Saturday, May 17, 2014

Summers on Piketty: take a chunk of salt

So, Larry Summers has weighed in on Thomas Piketty's Landmark work Capital in the Twenty First Century.    Predictably, Summers disagrees with Piketty's prescriptive ideas for the future, but clearly accepts and does not challenge his scholarship. Summers is a deacon of the neo-liberal deregulated "free" market model. I put "free" in quotation marks, because we have to remember NAFTA (reminder: millions of campesinos forced out of their own market by US government-subsidized corn) and also the structure that was put in place to allow untenable leverage in the finance sector with taxpayers underwriting all of the risk.

Ironically, it is Summers' policies (along with Robert Rubin), which brought the end of Glass-Steagall and the reckless deregulation that put in place the structure which may have accelerated the financial collapse of 2008.  These were policies directly informed by Summer's underlying beliefs about economics and policy.  Dissenting economists were dismissed.  His hubris comes out here with complete pomp, assumed efficacy and the reassertion of his prescribed and elitist, top-down "management" of the economy.  He actually refers to his fellow Americans as "a surly middle class."

Summers seems to be locked into the idea of what he considers "feasible" steps, prima facie excluding the notion of any radical changes being made to a system that is patently broken.  When reading criticism from someone who has been so wrong in the past with his own "feasible" policies - the same policies that created so much economic and social destruction - we should take a big chunk of salt.

The Atlantic Article by Summers is here.