[Corp. Watch] Economic orthodoxy is a dangerous "brain bubble"

[Corporation Watch]

[NOTE: The Washington Post had a "Spring Cleaning Special" in which  
ten writers are asked to make the case for something that deserves to  
be tossed out this spring. Author/activist Naomi Klein argued for the  
elimination of Barack Obama's chief economic adviser, Larry Summers.]


Why We Should Banish Larry Summers From Public Life

  By Naomi Klein

(Washington Post, April 19) -- I vote to banish Larry Summers. Not  
from the planet. That wouldn't be nice. Just from public life.

	The criticisms of President Obama's chief economic adviser are well  
known. He's too close to Wall Street. And he's a frightful bully, of  
both people and countries.

	Still, we're told we shouldn't care about such minor infractions.  
Why? Because Summers is brilliant, and the world needs his big brain.  
Which brings us to a central and often overlooked cause of the global  
financial crisis: Brain Bubbles.

	This is the process wherein the intelligence of an inarguably  
intelligent person is inflated and valued beyond all reason, creating  
a dangerous accumulation of unhedged risk. Larry Summers is the  
biggest Brain Bubble we've got.

	Brain Bubbles start with an innocuous "whiz kid" moniker in  
undergrad, which later escalates to "wunderkind." Next comes the  
requisite foray as an economic adviser to a small crisis-wracked  
country, where the kid is declared a "savior."

	By 30, our Bubble Boy is tenured and officially a "genius." By 40,  
he's a "guru," by 50 an "oracle." After a few drinks: "messiah."

	The superhuman powers bestowed upon these men -- and yes, they are  
all men -- shield them from the scrutiny that might have prevented the  
current crisis.

	Alan Greenspan's brain bubble allowed him to put the economy at great  
risk: When he made no sense, people assumed that it was their own fault.

	Brain Bubbles also formed the key argument Greenspan and Summers used  
to explain why lawmakers couldn't regulate the derivatives market: The  
wizards on Wall Street were too brilliant, their models too complex,  
for mere mortals to understand.

	Back in 1991, Summers argued that the subject of economics was no  
longer up for debate: The answers had all been found by men like him.  
"The laws of economics are like the laws of engineering," he said.  
"One set of laws works everywhere."

	Summers subsequently laid out those laws as the three "-ations":  
privatization, stabilization, and liberalization. Some "kinds of  
ideas," he explained a few years later in a PBS interview, have  
already become too "passé" for discussion.

	And that's the problem with Larry. For all his appeals to absolute  
truths, he has been spectacularly wrong again and again. He was wrong  
about not regulating derivatives.

	He was wrong when he helped kill Depression-era banking laws [during  
the Clinton administration], turning banks into too-big-to-fail  
welfare monsters.

	And as he helps devise ever more complex tricks and spends ever more  
taxpayer dollars to keep the financial casino running, he remains  
wrong today.

	Word is that Summers' current post may be a pit stop on the way to  
the big prize, Federal Reserve chairman. That means he could actually  
make "maestro."

	Mr. President, please: Pop this bubble before it's too late.