Losing Larry for Real.

summers.jpgWith the announcement that Larry Summers is leaving the Obama administration at the end of the year, speculation has begun about who will replace him, with reports indicating that the White House wants a "woman CEO." Please, please, spare us this terrible idea. Sure, there could certainly be more diversity on the White House economic team, even with Elizabeth Warren's new presence. But anyone who thinks a CEO would be good at this job is foolish -- and any CEO who would take this job would essentially be signing up for failure.

It's not just that the White House's problems with business aren't rooted in policy -- they're based on ideological warfare. It's that the skill set that goes with being a CEO -- making smart business decisions, primarily, and leading a team in executing a strategy in the marketplace -- are radically different from the role the NEC director ideally performs. As Keith Hennessey, a former NEC director himself, explains, this involves directing the policy process, presenting competing arguments to the president, managing bureaucracy and easing political tensions.

Basically, it's the difference between an executive and a coordinator. The big knock against Larry was always that he was too egotistical to manage the process fairly -- although this is somewhat overstated -- so putting in someone used to making executive decisions is probably not the best call. Nor, I would note, is putting someone with little policy-making experience in that chair a good idea. None of this is to say that there shouldn't be more business experience in the White House -- there's actually quite a bit on the occasionally important President's Economic Recovery Advisory Board -- but the NEC is the wrong place for it. Savvy operators like Treasury Secretary Tim Geithner, Treasury counselor Gene Sperling, and OMB Director Jack Lew would make that person irrelevant almost immediately.

That's why the post will likely go to someone in government or academia with some corporate background. Respected economist Laura Tyson is certainly the top choice right now, given her long experience as a policy-maker. One dark-horse candidate who would be a powerful operator in the position is current NEC Deputy Director Diana Farrell, who played a large role in the financial-reform bill, understands the policy process and has a business background at the consultant firm McKinsey. My ideal solution would have been to replace departed White House economist Christina Romer with Tyson and install Ron Bloom, labor's investment banker, as NEC chair -- he's the only person I can think of with sterling progressive credentials and hard-core business chops.

Meanwhile, though, as I wrote when rumors of Summers' departure first arose last spring, this isn't exactly a victory for progressives. Despite his reputation, Summers was usually a forceful advocate for the Keynesian economic policies supported by the left, even if he didn't play well with others. He wasn't always the best public advocate, however -- one reason the White House seems to be prizing optics over policy in their early calculations about the position, which also suggests the left will like his replacement less.

The best case scenario for his departure at the end of the year? The White House finds someone who really wants to run the process, who can be a good public advocate and open up what has been a fairly narrow discussion of policy options -- and someone who can work out an economic strategy for dealing with a more Republican Congress. The worst case scenario? Someone chosen primarily for their image -- the "woman CEO" -- who will be quickly subverted by their colleagues and whose strategy is agreeing with what will be a more Republican Congress.

-- Tim Fernholz

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