Late Afternoon Reading: Summers, Income Inequality, an Army of Unemployed

Ryan Lizza has a new profile of Larry Summers in the upcoming issue of the New Yorker. A lot of the details about Summers’ time at Harvard are pretty well known, but it includes some interesting details about how decisions, especially around the stimulus and the banking programs, were made in times of crisis.

Summers played the role of "the ultimate murder board," according to Sperling, making the Treasury officials defend their ideas the way a Ph.D. student must defend a dissertation. He challenged and provoked Geithner to make sure that he had thought through every aspect of the plan. They argued back and forth, as they had done in the Clinton Administration, and their intensity was often jarring to the other Obama advisers. Summers didn’t trust the regulators, and was particularly worried about whether the stress tests designed by them were sufficiently tough on the banks. He pointed out that, in the days before Lehman, Bear Stearns, and Washington Mutual crashed, the same regulators had said that capital at those institutions was more than adequate.

In the end, though, Summers acknowledged that there were no better options, and Geithner’s plan survived intact. On March 31st, Summers sent the President a page-and-a-half memo outlining the reasoning behind the decision not to nationalize any banks. Obama was on his way to the G-20 meeting in London, and he wanted to be prepared with the best case against it.

Another piece with an interesting thesis, despite its muddled premises and pot-shots at liberalism, was Ross Douthat's column from the New York Times yesterday that argued:

So it's fair to say that if a period of Democratic dominance doesn’t close the gap between the rich and the rest of us, it will represent a significant policy failure for contemporary liberalism.

I don't really want to examine the recent policy failures of conservatism, and Douthat's argument is in many ways very wrong, but that one sentence is right. One way to close this gap is to retrain workers to be qualified for high skilled jobs that are currently, even with 9.8 percent unemployment, unfilled:

Even with 15 million people hunting for work, even with the unemployment rate nearing 10 percent, some employers can't find enough qualified people for good-paying career jobs.

Ask Steve Jones, a hospital recruiter in Indianapolis who's struggling to find qualified nurses, pharmacists and MRI technicians. Or Ed Baker, who's looking to hire at a U.S. Energy Department research lab in Richland, Wash., for $60,000 each.

Economists say the main problem is a mismatch between available work and people qualified to do it. Millions of jobs with attractive pay and benefits that once drew legions of workers to the auto industry, construction, Wall Street and other sectors are gone, probably for good. And those who lost those jobs generally lack the right experience for new positions popping up in health care, energy and engineering.

Seems like a national commitment to prepare the future workforce and train the "army of unemployed" referred to in this article is necessary. NDN took a first step in this, offering a proposal that would offer free computer training to all Americans through the nation's community colleges. More broadly, as Simon has argued, increasing the wages and incomes of every day Americans is the primary governing challenge facing policymakers today, a challenge made even more pressing given the severity of the great recession.