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Brilliant Mistake: Larry Summers and the Fed

For the new elite, public service is a massive graduate seminar.
Larry Summers

Among the interesting debates of a slow summer is the argument about Ben Bernanke’s replacement as Fed chairman. The White House has not yet indicated its choice. But the main contenders are thought to be Larry Summers, the former Treasury Secretary and Harvard president, and Janet Yellen, the current vice chair of the Fed.

Both Summers and Yellen have the credentials we expect for the position. But Yellen is favored by progressives because she is seen as an advocate of softer money and stricter financial regulation. In addition, many like the idea of appointing a woman to run the Fed.

I have nothing to contribute to the technical aspects of this debate. And the gender issue has more to do with academic politics than any significant public concern.

Nevertheless, the fact that Summers is even in the running for such an important job despite a record of bad judgment tells us something important about the norms that define America’s current ruling class. While the old WASP elite justified its influence on grounds of prudence and respectability, the ostensible meritocracy that replaced it sees intellectual brilliance as the authoritative claim to rule.

My point is not that members of the midcentury Establishment always possessed the qualities they claimed, or that our current masters are actually the smartest guys in the room. Rather, it’s that our ideas about qualifications for power have been transformed–and that Summers embodies this transformation.

Summers is a notorious jerk and slob, and has been wrong about almost every major economic issue for the last twenty years. But he is, by most accounts, a bold and provocative thinker. For his supporters, that outweighs possible limitations of character or judgment.

I am not convinced of Summers’ originality. On big issues such as the repeal of Glass-Steagall or derivatives regulation, he seems  a reliable advocate of the conventional wisdom that links Ivy League economics departments to Wall Street.

Yet the novelty of Summers’ ideas isn’t the interesting thing in this debate. Rather, it’s the assumption built into his supporters’ arguments: that aptitude for politics is closely allied with academic ability. The old elite proverbially understood public service on the model of a country club. The new one sees it as a sort of massive graduate seminar.

Although they are rival conceptions of politics, these views are not absolutely opposed. In fact, both are obsessed with pedigree. They just look for different qualities in their exemplary specimens. The archetypal WASP wanted to know where a job applicant prepped; his meritocratic successor will ask where she did her Ph.D. (It is assumed that all the players in these scenarios were undergraduates at Harvard.)

Both conceptions also have blindspots. The country club model elevates superficial collegiality over actual results. The graduate school vision, by contrast, prizes abstract knowledge at the expense of practical wisdom. American history is littered with failures by each approach.

On the whole, however, the defects of gentility are less dangerous to common interests than the defects of intelligence run amok. The great problem with the application of the academic mind to politics, is that policies that work in theory are notoriously ineffective in practice. Summers is, without question, a smart man. As Fed chairman, however, he would be a brilliant mistake.



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