David R. Henderson  

Larry Summers's Anti-Trump Case In a Vacuum

Warren Buffett, out of sample... Banning the Benjamin Would Red...

Recently, economist Larry Summers made his case against Donald Trump.

It has one main problem. Although Larry makes, in some ways, a powerful case, he makes it in a vacuum. The question is not whether Donald Trump should be president or no one should be president. Given that Larry is a Democrat and, as far as I know, has always supported Democrats for president, his likely choice for president is Hillary Clinton. But he very cleverly avoids even mentioning her name.

And that's the main problem with his post. Many of his criticisms of Trump could also be levied against Clinton. In this, by the way, he is not alone.

What follows is my response to Larry's main points.

Larry opens his case with his main claim:

The possible election of Donald Trump as president is the greatest present threat to the prosperity and security of the United States.

That could be true. But if he's the greatest threat, that means that the threat must be greater than that from Hillary Clinton. Does Larry make that case? He doesn't even try.

Larry writes:

The problem is not with Trump's policies, though they are wacky in the few areas where they are not indecipherable.

That's overstated. His policies are often indecipherable and sometimes wacky, but not always. Try this one about Israel, from the Houston debate:
BLITZER: You said this about the ongoing conflict between the Israelis and the Palestinians -- I'm quoting you now: "Let me be sort of a neutral guy. I don't want to say whose fault it is, I don't think it helps."

TRUMP: Right.

BLITZER: Here's the question. How do you remain neutral when the U.S. considers Israel to be America's closest ally in the Middle East?

TRUMP: Well, first of all, I don't think they do under President Obama because I think he's treated Israel horribly, all right? I think he's treated Israel horribly.


TRUMP: I was the grand marshall down 5th Avenue a number of years ago for the Israeli Day Parade, I have very close ties to Israel. I've received the Tree of Life Award and many of the greatest awards given by Israel.

As president, however, there's nothing that I would rather do to bring peace to Israel and its neighbors generally. And I think it serves no purpose to say that you have a good guy and a bad guy.

Now, I may not be successful in doing it. It's probably the toughest negotiation anywhere in the world of any kind. OK? But it doesn't help if I start saying, "I am very pro-Israel, very pro, more than anybody on this stage." But it doesn't do any good to start demeaning the neighbors, because I would love to do something with regard to negotiating peace, finally, for Israel and for their neighbors.

And I can't do that as well -- as a negotiator, I cannot do that as well if I'm taking big, big sides. With that being said, I am totally pro-Israel.

In U.S. presidential campaigns, pro-Israel is pro forma. But what was refreshing was his statement in the second last paragraph of the transcript excerpt above. Larry might disagree with it, but it's not wacky.

Larry also claims that Trump "flirted with the Ku Klux Klan." I do not think the word "flirted" means what he thinks it means. I find Trump's hesitance on the KKK pretty awful, but it's not flirting. By the way, few commentators have noted the package dealing in Jake Tapper's question about David Duke and the KKK. Jake asked him if he would disavow them and whether he wanted their support. Those are two different questions. Were I to run, I would reject them and want their support. Remember that the goal is to raise funds and win votes. It would be sweet to get money from people you detest: you now have their money.

Larry writes:

Time and again, he has claimed he will crush those who stand in his way; his promised rewrite of libel laws, permitting the punishment of the New York Times and The Washington Post for articles he does not like, will allow him to make good on this threat.

That is horrible. It sounds kind of like--Hillary Clinton. Has Larry heard of Citizens United? Does he know what it's about? It's about some people who got together and formed a corporation to finance a movie critical of--Hillary Clinton. Hillary Clinton has made clear her opposition to corporations not called the New York Times or the Washington Post that go after her. Indeed, she made opposition to the Citizens United decision a litmus test for Supreme Court appointees.

