Former Treasury Secretary Larry Summers, on Friday, offered his take on the economic policies the two frontrunners in the presidential race will likely pursue if they are elected for a second term.
Biden’s Sound Activist Approach: “This is probably the most consequential presidential election since the Second World War,” said Summers in an interview with Bloomberg’s “Wall Street Week.” If President Joe Biden is elected, he would likely continue with a Keynesian approach to economic management, he said.
Keynesian economics, a macroeconomic theory based on the work of the British economist John Maynard Keynes, suggests demand creation will stimulate economic growth.
Summers said, “He [Biden] has felt that one needs to put very substantial emphasis on market failures, particularly in areas relating to the environment and climate change.”
“And in the long democratic tradition, he has worked to do things to support those who have been left behind; he has focused on supporting what he regards as particularly salient job creating industries,” he added.
The economist, however aired criticisms regarding Bidenomics as well, as he said there have been an overemphasis on industrial policy and protectionism. He also said there was a costly misjudgment in the extent of the initial fiscal stimulus.
“Broadly, President Biden has supported what I think is a sound activist approach to economic policy,” the former Treasury official said.
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Very Worried About Trump: On Donald Trump, Summers said, while at office, the former president showed support for removal of all kinds of legal restraints on the power of the presidency. “He has spoken of being dictator for a day. He has spoken of severing traditional alliances with the rest of the world, of undercutting longstanding American approaches to international trade, to economic regulation, to much else,” the economist said.
“I think all of this is very threatening to the American economy,” he said.
Similar to how populism yielded temporary and initial economic benefits for Italy’s Benito Mussolini and Argentina’s Juan Peron, it could work for a short term for Trump, according to Summers. “Ultimately, [it] brings a great deal crashing down around it,” he said, adding “And so I am very worried…
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