Larry Summers withdrew himself from consideration to be the next Fed Chair.  He was looking at a difficult approval process in the Senate.  (Pure speculation on my part but perhaps Pres. Obama saw a fight in the making and decided to pass on Summers in order to secure a few votes in favor of whatever resolution on Syria comes forward?)  Bring on Janet Yellen.

Update 9/16/2013:

Shortly after Larry Summers withdrew from consideration Brad DeLong put up a post, If Larry Summers Were Who His Critics Say He Is, He Would Not Have Written This… The post simply quoted Summers’ withdrawal letter.  I submitted a comment – a fairly strong one – that I didn’t buy it.  My comment disappeared into the aether but I believe my point was worthwhile so I provide an expanded version here.

Frankly, I’m not clear what Brad means by “who his critics say he is”.  Summers’ critics had a number issues with him.  Which criticisms is he referring to?  (I don’t think it’s a claim that Summers is insufficiently Keynesian.)  Let me address a few of what I see as lesser ones before getting to what bothered me most:

1. Many cite Summers’ advocacy of deregulation in the 1990s.  Yes, that was awful policy.  It should have been obvious to him at the time but I read (Krugman and Bernstein) that he’s learned from that experience.  Good leaders sometimes make mistakes.  As much as I don’t like big screw ups I value leaders who learn from their mistakes.  His affair with deregulation isn’t a dealbreaker for me.
2. There’s also criticism that when advising Pres. Obama he was not a strong advocate of a larger stimulus.  There’s evidence to suggest that this criticism simply isn’t correct.  Perhaps.  Perhaps not.  This isn’t a dealbreaker for me either.
3. Although I didn’t here too often from actual critics – much more often from people claiming to characterize critics than from actual critics – there was also his statement re women in science while he was president of Harvard.  While I’m bothered by the comment it’s not a dealbreaker for me either.  Good people sometimes say stupid things.  Apologize. It he made the comment out of a deep-rooted belief then treat it as a teachable moment.  To me it was bad but well within the realm of forgiveable offenses.
4. Summers has a “prickly” personality.  So what.  Professionals are able to deal with abrasive personal styles.  Also, seems like the Fed could use a good kick in the pants.  If anything I’d view a prickly personality as a plus for the job.

Those are the criticisms which don’t bother me enough to be dealbreakers.  Bob Kuttner had a post last week, The Summers Dossier.  I think the substance of Kuttner’s post is much more damning than any of the criticisms above.  In a nutshell, he cites among other things several poor decisions made as Harvard president, a “revolving door” issue with Citi – saving them a lot of money while he was in govt, taking money from them while he was out, and then being in a position to regulate them if he were Fed chair.  The Harvard issues Kuttner cites are examples of poor judgment while in a position of leadership.  They had nothing to do with making a good-faith call on policy and then having things turn out badly.  Kuttner describes opinion-based actions where Summers should have known better.  Similarly, the revolving door issue with Citi demonstrates lousy judgment.  I don’t begrudge the man a living but his relationship with Citi looks really bad.  If you’re to be a public servant then you need not just to avoid conflict of interest but the appearance of it.  You need to do better than have plausible deniability.  You need to steer clear of dubious situations entirely.

If you’re a Summers advocate you have three choices in how to respond to the criticisms above:

1. Refute them with evidence
2. Acknowledge them and argue that in evaluating his candidacy that the pros strongly outweigh the cons
3. Ignore them.

Stating “If Larry Summers Were Who His Critics Say He Is, He Would Not Have Written This…” is to choose Option 3.  It’s the sort of thing you say reflexively when defending a friend.  It’s an emotional response not an analytical one.  Summers’ letter does nothing to address the criticisms above.   No one questions Summers’ intellect or policy chops.  The issue is the soundness of his professional judgment on matters where he has a personal interest.  Summers’ letter demonstrates that he’s articulate.  No more.  No less.

So Summers has demonstrated poor judgment in the past – some of which he may have learned from, some perhaps not.  He’s Qualified Candidate #1.  Suppose I’m president.  In addition to Summers I’m also considering Qualified Candidate #2, Janet Yellen.  She’s also got the intellect and the policy chops but she doesn’t appear to suffer occasional big lapses in judgment.  If I’m looking at two well-qualified candidates for a job and one potentially has baggage while the other one doesn’t then why on Earth would I take a risk on the one with baggage?