I have to say: if Barack Obama really does wind up nominating Larry Summers for Fed Chair, it's got to be some sort of record-breaking performance for Worst Use of Trial Balloons.
We've been hearing about the possibility for months. As far as I can tell, the reactions -- I think from both parties and all ideologies, issue positions, and experience with the potential nominees -- fall into basically three baskets:
1. Larry Summers is the World's Greatest Monster. Having him at the Fed would be an abomination (includes subgroup: Bob Rubin is the World's Greatest Monster, and Summers is disqualified by having had anything to do with him).
2. There are a handful of good, qualified, people, of whom Summers is one...but there's no reason at all to select him over Janet Yellen, who overall is the better candidate (plus a small subset of who have a different candidate)
3. Brad DeLong, who thinks that there are a handful of good, qualified, people, and who would give Summers a very small edge over the rest of the field.
OK; maybe I missed someone else in camp 3. And as DeLong points out, those are only the people, mostly outside of the administration, who will speak out publicly. But that's why you do a trial balloon! If you only want to know what your current economic team thinks, you don't need to go public to find out.
In other words, the administration put up a series of trial balloons, which were shot down, blown up, popped, deflated, or whatever else you do to balloons to make them dead, dead, dead, and gone away forever. And yet it appears that they're still going full speed ahead.
Very strange. If you want Summers, regardless of what anyone thinks, why go through all this? Just do a (relatively short, please) rollout. Or, if you do care what people think...listen to them!
Keeping this thing going for weeks and weeks for no good reason just makes it look like the White House doesn't know what it's doing. It's not the end of the world, but it's surely not a plus, either.
What do business people think of him?
ReplyDeleteOne possibility is that they are doing the trial balloon out of routine or some sense that it's important for them to appear to be deliberating a whole bunch. That is, Obama really is just listening to his economics team and they want Summers for personal reasons (people apparently don't like to work with Yellen or something) and for some strange reason they're doing the fake trial balloon thing so it looks like they gave her "due consideration" or something. I'd agree that it is weird.
ReplyDeleteOne of the frustrating things to me is that there is a perfectly good case to make against Yellen, it's just that nobody is bothering to make it. You could argue that she's been very much part of the Bernanke's "consensus" of dithering and moral cowardice in the face high unemployment. And while she has written wonky papers calling for more action in the end she would continue this trend if she got the job.
I'm not saying I agree with that, but it strikes me as just as valid a reason to oppose someone as how they cheesed off some people when they were in charge of Harvard.
Ah, but Ezra Klein (or Wonkblog) had a column up last week or so that the primary reason the white house doesn't like Yellen is that she is too much of an independent thinker from Bernanke, and not enough of an agreer and helpmeet for Bernanke.
DeleteThose pesky womens with thinking they have their own ideas!
Dug up the link and the quote. The white house doesn't like Yellen, all their reasons are insanely sexist.
Delete"When she arrived at the Fed as its No. 2 official in 2010, Yellen carved out a different kind of role from her two immediate predecessors in the job, Don Kohn and Roger Ferguson. Kohn and Ferguson worked much like deputies to the chairman, acting as close confidantes to Ben Bernanke and Alan Greenspan and then helping them carry out their decisions.
Yellen has a perfectly solid relationship with Bernanke, as best as I can tell, but she’s more of her own thinker within the institution. She has spent her time as vice chairwoman urging Bernanke and her other fellow policymakers to shift policy to try to do more to combat unemployment, and thinking through ways to do just that. She even had one economist who functioned for a time as something of a de facto chief of staff, Andrew Levin. And people dealing with her within the Fed have viewed her not so much as Bernanke’s emissary but as her own intellectual force within the organization.
...
A second, and related, reason that Yellen’s leadership style isn’t a great mesh with the Obamaites is also one of her strengths. She is always meticulously prepared, a careful and systematic thinker who chooses her words carefully. In a Fed policy committee meeting or a gathering of international central bankers, she typically scripts herself in advance and reads those prepared comments.
She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic..."
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/20/why-the-white-house-is-uneasy-with-picking-janet-yellen-as-fed-chair/
Dug up the link and the quote. The white house doesn't like Yellen, all their reasons are insanely sexist.
Delete"When she arrived at the Fed as its No. 2 official in 2010, Yellen carved out a different kind of role from her two immediate predecessors in the job, Don Kohn and Roger Ferguson. Kohn and Ferguson worked much like deputies to the chairman, acting as close confidantes to Ben Bernanke and Alan Greenspan and then helping them carry out their decisions.
Yellen has a perfectly solid relationship with Bernanke, as best as I can tell, but she’s more of her own thinker within the institution. She has spent her time as vice chairwoman urging Bernanke and her other fellow policymakers to shift policy to try to do more to combat unemployment, and thinking through ways to do just that. She even had one economist who functioned for a time as something of a de facto chief of staff, Andrew Levin. And people dealing with her within the Fed have viewed her not so much as Bernanke’s emissary but as her own intellectual force within the organization.
...
