The fall from grace of the man who was supposed to "save the world"

BarcelonaThe magazine Time The February 15, 1999, issue of the magazine featured three men on its cover with a condescending air and the headline "The Committee to Save the World." In the center, Alan Greenspan, then the all-powerful chairman of the Federal Reserve (the Fed, the US central bank), appeared surrounded by US Treasury Secretary Robert Rubin and his deputy, Lawrence "Larry" Summers. The magazine highlighted the three economists' role in managing the recent financial crises in Mexico, Southeast Asia, and Russia. That cover served as a springboard for Summers, the least known of the three. In July of that same year, 1999, he replaced Rubin as head of the Treasury (equivalent to the Ministry of Economy) and for many years was one of the most respected economists in the US, where he stood out as one of the architects of the Democratic Party's neoliberal shift: he was a staunch advocate of financial deregulation, free trade, and free markets.

A quarter of a century after appearing in TimeHowever, Summers' reputation was already at rock bottom and completely collapsed last month when, at 70, he had to resign from all the positions he still held after his close ties to financier and convicted sex offender Jeffrey Epstein came to light. It's the final blow to a career that, thanks to his connections in the corridors of power, had until recently remained untouched by mistakes and scandals.

Born to be part of the elite

Summers was destined to be an economist from the moment he was born in Connecticut in 1954, the son of a Jewish couple who were professors at the University of Pennsylvania and the nephew of two Nobel laureates in economics, Kenneth Arrow and Paul Samuelson. At 16, he went to the Massachusetts Institute of Technology (MIT) to study physics, but graduated with a degree in economics. He earned his doctorate from Harvard in 1982, where he was one of the youngest professors before becoming chief economist of the World Bank. He entered government with the Bill Clinton administration. His time as Rubin's right-hand man and Secretary of the Treasury was marked by strong economic and financial sector growth. After all, he was one of those responsible for the repeal of the Glass-Steagall Act—the law that separated investment banking from commercial banking—which, according to most experts, allowed large American banks to invest heavily in the housing bubble and mortgages. subprime

In this respect, the darkest point of his tenure was surely his clash with Brooksley Born, chairwoman of the CFTC, one of the financial sector regulators in the US. In 1999, Born asked the administration to control the complex financial products with which banks bundled cheap mortgages worth billions of dollars. These products were what, when the bubble burst in the US in 2008, caused the biggest global economic crisis since the Great Depression.

Summers and Greenspan convinced Congress to prohibit the CFTC from regulating derivatives in any way. Born resigned. Summers, on the other hand, left the government in 2000 to become president of Harvard. There, he caused a public scandal when he argued at a conference that men are more successful than women in scientific careers for biological reasons. But neither sexism nor banking deregulation prevented Barack Obama from appointing him director of the National Economic Council, which advises the US president, in 2009, at the height of the financial crisis.

Despite the sympathies and job offers from business leaders and politicians, responsibility for the crisis damaged Summers' reputation, making him a target of criticism from the left and the populist wing of the Republican Party. Obama, a centrist Democrat, He tried to make him chairman of the Fedbut he himself he retired Seeing that he would not receive congressional support due to opposition from more progressive senators, who considered it intolerable to place one of the architects of the lax regulations that had led to the banking collapse at the head of the central bank, Summers also ruled himself out in the face of criticism when Joe Biden won the 2020 election and rumors swirled that he would have a new government position.

Perhaps that's why for almost a decade he dedicated himself to attacking the Fed and the US government for what he considered excessive spending, predicting a catastrophe in the debt markets. His predictions didn't come true, but they earned him ridicule from left-leaning economists, such as Nobel laureate Paul Krugman.

Friendship with Epstein

However, what ultimately removed Summers from the public eye was not his management style or his ideas, but his relationship with Jeffrey Epstein, the businessman convicted in 2005 for child sex trafficking. In 2019, the so-called Epstein case When the businessman was arrested for running a vast child prostitution ring allegedly used by all sorts of celebrities, politicians, and millionaires, Epstein committed suicide in prison, according to police, but his death has sparked all sorts of conspiracy theories. While Summers was president, Harvard gave an office to the notorious pedophile when he donated $25 million to the university. Court documents show that Summers traveled at least four times on the businessman's private plane, and the day before his arrest, Summers emailed him asking for advice on how to seduce a "disciple" with whom he wanted to begin an extramarital affair.

The email could put Summers' marriage to poet and academic Elisa New in a difficult position, but she too is implicated in the scandal. In 2017, Epstein promised to donate half a million dollars to a public television program hosted by New, and in an email to the businessman a year later, the poet told him she would reread LolitaVladimir Nabokov's novel, in which the protagonist sexually abuses his 12-year-old stepdaughter, was one that Epstein claimed he always kept on his nightstand. To make matters worse, Summers and New spent part of their honeymoon on the financier's private island in the Caribbean months before his arrest in 2005.

The Epstein scandal has forced Summers to resign from his positions at Harvard, Yale University, and the think tank Brookings, as well as the board of directors of the artificial intelligence giant OpenAI. In a letter, he expressed regret for his "relationship" with the pedophile businessman. Not a word about the rest of the scandals and mistakes.