The Summers/Geithner Team: Obama’s McNamara or Rumsfeld?
[For a post on ten reasons to vote Democratic this November, click here.]
One of the deepest mysteries of politics and governance is why presidents cling to misguided advisors long after it becomes apparent to everyone else that they have not just outlived their usefulness, but have become liabilities. The names of these advisors dot the arc of our nation’s descent from greatness: McNamara, Rumsfeld, and now the economic team of Summers and Geithner.
These advisors kept their presidents from seeing the big picture until it was too late. McNamara had his industrial outlook, his paranoid “domino” theory and his quantitative obsession with body counts. With these persuasive but misguided ideas he prevented Lyndon Johnson from putting the War in Vietnam in proper perspective. In hindsight, we can now see that war for what it was―one more inevitable step in the worldwide process of de-colonization that occupied most of the last half of the twentieth century.
With his hyper-aggressiveness and manic optimism Donald “they will greet us with flowers” Rumsfeld kept Dubya from seeing the big picture in Iraq. It was (and still is) immensely difficult to keep a pressure-cooker of a dictatorship from boiling over once the dictator is gone. Someone with perspective and judgment might well have discerned this simple truth with the example of Yugoslavia so recently in mind. But Dubya lacked those qualities, and Rumsfeld had none.
Just so, the President’s economic team of Summers and Geithner, with their monomaniacal focus on the finance sector and saving it from imminent collapse, ignored the disastrous long-term trends undermining our economy and our future. Financialization, the wasting away of our manufacturing base, the slow death of our middle class, the decay of our education and other infrastructure, and the insidious abrogation of the ruling class’ social contract with workers―these are the things that most threaten our culture and our way of life. They have been threats for a long time. Yet Summers and Geithner, while patting themselves on the back for avoiding short-term disaster, have come up with no good solutions for any of them.
To see how far we’ve fallen, you need only consider two facts. In just a few years, our federal government has accumulated a thirteen trillion dollar debt. Over the same time, our business community, in the aggregate, has accumulated an 8.4 trillion dollar cash hoard. Someone has to explain to the American people, especially those losing jobs and homes, how the net result of the last several years of economic policy has not been to borrow money from China at taxpayers’ expense and give two-thirds of it to our private business sector, which has sat on it and done nothing to stop our fall.
McNamara and Rumsfeld were secretaries of defense. Summers is Director of the White House National Economic Council, and Geitner Secretary of the Treasury. At first glance, it looks as if their respective fields have little in common. McNamara's and Rumsfeld’s involved the nitty-gritty business of preparing for and winning wars, an exercise in industrial-scale killing. Summers’ and Geithner’s, it would seem, involves the more rarefied atmosphere of banks and financial councils, an abstract domain devoid of dust and blood. But there are parallels. Bear with me.
Both military affairs and high finance are matters of expertise outside most presidents’ ken. Except for the rare general who became president (as after the Civil War and World War II) most of our presidents from recent memory have had scant, if any, direct experience with military affairs. The last three presidents did not even serve in the military, unless you count Dubya’s hiding from Vietnam in the Texas Air National Guard as service.
Banking and finance are similar to military leadership in this respect. I cannot think of any chief executive who rose from president of a bank to our nation’s highest office. Like J. Pierpont Morgan, bankers have always been shadow leaders, pulling the strings from behind the scenes.
The consequences of these facts are much the same, despite the superficial dissimilarity between fighting wars and handling large amounts of money. Both are obscure specialities, steeped in mystique, as unfamiliar to the average politician as space or climate science. Both are matters on which political leaders have to―and generally do―rely on experts.
The results are “perspective gaps,” or blind spots, if you will, in presidents’ vision. In an incredibly diverse and complex nation of 307 million people, our presidents are generalists. They have to be. We elect them, if we are wise, for their perspective and mastery of the big picture. So they fear (sometimes wisely) to tread on the domains of advisors on military and financial affairs, which are narrow specialties requiring unique training and experience. And of course the advisors exploit this laudable presidential humility in an egotistical effort to increase their personal power and influence.
These are the origins of our most grievous national errors of the last sixty years. Today McNamara’s “domino theory” (that Russian or Chinese Communism would sweep Southeast Asia) seems ludicrous, as our cruise ships dock in Hanoi and Saigon and our multinational corporations avidly switch their factories from China to Vietnam in search of lower-cost labor. Yet to Lyndon Johnson’s eternal infamy, that ludicrous theory was responsible for the loss of over 50,000 Americans in a war that never should have happened.
In retrospect that Idiot Rumsfeld’s failure to prepare for the aftermath of occupying a very foreign land, with millennial grievances only recently suppressed, now seems equally suicidally stupid. But at the time, it all seemed so simple: just remove the nasty dictator and the sophisticated, secular Iraqis would find their own way. No one seemed to have brought to bear the necessary perspective: a little knowledge of history, including the millennial religious differences that the dictator had suppressed with bloody ruthlessness for only thirty years.
