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Hi. My name is Larry Summers and I'm glad to be with you. I'm doing something a little
different than most of the other classes in this series. Rather than talking about a
specific area of knowledge, rather than talking about my field of economics, I'm going to
talk about knowledge in general, talk about Universities, talk about ideas and talk about
their importance. Since it's going to be a personal prospective,
I thought I'd begin by just saying a little bit about my background. I grew up in an
academic family of economist; became an economist, was a professor of economics at MIT and Harvard,
then went into government working at the World Bank in the United States Government, and
ultimately becoming secretary of the treasury, then served as Harvard's president for five
controversial years between 2001 and 2006. I went back to being a professor, then served
as President Obama's Chief Economic Advisor for the first two years of his administration.
That gives me a perspective on universities,
I think and a perspective on life beyond universities. It gives me also the perspective of an economist
and the perspective, more generally of a social scientist. I think that's something very
important and it's something I want to emphasize. If you think about a high school education,
you study English, you study literature, you study music, you study art. If you think
about a high school education, you study biology, you study chemistry, you study physics. But
you don't study social science in the same way. You don't learn about scientific approaches
to how societies function and how societies operate. And part of what I'm going to try
to convince you of today is that such approaches have greatly enhanced their understanding
that understanding them better is hugely important for your future.
Before I say anything else, I want to say something about my philosophy of education
and my philosophy about why what we do in universities is so profoundly important. And
I'll illustrate it with this story. Some years ago, I was fortunate enough to
receive an honorary degree from one of America's great Universities and of course, the president
of that university gave the commencement speech. It was a very very good speech. At one
point, the president said, "and the great thing about our university is we consider
every subject, we discuss every question, we look at every kind of evidence, we focus
on every approach to analysis. And out of that dialogue, out of that debate, comes"
and then the sentence was completed "a greater understanding of each other's perspective."
And I felt very let down when I heard that. Because I thought what came out of considering
every argument debating every question, looking at every kind of evidence was a closer approximation
to truth. And out of a closer approximation to truth, came better understanding of our
world. And out of better understanding of our world, came a better world. And so it
is my strongest conviction that the reason what you are engaged in is so important is
because understanding, getting closer to truth, progress is the most important thing there
is for making lives better for all our people.
I want to talk about three things today. First, I want to talk about the importance of ideas,
the importance of intellectual life. Second, I want to talk about the importance of some
of the trends that are defining our time. I'm going to do that by posing a question
that we can't know the answer to but that we can guess at. What will historians say
about our time 250 years from now? And third, I want to take a perspective on what all this
means for your education, what all this means for the work of universities and colleges.
Think about what is remembered of any society
in the longest run. Does anyone remember who ruled England when Chaucer wrote or when
Milton wrote or when Shakespeare wrote or even when Dickens wrote? Their names will
be remembered long after any political rulers name is remembered. Does anyone know who
ruled France while the Great Impressionist created their work? Isaac Newton's name
will be remembered far longer than any person of wealth or fortune. Einstein's reconceptualization
of the universe likely will last longer than almost any monument than anyone constructs
to themselves or to any triumph. As the Harvard scholar, Helen Veldlar wrote, it is
for the works of creation that ultimately civilizations are remembered. And so it
is ultimately when one takes the longest view the kinds of ideas that you were exposed to
in this course. The kind of ideas that you will be exposed to in the remainder of your
education that are most important. But of course, for most of us it is not conceivable
that we are gonna create a sonnet like Shakespeare did or a painting like Picasso did. But
what is it that shapes the way our nations function? The decisions our nations make
that can affect the lives of millions of people? Now John Kennedy was not a typical Harvard
undergraduate and he certainly didn't have a typical post Harvard career. He did write
an undergraduate thesis. It was entitled, "Why England Slept." He had a father who
was very ambitious for him; he had access to help from journalists. He published that
thesis under the title Why England Slept and it was basically a vicious critique of Chamberlain’s
errors of appeasing Hitler at Munich. That set of ideas shaped U.S. foreign policy
for over a generation. The lessons John Kennedy learned about international relations,
the research he did helped shape his approaches to how, as President of the United States,
he would protect America’s national security. He learned important lessons about restraint
and but for his wisdom, the Cuban Missile Crisis could have ended in conflagration.
