Interview With Larry Summers

PREV 4 of 5 NEXT

L.G.: Tell me, you've been involved in an online credit-card venture with Steve Case, as a managing director of this fund, D.E. Shaw, which seems to be part hedge fund and part venture capital. It's a huge thing isn't it?

L.S: Lloyd, since I've stepped down as Harvard president, my primary activity has been as a professor of economics at Harvard, teaching as a university professor in the various schools of the university.

L.G: Teaching undergraduates, too, right?

L.S.: You know, I practice what I preach.

L.G.: God bless you, sir.

L.S.: I put emphasis on undergraduate education when I was president, indeed taught undergraduates while I was president, so I've kept on teaching undergraduates. I've also, on a part-time basis, affiliated with D.E. Shaw, where I provide advice on a range of macroeconomics and strategy questions. Having studied financial markets as an academic, and having been closely engaged with them as a policymaker, it's been enormously interesting for me to get the participants' perspective on financial markets.

And then I've enjoyed being involved with a number of smaller companies such as the Revolution Money venture, which has a potentially very exciting credit-card technology, using credit and debit technology, using the internet that, in a sense, brings together bricks and clicks by providing both a capacity for regular retail transactions and also for online.

L.G.: Is that on the market yet?
 
L.S.: On a partial basis—through certain vendors and certain stores. And then there's a significant number of the cards now accepted at over a million places. A growing number of people are carrying the card, or the technology is providing the backbone for other cards that people are carrying. 

L.G.: On D.E. Shaw, I'm just curious, did you advise them to short Fannie Mae and Freddie Mac?
 
L.S.: Oh, I provided macroeconomic advice, not individual stock advice. Certainly, as goes with the financial-industry standards, I don't talk about the specifics of any advice I provide.

L.G.: And then you invested in Big Think.
 
L.S.: I did. You know, one of the great things about being in a university is the remarkable students you meet and the remarkable friends of the remarkable students you meet. And one of the founders of Big Think was friends with students and colleagues of mine. I was very excited about the idea of raising the level of public dialog, and so found it to be an exciting venture, and so invested on a small scale. We'll have to see how it all works out.

L.G.: You've obviously had a career, or several, in economic theory and public policy and in academic administration. What's it like being in the marketplace?
 
L.S.: It's a lot less political than Washington, and Washington's a lot less political than academic administration. There's pretty clear ways of knowing whether you were right or whether you were wrong. I find that to be satisfying and exciting. For somebody passionately interested in economic questions, you learn a lot by being alongside people who are actively engaged in trying to make profits.
 
L.G.: Is that a bit of a thrill? Do you get a kick out of that?
 
L.S.: Oh, you know, I'm somebody who's not been primarily commercially motivated. That's why I was a professor, then I was a government official, then an academic administrator. Now my primary activity is back to being a professor. But I've learned a lot and gotten a great deal of satisfaction and considerable zest out of these various business ventures that I've been involved with—again, very much, in the case of most of them, on a part-time basis. And I've certainly come to understand many aspects of financial markets better through my work with D.E. Shaw.
 
L.G.: You've mentioned that it's more political, for the sake of argument, let's say at Harvard than it was in Washington. Do you agree with that old saw that the reason academic politics are so vicious is because there's so little at stake? What's your sense of what you learned from that experience?

L.S.: I wouldn't want to deny that there's sometimes pettiness in academic life, but I actually think the stakes in how we organize basic science in the United States, the stakes in what the next generation of leaders are taught during the most formative years of their life, the stakes in what kind of international presence American universities do or do not establish, I don't think these are minor issues at all. And some of the steps that we were able to take during my presidency at Harvard—establishing for the first time for a major American university the principle that any family with income below $60,000 wouldn't have to make any financial contribution to undergraduate education; establishing as a normal expectation in a leading university that students would have an international experience before they graduated; commencing a building program that in total was 17 football fields worth of laboratory space for cutting-edge interdisciplinary science, not done with individual investigators but done collaboratively—I think these are large things that have a large effect on the society. So I would reject the idea that the stakes in what gets decided at universities are always small.

PREV 4 of 5 NEXT