Larry Summers is simply not credible. This is an "oh fuck things are about to get out of hand, let's try to insert ourselves into the debate so we don't get locked out" paper.
Here is Larry Summers from his 1998 speech "The Challenges of Success".
"
The world looks very different than it did at the beginning of this decade, a time when America was said to be in decline. It is now clear that America will grow faster in this decade than Japan and Europe. Their four-decade-long story of convergence has ended and America is pulling further ahead. Why this success? A large share of the credit must go to the two forces that this conference brings together: technology and finance.
The twin forces of intonation technology and modern competitive finance are moving us toward a post-industrial age. And if you think about what this new economy means - whether it is AIG in insurance, McDonald's in fast-food, Walmart in retailing, Microsoft in software, Harvard University in education, CNN in television news - the leading enterprises are American.
"
Edit:
I tried deleting this, because it is an ad-hominem, which feels good but adds nothing.
It is just endlessly frustrating that one of the principle architects of the current status-quo demands so much attention.
Summers helped structure post-Soviet Russia, viciously attacked Brooksley Born when she sought to regulate the swaps market, among many many other serious lapses in judgement.
And yet, when he and his students come up with another insane policy proposal we have to take it seriously and challenge it on the merits.
It feels a lot like the allied strategy during WW2 of saturating enemy air defenses.
I'm not hugely surprised that the OCR of the scan of the transcript of the speech says "intonation technology", but i'm mildly amused that both Stoller and you copy-and-pasted it without question.
There is a lot to unpack, but here is one example.
He holds out AIG as a world-leader to be emulated.
In the same year he gave that talk, he attacked CFTC chair Brooksley Born when she proposed margin rules for OTC swaps. She made this proposal in the aftermath of the LTCM collapse. Summers/Greenspan/Rubin said that banks were so "sophisticated" that they didn't need margin rules, and that these rules would somehow cause a financial crisis.
Ten years later, AIG almost collapsed because it had a division making massive directional bets on credit markets using un-margined swaps. Were it not for a $200bn loan from the public, AIG would have collapsed.
Here is Larry Summers from his 1998 speech "The Challenges of Success".
" The world looks very different than it did at the beginning of this decade, a time when America was said to be in decline. It is now clear that America will grow faster in this decade than Japan and Europe. Their four-decade-long story of convergence has ended and America is pulling further ahead. Why this success? A large share of the credit must go to the two forces that this conference brings together: technology and finance.
The twin forces of intonation technology and modern competitive finance are moving us toward a post-industrial age. And if you think about what this new economy means - whether it is AIG in insurance, McDonald's in fast-food, Walmart in retailing, Microsoft in software, Harvard University in education, CNN in television news - the leading enterprises are American. "
Edit:
I tried deleting this, because it is an ad-hominem, which feels good but adds nothing.
It is just endlessly frustrating that one of the principle architects of the current status-quo demands so much attention.
Summers helped structure post-Soviet Russia, viciously attacked Brooksley Born when she sought to regulate the swaps market, among many many other serious lapses in judgement.
And yet, when he and his students come up with another insane policy proposal we have to take it seriously and challenge it on the merits.
It feels a lot like the allied strategy during WW2 of saturating enemy air defenses.
[1] https://mattstoller.substack.com/p/how-bill-clinton-and-amer...