explain events through personalities

you betcha! couple this with the high demand and low supply of memes, and then add a couple sled dogs to the sled (brains on idle, and poor fundamental understanding of the underlying issues,) and you're off to the idiotarod.

Posted by: JimPortlandOR | June 9, 2009 4:27 PM | Report abuse

"an economic team made of brilliant and persuasive adults"

Adults, who do NOT, in fact, have profound ideological differences on economics. The most remarkable thing about Obama's team is not that they are a collection of Stars -- and they are, with egos and assertiveness to match -- but that there is so little basis for a substantive difference of opinion among them.

One of the themes of these personalities-among-the-economists stories is that there is someone on the policy team with left or populist ideas and values. Except it is hard to figure out, who that could plausibly be.

Pretty much everyone on the team, from Austan Goolsbee to Larry Summers was dead wrong about various aspects of the mortgage bubble, credit default swaps, and the like. There's more than a whiff of corruption in Rahm Emmaunel's brief but profitable career as an investment banker and Larry Summers' part-time gig as a hedge fund manager.

Christina Romer's work as historian has often been cast by her in terms that flatter the Right -- her work on the effect of European refugee investment on U.S. economy during the Great Depression is presented by her in a way that makes her sound like the Last Monetarist.

If it all goes bollix, I suspect that the personalities will matter less than the homogeneity, and the absence of more radical voices, and analysis that would highlight factors unconsidered.

Posted by: brucew07 | June 9, 2009 5:43 PM | Report abuse

Great post. This phenomenon takes place in the sports world all the time -- a perfectly good team that's lost some close games due to bad luck (or bad scheduling) suddenly starts winning more often. Though their level of play hasn't actually improved, sportswriters feel the need to attribute the additional wins to something other than luck, so we get articles about epic team meetings or personnel changes which are actually basically arbitrary.

See 2004 Red Sox (Pokey Reese for Nomar), 2005 Michigan State Spartans men's basketball ("getting over the hump" against ranked teams), and many others.

Posted by: davestickler | June 9, 2009 6:58 PM | Report abuse

Double what Bruce says, the NYT article makes it seems like Goolsbee is the most progressive member of the team with his stance on salary cap for CEOs of bailed out banks. But he is hardly a radical. Most certainly, the "brilliance" of Obama's economic team has come at a high cost of diversity.

Posted by: MrGoodKnight | June 9, 2009 8:48 PM | Report abuse

"So though these tales are interesting, it's not clear what they amount to."

They amount to big ZERO. Whether Oil shock or no; who cares for personalities? These team members do not stand for elections so as we public should not have opinions about them or if we have any say in that.

When we elect President and Congress folks, it is their prerogative and duty to appoint folks. They are accountable for these appointments. We public should least bother about their personality quirks as if we do not have any other business to do.

It is a different matter that many media folks do not have any other job than spinning these gossip columns and news items.

Posted by: umesh409 | June 9, 2009 10:54 PM | Report abuse

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