He learned important lessons about resolve, about avoiding the appearance of appeasement
and some believe that those contributed to the tragic errors of America’s entry into
the Vietnam War. You can debate the particular substance of
the lessons he learned. What you cannot debate is that it was his ideas. His ideas
learned from his education that shaped the direction of our nation.
In much the same way, economists today, presidents today debate our great recession, they debate
how best to drive our economy forward. They take it as a given that their objective is
to raise something called the GDP, the Gross Domestic Product. You know, it wasn’t
always thus. People didn’t know there was such a thing as the GDP a hundred years
ago until it was conceptualized by economic research, taught to generations of students.
Generations of students learned that demand had a great deal to do with what happened
to economies. It says something that the works of the great
British economist, John Maynard Keynes were taught in Harvard and Yale in the 1950’s,
but alumni protested that they were a communist plot. And just 20 years later, Richard Nixon,
one of our most conservative presidents declared that we are all Keynesian now. To be sure,
the world moved away from Keynes’ doctrines as economies changed in the 1980’s and 1990’s,
and now with the current downturn, they’re moving back in those directions. Again,
the specifics don’t matter, what does matter is the basic idea that it is ideas; it is
what becomes conventional wisdom that shapes the choices of nations.
I started by talking about how civilizations are remembered. Then I talked about what
shapes the course of nations. How about the ways in which ordinary life is carried
on. What is it that is done by businesses? What is it that is done by individuals?
We take it for granted in our lives that there are things that happen consciously and
things that happen unconsciously. One hundred and fifty years ago, there was no idea of
the unconscious until Freud developed such an idea. Five hundred years ago, there was
no idea of childhood as we now conceive it. Children were thought of as miniature adults.
This is life-changing because of ideas.
Activities that people think of as the most mundane are revolutionized by intellectual
sophistication. The example I like to give is Major League Baseball. For a hundred
years, until about a decade ago, baseball teams chose their players by hiring scouts.
Sending former baseball players out to watch people play baseball and pick up and try to
recruit strapping, strong-looking, young guys. There is still some of that, but now, any
successful team drafts based on careful statistical analysis. They’ve found all sorts of patterns
that had never been noticed before having to do with what kinds of players play well
and what kinds of players play less well. It was driven by inspiration and the product
of that inspiration was competition. Baseball makes progress; stores make progress in how
they sell things. We don’t think of it as a source of knowledge or as a great innovation,
but I would suggest to you that the idea of the double blind experiment, the idea that
you test a medical therapy by giving it to some people, not giving it to other people
and doing a controlled experiment is one of the most important innovations in medicine
that took place during the 20th century. Thought, evidence, ideas, change, progress.
It’s not just at the civilizational level. It’s not just at the level of whole nations.
But it’s at the level of successful organizations of every kind.
And then there is, of course, the individual and what determines how successful individuals
are. And here too, the evidence is strong and the world has changed. The economic
return to being better educated is far greater than it was even a generation ago. Look
at the difference in income between college graduates and high school graduates. But
it’s not only the economic return. The gap in life expectancy between those with
more education and those with less education has doubled as more and more practices have
been discovered that the educated can follow, that improve their health and improve their
well being. It’s more difficult to gauge life satisfaction,
but increasingly psychologists are finding ways of measuring happiness and they’re
finding that those who are better educated enjoy more satisfying lives as well.
So if you look at it at every level, we’re finding that ideas, understanding, comprehension,
their contribution to progress are becoming that much more important. Indeed, I would
suggest to you that if one wanted to describe how the world or at least large parts of the
world had changed over the last 60 years, it has been a movement from a work that is
governed by the idea of authority to a world that is governed much more by the authority
of ideas. And such a world carries with it staggering potential, but only potential
for those who grasp, who use, who cherish and who develop ideas.
