Larry Summers, the former Secretary of Treasury and President Emeritus at Harvard University, spoke at the Susan Bies Lecture at the Global Hub on Wednesday, Oct. 18. About 220 students came to the lecture, including 20 students who were on the waitlist for the event. The invite-only lecture was open to economics faculty, Ph.D. students, and undergraduate students, as well as Kellogg faculty and MBA students.
The annual Susan Bies Lecture has been held since 2008 in honor of Susan Schmidt Bies, Northwestern alumna, on various economics topics. This year’s lecture featured Summers in conversation with Janice Eberly, professor of Finance at Kellogg School of Management and the former Assistant Secretary of Treasury, followed by a Q&A session.
Having served as Secretary of Treasury in the Clinton administration and as the Director of the White House National Economic Council in the Obama administration, Summers spoke about approaching economic issues as a policymaker.
“My view is, you build up intellectual capital when you’re in academia, and you draw that capital when you’re in government,” Summers said, regarding the differences of being in government and in academia. He explained that when in government, one is obligated to make judgment calls when complex issues were at hand based on the expert knowledge one possesses.
“You do not have the option of saying ‘I don’t know’, you do not have the option of saying the problem is too hard, and you have to act,” he continued. In order to be a helpful advisor, Summers said, one must be able to suggest what the government should “do,” in addition to what it should “think” about.
Summers also spoke about his academic perspective on economic issues as the former president of Harvard University and current professor at the university.
“My philosophy has always been, when I’m in academia, that trying to tell people in the government what exactly they should do, is hopeless,” Summers said, "due to a lot of detailed constraints of the situation such as the relationship with the president”or what the congress is willing to do.”
He segued into discussing his own academic argument: he said “what macroeconomists needed to think about and what the paradigm of thinking about macroeconomic policy needed to be something quite radically different from orthodoxy that prevailed pre-crisis [in 2008].”
Summers also spoke about the moments he were proud of and the moments he wishes he could re-do. “I’m proud that we basically figured it out that it would be better to err on the side of doing too much than doing too little,” he said. He said he felt like that was a core judgment that set an important precedent for a “one-in-a-60-year” event. He also said he was proud of the “bailout of the automobile companies,” which he said he believes was crucial in saving Michigan and restoring confidence in the economy.
At the same time, he acknowledged that there is a “continuing question of [the fact that his team] ended up not doing a lot for housing sector,” and many people thought that was a “huge mistake.” In response to such accusation, he clarified that through economic research, his team made a careful judgment of employing “flow debt relief,” which would be effective in helping people, force banks to take smaller losses and continue lending, and conserve government resources.
“It was really good, very interesting. He’s very to the point, and not worried about hurting anybody’s feelings,” said Professor Mark Witte, who reached out to undergraduate students to promote the lecture.
“I thought he struck a good balance between talking about his time working on policy under the Treasury versus his time as an academic,” Weinberg senior Tyler Goff, who attended the lecture, said. "I was intrigued by Summers' question about the sources of inequality, for which he mentioned that with globalization, the superable are now increasingly able to leverage their skills for economic gain, widening income inequality.”