Summers to the Dark Side?
By Arnold Kling
David Leonhardt’s story on Larry Summers makes it sound like Larry has moved to the dark side.
Summers says. “And I think now the challenge is, again, to protect a basic market system based on open trade and globalization, to make it one that works for everyone or for almost everyone, at a time when market forces are often producing outcomes that seem increasingly problematic to middle-class families.”
…Health care reform is another obvious priority. In Summers’s view, the current employer-based system, which creates insecurity for many families and big costs for companies, may need to be replaced by one in which the government pays for insurance but individuals choose what plan they want. It would be single payer, but not as England or Canada does it.
Summers becomes really excited by what he sees as the potential for a life-sciences revolution. It will happen only if government again does its part, though…He likes to talk about “clusters” like Silicon Valley — in the life sciences and other areas — where groups of companies can feed off one another to become more productive. Moving jobs to a low-wage country then becomes less attractive. And the government can help create clusters, just as it built the highway system and the Internet. If you didn’t know any better, you might even refer to this idea as industrial policy.
It sounds as though Larry has become focused on the distribution of income. My guess is that this is mostly a phony issue. My sense is that capitalism seems “increasingly problematic” only to people who have always thought it was problematic, people on the other side of the Great Tug-of-War.
But I would rather have Larry be the one worried about it than others on the Left. Larry is less likely to aggressively push really stupid policies. In general, the Democrats have lousy instincts when it comes to economics, but they have reliably good economists.