Hedy Lamarr, Beauty With a Great Scientific Brain
Anyone who has worked in a large corporation knows that often times really competent people don't move ahead and those who make error of judgment after error of judgment move ahead on the corporate ladder with great gusto. Apparently the same thing applies to those who move seamlessly in and out of academia and government with extensive corporate consulting along the way to feather their nests.. Those folks know the right people, build the right impressive resume and seem to be offered jobs anyway for which they should be disqualified. They have a mentor who pulls them along and overlooks vast errors of judgment for reasons others find perplexing..
I watched this behavior at the Dreyfus Corporation during the years I was there. There is something about making the guy who has the power in the corner office or the oval office feel comfortable and non-threatened. By reputation, Larry Summers is brilliant. In reviewing his points of view along the way, I am not sure why he carries this reputation but he does. It also appears from what one reads about Summers that whether or not you think he is the smartest man in the room, he definitely does. That, by the way, has been written about Barack Obama, too. When interviewing campaign managers years ago, Obama told them he knew how to run a campaign better than they did. Perhaps this superiority complex binds the two men together so that Obama favored Summers as the successor to Ben Bernanke even as the Senate Banking Committee made clear this week Summers is a No Go.
I have been an outspoken advocate for women in the work place for decades. Just imagine my revulsion in January 2005 when the ever so clever Lawrence Summers, then President of the oh so pompous Harvard University, declared about women: "In the special case of science and engineering, there are issues of intrinsic aptitude, and particularly of the variability of aptitude, and that those considerations are reinforced by what are in fact lesser factors involving socialization and continuing discrimination." The news media were all over the gaffe. Or was it Mr. Summers Freudian slip?
Within days came Summers' backpedal: "Despite reports to the contrary, I did not say, and I do not believe, that girls are intellectually less able than boys, or that women lack the ability to succeed at the highest levels of science." I'm sure Madame Curie and Hedy Lamarr are glad to hear that. (Lamarr was a gorgeous movie star and also the holder of vital patents along with George Antheil for inventing frequency hopping and spread spectrum technology to ensure secure wireless communications. She was a Nazi hater and she offered her invention to the U.S. Govt. in fighting WWII. Her patent is now embedded in your cell phone .)
Way above his not so hot views on women are his decades long history of mistakes on economic policy. Summers' played a key role as Treasury Secretary under Bill Clinton in the repeal of The Glass Steagall Act. Glass Steagall was enacted in 1933 and kept the American banking system safe for more than 70 years. The initial intention was to protect the public from the abuses that occurred in the 1920's during which banking and securities underwriting were allowed to take place under the same roof. That was viewed as critical to the Great Crash and the Great Depression and the shuttering of more than 4000 banks across America. The Act was well designed and effective.
Many years ago I was at a fabulous dinner party honoring the 60th wedding anniversary of my Aunt and Uncle Meyer and Merle Berger. John Kenneth Galbraith had long been a friend of my uncle's through their long membership in the Americans for Democratic Action. Like Paul Volcker, Mr. Galbraith was an exceptionally tall man. I felt as if I were talking to his belt buckle where he should have worn the microphone for the hearing aid he needed. I had read his book The Great Crash and asked him how he felt about the renewing conversations about the repeal of Glass Steagall. Mr. Galbraith told me that the repeal, if enacted, would end in the same disastrous way that the lack of those controls had ended in the 1930's.
Laws change but human nature never does. Greed overtook the financial markets in the last decade just as they did in the 1920's. In a well written piece by Arianna Huffington on March 25, 2009, she castigated Summers for not just promoting the repeal of Glass Steagall but also backing another Sen. Phil Gramm disaster bill which she called a "financial time bomb," the Commodity Futures Modernization Act which allowed commercial banks to trade the very mortgage backed securities and CDO businesses that led to "Too Big to Fail" bail outs.
It's pretty clear to me that Larry Summers isn't a particularly original or clever or innovative economist no matter what his reputation to the contrary might be. He's carried water for a lot of major financial institutions and made himself fairly rich especially riding the connections of his mentor former Treasury Secy. Robert Rubin who was well plugged in, both at Citicorp and at Harvard where Summers was named President.
In one of his most famous gaffes of a career of them, Summers was present at the 2005 annual conference in Jackson Hole WY of the world's leading central bankers. Raghuran Rajan, then the chief economist of the IMF (International Monetary Fund) spoke about the lurking dangers and the coming financial crisis expressing particular concern about the bonus system that rewarded employees with giant paydays for taking risks with the financial resources of the banking institutions for which they worked with no real exposure to losses other than perhaps losing their jobs. At the end of his talk, Larry Summers attacked this talk and called Rajan a "Luddite." Oh really Larry? Galbraith knew it. Rajan knew it. And, I knew it and I didn't go to Harvard. (They didn't even admit girls in my day!)
We can conclude that since Summers wasn't a very good economist there must be something else he has mastered. He must be crafty enough in his speech to convince people they should rely on him and embrace his pontifications as if he really knows what he is talking about despite the dangers of his consistently wrong conclusions. Whether it is having his eye on the economic ball or running Harvard University, it is Summers who repeatedly comes up lacking. It must be his set of corporate skills, of ladder climbing by stroking the right folks, that are really outstanding and the lesson we all should master.
Even in this time of obvious dysfunction in Washington, at least the Senate Banking Committee got this right as several Democrats said they wouldn't vote this nomination out of committee. Now reports say that Obama is mad at the up swell for Janet Yellen as the next Fed Chair and may not nominate her for that reason. In my view: "Janet, you go girl!" It's time a well trained woman held that job.
Joan E. Lappin CFA Gramercy Capital Mgt. Corp
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