Larry Summers lectures on economy, encounters opposition

On Thursday, Larry Summers, a prominent economist and professor at Harvard’s Kennedy School for Government, spent the day at the College visiting classes and meeting students and faculty.

Larry Summers
Professor of Economics Bill Gentry scolds student protestors at Larry Summers' talk last Thursday. Photo courtesy of Caleb Baer.

In the evening, he gave a lecture notable both for its broad title, “Larry Summers on the Economy,” and the Occupy-style protest that students attempted immediately before Summers’ speech.

Summers is no stranger to controversy. He has held a wide variety of prominent positions throughout his career and has made numerous decisions and statements that have brought his name into the media, both for better and worse. In the ’90s, he was chief economist for the World Bank and later Secretary of the Treasury under the Clinton administration. In the 2000s, Summers served as president of Harvard but ultimately resigned due to controversy surrounding a statement he made about women and the sciences. Most recently, he served as the director of the National Economic Council immediately following the 2008 financial crisis. Summers drew upon these varied experiences in speaking about the topics of leadership and the economy to audiences at the College.

On the Economy

As audience members entered the ’62 Center for Theatre and Dance for Summers’ lecture on Thursday, two students standing near the entrance were passing out fliers outlining a series of accusations leveled against Summers, an action which foreshadowed the events of that evening. The fliers claimed that Summers’ actions were at odds with the mission of the College, alleging that he had opposed the Kyoto protocol, “paved the way” for financial deregulation, assisted in the repeal of the Glass-Steagall Act and dismissed concerns of an impending financial crisis earlier in the decade.

When the audience was settled, Bill Gentry, professor of economics, stepped to the podium to introduce Summers, speaking as a former colleague about his respect for Summers’ intelligence and breadth of knowledge. As he walked away from the podium to trade places with Summers, between five and 10 members of the audience, who were scattered throughout the main level and balcony, rose from their seats. A student in the front row near the speaker’s podium yelled, “Mic check!” The other standing individuals echoed him. At the same time, Gentry strode back onto the stage.

“Young man, sit down,” Gentry shouted, targeting the student closest to the podium. “This is not civil discourse.” He told the protestors that they should either sit down or leave, and informed them that they would have a chance to ask “civil questions” during the Q&A session following Summers’ talk. The audience applauded Gentry’s declaration, but the protestors remained standing for several more seconds without speaking. They finally sat down – one young woman literally tugged into her seat by a neighbor who had grabbed her shirtsleeve – and the audience clapped again.

A loose group of students engaged in various issues at the College,  and a few community members, had planned the action in the preceding two days. According to participants at the planning meetings, the group had discussed at length which type of action would be most appropriate, taking into account the fact that Summers’ daughter, Pam Summers ’12, attends the College. While protestors intended to “begin a discussion on campus” about the American financial system, some participants acknowledged that the subsequent discussion has instead been focused on the delivery rather than the content of their message, which they attributed to the fact that they never delivered the message actually planned for the “mic check.”

Summers, when he ultimately stepped to the podium, seemed unfazed and spoke quietly and slowly. “That was a more dramatic introduction than I usually get,” he said.

As Summers began to speak, a couple of the participants of the attempted mic check quietly rose and left the auditorium.

He began his discussion of the economy with a question: “What is different about the global economy?” In answering this question, Summers identified what he considers to be the most important economic trends of the era – the acceleration of both technological change and the elevation of standards of living. “This is more rapid change than we have ever seen before,” Summers said.

Addressing the current economic climate, he acknowledged that although the economy is growing again, unemployment is still very high and the U.S. economy is producing much less than it should be.

“The number one priority has to be getting America … [back] to full capacity,” Summers said. “There is only one important answer, and Keynes had it – demand.” He argued that the current situation was a solvable problem: Because borrowing costs for the government are at historic lows, he held that the government should take this opportunity to stimulate demand, particularly through an investment in infrastructure.

