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Blog Post | March 10, 2024

Responding To Larry Summers

Economic MediaHack WatchLarry Summers
Responding To Larry Summers

We asked the media’s most prominent economist about his many corporate entanglements. His defense? Stop asking questions.

Last week, Revolving Door Project’s Executive Director, Jeff Hauser, published an op-ed in the Harvard Crimson. The piece highlighted Professor Larry Summers’ numerous corporate jobs, and the conflicts of interest that they create. Despite clearly not complying with Harvard policy regarding conflict of interest disclosure, Summers responded to the Crimson’s publication of the piece with an indignant letter to the editor. The letter is seemingly incredulous that the editors of the Crimson would publish anything calling Summers out, and attempts to cast aspersions on Hauser’s piece, implying it is somehow untrue or dishonest. This is yet another instance of Summers providing a veneer of disclosure in an attempt to deflect attention away from his lack of real disclosure. Used to receiving deference from the press, Summers is playing to the refs, expecting a whistle to save him from public scrutiny. It’s worth examining his efforts in expectation of future flopping attempts. 

All the claims in the op-ed are verifiably true, and Summers’ feeble efforts to portray them otherwise are nothing more than an attempt to protect himself from any possible ramifications of his own actions. Let’s go through the defenses Summers offers one by one. For full context, I would recommend reading the original op-ed here and Summers’ letter here

The letter to the editor’s main thrust is a complaint that Crimson editors did not reach out to Summers himself for clarification about his countless corporate entanglements and what each one of them entailed. Unfortunately for Summers, this argument isn’t the strong one he thinks it is, it’s just a continued misunderstanding of the op-ed. (And, for that matter, how op-eds work: they are definitionally opinion pieces reflecting the author’s views, not objective reporting that need to give everyone else a chance to chime in). 

Two years ago, The Revolving Door Project published an open letter calling on Summers to publicly disclose all of his corporate ties. Summers was asked for comment by the Crimson at the time. He rebuffed the call, arguing that he was in compliance with Harvard policies while refusing to make the disclosures that would allow the public to verify this (perhaps because this would expose another violation of Harvard policy regarding limits on outside employment). While this open letter was seemingly insignificant to Summers, that was the genesis for Hauser’s op-ed last week. Without the full public disclosure of his corporate ties, it is impossible to know the details of Summers’ corporate work. 

Those of us interested in keeping track of it are forced, due to lack of information from Summers, to make inferences based on the information available to us. And what information is available to the public? Typically press releases from corporations implying that input from a Harvard professor and former senior government official will give the company greater insight into public policy–and possibly greater influence within the corridors of government.

Great examples of what we learn not from Summers’ website but from corporate flacks are Summers’ positions as a “board advisor” and a “senior advisor” at Atlas Merchant Capital and Digital Currency Group, respectively. In his letter, Summers dismisses these positions as nothing more than “minor advisory relations.” But until the publication of Hauser’s op-ed, Summers had rebuffed or ignored all calls for public disclosure of his work at these companies. In fact, he still has not clarified what that work entailed, how many hours a week it was conducted, and what type of advising he provided. 

Summers is seemingly upset both that people have called for transparency, and that, in the absence of transparency, individuals like Hauser used the information at their disposal to ask questions regarding Summers’ work. Summers’ positions would put anyone in an impossible position unless they simply do what he wants: stop asking questions entirely. Summers neither wants people to ask questions based on the publicly available information, nor does he want to provide his own context to the situation. He does not want the questions to exist at all, a privilege that should not be granted to anyone in the public eye, least of all someone as influential as him. 

In his letter, Summers claims that he does disclose his corporate ties on his website, citing his disclosure of Doma, Skillsoft, OpenAI, D.E. Shaw and Citigroup as examples. This is true, Summers does indeed disclose all of these corporate ties on his website. What’s missing is many other ongoing and recently ended corporate entanglements. Instead of acknowledging that he has refused to disclose his complete list of positions, Summers instead takes the brave position of “I’ve disclosed some, isn’t that good enough?” While a good rhetorical flourish to cite the disclosures he has made, the claim does not hold up when someone bothers to track all of his jobs, as we have attempted to do. For those interested, we posted a sizable twitter thread on the subject, but suffice it to say, Summers’ disclosures are woefully inadequate. 

