Magazine article The International Economy

"White Pig"

Magazine article The International Economy

"White Pig"

Article excerpt

Everyone thought a U.S. Treasury under Larry Summers would see an inflexible, naive, even pompous academic with no sense for the real world. Everyone was wrong.

It would be an impossible task even for a man as brilliant as Lawrence Summers: finding a way to follow in the footsteps of Robert Rubin without engendering unfavorable comparisons. After all, when your predecessor has been deified as the greatest U.S. secretary of the Treasury since Alexander Hamilton, how is one supposed compete? "Unfortunately, Summers follows the picture-perfect secretary," notes Allan Sinai, CEO of Primark Decision Economics Inc.

Yet as he approaches his first anniversary as Treasury chief, Summers should feel good about his performance. True, he has been beaten up by critics who say Rubin would have been more deft in managing the Treasury debt buyback plans that briefly created chaos in the bond market last February. And the former deputy secretary has taken heat for allowing the search for a new managing director of the International Monetary Fund (IMF) to degenerate into an embarrassing public feud between Germany and the United States. In most other respects, however, Summers has matched -- even surpassed -- his mentor, particularly when it comes to shaping economic positions and dealing with the U.S. Congress. It's all the more remarkable considering that Summers is operating at a disadvantage: Rubin and Summers had operated as a partnership in which Summers took the lead in developing policy. But now Summers is flying solo.

"It's a mixed verdict," says David Jones, chief economist at Aubrey G. Lanston & Co. "He's done extremely well on issues, but he's poor on diplomacy. The public fight over a new head of the IMF was a disaster. His weakness is tactics and techniques, not substance and style."

Of course, style was never Summers' strong suit. As Treasury undersecretary for international affairs and later as deputy secretary, the former Harvard University and World Bank wunderkind of economics won raves for his keen policy analysis. But he was also known for his arrogance, abrasiveness, and bullying of those he considered intellectual inferiors, which happened to be most people he encountered. When Summers succeeded the unflappable, understated Rubin last July at the age of 44, many in Washington wondered whether the economist had the emotional maturity for a critical job that customarily went to much older men -- Rubin was 56 when he was appointed.

The answer appears to be "yes." Friends say Summers still can be abusive to subordinates, although he is often unaware of his bad behavior. Yet Summers has shown surprising grace, humility, and flexibility in his dealings with other government officials, members of Congress, and the news media. "Larry is not as soft spoken as Bob, but they learned a lot from each other," observes Representative Sander Levin, a Democrat from Michigan and a friend of both. "Bob learned from Larry's insight on economics, and Larry learned from Bob about the nuances of public policy and interpersonal relations."

Other friends say Summers has learned how to get results in a realpolitik culture that doesn't always reward the person with the best intellectual argument. He is not mean-spirited by nature. Nevertheless, "He has come to appreciate that people who aren't as bright will do bad things to prevail," says one associate. "We're talking about backstabbing, lying, fraud."

When it comes to applying interpersonal relations to the art of compromise, Summers may have eclipsed his boss. For all his good points, Rubin had a stubborn streak when he is in negotiating mode. His intransigence galled Republicans in Congress, particularly when he bested them, such as when they had to back down in a budget battle that temporarily shut down the government twice.

"Bob is a line-in-the-sand kind of guy, and the Republicans in Congress hated him for beating them so much," says a former Treasury official. …

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