In Praise of Mistakes

I’m not sure Frank Rich has this right:

No, it’s the economic team that evokes trace memories of our dark best-and-brightest past. Lawrence Summers, the new top economic adviser, was the youngest tenured professor in Harvard’s history and is famous for never letting anyone forget his brilliance. It was his highhanded disregard for his own colleagues, not his impolitic remarks about gender and science, that forced him out of Harvard’s presidency in four years. Timothy Geithner, the nominee for Treasury secretary, is the boy wonder president of the Federal Reserve Bank of New York. He comes with none of Summers’s personal baggage, but his sparkling résumé is missing one crucial asset: experience outside academe and government, in the real world of business and finance. Postgraduate finishing school at Kissinger & Associates doesn’t count.

Summers and Geithner are both protégés of another master of the universe, Robert Rubin. His appearance in the photo op for Obama-transition economic advisers three days after the election was, to put it mildly, disconcerting. Ever since his acclaimed service as Treasury secretary in the Clinton administration, Rubin has labored as a senior adviser and director at Citigroup, now being bailed out by taxpayers to the potential tune of some $300 billion. Somehow the all-seeing Rubin didn’t notice the toxic mortgage-derivatives on Citi’s books until it was too late. The Citi may never sleep, but he snored.

 I’m not of the opinion that Robert Rudin is The Smartest Man Evah, I’m not even sure he’s all that smart of an economic mind. But it’s still true that his fundamental idea of 1993, that pursuing a path of deficit reduction as a matter of fiscal policy would induce the Fed to lower interest rates which would stimulate the economy, did lead to a period of both economic expansion and prosperity as well as a balanced budget. That he was inept/greedy at Citi doesn’t really change that, it just shows that running a private business and making public policy aren’t two sides of the same coin (no matter what Mitt Romney says), and that being good at one doesn’t mean you’ll be great at the other. So by that measure, that Geithner hasn’t worked in private sector Wall Street doesn’t really bother me, anymore than the fact that Obama never served in the military makes me worry about his ability to function as Commander-in-Chief.

Rich also writes:

Washington’s cheerleading for our new New Frontier cabinet superstars has seldom been interrupted by tough questions about Summers’s Harvard career or Geithner’s record at the Fed. For that, it’s best to turn to the business press: Andrew Ross Sorkin at The New York Times, for one, has been relentless in trying to ferret out Geithner’s opaque role in the catastrophic decision to let Lehman Brothers fail.

I’m not sure this is really right either. Aside from the unlikelihood of finding anyone who’d never been wrong about anything that would relate to the job of Treasury Secretary, whatever happened to learning from your mistakes? After all, it’s not like Geithner was the only person who thought Lehman might not need to be bailed out, with the rest of the world frantically screaming that their collapse would lead to catastrophe. There were some, to be sure, but by and large there was a real debate over the best course of action. That Geithner was wrong isn’t important so much as whether or not he learned from that mistake is (although I don’t want to take anything away from the people who got it right). Besides, there’s nothing that guarantees that Geithner will be wrong about the next question just because he was wrong about Lehman, or that the people who were right then won’t be wrong about the next question. Indeed, given the degree to which it seems everyone was mostly guessing back then, I doubt it has little predictive value at all.

That’s not to say mistakes are good, of course, but all the same we really ought to stop obsessing over these like any mistake is disqualifying, otherwise we’re not going to be able to find anyone to do the job.

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