If Summers truly is so open about his corporate ties, why was Block Inc. — a company where Summers served as a member of the Board of Directors for over a decade —  left off the list of disclosures? Could it be that Summers resigned from the company without explanation last month, just a week before federal officials announced they were investigating it for its role in money laundering and terrorist financing? Why does Summers not disclose his former position at Digital Currency Group? Could it have to do with their ongoing legal battle with the Attorney General of New York, who has alleged that the company defrauded investors of $1 billion? Or perhaps it has to do with ongoing investigations by the Department of Justice and Securities and Exchange Commission? Interestingly, Summers actually did disclose this one, until he got a question about it from Protos, at which point he scrubbed it from the website bio he touts a display of forthright disclosure. Why does Summers not mention his position with Atlas Merchant Capital, with Crimson Education, Xapo, and many more? Because these all lead to more uncomfortable questions being asked. I’m glad Summers does disclose some of his corporate ties, but the operative word there is some

The third and final argument in Summers’ letter is one about honesty. Summers prides himself on his economic policy recommendations, so the op-ed’s questions about the motivation behind some of his punditry must’ve hit hard. This is understandable for someone who provides advice to the President himself. In particular, Summers seems taken aback that someone would question whether perceived or real corporate ties to Silicon Valley Bank could have influenced his policy recommendations during the crisis last year. 

The letter defends the recommendations he made by citing the many other economists, banking experts, and regulators who took the same position as him during the Silicon Valley Bank collapse. But it wasn’t the wisdom of Summers’ policy recommendations that was in question, it was the motivation behind them. So long as Summers seeks to be taken seriously as an economic expert, he would be better served by lacking even the appearance of a conflict of interest. To quote the Harvard faculty policy on conflicts of interest, “a distinction between ‘apparent’ and ‘actual’ conflicts of interest is not useful […] It exists (or does not exist) regardless of whether it is operative, that is, whether it is in fact influencing an individual’s judgment or actions.” Summers’ behavior could be completely without influence by his corporate ties, but even by his own university’s definition, be a conflict of interest. 

Summers’ purported infallible nature does, of course, invite questions of their own. As a luminary in a field that so often assumes rational self-maximization as a rule for human behavior, how does Summers explain his own ability to act outside the realm of financial self interest? This has not been properly explained to me, though one day I hope to understand the state of Nirvana he has achieved and how it sets him apart from us lowly profit-maximizers and cost-minimizers. But all these questions do not even address the fact that in several of his corporate positions Summers has or had a legal obligation to act in the best interest of shareholders. In serving as a board member of a corporation (think of his 12 years at Block Inc.) Summers has not only had financial incentives to ignore, a fiduciary duty to ignore as well. While the obligations of this duty certainly do not apply to all public statements, I am curious at how he claims he is able to ignore this obligation entirely. Regardless, it’s a moot point; because, as Harvard says, just the appearance of a conflict of interest is impropriety enough. 

It is not only conflicts of interest that make us question Summers’ independent thinking, but often news reports and press releases by the very companies he works for that compound this issue. When he was hired by VC firm Andreessen Horowitz in 2011, Business Insider reported that the undiscussed reason for his hiring was because “Summers has one of the biggest rolodexes in Washington DC.” When Summers resigned from FinTech firm LendingClub in 2018, a fintech trade publication wrote a eulogy for his time at the company, saying “Having such a high profile person involved in our industry in its early days was just what we needed […] We probably would not be where we are today without the involvement of Larry Summers.” When brought onto the advisory board of Xapo, a bitcoin bank, Xapo CEO Wences Casares said that Summers was brought on to legitimize the company in the eyes of everyday people like “your mom.” And the Australian Financial Review wrote about Summers joining FinTech firm Afterpay, describing his duties as “to help Afterpay navigate US regulation and introduce the company to contacts to smooth its growth in the US market.” Given all of this, it is no wonder that some (us included) would begin to question whether Summers’ judgment is truly as impartial as he portrays it to be or whether he is a mercenary for sale. Particularly given his refusal to provide more context on these matters. 

Perhaps this response will help Summers understand our critiques, our motivations, and why we must reject his dismissive rebuttals. If Summers truly has nothing to hide, why not be fully transparent with his corporate entanglements? It’s the lack of information that drives us to ask these uncomfortable questions of Summers. Without transparency we must continue to ask questions based on the information available to us. The only way to end the questions he hates so much is with complete transparency. Anything less will continue to corrode his reputation and the reputation of the university that employs him.  

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