The Obama White House engineered the release of its top staffers’ financial disclosures for minimum news cycle impact in the time-honored fashion, dumping them quietly last Friday afternoon. Bloomberg has a nice summary. To no one’s surprise, chief economic adviser Lawrence Summers had a very good year in 2008, raking in $5 million from his position as a managing director at D.E. Shaw, a $30 billion hedge fund, and another $2.7 million in speaking fees for regaling Wall Street audiences with insights gleaned from his enormously powerful and self-impressed brain.
Let’s review a few of the high points on the CV of the man who is calling most of the shots in the president’s plan to save the economy by rescuing the people most responsible for its collapse:
Poor countries should be the world’s dumpster. Back in December 1991, when he was the World Bank’s chief economist, Summers sent out a memo extolling the virtues of treating less-developed countries (LDC) as global dumping grounds. It read in part:
‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]? I can think of three reasons:
1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that….
Looting Russia. In the early 1990s, Summers was a key figure in the so-called Harvard Boys group that did so much to convert Russia from a stodgy, collectivist command economy into a kleptocrat’s wet dream of privatization and profiteering. As Mark Ames wrote in the Nation last year, “[B]y the end of the 1990s, Russia’s GDP had collapsed by more than 60 percent, its population was suffering the worst death-to-birth ratio of any industrialized nation in the twentieth century, and the financial markets that Summers and [his protege Andrei] Schleifer helped create had collapsed in what was then the world’s biggest debt default ever. The result was the rise of Vladmir Putin and a national aversion to free markets and anything associated with Western liberalism. Summers, through Schleifer, was also tainted with some of that country’s corruption, which resulted in a US Justice Department lawsuit against Schleifer and others.”
Regulate derivatives? Never! Back in 1997, the chair of the Commodity Futures Trading Commission, Brooksley Born, began to agitate for government regulation of the mushrooming derivatives market. That effort was quickly nipped in the bud by a blustery phone call from Clinton administration Depty Treasury Secretary Larry Summers. Afterward, according to Newsweek, “‘She was ashen,’ recalls Born’s deputy Michael Greenberger, who walked in as the call was ending. ‘She said, That was Larry Summers. He was shouting at me.’… Summers’s phone call was the first sign that her humble plan had riled America’s reigning economic elite. Rubin, Fed chairman Alan Greenspan and Summers were concerned that even a hint of regulation would send all the derivatives trading overseas, costing America business.”
Deregulating banks. In 1999, President Bill Clinton signed the Financial Services Modernization Act, which repealed the Depression-era Glass-Steagall Act that had prohibited commercial banks from taking the sorts of risks that investment banks routinely took. The financial chicanery of the bubble years was already an advanced art by this time, but the FSMA spread the contagion to a lot of very large institutions that otherwise couldn’t have played. At the time, Summers had this to say: “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century. This historic legislation will better enable American companies to compete in the new economy.”
A woman’s place. As president of Harvard, Summers told a January 2005 academic conference that “innate ability,” or words to that effect, might be the reason that women were underrepresented in math and science jobs.
The last word. In the Newsweek profile of Summers quoted above, the old presidential adviser/Beltway hack David Gergen–who toiled in the vineyards of Nixon, Ford, Reagan, and Clinton–said this about his pal Larry: “He’s very much a market man. He’ll come out more on the side of lighter regulation.”