The second issue he addressed as a major priority and challenge for the U.S. economy was correcting for growing fiscal inequality. He stated that we need to protect the “sense of general inclusion and opportunity” that America has long offered to its citizens but that has been receding as inequality has expanded in recent decades.

In particular, Summers spoke about how tax rates have changed over the past few decades, highlighting the fact that, especially for the top income bracket, they are much lower than they historically have been. Despite this recent decrease, currently “people say that it will wreck the economy to lift the top tax rate,” Summers said. “We must find ways to ensure that the benefits of [new] innovations are shared.”

Having delivered his central points, Summers opened the floor to questions. He took several pointed questions, including a few from participants in the mic check. The questions varied in subject from the International Monetary Fund loan conditions to executive pay limits to the repeal of the Glass-Steagall Act. Though he was quick to challenge the framing of questions, he answered every one.

As the audience filtered out of the auditorium, some of the protestors were passing out a second flier explaining the purpose of the “mic check” at the beginning of the lecture. They argued that though “some have called mic checks tantamount to censorship” of speakers, these acts are instead an attempt “to highlight the everyday censorship of the voices of the masses.”

On Leadership

Earlier in the afternoon, Summers spoke to a combined group of two Winter Study classes – “Institutional Leadership and Social Responsibility” and “Making Sense of the CIA” – on the topic of institutional leadership.

“Usually when I talk, I talk about economics and I talk about policy questions,” Summers said in the beginning of the discussion. “I often find myself in positions of leadership, but much less often in the position of talking about leadership.” In addressing the class, Summers shared several of the stories that have helped him to define leadership; he discussed not only his own positions but also critiqued those of others.

While at Harvard, Summers was thrust into the spotlight on a number of occasions. For example, the first day of class registration at Harvard following his appointment to the presidency was Sept. 11, 2001. As president, it was his responsibility to deliver a message to the university during a hastily-organized vigil. “[It] was the first of some very large controversies I’ve caused at Harvard because I remarked in some way that [what happened on Sept. 11, 2001] was evil, and there were many who felt that one should just treat it as a tragedy,” he said.

At the time, members of the Harvard community also suggested that the beginning of the semester should be postponed, but Summers disagreed. “We made the decision to persevere,” he said. In reflecting on the experience, Summers explained that it taught him something about leadership. He remarked that “it’s sort of an accident” when you are presented with a situation that demands great leadership.

Summers also received negative attention for changes he hoped to make at Harvard. He aimed to revolutionize the landscape of financial aid at elite U.S. colleges, a challenge that would require considerable energy.

“You have to decide – and I didn’t do this very well, [it’s] one of many things I would fault myself for – what two or three things you really care about,” Summers said in prelude to his explanation. “You may think you can care about eight, you may be right about eight, but if they’re significant, there are limits to the amount of things you could do.”

One of Summers’ main priorities as president of Harvard was to “question [the existence of] equal opportunity.” At the start of his tenure, the vast majority of students at Harvard and other selective institutions came from upper and upper-middle class backgrounds. He gave Harvard’s financial aid office the directive to create a program that would allow him to “say that this university stands for the principle that there is a threshold below which you don’t have to pay anything” for a college education. The policy was popular and spurred competition among other schools to expand their financial aid programs. In the case of this program, “success came from having a clear idea, keeping it simple and making sure it was a message that would reverberate,” Summers said. “That’s leadership, too.”

A third lesson that Summers referenced from his time at Harvard was a situation that arose not from his own deliberate actions, but (by his own account) from a lack of forethought – the infamous controversy surrounding comments he made regarding women in the sciences. Though some felt he could have done more on the issue, Summers believes that, as president, he prioritized increasing diversity within the faculty. There were, however, limits to his support. “I didn’t want anyone to feel that they’d been chosen for the faculty at Harvard for any reason other than that they were an outstanding scholar and teacher,” Summers said. “I had been quite resistant to any suggestion that standards should be lowered.”

