Replacing Larry Summers

Paul Krugman has written a post for his NY Times that takes on the question of who should replace Larry Summers:

There’s a lot of buzz around the idea that Obama will or should appoint a CEO to take over the Summers job. Now, the first thing to say is what Yglesias says: Obama should pick someone who can do a good job. Never mind image, or the message the appointment supposedly sends — there are about 600 people in this country who care about that stuff, and most of them are paid to care.

So the question is, does having been a successful CEO constitute good qualifications for this job? And the answer is no.

For one thing, the NEC director is supposed to serve as a coordinator and honest broker among views — not, or at least not primarily, as a decision maker. One of the complaints about Larry Summers was precisely that he supposedly wasn’t sufficiently willing to let others’ views get aired (I have no idea how true this was). That’s not what CEOs are paid for — their job is to be decisive, not summarize other peoples’ arguments.

Beyond that, the idea that business executives know what the economy needs is just wrong.

A long time ago I wrote an article titled “A country is not a company“; unfortunately, HBR charges for the whole thing, but you can read the intro at the link. The theme was that economic policy requires a very different kind of thinking from that appropriate for company strategy. Companies are very much open systems, selling the vast bulk of what they produce to other people, able to draw in resources from outside mostly at will; countries — even small countries — mainly sell to themselves and have to make the most of the labor, land, and to some extent capital they have.

Beyond that, companies — even if they have relatively decentralized management — are top-down organizations in which people do what they’re told. Market economies are free-for-alls, in which the job of policy is largely to provide incentives to do things (and yes, that’s true even if we’re talking about monetary policy and fiscal stimulus).

No doubt a really smart CEO could master enough economics to do the job; so could a really smart engineer, or a really smart singer-songwriter. But experience as a business executive has far less to do than people think with managing the economy.

I sure wish Obama read Paul Krugman, but I'm 99.9% sure he doesn't. And this is one of the great tragedies of the Obama admininstration. He should pay attention to smart people who offer honest advice with no hidden agenda.

Krugman goes on to say "not me!" for the replacement and points at Laura

Tyson as being qualified, then notes:
And Ezra Klein reminds me that she’s done the job before, from 1996-2000 — although it would be much more important now than it was then, because back then economic policy was dominated by the Rubin-Summers axis.

If I were the praying type I would be down on me knees day-and-night fervently praying for Obama to "see the light" and appoint Tyson!

Instead, I'm about 95% convinced he will cave in to the mindless crowd and appoint some CEO to replace Larry Summers. As Krugman points out, a smart guy who happened to be a CEO could do the job. But it wouldn't be because he was a CEO, but because he was smart and had the requisite skills. It makes no sense to limit the pool to CEO-types when what you want is a skill set that exists across a broader stratum of society.