Larry Summers: On the Economic Outlook, the Case for Public Investment, and the Threat of Inflation

Conversations with Bill Kristol

News, Society & Culture, Government, Politics

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🗓️ 25 February 2021

⏱️ 68 minutes

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Summary

How should we think about fiscal stimulus in an era of low interest rates? Is $1.9 trillion too much? Is the proposed relief package sufficiently well targeted? In this Conversation, former Treasury Secretary Lawrence H. Summers shares his analysis of the American economy and the challenges we face. Summers argues for substantial fiscal stimulus but emphasizes the importance of investments in infrastructure that could lay the groundwork for durable economic growth. Summers warns about the dangers of inflation—and especially if the accommodative fiscal and monetary policies of the crisis era become standard practice. Finally, Kristol and Summers discuss the state of higher education and how universities should conceive of their mission today.

Transcript

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0:00.0	Hi, I'm Bill Crystal. Welcome back to Conversations. Very pleased to be joined again today by Larry Summers,
0:21.2	the former Secretary of the Treasury, Top Economic Advisor, President Obama, as we came out of the
0:26.9	financial crisis, University Professor at Harvard and we've had two excellent conversations
0:32.9	about economics with Larry and I look forward to this one as well. So thank you, Larry, for joining me.
0:38.8	Good to be with you, Bill. So let's get right to it. You've been involved in the debates about
0:43.8	stimulus package for more, much more broadly, on the general economic situation, what has to be
0:48.3	done, what doesn't have to be done for our economy. And I mean, why is the following wrong? We'll get
0:54.4	the vaccines out. We'll get back to work and we'll get back to something close to full employment
1:00.3	and a good decent economic growth. And is there really a problem here? Why do we need to be
1:05.6	worrying so much about different forms of either the relief or infrastructure or government action
1:12.8	in general? Why isn't just solving the pandemic enough? So I think there's a lot to what you say.
1:21.9	The biggest failure of the US public sector in two generations has been the 500,000 people
1:31.5	who have died so far of COVID. The way historians will ultimately remember this moment
1:39.7	is that the autocracies of the East succeeded in containing this problem and the democracies of
1:46.3	the West failed in containing this problem. And that is its ultimate historic significance.
1:53.6	So by far, the most important thing is that we be competent and effective in responding to COVID.
2:01.6	We have spent too little, too incompetently with too little organization. And that is our biggest
2:09.6	failing so far. Beyond that, there is a need, especially given how poorly we have contained COVID,
2:21.3	to support incomes, to support families, to support those lives that have been disrupted by COVID,
2:30.7	disproportionately the burden of COVID has fallen on the most disadvantaged. That's why I was a
2:37.8	strong supporter of the CARES Act during the worst of COVID last year. That's why I believe the
2:46.5	$900 billion program was an important step. I believe we do need to maintain unemployment
	...

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