Summers’ and Geithner’s errors of perspective were more subtle, but equally grave. They did a good job keeping the economic house from burning down. But they utterly ignored the storm surges eroding its foundation and pressing its structure to the point of breakage.
In fairness to these economic advisors, I should add that the storm surges were a long time in coming. Globalization, the commoditization of labor, middle-class erosion, and the decaying of our education and infrastructure are long-term trends that neither started nor apparently will end on Summers’ and Geithner’s watch. But by limiting their attention to the fire in the attic and ignoring the slow storm surge battering down the front door, they have showed a breathtaking lack of perspective. And their self-evident narrow expertise, plus their own cocksureness, led a president rightly famous for his sense of perspective to take his eye off the ball.
There is yet one more insidious force behind this growing disaster: personality. In every case, it was not just expertise that led a president to abdicate his control over the big picture. Similarities in personal style motivated presidents to place too much trust in advisors who were too much like them.
With the help of his father’s enormous wealth, JFK had had the most meteoric rise to the presidency since Lincoln’s, later eclipsed by Dubya’s and Obama’s. Just so, McNamara had risen meteorically through the industrial establishment, becoming CEO of Ford Motor Company at an impossibly young age, largely for being good with numbers. Both JFK and McNamara were smart, superbly educated, and proud of their education and brains. In these respects they were blood brothers. Lyndon Johnson, a man of much humbler education and intellect, remained in awe of both of them, even after JFK’s assassination.
Dubya was far too stupid to see how stupid Rumsfeld was. But the two men likewise had something big in common: both were bullies.
From his first moment in office, Dubya abandoned his campaign pledges for a “humbler” foreign policy with no “nation building.” He sought to govern with an iron fist and a 50.1 percent “mandate.” Just so, Rumsfeld played the bully in the Pentagon. He micromanaged everything with his infamous “snowflake” memos. He scared the public and allies alike with angry and nonsensical rants to cover his self-evident mistakes (“Stuff happens!”). He even terrorized hardened generals, earning Dubya’s undying admiration as the biggest bully on the block.
The puerile notion that a proud and ancient nation could be subdued and pacified in a few weeks after a few tank battles was well in character for both men, because both, at some level, were little more than schoolyard bullies. It took Dubya’s chief Republican rival McCain (also something of a schoolyard bully) to be first to recognize the type in Rumsfeld and decry the extraordinary damage he had done.
The same process of personal affinity seems to sway the President. Like him, Larry Summers and Tim Geithner are wunderkinder. By dint of superb education, brains and a bit of brashness, they each attained an extraordinary position unusual for their age and experience. They no doubt recognized each other as kindred spirits, brilliant, self-confident, and trained to rule.
But the president seems to have forgotten something crucial. Of the three, only he has any experience with real people at the street level, from his community organizing days. Larry Summers spent his career as an academic with brief stints in government service, mostly as an understudy, plus two years as Treasury Secretary under Clinton. His sole experience in actually running anything, as president of Harvard, was hardly an unqualified success. Similarly, Geithner cut his teeth in the rarefied atmosphere of Wall Street and the Federal Reserve System, apparently without giving much thought to the big picture. I have seen no evidence that either man ever thought deeply about the ineluctable historical forces eroding the pillars of our nation’s greatness, let alone the fate of common Americans caught in their grip.
And so we have the perspective gap. Although possessed of superb perspective generally, the President has abdicated his economic leadership to two brilliant but narrow and cocksure specialists, who no doubt remind him of himself. Despite the chasm between the military and high finance, the outcome of that approach threatens to be the same as Johnson’s retention of McNamara and Dubya’s retention of That Idiot Rumsfeld.
The solution is obvious and simple in principle, but perhaps against the grain of habit and personal style. Drop the wunderkinder and go for grey hair. Jettison Summers and Geithner, who’ve saved the attic but left the foundations crumbling. Get some people on board who’ve thought deeply and for decades about the historical forces battering our economic foundations, who have some new ideas, and who are prepared to take a holistic view. The model should be Paul Volcker, without whose thinly disguised attempt to resurrect Glass-Steagall financial reform might well have been ineffective.
Unless the President retakes the reins of perspective, the prognosis is clear. Some time in the future―perhaps in as few as ten years―the American people will look back in wonder and anguish at the Administration’s economic program, devoid as it has been of a decisive cure for any of our long-term ills. And they will ask them the same plaintive question they now ask about the War in Vietnam or Rumsfeld’s planless invasion of Iraq: “Why in hell did the president approve that?”
Saving the financial sector from self-induced ruin is not enough. Even John McCain might have done that, on the advice of men like Hank Paulson, although perhaps too late to save the nation.
If the President wants to earn an honored place in history he must tackle the really hard problems. And for that he needs economic advisors who can do more than calculate. He needs men and women with a keen sense―born of rich experience―of the historical forces shaping our world and driving us deeper into decline with every passing day. Most of all, he needs men and women with the wisdom and compassion to understand that our greatness flows from the strength and happiness of our common people and will not survive their fall.