The puzzle chains are long, but Larry Summers say that doesn’t mean they’re secure.
Question: Beyond a simple title, what do you do for a living?
Lawrence Summers: You know, the longer I was in government, the longer I came to see that while we were all very busy and ran from meeting to meeting, ultimately the choices we made were set within the intellectual framework that we had all inherited, that we had all breathed in living in college, lived in our lives beyond that framework; whether it was ideas about how to stimulate or stabilize an economy; whether it was ideas about how to negotiate with other nations; whether it was ideas about how the federal government should borrow money; whether it was ideas about inner cities. Whatever it was was hugely defining of what happened going forward.
The puzzle chains are long, but that doesn’t mean they’re secure.
So after a long period when my job involved taking responsibility for leading important institutions, or components of important institutions – the World Bank, the Treasury and at Harvard – I think of myself as backing the idea generation and the idea spreading is missed through the writing and the researching and the speaking and the teaching that I do.
I’m trying to take on some of what I hope and believe are the most important questions for our country and the world in the next half century. How are we going to manage the rise of countries that will see their standards of living increase by factor of a hundred in a single human lifespan? What about the share of the income going to the top 1% nearly doubling $600,000 a person at the expense of $7,000 a person for everyone in the bottom 80% of the income distribution? How are we going to manage and keep stable a global financial system where the flow isn’t as it always was in the past with the Roman Empire or the British Empire, from the center to the periphery, but it’s from the periphery to the center with the world’s greatest borrower being the world’s greatest power?
So my job now is to think, to provoke, to have ideas, to prove the intellectual framework within which we all operate; to spur through argument, through entrepreneurship, through teaching others to think about the most important questions; and to lead us to be a more thoughtful, smarter and wiser society in in dealing with its major challenges.
And if I’m able to do that by myself by encouraging the work of others, I think that will be a source of great satisfaction to me, and hopefully some contribution.
I’m hesitant to pick out individuals as doing particularly important work. I think that’s something that you only see with the passage of time. But I think the kind of area, philanthropy, that has been opened up with global health and a bringing of rigorous analysis to those problems, is something that is profoundly important.
I think the whole set of advances associated with behavioral economics and the recognition of the many different aspects of how people make decisions that go way beyond rationality, and that have implications for how options are priced. And some of the questions in behavioral finance that people have worked on, but have much more profound implications for the ways in which we can best educate people, the ways in which we can best support people, I think these are terribly, terribly important issues.
I think the questions around how we’re going to help the societies that are falling furthest behind. There’s a range of very able people – Jeff Sachs – towards one end, in terms of a continuum of views, others on a different, who are doing very, very thoughtful work.
But you know, my approach in general in life is to try to engage with the issues rather than particular individuals. And I think the second revolution that’s underway after the Industrial Revolution, with the rise of China and India, is profound than anything else that’s happening.
Recorded On: July 13, 2007