What will people look back on when they look back on our time 200 or 250 years ago, from
now? What are some of the ideas that shape our
time? There’s a way of getting at that question. Let’s try to think about what
a historian 250 years from now will say about this quarter century or this half century
that we are right now in the middle of. It won’t actually say that much, if you think
about it, we, most of us, can’t distinguish in a terribly sharp way what happened between
1675 and 1700 from what happened between 1700 and 1725. But I think there are some things
that they’re likely to note. Now to be sure, there could be catastrophic events.
If global climate change is not contained or managed in some way, how that story plays
out could be the defining feature of history.
If nuclear proliferation has the consequences that some fear, some kind of nuclear conflagration
could be what people remember from our time. But those, it doesn’t seem to me would
be the things one would expect. And instead there are three aspects of the world all in
the main favorable, all in the main reflecting the power of ideas that are, I believe going
to be the legacy of our time. First, we now are headed for a truly global
progressing economy and society. If you look at economic history, what you see is
that there was essentially no progress through most of the history of humanity. Scholars
debate vigorously and bitterly whether the standards of living in London in 1800 were
the same as they had been in the Athens of Pericles or whether that they were 50 percent
greater, whether perhaps even they were 100 percent greater. But even if they were 100
percent greater, a doubling of standards of living over 2,300 years works out to a negligible
annual growth rate. The reason they called it the Industrial Revolution,
was that for the first time in all of human history, progress started at a rate where
it was noticeable within a human lifespan. For the first time in all of human history,
at the end of the human lifespan, the conditions of life, the conditions of existence were
importantly different than they had been at the beginning of a human lifetime. Why did
the Industrial Revolution happen in England in 1800 rather than in Brazil in 2000 or in
China or India in 1200? That’s a matter of much debate and much analysis. Was it an
accident? Are there deep reasons? These are matters that are extensively debated.
But what is not debated is that the Industrial
Revolution had to do with the application of scientific ideas to the basic tasks of
growing food, making clothing, providing shelter. What’s not in doubt is that the Industrial
Revolution was propelled forward by innovations which were the product of thinking human beings,
incentivized to develop better ways of doing things. What is not in doubt is that the
Industrial Revolution benefited from emulation and imitation. That good ideas were carried
out not just by the person who had them, but by others who saw them being carried out and
emulated success. And what is not in doubt is that competition, argument, debate, trial
and error pushed all of that forward. But the Industrial Revolution, as great as
it was, led to growth rates of income, of growth changes in standards of living of perhaps
one percent a year, perhaps slightly more. Over the course of a human lifespan, which
in those days was only 40 years, living standards might rise 40, perhaps 50 percent. That
was unprecedented and unimaginable relative to anything that had come before. But it
was very little compared to what was to come.
As the Industrial Revolution spread across Europe, as America proved to be particularly
innovative, particularly successful in applying technology, to have a culture that particularly
rewarded those who were prepared to do new things in new ways. You saw progress in
the United States at the end of the 19th century that was considerably faster, perhaps twice
as fast, perhaps even a little more than twice as fast as had ever been seen in Britain during
the Industrial Revolution. And so it was possible to imagine around the
turn of the century that living standards in the United States would rise by a factor
of three or by a factor of four over the course of a human lifespan. That too was an immense
achievement and it was the reason that the United States emerged as a power, a great
power in the first half of the 20th century.
Now think about what has happened in China, in India, in other parts of the world. Growth
rates not of one percent of two percent or three percent, but growth rates of seven percent
or eight percent or nine percent. Einstein is said to have said, that compound interest
is the most power force known to man. At seven percent a year growth, a quantity doubles
in 10 years. Think about what seven percent growth means for an economy. It means doubling
in one decade and then doubling in the next decade. It means that with a 70-year lifespan,
it is imaginable that living standards would differ by more than a factor of 100 from where
they were when a person was born, at the end of a human lifespan. It means that in a
decade, an individual goes from walking to having a bicycle, in another decade a motorcycle,
in another decade to an automobile. It means that areas that on photographs 30 years ago
were green rice fields, large gleaming cities are built today. It means that at one point,
one in six sky cranes on planet earth were in Shanghai.
