Below is the text of the remarks from Dr. Lawrence Summers, the
Director of the White House’s National Economic Council, to the U.S.
Energy Information Administration Conference.
A few months before I came into government, my twin daughters completed
their course in AP U.S. history at their local
high school and I reviewed for their test with them. There were two
aspects of that experience that stuck with me as I thought about my
objectives in advising President Obama.
The first is that while I, as a macroeconomist, thought of the 1982
recession as a big deal, thought of the inflation of the 1970s as a big
deal, thought about the 1987 stock market crash as a big deal, none of
them got mentioned in my daughters’ history course.
On the other hand, they spent six weeks on the events of the 1930s.
And the lesson I took away, coming into office a year ago, was that our
first priority had to be making sure that a depression was avoided.
Making sure that the vicious cycle of deleveraging and contraction that
then plagued the economy was first contained and then ultimately
reversed. And so this was remembered as a very disturbing economic
fluctuation, but not as the kind of depression that defined an era.
And the evidence, I think, suggests that the President has made very
substantial progress with that objective.
- Fifteen months ago, a depression did not look unlikely as
three-quarters of a million Americans were losing their jobs each
month.
- The stock market was, after correcting for inflation, at 1966 levels.
- And the output was declining at 6 percent a quarter.
Today, we have a long way to go, but a 6 percent
GDP loss in first quarter gave way to a 6
percent gain in GDP, according to the most
recent statistics.
Markets have risen by 75 percent since last March as conditions have
substantially normalized.
And while there are special factors and there will be fluctuations, the
economy has begun to produce jobs again: 162,000 last month, the largest
increase in the number of jobs in three years.
While we have a long way to go in an economy with 9.7 percent
unemployment and $1 trillion short of potential, we are at last moving
in the right direction.
As we move in the right direction, as this recovery unfolds, as what
economists call the left tail of the distribution recedes in likelihood,
it becomes essential that
- We think about the renewal of the American economy;
- We think about creating an economy with a stronger foundation for
prosperity than the one that we inherited;
- We invest more and consume less;
- We technologically engineer more and we financially engineer less;
- We look to the long view and to the short view less;
- We compete in the global economy and we win.
To do so, in many areas, will require a change in our gestalt. Not the
continuation of existing battles and of existing conflicts, but the
reformulation of problems in new ways that permit us to cut across old
debates and to as a nation move forward.
It is the accomplishment of those tasks of national economic renewal
that are what came through again and again as what history remembered in
that history course my daughters took.
Whether it was the land grant colleges and intercontinental railroad of
President Lincoln, whether it was the Sherman Act and national parks and
much more of President Theodore Roosevelt, whether it was the expansion
of the concept of protection so as to save the market economy from
itself with Social Security and unemployment insurance and deposit
insurance of President Franklin Roosevelt, ultimately the most
historically memorable accomplishments are those which renew our market
system, which approach problems in different ways, and extend our
efforts to create a more stable and more durable and more secure
prosperity.
And it is that across a range of areas that will, I believe, define
President Obama’s presidency when its history is written.
That was the motivation for the President’s historic battle for
comprehensive health reform.
That was the motivation and is the continuing motivation for our efforts
to insist that we rebuild our financial system and particularly the way
in which it is regulated on a much more secure foundation after all the
crises of the last generation.
And it is this approach of a new gestalt, a new view, a new paradigm,
and a commitment to renewal that I believe needs to shape our approach
to energy policy going forward.
To be sure, energy policy is about much more than economics.
There are only two ways in which mankind can affect the basic terms of
life on earth on a planetary scale. One is what happens with respect to
nuclear weapons. That’s outside my sphere, but in Prague later this week
and in Washington next week we are making substantial progress with
respect to the challenge of nuclear weapons.
The other, of course, is with respect to global climate change, where it
is an imperative for this planet that we act so as to reduce the risks
that current science points up.