Brad DeLong provides it:
When Charles Ferguson writes:
Summers rose up from the audience and attacked [Raghu Rajan], calling him a “Luddite,” dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector…
he has gotten the mood and some of the substance of the discussion wrong.
I was there–not only for the formal session recorded in the transcript, but for the patio-coffee and the lunchtime and dinnertime conversations that followed.
Larry http://www.kansascityfed.org/publicat/sympos/2005/pdf/GD5_2005.pdf did not “dismiss” Raghu concerns… Indeed, for twenty years one of Larry’s conversation openers has been: “You really should write something else good on positive-feedback trading and its dangers for financial markets.”…
And if you think that Larry pulled his punches in August 2005 on the importance of reforming compensation schemes because fourteen months later he was going to take a job at the hedge fund of D.E. Shaw, you attribute an extraordinarily degree of precognition–back in August 2005 I thought Larry had weathered the storms at Harvard and would be president until 2010 or so.
When some journalists write about how economists “failed” in this crisis and did so because of their incentives it sounds extremely conspiratorial and, to be frank, Naomi Klein-ish. And just to be clear, that’s not a compliment. Economics is an extremely combative science. If you want to put forth some argument in the public sphere it will be attacked, mercilessly, even if it’s brilliant and correct.
Journalists and bloggers frequently seem frustrated or confused by the lack of agreement among economists, but it is precisely this disagreement that generates such a robust system of criticism. Even if you’re ideas are absolutely correct and rigorously argued, there will be someone -and probably a Nobelist or two- who disagrees with you and is looking for the weak spot, eager to tear it apart. I just don’t see any room in this environment for money motived research to gain ground.
Say Larry was in fact putting forth weak ideas because of his monetary incentives. Well his biased reasoning would obviously be transparent to colleagues who are immersed in the same literature and researching the same topics as him. Would highly esteemed and well respected economists across ideologies be willing to line up in droves to coauthor papers with someone whose research displayed a motivated bias? Because the only thing about Larry more impressive than his talent is his list of coauthors. A brief list includes:
- Olivier Blanchard
- David Culter
- Brad DeLong
- Jonathan Gruber
- Barry Eichengreen
- Greg Mankiw
- Alan Kreuger
- Lawrence Katz
- Jeffrey Sachs
- Martin Feldstein
- Stanley Fischer
So ask yourself what is more likely to be the case: is Charles Ferguson misjudging Larry Summers, or is this ideologically diverse list of experts misjudging him? Or is it the case that Larry wasn’t biased earlier in his life and spent his whole career as an unbiased researcher until the late 2000s when he could no longer contain himself and gave in to the lurid call of biased research? Again, this sounds to me like Naomi Klein speculating about Milton Friedman and his motives in helping to liberate the Chilean economy. It’s just not plausible to me.