And this is not a matter of something that is happening in one corner of the globe. Close
to one in five people on planet earth live in China and close to 40 percent of the population
of our planet live in China and in India. Why are they enjoying this profound rapid
growth? Again, the matter is studies and debated extensively.
But most people would accept that it has a great deal to do with their being prepared
to open up and to emulate and to learn from economies, from companies from individuals
who are producing in more sophisticated ways than they have. Most people would accept
that it has a great deal to do with a move to systems in which individuals have an opportunity
to benefit from their own success. You know, it has been said that no one every washed
a rented car. And it captures an important truth that when people own things, when people
get the fruits of success, they work harder to produce success.
As those societies have opened up to learn from the rest of the world, as those societies
have moved to systems where individuals can share in success, the results have been more
rapid growth than the world has ever seen. Now that growth will not continue forever.
Much of the growth comes from convergence. It comes from catching up and after you
grow fast enough, long enough, there’s no longer for you to catch up. With standards
of living in China still where they were in the United States in the 1920’s, there is
substantial room for this progress to continue.
There is no guarantee that it will continue though. Environmental challenges, the challenges
of avoiding the kind of financial problems that set back the United States during the
Depression. The challenges of maintaining a political system that is on the one hand
authoritarian and based on central control along with an economy that depends on information
being disseminated widely will be a great one for the Chinese. The challenges of engaging
with the rest of the world on very different terms than has been the case historically
will be a great one for the Chinese and for the Indians as they prosper.
No one can say how this story will end. But we know enough to know that it will be a very
big story of our time. We know enough to know that it is a story that is about progress
through knowledge. And we know enough to know that if you want to be part, fully of
the adventure of our times, it’s a story you want to understand and be part of.
There’s a second thing, a second aspect of this time that will be remembered for a
very long time to come. And that is the revolution that is underway in the sciences.
Especially in the information sciences and the life sciences and the way in which we
bring them together. You know, if you think about it, through much
of history, medicine has proceeded as much by luck and trial and error as anything else.
Fleming found Penicillin more or less by accident as a mold. Jenner found the Small
Pox Vaccine by stumbling on something with cattle. We are now at the brink of a very
different approach to understanding human health and to improving the human condition.
For the first time, we have sequenced in the last decade, the human genome. The map
that describes our common humanity. It’s a code that’s written in four letters, ATC
and G, the basis that are part of DNA. And here’s the kind of understanding we have.
You can think of the human genome as a book of several million pages. If you go to page
2,600,453, you go down 14 lines, you go over 11 spaces and you have a “T” instead of
an “A” then you may well have cystic fibrosis.
That’s a kind of understanding of the disease process that is at an entirely different level
of rigor than we’ve had before. And it points to prospects for intervention, for
change unlike any that we have seen before. No one can know all that will be possible,
but for the first time it is imaginable that we will find cures for dementia, that we will
enable people to repair their hearts. That we will stop labeling cancers by where they
take place in the body and instead identify them by the type of tumor and have an appropriately
targeted agent for each type of tumor. These are likely to be years of remarkable progress
in physical health, and they may be even more remarkable progress in mental health as we
come to understand brain functioning better and better.
To be sure, these will involve difficult ethical questions. The drugs that are taken by man
on college campuses, even high school campuses today to help concentrate or pull all-nighters
before exams point in the direction of what might be called mental steroids. And as
better and better mental steroids are developed, some of the same issues that arise with respect
to physical competition are going to arise with respect to mental competition.
