For Larry Summers, former Treasury Secretary and current Charles W. Eliot University Professor at Harvard University, President Donald Trump’s decision to bring business people to Washington can be a double-edged sword.
“I think that business people can provide a very, very valuable perspective in [Washington],” Summers told Yahoo Finance’s Andy Serwer in a wide-ranging interview on Friday. “On the other hand, Washington is very, very different from running a business.”
Trump has one of the most business-heavy Cabinets in US history. That Cabinet includes Secretary of Treasury Steve Mnuchin, former chief information officer of Goldman Sachs; Secretary of State Rex Tillerson, former CEO of Exxon Mobil; and Commerce Secretary Wilbur Ross, a billionaire investor. Trump also tapped former Breitbart News executive chair Steve Bannon as White House chief strategist. Bannon is also a Goldman alumnus.
Speaking to Yahoo Finance, Summers highlighted three pitfalls of a president bringing on business people with little or no experience in the public sector.
A lack of experience in complex public policy
Speaking to Andy Serwer, Summers suggested that the public sector was simply more complicated than running a business. “It’s a much more complex environment, with many different moving parts,” he noted.
A perspective that doesn’t look at the economy as a whole
Summers also noted: “Businesses often bring the perspective of what’s good for an individual company, and that’s often something that’s very, very different than what’s good for the economy as a whole. And I also think, it’s crucial to recognize that there are important interests in our economy that aren’t business interests.”
Moreover, Summers mentioned a Cabinet filled with business executives simply doesn’t represent the majority of the American people. “The vast majority of us are not executives in business. We’re people who are employed by companies,” he said.
Summers called this “maldistribution of representation” a “flaw in the staffing of this administration.”
Of course, business executives in Washington also bring concerns about conflicts of interest, Summers said, noting the president’s family is “running around the world opening hotels” with Secret Service protection.
Moreover, Summers said, he was surprised to see a press release when the head of the National Economic Council, Gary Cohn, stated he would recuse himself from any matters with Goldman Sachs after having served as its CEO. Summers suggested it was odd that the administration would go out of its way to mention the recusal when in any other administration it would have been pro forma.
“I was struck that it was announced that the head of the NEC, was going to recuse himself from any business with respect to Goldman Sachs. I have to say my reaction was, ‘Of course,'” Summers noted. “That was in every previous administration, it was the law that people recused themselves from the business they worked at before they went into the administration.”
More from our interview with Larry Summers:
- Larry Summers is worried about ‘enormous damage’ to the economy
- Larry Summers says Paul Ryan’s tax plan isn’t viable
- Larry Summers wants Gary Cohn to produce the evidence
- Larry Summers warns against drawing conclusions from the stock market