A second, and related, reason that Yellen’s leadership style isn’t a great mesh with the Obamaites is also one of her strengths. She is always meticulously prepared, a careful and systematic thinker who chooses her words carefully. In a Fed policy committee meeting or a gathering of international central bankers, she typically scripts herself in advance and reads those prepared comments.
She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic..."
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/20/why-the-white-house-is-uneasy-with-picking-janet-yellen-as-fed-chair/
I can't find a sexist reason there. No good reason, mind you, but no sexist reason either.
DeleteAre these trial balloons or just media commentary? I haven't followed this close enough to know. The reason I ask, though, is this: We know that Bernanke will leave and when. Is there any reason for the White House to make it's selection know sooner, rather than later? If they make the selection known sooner, doesn't it just leave too much time for negative commentary? If they make the selection as late as possible, doesn't that put more pressure on senate to confirm asap? Doesn't the time between the date when it's known there will be a nominee and the date when a nominee must be identified just leave a lot of room for media commentary, which can be mistaken for trial balloons?
ReplyDeleteIt seems this is all in an effort to secure the necessary votes on the Banking committee (Brown, Merkley and Warren are skeptics). Ezra Klein detailed the likelihood that this gets through the Senate, but the group that needs to hold with the president are progressive Dems and then rely on GOP help for cloture.
ReplyDeleteIt seems the President wants Summers and Progressives want Yellen and if the WH can't get the votes for Summers, the long rollout might be nothing more than a stall tactic.
It'll be interesting if Progressives choose now to draw a distinction between themselves and the President.
Doesn't it seem obvious that Summers is being "floated" by people inside the administration who are against him?
ReplyDeleteThat doesn't seem obvious to me at all. It appears his name is being floated by advocates and defenders AND people who don't support him and think he'll destroy the economy.
DeleteI understand that the intertubes don't quite have the same disclosure requirements of traditional media, but as the tireless advocate on the lonely pro-Summers ice floe, shouldn't DeLong disclose that his professional relationship with Summers goes way way back?
ReplyDeleteI think he's been very open about his longtime working relationship with Summers.
DeleteMy comment came off a bit snarky, I didn't mean to suggest that DeLong was actively hiding anything. My issue is this: if an academic is funded by (say) industry, there's an expectation that all relevant publications would disclose that fact.
DeleteThe blogosphere is too fast and loose to abide by those disclosure requirements; otoh, if one such as DeLong has an influence on this debate, its important for everyone to understand his background. How should that be communicated?
It would be logistically difficult to do so on every blog post, following the model of traditional publications. Then again, this is the kind of thing that shouldn't just be known by insiders. Its a really tricky question for the internet, it seems to me.
And sorry if I was snippy back; I've been cranky all week.
DeleteI don't think there's a problem. To the extent that Brad DeLong has any influence on what happens, it's primarily because his views carry weight with the president and top WH staff, and they know exactly where he's coming from. If there's any secondary influence, it's that he may affect what others -- say, Krugman, or even possibly some Senators -- think, and they, too, almost certainly know where he's coming from.
So I just don't think it's one to worry about.
Still holding on to the hope that Obama's allowing this to play out so he can show Summers and Summers' backers he tried everything he could to get him confirmed. Then he can go with Yellen, though Fischer would be even better.
ReplyDeleteIf he ends up going with Summers, agreed, this whole process was really weird.
"Keeping this thing going for weeks and weeks for no good reason just makes it look like the White House doesn't know what it's doing."
ReplyDeleteThis is my vote.
Also, this is very telling:
"She is methodical, not manic. And the prevailing style of the White House insiders advising on the decision leans a bit more toward manic..."
This reminds me of what I call "campaign time." It that period when a campaign really begins in earnest and things get a bit crazy. Lots of people in politics just absolutely love that atmosphere. I suspect the "insiders advising on the decision" are campaign hands who are now on the White House team. Although, I'm not sure who that might be anymore.
In the world of "campaign time" errors brought on by manic behavior can really get you, but they rarely actually do, since things move very quickly. But, in the more staid atmosphere of actually governing, well, it's different.
Jared, this is something on which I strongly disagree with you, and think that your post is not up to your usual standards.
ReplyDeleteLarry H. Summers has an extensive public record of accomplishment, much of which is bad:
1) He was prominent in the intellectual, policy and political effort to deregulate the financial industry, which lead to the worst economic disaster for the developed world since the Great Depression.
2) He was president of Harvard, and a corrupt, lying disaster who cost Harvard a very large sum of money.
3) In the Obama administration, he was the point man for saving Wall St while doing as little as possible to rescue Main St. And this isn't hindsight; read Krugman's columns at the time.
4) Every single mention of his alleged brilliance is based on some private anecdote, usually involving a faculty lounge or blackboard discussion. I have never seen his brilliance extolled in doing something public, significant, and successful (in a non-corrupt way).
If you think of this as hiring a senior executive, the decision is clear and not in doubt - drop Summers from consideration, and consider his supporters (who have supported him through numerous disasters) to be not your friends.