Saturday, April 4, 2009

The Genius of Larry Summers

Casual readers of the press might be put off by the fact that Larry Summers received $2.7 million last year just for giving speeches, including a $135,000 appearance at Goldman Sachs. Maybe they think he was being buttered up by companies whose business plan now consists of siphoning off taxpayer money by the tanker load. They shouldn’t jump to conclusions though.

I have it from a confidential source that Summers’ performance was worth every penny, and then some. What does a speaker have to do to earn four times the median full-time wage in a single night? You name it, Summers did it. “He was awesome, just awesome”, says Monique (not her real name). “You think you’re just getting an economist, but he was so much more than that—an artist, an entertainer and one of the greatest minds of the last 500 years.”

The first thing to realize is that Summers doesn’t just walk onto the stage like any other former college professor turned policy czar. Sure, he has a flashy PowerPoint, but “Inconvenient Truth” doesn’t begin to touch it. “It was like a stadium rock concert,” explained Monique, “with a light show and incredible special effects. I thought I would never be able to actually see the world economy, but there it was. In fact, with the 3-D glasses he handed out, you would swear you were actually in the world economy.” Unfortunately, near the end of the talk the complex circuitry behind the stage shorted out, and the world economy spectacle came to a sudden end. Cleanup crews had to work long into the night to gather up countries that had literally melted down as a result of a series of electrical fires. But the audience loved it, and even the crash-and-burn finale worked brilliantly as theater.

But lets talk about Larry himself. First of all, remember that he is not only an economist, but was president of Harvard University, often walking into classes with a bewildering array of subject matter—physics, archaeology, literary theory—and wowing students with his ability to lead a cutting-edge discussion that their professors could only envy. So don’t assume that Summers simply gave a speech about the economy. “I would call it performance art,” offered Monique. “He gave us poetry, music and insight into emerging economic trends. The highlight came when Larry, who had worked himself into a very funky rap groove, began rapping in tongues so that dozens of languages, some maybe going back to the stone age, were bouncing off the walls. People were going wild. And the amazing thing is that all of it had something to do with managing complexity in a flat world framework.”

For an encore, Summers fielded questions from the audience. Here he demonstrated his legendary capacity for passing quick judgment: he devised innovative business strategies on the fly, identified market niches that no one had noticed before in fifteen emerging economies and successfully predicted the contours of future government bailouts of the financial sector, right down to the tiniest loophole. “He changed my life,” Monique concluded. “It was his entertainment that opened me up and made me receptive, but the economic vision was irreplaceable. I thought I was maximizing wealth before I heard Larry, but I didn’t know the half of it.”

So the bottom line is that, at $135,000 for two hours, Larry was doing Goldman Sachs a big favor. He doesn’t owe them, they owe him.


Anonymous said...

i don't remember any of his papers; that style of economics i think i find incomprehensible or boring---but maybe i never read any.
i did hear him on CSPAN talking on economics, and I was amazed it turned out to be him, because he sounded like a dolt. someoone said maybe he was just talking down for a pop audience, but his harvard speech on gender didn't seem all that deep (and i suspect his econ might be like that, just dressed up stuff. the heterodox models seem better than that).

Jacquesen said...

Where exactly is the relationship between genius and conflict of interest? The entire post seems to consist in a non sequitur. I'm perplexed, since I regularly visit this blog, and almost always obtain reasoned argument. If the two are mutually exclusive, then why not explain why?

Jacquesen said...

I meant, if the two are not mutually exclusive, then why not explain why.

hapa said...

still his fault, then -- bedazzling the masters of the universe while they were threading the spaceship through the solar corona -- his license to save the world should be revoked

Shag from Brookline said...

“He changed my life,” Monique concluded. “It was his entertainment that opened me up and made me receptive, but the economic vision was irreplaceable. I thought I was maximizing wealth before I heard Larry, but I didn’t know the half of it.”

Maybe if we knew a little more about Monique, we might better understand my fellow townie Larry Summers - or Monique. But just how did Summers do Goldman Sachs a big favor? What does Goldman Sachs owe him? Does it have anything to do with the Bush Bailout of AIG and the Obama follow up?

Summers as an entertainer? His public appearances defy this.

" ... and successfully predicted the contours of future government bailouts of the financial sector, right down to the tiniest loophole."

Does this suggest Summers had a hand in the Bush Bailout? Certainly he did with the Obama follow up.

What next for Larry the Entertainer, SNL?

Joel said...

Hilarious! Great farce, made all the funnier by the fact that so many of the commenters here mistook it for actual reporting!

Shag from Brookline said...

If this was tongue in cheek, whose tongue and in whose cheek? What next, an economic cartoon show:

"Larry the Hedge-Hog"?

Or to paraphrase the old GM credo:

"What's bad for Harvard is bad for America."

hapa said...

"and for my next trick, i will feed your job, shelter, health security, and faith in the mechanisms of civilization to THIS ENORMOUS AND MORTIFYING ROBOT TIGER. can i please get 1 volunteer for every 5 members of the audience?"

Jack said...

The one true sign of Summers' intellect is his ability to stay at the heart of economic power in spite of little evidence of any significant contribution to economic productivity or value, if there is any difference. I suspect that such genius, if that is what it is, is the ability to understand the needs of the economic elites and to support those needs both ideologically and politically. I would be curious to know what significant intellectual contribution to the field of economics has been made by Summers in the form of learned theoretical product.

Myrtle Blackwood said...

2008 – November 11th. Don’t appoint Larry Summers... the Mexican government made an unacceptable deal with Under Secretary Summers, akin to what the mother country gave its colonies. Mexico was treated as if it were a country without a history, without prestige, and without institutions. The 1994 bailout package required that foreign banks get 49% of the banking market. Limits on interest rates for all loans were eliminated to pay off Citi, Chase Manhattan, Bank of America, JP Morgan, and the other foreign bond investors. In 1995 Mexican interest rates were increased to astronomical rates. Another stipulation on the bailout money required Mexico to put a cap on wages nationwide. The gravest problem was that these very high interest rates influenced the rates for other loans made to Mexico and also rigidified high levels of domestic interest rates. Beginning in March 1995, interest rates in Mexico exploded. Rates of return went positive in real terms for the next 10 years, and this contributed to the double problem of excessively costly (and almost nonexistent) financing for Mexican companies and high earnings for those who had invested in Mexican bonds, which led to the overvaluation of the peso....

Americas Policy Program Commentary Larry Summers, Champion of Wall Street Greed Attained by Impoverishing the Mexican People
Peter Cervantes-Gautschi November 11, 2008


1998. Summers protested against any regulation in the Derivatives Market in testimony to the US Congress, when Brooksley Born attempted to regulate it. “Geithner was in the thick of it with Summers”….”Geither is his protege of sorts”.
My email to one Wall Street reporter who wrote about Summers and Geithner:

Eleanor said...

I think Peter Dorman is being ironic.

It sounds like a three-ring circus.

I have nothing against three-ring circuses.

But I'm not sure I want a ring master in charge of the world economy.