Here's Matt Welch on Hillary Clinton's various assaults on free speech:

Trump's rhetorical record on free speech is bad, no doubt. But he has never been within a city mile of political office until launching his unlikely bid for the presidency last June. Hillary Clinton was First Lady of Arkansas for 12 years, of the White House for another eight years (and was unusually active on policy in both roles), then a United States senator for eight years (during which she was runner-up for the Democratic Party's presidential nomination), secretary of state for four years, and now the odds-on favorite to be the next U.S. president. And during this long public career she has sponsored, co-sponsored, barnstormed for, advocated, suggested, and bragged about a series of specific laws whose texts and/or ideas were found to be at least partly unconstitutional on First Amendment grounds.

A non-comprehensive list would include: The 1996 Communications Decency Act (parts of which were struck down by the Supreme Court one year later on free speech grounds), the 1998 Child Online Protection Act (eventually struck down by the Supreme Court in 2009 on free speech grounds), the 2002 Bipartisan Campaign Reform Act (struck down by the Supreme Court in 2010 on free speech grounds), and the 2005 Family Entertainment Protection Act (an almost exact replica of which was struck down by the Supreme Court in 2011 on free-speech grounds). It's almost as if there's a pattern there!

Larry writes:
Lyndon Johnson's celebrated biographer, Robert Caro, has written that while "power doesn't always corrupt...[it] always reveals." What will a demagogue with a platform like Trump's who ascends to the presidency do with control over the NSA, FBI and IRS? What commitment will he manifest to the rule of law?

It sounds awful. It is awful. And how well have we done with Bush and Obama? Moreover, does Larry see any irony in quoting Robert Caro, who showed what a power-hungry horrible man Lyndon Johnson was? Again, Trump is awful. So was LBJ. It's not clear to me that Trump is worse than LBJ, admittedly a very low bar. But again this points out the problem with Larry's piece: he evaluates Donald Trump in a vacuum. Is Trump worse than LBJ? Blank out. And, speaking of the IRS, is Trump worse than Lois Lerner's employer, Barack Obama? Blank out.

Larry writes:

Already Trump has proposed that protesters at his rallies "should have been roughed up."

That's awful. So would Larry oppose the law that allows federal government officials to rough up protesters at Donald Trump's rallies and at Hillary Clinton's rallies? And not just rough them up, but charge them with a crime carrying a prison sentence of up to 10 years? His former boss signed the law. How much, really, does Larry Summers favor free speech? Here's his chance to speak out. Any bets about whether he will?

Larry writes:

One shudders to think what President Huey Long would have done during the Depression, what President Joe McCarthy would have done at the height of the Cold War, or what President George Wallace would have done at the end of the turbulent 1960s.

One does shudder. But notice Larry's choice of time periods. The Depression preceded World War II, when Huey Long's political rival FDR threw over 100,000 innocent American residents into internment camps. Would Huey Long have been worse? I don't know. But any attempt to put Trump into perspective, given how unprecedented Larry claims Trump is, should consider FDR's fascistic wartime policy.

Larry writes:

Even the possibility of Trump becoming president is dangerous. The economy is already growing at a sub-two percent rate in substantial part because of a lack of confidence in a weak world economy. A growing sense that a protectionist demagogue could soon become president of the United States would surely introduce great uncertainty at home and abroad. The resulting increase in risk premiums might well be enough to tip a fragile U.S. economy into recession. And a concern that the U.S. was becoming protectionists and isolationist could easily undermine confidence in many emerging markets and set off a financial crisis.

True re protectionism. Although if Larry means by "isolationist" someone who does not want to bomb people in other countries, the way Larry's previous two President bosses have done, it's hard to see how people in say, emerging Iran, would lose confidence in the U.S.

Larry writes:

The U.S. and China are struggling over influence in Asia. It is hard to imagine something better for China than the U.S moving to adopt a policy of "truculent isolationism." The Trans-Pacific Partnership, a central element in our rebalancing toward Asia, could collapse. Japan would have to take self-defense, rather than reliance on American security guarantees, more seriously. And others in Asia would inevitably tilt from a more erratic America towards a relatively steady China.

