Sayonara to Summers
What was the perception of Larry Summers’s tenure in office?
January 15, 2001
When Larry Summers was sworn in as U.S. Secretary of the Treasury in July 1999, he was the youngest person ever to be appointed to that position. Yet even before that, he had always had one definite goal. It was to rid the world of the remnants of socialism, not just in Russia but around the world. Summers’ main target in this regard was the all-important Japanese economy.
What are your thoughts on how Japan is dealing with its recession?
“The exchange rate cannot be a substitute for policy.”
And on Japan’s attitude toward free trade?
“In Japan, free trade has traditionally meant the freedom to export Japanese products to the rest of the world, but it will now have to mean freedom of foreign companies to export to Japan.”
A Japanese reply:
“Mr. Summers has been very kind in advising us. I am moved to tears — but we would like to do our own thinking.”
(Taichi Sakaya, director general of Japan’s Economic Planning Agency, in October 1999)
What advice do you remember from your first days on the job?
“Rubin said to be cautious. And Alan Greenspan said to be opaque.”
Is the U.S. economic boom helping the poor?
“An economy where jobs are looking for people — as well as people looking for jobs — is one of the best social programs we have.”
What are your thoughts on the euro?
“Our judgment is the buck starts and stops with the United States. As long as we continue to follow our economic policy, our currency has nothing to fear.”
What is the challenge for the United States today?
“The major challenge for the United States is whether it can become the first outward-looking, continental, non-imperialist power in history.”
(In April 1997)
How much is the United STates globaly connected?
“It used to be said that when the U.S. sneezed, the world caught a cold. The opposite is equally true today. Our prosperity is linked inextricably to the maintenance of a strong world economy, an open international trading system, and stable global financial markets.”
What about competition from other nations?
“Now is the time for us to strike. We must strengthen our foothold in Asia, to ensure no nation overtakes us.”
Why do the international financial institutions need to improve their lending practices?
“If we are serious about preventing a global race to the bottom, we must be serious about helping those at the bottom to rise up.”
How has the global economy changed everyday life?
“It says something about this new global economy that USA Today now reports every morning on the day’s events in Asian markets.”
The global economy and poverty — where is the link?
“Far more people are poorer in the world because they live in countries that are insufficiently integrated in the global economy than are poor because they live in countries that are too integrated into the global economy.”
What can the United States do about it?
“We are richer than ever before and we are growing faster than ever before. Yet, the Achilles heel for the United States is our reluctance to engage adequately in the world.”
Why is Steve Forbes not convinced?
“Promoting Larry Summers to be U.S. Treasury Secretary is like sending Typhoid Mary into a maternity ward.”
(Former presidential hopeful Steve Forbes, May 1999)
Returning to the topic of Japan, is there a link between Karl Marx and the Japanese economy?
“Traditional communist economy puts an emphasis on coordinating economic activity relative to motivating economic activity. I think it is fair to say that the Japanese approach to management has probably put somewhat more emphasis on coordination than motivation of economic activity.”