The process of medicine will be transformed just as information technology transforms
what we think of as routine life. Maybe it provides some perspective or maybe it will
just make you think of me as ancient, but I remember very well giving a speech in Chicago
in 1988 and I was to give a speech to a given group. And a car picked me up at the airport
to take me to my speech. I got into the back seat of the car and there was a telephone
in the back seat of the car. And that was something so exciting to me that I called
everyone I knew to say that I was in the backseat of a car with a telephone and they shared
my excitement because it was that novel in 1988, just 23 years ago.
Today, more than half the people on earth have access to cell phones. In large parts
of the world, there will never be land line networks created. Cell phones will simply
be a leap frog technology. And a leap frog technology that will be used in the way we
are accustomed to thinking about cell phones. To talk, to text, but also in large parts
of the world, your bank account will reside on your cell phone; you will transfer money
using your cell phone. You will monitor your children using your cell phone and so
forth. We don’t know all the places that individuals
will take information technology. It was a revelation 40 years ago when sociologists
formulated the observation of six degrees of separation. When they formulated the
observation that it was possible for people to be connected, almost any two people in
the world with six links. I know you, you know someone else, that person knows someone
else and so forth. That was a kind of theoretical possibility. Now with social networks, people
find their way along those chains and find their way very rapidly.
No one thought in 1960 the world would have use for as many as 100 computers. The people
who first found the copying machine didn’t see that it would be pervasively used because
mimeograph was available. We can’t yet know where the degree of connectivity that
social networks make possible will take things. But we can know that those effects are likely
to be very, very large. Notice that exponential growth has a special
property. Suppose I take the series of numbers, one, two, four, eight, 16, 32 and so forth.
Each number is twice the last, but 32 minus 16 is twice as much as 16 minus 8 and 64 minus
32 is twice as much as 32 minus 16. It’s a feature of exponential growth, of steady
percentage growth that the increment of change that takes place gets larger and larger each
year. And that’s what happens with knowledge. As we know more and more, even if each bit
of knowledge is expanded at the same rate, the total accretion to knowledge each year
becomes that much greater. And that’s why we are likely to see as much scientific
progress in the next quarter century as we’ve seen in the entire previous century.
Now these are not unrelated development that I am talking about here. This scientific
and technical progress and these changes in standards of living that I have just described.
Precisely the reason we are able to see more rapid progress than ever before is because
there is more technological progress, more that can be emulated than ever before.
So far, when I’ve talked about what people will look at when they look at our time, I
have emphasized what in a sense is external to the individual, external to the human heart.
I talked about rapid growth in some parts of the world and all that that may mean for
the global system. I’ve talked about progress in science and technology. There’s another
difference, and it’s a difference that has been underway for many, many years, but it
also may be accelerating. And that is and ever widening sphere of human concern and
human compassion. Think about the fact that a half century ago,
at the places where you might be likely to listen to this tape, there would have been
very, very few African-American students, in some, there might have been no African-American
students. Institutions like Harvard and Yale did not have women students and even
allied colleges had numbers of women that were a quarter of the number of men who were
studying. Homosexuality was a crime in every one of the 50 states and the idea that gay
soldiers could fight in the military, whether gay people could be married would have been
an inconceivable kind of notion. Th e idea that those with mental illness had rights
to be involved in shaping their care, the idea that those with serious medical illness
had the right to be told what their condition was, none of these were norms in our society.
The set of concepts that we were prepared
to accept as objects of our sympathy was far more limited than it was today. Here’s
a great question that I hope you will all think about. It was asked of my daughter
as we sat at a dinner in Washington. A guy asked my daughter, he said, “Ruth, 150 years
ago, sitting in this room, we took slavery as absolutely natural and for granted. And
yet sitting here now, it seems inconceivable and barbaric that we would accept the institution
of slavery. A hundred years ago, we took capital punishment; we took flogging for kids
who were out of line as absolutely natural. And that seems inconceivable today. It
is unlikely,” he said, and I think he was right, “that we have reached some apex of
civilization now. What is it that we do that seems natural to us that will seem barbaric
100 years from now?” I don’t know what the answer to that is.
Perhaps it is aspects of the way we treat the poor or the very young or the very old.
