Larry Summers

American economist and public official; Professor at Harvard University; former US Treasury Secretary under President Clinton (1999–2001); former director of the National Economic Council under President Obama (2009–2010); former President of Harvard University (2001–2006).

Summers was the youngest person tenured in Harvard’s economics department and established his research reputation in the 1980s on topics including capital taxation and business cycles. He is best known to the broader public for his advocacy of the ‘secular stagnation’ thesis — the argument that advanced economies face a structural, not merely cyclical, shortfall in aggregate demand that keeps growth and inflation persistently below target — and for his willingness to dissent loudly from consensus positions, including his early scepticism about the pace of post-crisis monetary tightening.

Core positions

Summers holds that the neutral real interest rate — the rate consistent with full employment — has fallen sharply in advanced economies, driven by rising savings propensity (demographic ageing, inequality, insecurity) and falling investment propensity (cheap capital goods, weak population growth). This structural shift means that central banks have been tightening too readily, and that the Fed’s 2 per cent inflation target functions in practice as a ceiling rather than a midpoint. His policy preference leans towards nominal GDP targeting and genuine symmetry around the inflation target.

On labour, he believes workers have lost bargaining power that should be partly restored, both for wage reasons and for non-wage benefits — safety, grievance procedures, job satisfaction — and broader political economy reasons. On capital taxation, he has moved away from the zero-rate models he helped develop in the 1980s, arguing the empirical premise (infinitely elastic savings) has not held, and that much capital income reflects rent rather than productive risk-taking.

He is characteristically direct in intellectual disagreement and credits continuous self-critique — reviewing every answer for how it could be improved — as the discipline that drives ongoing development.

In the wiki

• Larry Summers on Macroeconomics, Mentorship, and Avoiding Complacency — Conversations with Tyler, Ep. 28: secular stagnation, Fed policy, labour unions, capital taxation, China, and the production function against complacency