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Former Treasury Secretary Lawrence Summers on Tuesday criticized a paper jointly written by Peter Navarro and Wilbur Ross – both tapped for top positions in President-elect Donald Trump’s administration – as “beyond voodoo economics” and equal to “creationism.”
The ex-official in President Bill Clinton’s administration told Bloomberg that the paper authored by Ross, the billionaire investor appointed as commerce secretary, and Navarro, the economist named as the head of Trump’s newly formed White House National Trade Council, goes “beyond any set of doctrine that has been taken up by any administration in my lifetime.”
“The Navarro-Ross paper is well beyond voodoo economics,” the Harvard professor and Democrat said of the duo’s September report on Trump’s growth plans. “The logic of it, the arguments made, are so far out of the mainstream of any kind of responsible economic thinking that they are the economic equivalent of creationism.”
Summers compared it to scientists who “say they doubt global warming.”
“So if this paper is to be a guide to US economic policy, and I’m not sure at all sure it will be … but the kind of thinking that is implicit in that paper goes beyond any set of doctrine that has been taken up by any administration in my lifetime,” he said.
Ross and Navarro, a noted China hawk who authored books such as “Death by China” and “Crouching Tiger: What China’s Militarism Means for the World,” will have a huge hand in leading US trade policy.
Summers also said that markets, which have taken a huge upswing since Trump’s election, are not appreciating the “extraordinary uncertainty” that a Trump administration presents, which he said include “enormous risks to the global economy.”
He also dismissed the idea that tax policy aimed at encouraging US companies to repatriate cash held overseas would provide a big boost to the economy. Trump had repeatedly championed this idea along the campaign trail.
“The vast majority of the companies who have large overseas cash also have substantial amounts of domestic cash,” Summers said. “The reality is that cash that’s brought home will be used to pay dividends, to pay back shareholders, to buy back shares, to engage in mergers and acquisitions, to rearrange the financial chessboard, not to invest in large amounts of new capital. It is a chimera to suppose that there will be large increases in capital investment as a consequence of that repatriation.”