Today's New York Times has a good economics article in the Arts Section (I thought it might appear in the business or sports section) on skeptical economists who question whether FDR's well meaning actions ended or exacerbated the Great Depression. This debate has lead to great economists doing funny things. For example, consider John Cochrane's Darth Vader imitation.
In other news in today's Times, we learn how much $ Larry Summers made last year. Summers' $ Disclosure .
A cynic might ask, "Why was Wall Street willing to pay such high speaking fees to him?" Now if it is based on his ample stock of insights from his cumulative QJE publications, this is fine with me. I would be less happy if Wall Street engaged in the following dynamic logic before the November 2008 election.
1. We think that a Democrat will win the White House in 11-2008
2. We think that Larry Summers will be a King in the New Administration
3. We'd like him to be our friend.
Capture theory is not a new idea in economics. see http://en.wikipedia.org/wiki/George_Stigler
Are economists susceptible to capture or are we the only ones who do not act in accord with our theories? It is only human nature to be nice to those who have been nice to us.
I am accusing nobody of corruption other bloggers are talking about strong conflict of interest here. Taking so much $ from Wall Street does give a bad smell. I would have been happier if he had given 400 talks at $10,000 a pop at Universities such as Yale.
The Obama Team is making dozens of decisions that have efficiency and distributional consequences. What is their criteria function for how they rank their policy choices?
Here are the nitty gritty details of Dr. Summers' huge earnings from last year. You judge for yourself.