The U.S. government standing down in Asia would make China better off. And that's bad for the United States why? I seem to recall someone thinking that when China is better off, the United States is worse off. Who was that? Oh, yes: Donald Trump.

And Japan, one of the wealthiest countries in the world, would have to take self-defense more seriously, and not rely on U.S. taxpayers. Oh my God!

Larry writes:

The United States has always been governed by the authority of ideas, rather than the idea of authority.

Good one, Larry.

Comments and Sharing

COMMENTS (18 to date)
Would Huey Long have been worse? I don't know.

Well, he must have been pretty bad to have been assassinated by a time traveler.[citation needed]

jj writes:


What did you think of Larry Summers recent column in the WP advocating the U.S. ban $100 bill? His stated reason is to stop terrorists and drug dealers. Do you think the terrorist reason is a red herring? It seems obvious to me that the reason he is advocating this is to make it easier to implement negative interest rates or make it easier for the government to collect tax revenues. But, he never once mentioned those reasons in the article. IMO, Summers is an awful person for writing that column while intentionally hiding his true motives.


jj writes:

#2- The last comment is a question to David, not Scott Sumner

David R. Henderson writes:

I have been planning a blog post on the $100 bill issue. You’ve hastened it a little. Sometime in the next day or three.

Effem writes:

Great post - I enjoyed it. I've been having this conversation with a lot of people. As best I can tell, most people object to Trump for not much more than the fact that he simply doesn't look or sound like their "intellectual" peer group. Which is exactly why the rest of the country quite likes him.

All these lovers of "free markets" all of a sudden hate this market of political ideas we call democracy. It's no coincidence that this group is largely composed of the winners from our "free market" economy (quotes intentional - will remove them when it's as easy to import a medicine, a lawyer or a hedge fund manager as it is a manufactured good. America sure could use the cost relief across most services.)

LD Bottorff writes:

The "market of political ideas we call democracy" is inferior to a real market. If 60% of the smart-phone market goes to Apple, I can still buy a Samsung. But in democracy, I get stuck with the majority's choice no matter how much I object.

Unless, of course, I can convince five lawyers on the Supreme Court to overturn the democratic process.

I admit that I consider myself a winner in our relatively free economy. If you have the resources and spare time to comment on this site, you are probably a winner yourself. :)

RobertB writes:

I'm pretty sure when Summers use "isolationist" to refer to Trump, he's not indicating concern that Trump is unwilling to bomb people in foreign countries. Trump has advocated the targeted killing of noncombatants (the families of terrorists) as an effective anti-terrorism strategy. A fairer reading of Summers' use of the term is that Trump would be less committed to our alliances with Japan and Europe in a way that might increase geopolitical risk in the relevant regions.

Andrew_FL writes:

All of a sudden? We've been hating democracy, and rightly so, since at least the 18th century.

Charlie writes:

It's pretty wacky to call anything in Trump's Israel response "a policy." Is "I'd like to broker peace in the Middle East" a policy? Is Donald Trump's usual response to problem X, "I'm Donald Trump and I'll solve problem X." a policy?

Charlie writes:

David, did you see the segment of Fox and Friends where Donald Trump said the key to defeating terrorists is to take out their families?


Trump certainly has some erronious beliefs regarding economics, but are they any more ridiculous than many of those of Larry Summers' former boss, who stated in a speech in September 2009 to a joint session of congress;

I've insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects. But by avoiding some of the overhead that gets eaten up at private companies by profits and excessive administrative costs and executive salaries....
[my bold]

I stress that that was not Obama speaking off the cuff, but in a scripted speech to congress!

In addition to that one, Obama has also lamented that his auto insurance company did not sell him collision insurance on his $1,300 beater car he drove as a community organizer. He expressed amazement that anyone would question his stimulus package in 2009, by saying it was the consensus of the economics profession that fiscal policy was the answer to a recession. He reputedly told Christi Romer that monetary policy had 'shot its wad'.

