One would expect Ryan Lizza's epic New Yorker piece on Larry Summers to be somewhat glossy, but, yeah: you can basically tape this piece to the back of your child's Halloween costume for traffic safety. There's a lot left out, but Felix Salmon is at least impressed with the fact that Summers seems to understand that during his time at Treasury, he had a hand in cooking up the derivatives market:
Summers told me, "If we had known that derivatives markets would mushroom the way they did and that regulators would remain spectators, we would have acted. With hindsight, all of us with involvement in financial policy wish we had done more to forestall problems."
Quoth Salmon: "And although it's now pretty clear that Summers's deregulatory impulses as Treasury secretary had pretty gruesome consequences, it still reflects well on Summers -- a man of no small ego -- that he is willing to admit as much." Well, what other choice does Summers have, really?
Salmon cites numerous bits of Summers-iana that could have been included but weren't, most significantly, in my opinion, the extent to which Summers has worked to freeze out Paul Volcker. Over at the American Prospect, Dean Baker evaluates the piece, finds it even more wanting, and is much harsher in his assessment:
Finally, we are told in conclusion that: "So far, none of the worst fears of those who believed that the stimulus was too small or that nationalization was the only option or that taking over car companies would destroy the fabric of capitalism have materialized."
Sorry, but this is wrong, big time. The worst fears of some of us who said that the stimulus was too small were that we would be sitting around with 10 percent unemployment for a long period of time and that stimulus would be discredited. That pretty well describes the world we live in, even that may not be the case in New Yorker land.
In terms of the bank bailout, some of us were worried that we were effectively taxing the whole country to support the rich bastards that put the economy in the toilet. Bank profits now stand at a record share of GDP and the bonuses at Goldman are as big as ever. What did the critics get wrong?
As a side note, I think that the way in which Salmon attempts to offer praise to the Obama administration is really strange:
...can anybody give me an example of something with the following three characteristics:
1. It is a policy initiative of the current Obama administration
2. It was significant enough in scale that I'd have heard of it (at a pinch, that I should have heard of it)
3. It wasn't fundamentally extremely well-managed during the execution.
Salmon's point seems to be that "policy initiatives are sometimes good and sometimes bad" but, hey, once the administration decided on a course of action, they really managed it well. But so what? I thought one of the lessons of, say, the Iraq War was that you couldn't transform a bad strategy to a good one through sheer force of management.
RELATED:
Inside the Crisis [The New Yorker]
The Good Things About Larry Summers [Felix Salmon]
New Yorker Rewrites Economic History [The American Prospect's "Beat The Press"]