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June 11, 2006
David Warsh, Proprietor

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Choosing the Right Pond

“Out of His League,” was the headline on the Financial Time’s May 14 post-mortem on Lawrence Summers’ tumultuous five-year presidency of Harvard University. There may be no better way to put it. 

The lengthy FT article (subscription required) was the first of what will surely be many re-assessments designed to put to rest the canard that the 53-year-old economist had been the victim of a left-wing faculty putsch.

The interpretation, which Summers himself advanced in his resignation statement, asserting that “rifts between me and segments of the Arts and Science faculty make it infeasible for me to advance the agenda of renewal that I see as critical to Harvard’s future,” is a smokescreen — a surefire signal that a partisan of one sort or another is seeking to misappropriate the story for personal purposes (if sometimes no more complicated than the defense of a friend).

Summers was fired for all intents and purposes in February by the little seven-member corporation that runs Harvard, after alienating majority factions in many key constituencies within the university — women, African-Americans, humanists, university staff, its core Faculty of Arts and Sciences, several of its professional schools, wealthy donors and, probably, a preponderance of its 300,000 living alumni.

Two quite good and well-sourced accounts of these negotiations have appeared recently, one by Richard Bradley in Boston Magazine, the other by Javier Hernandez in The Harvard Crimson.

The fact is that Summers did himself in. All kinds of reasons have been advanced for his tendency to antagonize those with whom he disagreed at Harvard. The likeliest is also the most obvious — his lack of faculty experience.

Summers was tenured by Harvard in 1983 at the age of 29, after two years in Washington at the Council of Economic Advisers under his thesis adviser, Martin Feldstein. He spent much of the next eight years seeking to return to Washington, finally succeeding in 1991. When he joined the Clinton administration in 1993, he resigned from the Harvard faculty.

How did it happen that the university hired him back as president? Summers’ presidency probably is best understood as a side-effect of the tie presidential election of 2000. Harvard ostensibly had two horses in that race. George W. Bush was a graduate of its business school, but there can be no doubt that its institutional preference was for Al Gore, a graduate of Harvard College.

Had Gore been elected, Summers might have remained, at least for a time, at the Treasury Department, where he had replaced Robert E. Rubin as secretary late in the Clinton presidency. He was, however, no Gore favorite. And in any event, with Bush headed for the White House, Summers was out of a job. Harvard, meanwhile, eager to launch a big capital campaign amidst the heat of the Internet bubble, was in a hurry to find a successor to outgoing president Neil Rudenstine.  An unwonted sense of urgency took hold.

This time the search will proceed differently, with less haste and more deliberation. Former president Derek Bok has made it clear he intends to serve most of a year as interim president.  There are relatively few persons on the informal list of persons deemed to be credible candidates. Gradually a front runner will emerge, probably a scientist, the better able to cope with the strains engendered by the last few years. Only then will his identity emerge; there will be no beauty contests this time this time, as with disappointed candidates Lee Bollinger and Harvey Fineberg in 2000.

Not to worry about Harvard.

But what of Summers? What is the right league for this powerful, yet profoundly flawed intellect? His immediate concern must be to settle down with his new wife in their newly-acquired big house in Brookline — they have six kids between them — to assess the situation.

Probably he is finished in government. The meteoric rise which began with the Reagan CEA under Feldstein, which led to his becoming chief economic adviser in the presidential campaign of Michael S. Dukakis,  then to the chief economist’s job at the World Bank under George H.W. Bush, and, finally, to the Clinton Treasury Department, may be over. His role in the Shleifer affair makes it unlikely that Summers ever again can be confirmed by the Senate.

Harvard economic professor Andrei Shleifer is understood to have promised friends an account of how he wound making a series of prohibited investments that led to the collapse in 1997 of the mission he led, on behalf of the United States Agency for International Development, to advise the Russian government on the creation of a market economy.

Summers owes an explanation, too.  His resignation makes it unlikely we’ll ever know the extent to which he was involved in fashioning the cloak of protection that Harvard attempted to throw around his friend Shleifer from the earliest days of the investigation. But the questions that linger in the aftermath of the affair, now that Harvard had agreed to return most of the money it received under the contract and Shleifer has settled the fraud counts against him by paying a fine (all the while maintaining his innocence), probably rule out a nomination to a senior post in a Democratic administration, despite his otherwise superlative experience.

If so, that leaves two alternatives: Wall Street, with which Summers gained more than a passing acquaintance during his years at the Treasury Department, and international economics, of which he has become a distinguished practitioner.

The close investigation of topics in public finance, labor economics, financial economics and macroeconomics for which Summers was honored in 1993 with the John Bates Clark Medal, given every two years to a leading economist on the verge of 40,  seems well behind him now. So does his right of succession to the presidency of the semi-official National Bureau of Economic Research, to which he once seemed heir apparent, Marty Feldstein having held the post for nearly thirty years. Something about the turmoil of the last two years would seem to rule out simply reverting to the status quo ante — after all, it was after Summers visited an NBER conference to outline his views on the prospects for increasing female participation in science and engineering (“intrinsic aptitude” playing a key role) that the controversy over his leadership burst into public view.

On the other hand, the Russell Sage Foundation in New York, a leading center of cutting-edge research in social science, will need a new president one of these days. Then again, Summers could choose to write a book about the state of the world for a general audience, preferring to make his case directly to the public, not so much over the heads of the profession as on their behalf.  

Thus while Harvard searches for a new president, Summers, too, will examine the possibilities. Among them, he’ll seek to put down roots at the Harvard Business School, which has courted him assiduously since his resignation. For Cambridge remains the best place in the world to learn economics, and therefore the best place to teach it.

It is one of those situations where patience is the thing most worth having. Larry Summers remains a very big frog; there is no doubt at all about that: the question is what kind of pond he will choose. Granted, a university like Harvard contains multitudes. A close look at the bitterness of the negotiation that in February compelled his resignation, however, suggests that neither Professors Summers nor Shleifer, nor, for that matter, Harvard Corporation member Rubin, will remain connected to Harvard for more than a year or so.  

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