Perhaps it has to do with the ways in which we treat animals. Perhaps it has to do with
the ways in which superstition continues to shape our approaches to important human problems.
I don’t know the answer, but it would be very surprising if there are not important
aspects of how we live today that will shock the consciences of those who look back on
us just as our consciences are shocked by those who came before. And what will change
those consciences? It will be individuals, it will be protests, it will be ideas, it
will be philosophies, it will be better thinking than the thinking that came before.
This is the reason you are here in a university. You are here to be educated. You are here
to understand thinking better and to think better yourself. It’s not a chance you’re
going to have throughout your lifetime. Believe me, you will have a job, it will be enormously
fulfilling, but it will come with a set of tasks, some of it will be about thinking,
but all of it won’t be about thinking. But for the next few years, you have a chance
to focus on thinking. I think about some of the students who I’ve
had a chance to know over the years who took advantages of their opportunities in a university.
One of the stories I always like to tell is of a freshman seminar that I had a chance
to teach at Harvard when I was president of the university. I taught a seminar on globalization,
some of the issues I just referred to actually. And I assigned a reading that I had written,
a lecture that I had given to the American Economic Association when I was the United
States Treasury Secretary, about global capital flows. And as I did each week, I asked one
of the students to introduce the readings.
And this young man in October of his freshman year said something like the following. “The
reading by President Summers on the flow of capital across countries, it was kind of interesting,
but the data did not come close to supporting the conclusions.” And I thought to myself,
what a fantastic thing this was. In how many human institutions that have ever existed
could somebody who had been there for five weeks, tell the person who had the title,
“President,” that he didn’t really know what he was talking about and have nobody
even to find it very surprising. And it was a special moment.
Now, I don’t want to be misunderstood. I explained to my student that I actually thought
he was rather more confused than I was and I argued back, but what was really most important
about that was the universities stand out as places that really are about the authority
of ideas. You see it in faculty members who are pleased when their students make a
discovery that undermines a cherished theory that they had put forward. You see it when
professors will suggest topics to students, but they like it best when students find their
own topics to write about, to think about, to study about.
You are embarked in a university where it is the authority of ideas that is going to
be most important and it is up to you whether like that student in my seminar, you choose
to pursue your own ideas to put them forward and do so with your convictions.
I think of another student I had who came to me one morning, one evening actually, walked
into my office and said that I had written a pretty good paper, but that it had five
important mistakes and that he wanted a job. You could debate whether they actually were
mistakes, but you couldn’t debate that young man’s hunger to learn. You could not debate
that that young man was someone who wanted to make a difference in economics and he is
today a professor of economics. And his works are more cited as an economist than
any other economist in the world. I think of a young woman who studied economics,
whose interests were never in economics as an abstraction, whose interests were never
in the theory of economics, but whose interests were in how using this knowledge, you could
help to make the world a better place. She came to me wanting to write an undergraduate
thesis on a topic that might not have seemed natural for an economist. Her topic was
“Spousal Abuse,” and the economics of spousal abuse. And her theory was that when
spouses were better educated, when they were less dependent when they were more able to
pursue their own opportunities, they had more bargaining power, they were better able to
leave a difficult situation and so you would have less abuse. So she collected data and
she proved that that theory was right. She supported her conviction that insistence on
strength was very important for women. Her name was Cheryl Sandberg, and today she is
the Chief Operating Officer of Facebook. And her ideas, her willingness to look at data
to decide what is true is helping to guide that network that is reaching some 700 million
people. I can give more examples like those of Cheryl
or Andre Schleifer, of people who set a direction and a pattern as they were students that then
shaped the rest of their lives. But the students who are most successful, the students that
get the most out of their education are not the ones who copy someone else’s path. They’re
the ones that set their own path. But the paths that matter most are the paths that
involve better understanding ideas, putting forth ideas, urging one’s own ideas while
being prepared to change one’s mind in the face of evidence and recognizing that we all
have a chance to be part of the story as the world evolves from a world governed by the
idea of authority to a much better world governed by the authority of ideas.