At the time he made all those above statements, Larry Summers was one of his economic advisers.

marris writes:

This post is excellent! Thank you for writing such a well-reasoned response to Summers.

EB writes:


Thanks for pointing Larry´s non-sense of ignoring Hillary when arguing against DT.
Now you can point to Larry´s non-sense of ignoring his personal interest in Square when arguing against the $100 bill (see
http://www.forbes.com/sites/nicoleperlroth/2011/06/22/larry-summers-joins-square/#6e18055e2961 )

effem writes:


A few reactions:
-I agree with your complaint...you basically want a parliamentary system. Well, we don't have that so you have to accept that majority = "market." I can think of no better way given the constraints.

-Yes, I am for sure a winner in the current system. But unlike my peers I attribute a good portion of my success to that system. If I were born with an average IQ, in the middle of the country I'd have far fewer opportunities. I'm not even arguing for one system over another: but we should be very upfront about the fact that our choices produce winners and losers and make decisions accordingly.

The winners in this system feel very "smart" because they don't have to compete with Chinese wages. Let's change that and see how they do (I, for one, would be far less competitive). Let's start importing medical services (or allowing medical tourism to be covered by insurance)...watch how amazingly fast all these "free-traders" change their tune. It'd be instant. Free trade is wonderful when you don't compete with Chinese wages but your suppliers do.

zeke5123 writes:


There are ways beyond parliamentary systems that the "market place of ideas" isn't a market. The actions of any individual actor have very little affect on the actor. Basically, it is pure externality.

Methinks writes:


Bill Gross wonders why central bankers are suddenly so interested in Law enforcement. Bill Bonner thinks its a red herring and I find his argument difficult to refute:

First, let us dispose – as we would a dirty diaper with an outstretched arm – of the notion that getting rid of Ben Franklins and other large denomination bills would somehow “fight crime.”

If you want to do a $100,000 cash deal now, you need a stack of $100 bills a little more than four inches high. Now suppose the $100 bill is no longer available. Does the drug dealer say to his client, “Whoa, I guess we can’t do business. I can’t be bothered to carry big wads of cash.”?

Teenagers passing drugs“Sorry buddy, this is the last time….when there are no more Benjamins, it’s over…I just can’t take all that small cash…” (one of the many imaginary conversations currently playing in Larry Summers’ head).

Does the crony defense contractor meet a member of the House Armed Services Committee in the parking garage and tell him, “I’m sorry, I just can’t get you the money. It won’t fit in the envelope.”? Does the prostitute tell her pimp: “I don’t work for 20s.”?

Don’t worry about the criminals. In Argentina, the backbone of the economy is the 100-peso note – worth only about $6. We have a place in Argentina. We’ve seen how it works. People use 100-peso notes for everything – from buying the morning paper to selling $1 million apartments.

They carry it around in paper bags (so as not to attract attention of thieves.) They stash it in safes. Stacks of it bulge from their pants pockets and sit on the counters of the black market money changers. A nuisance? Yes. A crime stopper? Are you kidding?

Drug sellers, prostitutes, hit men, terrorists, money launderers. They’re already hunted like criminals… and threatened with fines, jail, or death. Is the inconvenience of small denomination bills going to stop them?

Forget it. They’ll switch to smaller bills, foreign currencies, Bitcoin, gold, or something else. Block the use of convenient currency… and they’ll innovate.


None of the legislation sold as a way to stop criminal activity - including the AML and the Patriot Act - have slowed money laundering or funding of terrorism. All such such attempts have done is made life harder for peaceful citizens engaging in government-approved activities.

Eliminating cash does make central planning easier, which has always been Larry Summers's consuming interest.

ThomasH writes:

Congratulations on finding a Trump position that is both non-wacky and decipherable. I thought his remarks on not letting people die on the streets was pretty non-wacky too, but it horrified Cruz and Rubio.

Dain writes:

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