Has Summers supported minimizing environmental regulation? Has he supported dismantling Medicare and Medicaid? Has he supported dismantling utilities? Has he supported eliminating food subsidies?

Summers obviously supports a stimulus package now — is there evidence to believe that in the past, Summers would have opposed the plan he is now supporting?

And how would you differentiate between Summers’ way of thinking and the way of thinking among conservative economists? Are there any ways in which Summers is “to the left” of the economic advisors who have worked for Bush or McCain? Or is Summers the sort of economist who would be considered perfectly acceptable to right-wingers?

Your question goes right to the heart of the type of thinking someone like Summers will bring to his position as an economic adviser.

Summers’ philosophy or ideology goes like this:  Deregulated the economy; privatize as much of government as possible; implement trade liberalization (eliminating tariffs and allowing foreign direct investment); slash government spending; implementing “austerity” instead of deficit spending (in order to keep inflation down); and so on.

Now, lots of people will support these initiatives and say “they all sound great,” and maybe it does sound great if you feel a reflexive distaste in your mouth every time you hear the word “regulation” or if the menace of inflation threatens to reduce the value of your property.  My reading has suggested that this set of policies is actually very terrible in practice for the majority.  The best case for an alternative set of policies is laid out by Ha-Joon Chang in his book Bad Samaritans.

But to give one a sense of how bad these policy prescriptions are, imagine if the U.S. had to accept them:  minimizing environmental and financial regulation; dismantling Medicare and Medicaid and utilities (let the market do its magic); stop subsidizing food production (see how millions of Americans who are barely making ends meat suddenly like paying more for basic foods); no stimulus package during a recession because we need to “live within our means.”

Under the tutelage of people like Summers, the U.S. did poke around around the edges of such reforms.  Energy privatization led to a spike in energy prices, for example, in California.  Financial deregulation led to the creation of high-risk derivatives which created risk across the whole economy.  Nixon briefly attempted to eliminate agricultural supports, but prices rose the backlash was so strong as food prices went up that he created the modern subsidy system (which has plenty of problems, don’t get me wrong).

Now, as I said way back in my original post, Summers, like most economists of this orientation, are thankfully hypocrites when it comes to applying their own medicine to the US.  When it’s their country at risk, they drop these principles in a heartbeat for more rational policies.

It’s sort of like Tom Friedman who extols how wonderful the free market is — for other people — then turns around and says we need to spend huge amounts of tax dollars to build high-tech green industry.

I’m glad they have come around to a better position, but I am not interested in rewarding their previous wrongness by giving them the keys to the kingdom.

Anyway, I have a follow-up question to your posts above. As you consider the negative aspects of Summers’ decision making over the years, is there a tendency he shows toward a particular kind of misguided thinking, and how would this misguided thinking manifest going forward? In other words, what sorts of things should we be looking for as we try to determine whether Summers is screwing things up in America the way he has screwed things up in the past?

I have nothing against Larry Summers, but I think there is some sense to having people evaluated based on their job performance. Larry Summers thought the stock bubble was cool, ignored the housing bubble, was in favor of the over-valued dollar and gave warmly supported financial deregulation.

This track record arguably make Summers one of the main villains in the current economic crisis. So why does the LA Times tell us that we need his wisdom to fix the situation?

I have no doubt that Summers is very bright, but his brilliance did not prevent him from supporting the policies that got us into this mess. Why do we think that his brilliance will lead him to choose the best policies to get us out of it?

Summers is a case in point.  To repeat points made in my previous post on him:

* the World Bank, under Summer’s leadership, was famously an advocate of “structural adjustment” policies across the world, especially in third world countries.  These policies aggressively tied assistance conditionally to restructuring of economies toward a more “neoliberal” line.  Summers joined a long line of Bank presidents in pushing for these very problematic policies, which were often foisted on countries experiencing various sorts of economic crisis, when they were at their post desparate.

* Summers was involved in the disastrous privatization fiasco that wrecked Russia’s economy after the fall of the Soviet Union.  For a full account of the controversy, you can read a relevant article from Institutional Investor Magazine here.

* In 1990, Lithuania turned to Summers to advise them on how to organize their economy.  Two years later, the Lithuanian suicide rate had doubled; within five years of independence form the Soviet Union, 35% of the population was unemployed.  I’m looking for a single good article that fully outlines Summers’ involvement in Lithuania; when I find it I’ll post the link there.

* In the US, of course, Summers is well known to have pushed for all sorts of financial “modernization” and deregulation initiatives–most relevant to the current crisis, the Gramm bill, which Bill Clinton signed.  There was plenty of warning before hand that these were ill-advised policies.  I’ll try to post relevant articles in this space as I recover them.

One might find excused why in all of these cases none of the disasters that befell these countries were Summers’ fault — or not solely Summers’ fault — that there were extraneous circumstances, etc., but this record doesn’t inspire confidence in me.  This is only an example, of course.  Those who support Summers ask us to take it on faith that he’s “smart.”

For example, you write “When Lawrence Summers’ ideas of good economic policy result in the demolition of the economies of multiple countries — including finally the US’s — he should be mistrusted.”

Can you tell me which countries’ economies were demolished by Lawrence Summers? And why Summers was responsible? And how this relates to Summers’ new job? (I’d like to avoid the demolition of our economy if it can be avoided.)

I seem to recall pretty vividly all sorts of confirmation fights led by Democrats over the last eight years (John Aschroft, John Bolton, Alberto Gonzales, Michael Hayden, Steven Bradbury) — to say nothing of the efforts to force the resignation or dismissal of people such as Donald Rumsfeld, Paul Wolfowitz and Gonzales — that was based on exactly the opposite premise: namely, that it does matter who is empowered to lead these agencies and departments, and specifically, that their ideology not only matters, but can, by itself, warrant rejection. Nobody ever claimed that Ashcroft, Bolton or Hayden were “unqualified.” It was their beliefs and ideology that rendered them unfit for those positions, argued Democrats.

When and why did everyone suddenly decide to change their minds about this and start repeating the mantra of some Obama supporters that high-level appointments are irrelevant because only the President counts?   For the people who now make this claim to justify Obama’s appointments, were any of them objecting during any of the above-listed confirmation fights that those fights were wasteful and unjustified because presidential appointments are irrelevant?