Lawrence Summers

Why isn’t capitalism working?

By Lawrence Summers
January 9, 2012

Americans have traditionally been the most enthusiastic champions of capitalism.  Yet a recent American public opinion survey found that just 50 per cent of people had a positive opinion of capitalism while 40 per cent did not.  The disillusionment was particularly marked among young people 18-29, African Americans and Hispanics, those with incomes under $30,000 and self-described Democrats.

It’s time for the IMF to step up in Europe

By Lawrence Summers
December 8, 2011

By Lawrence Summers
The opinions expressed are his own.

European leaders will meet today for yet another “historic” summit at which the fate of Europe is said to hang in the balance. Yet it is clear that this will not be the last convened to deal with the financial crisis.

The fierce urgency of fixing economic inequality

By Lawrence Summers
November 21, 2011

By Lawrence Summers
The opinions expressed are his own.

The principal problem facing the United States and Europe for the next few years is an output shortfall caused by lack of demand. Nothing would do more to increase the incomes of all citizens—poor, middle class and rich—than an increase in demand, which would bring with it increases in incomes, living standards, and confidence. A more rapid recovery than now appears likely would reverse, at least partially, a growing disillusionment with almost all institutions and doubts about the future.

To fix the economy, fix the housing market

By Lawrence Summers
October 24, 2011

By Lawrence H. Summers
The views expressed are his own.

The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.  Most policy failures in the United States stem from a failure to appreciate this truism and therefore to take steps that would have been productive pre-crisis but are counterproductive now, with the economy severely constrained by lack of confidence and demand.

The perils of European incrementalism

By Lawrence Summers
September 19, 2011

By Lawrence H. Summers
The views expressed are his own.

In his celebrated essay “The Stalemate Myth and the Quagmire Machine,” Daniel Ellsberg drew out the lesson regarding the Vietnam War that came out of the 8000 pages of the Pentagon Papers.  It was simply this:  Policymakers acted without illusion.  At every juncture they made the minimum commitments necessary to avoid imminent disaster—offering optimistic rhetoric but never taking steps that even they believed offered the prospect of decisive victory.  They were tragically caught in a kind of no man’s land—unable to reverse a course to which they had committed so much but also unable to generate the political will to take forward steps that gave any realistic prospect of success.  Ultimately, after years of needless suffering, their policy collapsed around them.

How 9/11 changed university life

By Lawrence Summers
September 2, 2011

By Lawrence Summers
The opinions expressed are his own.

September 11, 2001, was the day before classes were to start at Harvard College during my first year as Harvard president. I first heard of the planes crashing into the World Trade Center as I left a routine breakfast at the Faculty Club. Neither I nor anyone around me had full confidence about how to respond to such an event, one without precedent in our life experience. But, by midday, we had decided to hold a kind of service late that afternoon to commemorate what had happened, to try to provide reassurance to a scared community of young people.

A debt deal that solves the wrong problem

By Lawrence Summers
August 2, 2011

By Lawrence H. Summers
The opinions expressed are his own.

At last Washington has reached a deal that raises the debt limit and averts a default that would have been a national embarrassment and an economic and geopolitical catastrophe.   The forces shaping the deal and the deal itself are multifaceted–and so is the right reaction to it.  Mine has a number of elements.

Economic specialization is a feature, not a bug

By Lawrence Summers
July 26, 2011

By Lawrence H. Summers
The opinions expressed are his own.

Reuters invited leading economists to reply to Mark Thoma’s Op-Ed on the “great divide” in economics and will be publishing the responses. Below is Reuters columnist Lawrence Summers’s reply.  Here are responses from Roger MartinAshwin Parameswaran, James HamiltonDean Baker, and a recap of Paul Krugman’s.

Europe’s dangerous new phase

By Lawrence Summers
July 18, 2011

By Lawrence H. Summers
The opinions expressed are his own.

With last week’s tumult in Italian markets, the European financial crisis has entered a new and far more dangerous phase. Where the crisis had been existential for small economies on the periphery of Europe but not systemically threatening to either the idea of European monetary union or to the functioning of the global financial system, it now threatens both European integration and the global recovery. Last week’s drama surrounding bond auctions in Europe’s third leading economy should convince even the most hardened bureaucrat that the world can no longer let policy responses be shaped by dogma, bureaucratic agenda and expediency. It is to be hoped that European officials can engineer a decisive change in direction but if not, the world can no longer afford the deference that the IMF and non-European G20 officials have shown towards European policy makers over the last 15 months.

The jobs crisis

By Lawrence Summers
June 13, 2011

By Lawrence H. Summers
The opinions expressed are his own.

Even with the massive 2008-2009 policy effort that successfully prevented financial collapse and Depression, the United States is now half way to a lost economic decade. Over the last 5 years, from the first quarter of 2006 to the first quarter of 2011, the U.S. economy’s growth rate averaged less than 1 percent a year, about like Japan during the period when its bubble burst. At the same time the fraction of the population working has fallen from 63.1 to 58.4 percent, reducing the number of those with jobs by more than 10 million. The fraction of the population working remains almost exactly at its recession trough and recent reports suggest that growth is slowing.