During his tenure as president, Summers was invited to give a talk to the National Bureau of Economic Research on these and related issues. An old friend encouraged him to speak not as president of Harvard but simply as a knowledgeable economist. Though at the time Summers had qualms about the controversial nature of these issues, he agreed.

In this speech, Summers made some claims that, examined closely, were not necessarily inflammatory. “I also speculated based on some things I had read,” he said. One of his speculative claims made drawing on this research was that “whether it’s height or IQ or anything else, men are more variable than women.” From this, he extrapolated that, were the research in fact true, there would be fewer women at the top end of the distribution in any category. “If so, it was going to be hard … to have a gender-balanced math department … and that might be an unfortunate aspect of reality,” Summers said. “That’s what I said. Catastrophic error.”

Whether he was right or wrong about the research was irrelevant from a leadership standpoint, Summers explained. “What I didn’t understand, inexplicably, was that you can’t not be president of Harvard,” he continued. “Anything you say at any moment will be heard as a statement of the president of Harvard.”

Perhaps more importantly, the controversy that ensued drew attention away from what he wanted to achieve in his role as president. “[It’s a] basic principle of leadership: no unnecessary turbulence,” Summers said. “Not no turbulence, but no unnecessary turbulence for your objective. And here I’d beat up worldwide turbulence over something that was not my objective at all.”

The last story that he shared concerned his role as the director of the National Economic Council during the precarious period following the 2008 financial crisis.

“There was an extraordinary chorus of people who felt that the American financial system was bankrupt and felt that government needed to intervene in order to save it,” Summers said. He credited Secretary of the Treasury Timothy Geithner with the decision to hold off on the radical option of nationalizing the banking system. “The risk of depression that looked very real in 2009 didn’t look real at all six or nine months later,” he said. “That’s a tribute to two things: It’s a tribute to the fact that we acted decisively in all sorts of ways, but it’s also a tribute to the fact that we acted with restraint. That ability to live with uncertainty and that ability to recognize the difference between reversible errors – delaying doing something – and irreversible errors is also a very important part of leadership.”

 

 

  • Gary Lapon

    Where are the voices of the protesters here? Larry Summers is not exactly someone whose voice has been silenced. I would think that the Record, as a student paper at Williams College, would want to give a forum for the voices of students, especially those speaking out on an issue that is resonating so deeply with so many young people across the country. I wonder if the author is as familiar with the Occupy Wall Street issue as she is with all of Larry Summers many “accomplishments”? Occupy is a movement that polls show has the support of half or more of the people in this country, if the protesters were outnumbered in that auditorium. It would have been a great service to the Williams community (and given this story a semblance of an attempt to be unbiased) to provide the story of the students who bravely challenged a man like Summers, whose policies such as the repeal of Glass Steagall “allegedly” (!) contributed to the current the economic crisis. I would be interested in their thoughts on whether or not rising living standards are truly a key trend in the world today, for example, or for their take on Summers’ explanation for his statement on the lack of women in math and science. Larry Summers is a man who pushed helped shaped the regulatory environment and pushed strongly for deregulation of the very instruments (over the counter derivatives) that triggered the economic crisis. Then, as the crisis hit, he earned millions of dollars from Wall Street firms before going to work as economic advisor to Obama, where he (surprise!) pushed for Wall Street friendly policies. All things I’m sure we would know had the author printed some of the views of the protesters on the issues or printed some readily-available facts (such as statements by Summers that are on the public records) to back up or undermine the “allegations” against him. Larry Summers is a divisive-enough figure, and coverage of his appearance at Williams warrants more balanced coverage than this. Giving so much space to his statements and so little to the opposition leaves the impression that he is the “Serious” figure worthy of respect and the protesters aren’t. But it seems to me it’s the latter who are on the right side of history.

    Gary Lapon ’05

  • Gary Lapon

    PS I acknowledge that space was provided for a statement by the protesters, but this was also countered by the opinions of the editorial board.