Lawrence Summers: It’s the Economics, Stupid


February 23, 2006


Browse in Economics

Lawrence Summers, the Harvard president, has resigned, and the story quickly has become how the political correctness crowd hounded the poor man out. It was the “most radical, hard-left elements within Harvard’s diverse constituencies,” said Alan Dershowitz, the Harvard law prof, in today’s Boston Globe. Dershowitz called Summers’ critics “arrogant”, a subject Mr. Dershowitz definitely knows something about, as does Mr. Summers.

There is no question that Summers stepped into Harvard’s p.c. muck.  To that extent I almost feel for him, considering how he went out of his way to do so.  But Summers has a p.c. problem of his own, or more precisely an e.c. problem – economic correctness. Summers is an economist, which means he thinks he knows how the world works. Like many in his field, he has not a small view of himself and of the belief system he professes. This was part of his undoing.

Economists tend to strut in the corridors of academia. There is a pretense of practicality about them, of dealing in hard reality, unlike those sob sisters in sociology and the dreamers in romance lit. Economists get called to Washington. They work in the U.S. Treasury, as Mr. Summers did. As universities become more commercial, and more enmeshed in the world of corporate biotech and the like, it is not surprising that the Harvard board would think a Lawrence Summers was the man.

Yet the practicality of economics is largely a ruse. The world it assumes has become increasingly remote from the one we actually inhabit. If you read books on management, for example, you find yourself in a different mental universe. Managers talk about such things as team-building, networks, culture, excellence, morale, and the like – social factors that economists generally don’t pay much attention to.

Similarly with marketing. Economists should know a lot about it: they claim to understand what motivates people in the economic realm. Yet if you walk through an ad agency, you won’t find many copies of Samuelson’s Economics. You are more likely to find works by such writers as Maslow, Jung and Freud. It would be an interesting exercise to fathom the relation, or lack of same

Back in the ‘90s, Investor’s Business Daily reported that corporations were getting rid of their economists and hiring engineers and the like instead. Economists are too wedded to their academic models, managers said, and unwilling to look for patterns that don’t fit the models. People who look at data without the blinders tend to do a better job.

But within the profession the blinders are considered principles. Typically they start with a cartoonish version of human nature, and situate this supposed person in version of reality that is limited to say the least. They assume away most of the thorny questions about the aims of life , our inner conflicts, and the sides of our natures — the cooperative instincts, for example — that are inconvenient for the model. What’s left they translate into arcane math.

Is it really surprising that someone trained to look at other people this way might have trouble when it came to dealing with those other people? (Yes, the Harvard faculty can be difficult. As can lots of people. Welcome to the world, Bub.)

Summers once explained to a Harvard dean why he wanted to move funds from the sociology department to the Kennedy School of Government, where it would go to economists and political scientists. “In general, economists are smarter than political scientists, and political scientists are smarter than sociologists,” the dean recalls Summers saying.

That’s thinking like an economist. Summers’ problem was not just his unfortunate statements regarding such things as the scientific abilities of women. It was not just favoring some subject areas over others, as the Globe reported. The more basic problem was that he did not grasp the limitations of his own subject area, and level some of his iconoclasm at his own e.c.

Maybe he should have consulted some of those sociologists he disparaged. There was no place to go but up.