Come Friday, is Larry Summers really going to be our World Bank guy?
No, the Harvard thing didn't work out great, or his stewardship of the U.S. economy as Obama's economic genius, but who's to say our Larry isn't a perfect match for the World Bank? (Most of the economically informed people I know, but you know those nutty left-wingers. Also, it seems, a number of the U.S.'s fellow old-line economic powers.)
"So why does [Larry] Summers keep falling upward, from failure to promotion?
"Three reasons. He has powerful allies and patrons, and his views on the primacy of finance are congenial to theirs. Former Goldman and Citibank executive (with pit stops in between in D.C.) Robert Rubin, Summers' partner in the financial deregulation project of the Clinton era, is the most influential of these. Summers has a capacity to persuade people of his sheer brilliance, which leads some people to excuse both his mistakes and his temperament. But most importantly, Barack Obama likes Summers, and Obama is loyal to a fault."
-- Robert Kuttner, in "Pick Me! Pick Me!," at The American Prospect
The charming, chummy little tradition is that the European economic powers get to pick the head of the International Monetary Fund, and the U.S. of A. does the same with the World Bank. And the system has been just humming along. Think "Dominique Strauss-Kahn" in the former case, and "Paul Wolfowitz" in the latter.
In addition to which, inconvenient though it may be for the European powers in the first instance and our own selves in the second, there actually are countries -- countries with economies -- not located in either Europe or the U.S. As a matter of fact, a major part of the world's economy is now happening outside the perimeter of the Big Pickers. Strangely, the newer economic powerhouses like China, India, and Brazil are not at all fans of the "traditional" IMF-World Bank leadership situation.
I'm sure you recall that it's time to pick a new World Bank leader. Which means us. And we're counting down to a deadline. The candidate(s) are supposed to be submitted by this Friday, March 23. Meaning that President Obama is supposed to have made up his mind by then. There are two problems:
(1) President Obama seems to have made up his mind ages ago.
(2) The name he made up his mind on isn't getting an exactly joyous reception amongst our economic partners. Forget those upstarts like China, India, and Brazil. Nobody in the First World much cares what they have to say, a situation likely to obtain until they find a way to force their big brothers to pay attention. (Does anyone think that's going to be a pleasant process? Can you spell "putsch"?) We're getting strong indications that at least some of our European allies are far from thrilled at the prospect of turning the World Bank over to the best damned economic mind the U.S. economic establishment seems to know.
Is it time to share our Larry with the world? (Look out, world!)
I REALLY LIKE ROBERT KUTTNER'S TAKE ON THE
SITUATION AS SET OUT FOR THE AMERICAN PROSPECT
Pick Me! Pick Me!
After being ousted from Harvard and leaving the Obama economic team, Larry Summers has now decided he wants to be president of the World Bank.
ROBERT KUTTNER | MARCH 20, 2012
Why does Larry Summers have more lives than a cat?
He was fired as president of Harvard, did not exactly serve President Obama brilliantly as economic policy czar, and now seems to be in line for the presidency of the World Bank, a post traditionally chosen by the president of the United States.
The deadline for the selection is this Friday, March 23. The appointment is supposed to be made official at the April meeting of the World Bank.
Earlier this month, the White House leaked a short list of three names, Summers plus U.N. Ambassador Susan Rice and Massachusetts Senator John Kerry -- neither of whom want the job. Brilliantly subtle signaling, that.
Pointedly excluded from the list was Columbia University economist and world citizen Jeff Sachs, an adviser to the U.N. Secretary General Ban Ki-moon and a very serious crusader against world poverty. Sachs took the unprecedented and marvelously transparent step of nominating himself and publicly campaigning for the job, but he is a onetime rival of Summers at Harvard, a critic of administration financial policy and at the Bank he would be nobody's cat's paw.
It speaks volumes that Sachs' candidacy is not being taken seriously at the White House, though 27 members of the House have urged his appointment as have leaders of several smaller developing nations.
Nominally, the World Bank president is selected by a majority of the voting shares. The US and Europe together control a majority and invariably vote as a bloc. Ever since the World Bank and its sister institution the International Monetary Fund were founded in 1944, one has traditionally been headed by an American and the other by a European. The current head of the IMF is Christine Lagarde, former French finance minister.
Summers' appointment is all but certain, bur there are two ways that it could still come off the rails. There has been some criticism by third world nations seeking a more open process. And Summers has plenty of detractors in Europe. More generally, smaller nations have been pushing the idea that one of the big-three international economic institutions -- the Fund, the Bank and the World Trade Organization -- be headed by someone from the Third World.
But this will not happen with the Bank presidency any time soon. Perhaps when the WTO job opens up.
Small third world nations don't have the influence to demand an alternative and the larger ones -- China, India, Brazil -- do not have a rival candidate. The closest thing to serious pushback has been a guarded comment by the Mexican finance minister, Jose Antonio Meade, current chair of the G-20, asking for a more open process.
So the only practical way Summers' nomination will be blocked is if Obama has second thoughts or if some major European leader decides that he or she can't abide Summers and decides to spend serious political capital demanding an alternative.
However British Prime Minister David Cameron is happy to play his usual role of lap dog to the U.S, the French are consumed with an election that President Sarkozy is likely to lose, and German Chancellor Angela Merkel has her own problems.
Summers bombed as president of Harvard. He not only offended a large segment of the faculty, but gambled recklessly with the university's endowment based on his own seat-of-the-pants theories, losing billions. At the time people said, "Thank God this man is not running the entire economy."
Then President-elect Obama chose him to run the U.S. economy. As head of the National Economic Council, where Summers was supposed to serve as an honest broker, he functioned more as martinet. On policy issues, he resisted a larger stimulus, as well as more fundamental reform of the financial system. Some latter day reports have suggested a bitter rivalry with Treasury Secretary Tim Geithner, but Geithner is said to be fully supportive of Summers' appointment to head the Bank.
Summers did a stint at the Bank before, as its chief economist. He was not popular among its third world clients or its staff.
So why does Summers keep falling upward, from failure to promotion?
Three reasons. He has powerful allies and patrons, and his views on the primacy of finance are congenial to theirs. Former Goldman and Citibank executive (with pit stops in between in D.C.) Robert Rubin, Summers' partner in the financial deregulation project of the Clinton era, is the most influential of these. Summers has a capacity to persuade people of his sheer brilliance, which leads some people to excuse both his mistakes and his temperament. But most importantly, Barack Obama likes Summers, and Obama is loyal to a fault.
Summers wants this job. Barring last minute doubts on Obama's part, he will get it.
Actually, in addition to the explanations Kuttner suggests for our Larry's indomitability, colleagues have been suggesting others, notably that he's a bully. A big, bad bully. And in the absence of strong, usually organized resistance, bullies tend to get their way. Especially when powerful people like what they have to say.