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If he'd demonstrated some capacity for learning from his past mistakes, he could be forgiven.  Unfortunately, he hasn't done that.

It's not that Summers is stupid.  He's actually done some interesting stuff in his academic life.  (See, for example, his attack on Ed Prescott and Real Business Cycle theory in the '80s, or his and DeLong's work on Noise Traders vs Efficient Markets.)  But a lot of academics just suck at policy.  They're plagued by the notion -- not helped, in this case, by Summers's view of himself as having 60 IQ points on everybody this side of Keynes -- that their ideas are impossible to implement.  "The political system is too crude.  It's too hard."  And along with that, Summers is such a creature of Washington at this point that he's clearly more inclined to adhere to Village Law than to stick to what his work in his past life told him.

Extreme arrogance is also not a good thing in a Fed chair.  As Krugman pointed out about Summers, "Larry's extremely smart -- ask him and he'll tell you."  That's not good.  Barring a surprisingly strong recovery in the coming years, the next Fed chair(wo)man is going to need to build consensus towards more aggressive policy.  It's hard to do that with Summers running around calling everybody idiots.

And, again, Summers never admits being wrong, even when the evidence is overwhelming.  He denied the existence of the housing bubble and berated Ragharum Rajan for suggesting that "financial innovation" had made the world riskier.  He apparently attacked Krugman for suggesting Asian economies implement capital controls during the '90s crisis -- an idea so radical and outside-the-mainstream that it's now part of the IMF handbook; and an area of economics that Krugman pretty much founded, while Summers is a nobody.

He still thinks deregulation in the '90s was awesome.  He was ready to let the automakers collapse, which would've cost us the 2012 election.  He deliberately misrepresented to Obama the various stimulus proposals (he didn't even show Obama Romer's proposal in the original memo), and then made up the bullshit excuse that it would've been too hard to spend the extra $800bn.

It's a remarkably long list of bad calls, and the fact that he hasn't offered a mea culpa on any of them is disturbing.  

And this is all in addition to the fact that he's far less qualified than Yellen in terms of experience.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sun Jul 28th, 2013 at 10:33:53 AM EST
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