Felix Salmon

Replacing Summers

By Felix Salmon
September 21, 2010

It seems that David Warsh nailed it, back in May: Larry Summers is going to quit his White House position in November, according to Hans Nichols. He’ll probably go back to what he was doing before: a day a week for a hedge fund, a position as University Professor at Harvard, maybe even return to writing his column for the FT. And who will replace him?

Administration officials are weighing whether to put a prominent corporate executive in the NEC director’s job to counter criticism that the administration is anti-business, one person familiar with White House discussions said. White House aides are also eager to name a woman to serve in a high-level position, two people said. They also are concerned finding someone with Summers’ experience and stature, one person said.

The corporate-executive idea is a bit weird: of all the positions in the White House economic team, one would expect the NEC director to actually be an economist. And there aren’t many economists who are also prominent corporate executives. (Actually, I can’t think of any. Readers, help me out here!)

I also very much doubt that the presence of a corporate executive in the White House would have any success at all in countering criticism that the administration is anti-business.

If Obama wants a woman with experience and stature, maybe he can persuade Laura Tyson to come back for another tour of duty? But high-profile economists are hard to find, as is evidenced by the fact that so few of them become corporate executives. Filling the position won’t be hard, but I don’t expect Obama to fill it with someone the public has heard of.

Update: Thanks, readers! Gary Loveman, the CEO of Harrah’s, has a PhD in economics. As does Mohamed El-Erian, the CEO of Pimco.

15 comments so far | RSS Comments RSS

William Baumol? Jean Tirole?

The definition of “public” is open. But, as EconofContempt notes, it should be Jason Furman.

Posted by klhoughton | Report as abusive

Tirole? I would put 98% or better odds that it will be an American. (And, conditional on its being an economist, at least 70% that it would be a macroeconomist of some stripe. Where “of some stripe” means “not Jean Tirole”.)

Posted by dWj | Report as abusive

“I also very much doubt that the presence of a corporate executive in the White House would have any success at all in countering criticism that the administration is anti-business.”

No, of course not. But that doesn’t mean it won’t accomplish anything. Apparently, there are still average Americans out there who can ask, “Is the American dream dead for me?” with a straight face.

(“I never saw the owl of Minerva fly through Harvard Yard. In a society as wounded as our own, there is something repellent about the assertions of elitism… The wantonness of their capitalism was widespread and systematic, and it injured millions of lives. A society may be measured by whom it admires. No class of Americans has done more to damage America than the financial class.” http://www.tnr.com/article/important-peo ple)

Posted by j657 | Report as abusive

He should put Calculated Risk in the post!

Posted by MitchW | Report as abusive

A woman CEO? How about Carly Fiorina?

Posted by lambertstrether | Report as abusive

You could always be provocative and give it to Krugman …

Posted by norge10 | Report as abusive

Gad, the entertainment value of naming Krugman would raise the GDP all by itself. Think of Ben Stein’s apoplexy – it cheers me just to imagine it.

Posted by Dollared | Report as abusive

Dr Mohamed El-Erian – Economist by training, public service experience at the IMF and corporate experience at PIMCO. The signal to the bond market would be immense. He would also be a great Treasury Secretary.

Posted by RS123456 | Report as abusive

I don’t know about economists as CEOs now but William J. Catacosinos formerly of Long Island Lighting and Paul O’Neill of Alcoa were both economists.

Posted by bidrec | Report as abusive

No mention of Mr Summers efforts to guide President Clinton towards signing the banking reform measures that set the stage for this current crises…. It is amazing how intellectuals are never held accountable for their mistakes…they just go back to accademia and write papers to justify their efforts and spin their mistakes.

Posted by Gen | Report as abusive

“The corporate-executive idea is a bit weird: of all the positions in the White House economic team, one would expect the NEC director to actually be an economist.”

NEC has traditionally been a non-economist. Here is Greg Mankiw back in 2008:

http://gregmankiw.blogspot.com/2008/11/s ummers-to-nec.html

Saturday, November 22, 2008
Summers to the NEC
Larry Summers is going to be director of the National Economic Council.

I wonder: What role will the Council of Economic Advisers have in the new Obama administration? And how will the CEA and NEC get along?

When I worked for President Bush as CEA chair, the NEC and CEA had distinct and complementary roles. The CEA was staffed by professional economists, many from academia, whose expertise was economic analysis. By contrast, the NEC was staffed by those with experience on Wall Street and Capitol Hill. The NEC’s main role was to coordinate the policy process, to act as an honest broker, to make sure that all points of view were heard, and to facilitate discussion among the relevant departments so all felt they had a fair shot to make their case. Steve Friedman, formerly of Goldman Sachs, ran with NEC with impressive intelligence, humility, and diplomacy.

But the situation will likely be very different with Larry as head of the NEC, and perhaps Jason Furman as his deputy. Their skill set will overlap substantially with the three members of the CEA. In other words, the NEC and CEA will be more like substitutes than complements.

Only time will tell how well this alternative organizational structure will work.

Posted by ayaga | Report as abusive

Why should head of the NEC be an economist? It’s a coordination job — marshaling the agencies to formulate and execute policy. Clinton created it in the image of the NSC. Robert Rubin, the first to hold the job, was successful. Friedman was good.

Posted by Bill51 | Report as abusive

Roger W. Ferguson, Jr., the CEO of TIAA-CREF, is both a CEO and an economist (as well as a former Fed vice chairman and current member of the President’s Economic Advisory Board)

Posted by BeeSquared | Report as abusive

Is Summers going of his own accord, or is Obama desperate to look like he is doing something that will count?

Posted by dyllman | Report as abusive

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Posted by Anonymous | Report as abusive

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