On July 1 Larry Summers–the Wunderkind economist who ran the Treasury Department under President Clinton–takes over as president of Harvard University. “A fitting choice,” editorialized the New York Times. But fitting in what way? So far, Summers has maintained an eloquent silence on the activists who seized his future office for three weeks to demand a living wage for Harvard service personnel. Harvard may have an endowment of billions at its disposal, but Summers, who failed to respond to my requests for an interview, is unlikely to embrace the living-wage drive.
After all, if everyone were paid a living wage, where would we store hazardous waste? A decade ago, while chief economist of the World Bank, Summers put forward arguments for a “world-welfare enhancing trade in air pollution and waste” in an internal bank memo that expressed the value of a human life as the sum of its future earnings. “The costs of health-impairing pollution depend on the foregone earnings from increased morbidity and mortality,” Summers wrote. So if pollution takes five years off the life of the average, well-paid American, that is more significant than the same pollution prematurely killing off the average someone in Mexico or some other lower-wage country. Wrote Summers, “The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to it.”
Yes, it’s a ten-year-old memo, and Summers has apologized for his suggestions, saying they were ironic and intended to push colleagues to think outside the box. But don’t feel bad about asking him whether “impeccable logic” dictates that the death of a Harvard janitor paid $6 an hour matters less on some level than if the janitor is making $10.25. That’s just one of the harsh questions Harvard’s braver souls ought to be asking.
Here’s another: Why did Summers, while he was a top official at Treasury, so ardently embrace the corrupt sell-offs of Soviet industries? Russia’s privatization czar, Anatoly Chubais, oversaw “auctions” of the oil companies, nickel mines and other crown jewels of Soviet industry that were openly rigged. How openly? The privatizers invited some of Russia’s newly minted tycoons to organize the auctions–and then let those tycoons reject high bids and crown themselves the winners.
Long after those rigged auctions were over, Summers was praising their organizers as an “economic dream team” and was on a friendly first-name basis with them in official letters. That was consistent with the Clinton Administration’s see-no-evil approach to Boris Yeltsin’s boys–one that Summers helped design.
Summers’s critics may find new ammunition in a Justice Department lawsuit brought against Harvard over its work on Russian privatizations. In United States of America v. the President and Fellows of Harvard College, Andrei Shleifer, Jonathan Hay, Nancy Zimmerman and Elizabeth Hebert, the Justice Department accuses a team from Harvard of having “defrauded the United States out of $40 million”–the amount paid to Harvard’s Institute for International Development to work on Russian economic policy in tandem with reformers like Chubais. The Justice Department says that Shleifer and Hay, who ran Harvard’s Russia project, secretly bought large personal stakes in Russian oil companies and in “GKOs”–wildly high-interest Russian treasury bills. Harvard University’s endowment, by the way, was also heavy in GKOs. In other words, Harvard and its representatives were investing in areas they were being paid to help design and regulate.