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Spitzer Discusses Economic Crisis

By Danielle J. Kolin

Former New York Governor Eliot Spitzer criticized the federal response to the economic crisis in a lecture yesterday sponsored by Harvard’s Edmond J. Safra Foundation Center for Ethics, an appearance some media outlets called ironic due to Spitzer’s resignation in the midst of a prostitution scandal.

Speaking before a packed audience and news cameras, Spitzer emphasized that the Obama administration should invest more money in job creation and infrastructure, rather than directing money to propping up large banks and other bankrupt companies.

“Too big to fail is too big not to fail,” Spitzer said. “There are only two people who seem not to get that so far: [Former University President and National Economic Council Director] Larry Summers and [Treasury Secretary] Tim Geithner.”

Instead of giving $182 billion to insurance giant AIG, he said, the government should take such action as promising to buy 5,000 electric cars in 2013 and building electric charging stations along the highway system.

Spitzer criticized the federal assumption of bank debts, saying that socializing risk while privatizing gain creates an asymmetry and distorts incentives.

The former New York Attorney General also argued that the government must intervene in the marketplace in order to enforce integrity and transparency, claiming that markets will not address certain core values, including issues of discrimination and the minimum wage.

He added that only the government can ensure competition and prevent monopolies.

“I thought his suggestions were really enlightening, and politicians should pay more attention to them,” Amanda E. McGowan ’13 said.

Spitzer also addressed broader problems with corporate governance, which he said were “at the heart and soul of what has failed in the last 30 years.”

He emphasized that to limit the power of CEOs, shareholders must become more involved with reforming companies.

Spitzer served as New York’s main legal adviser from 1999 to 2006, when he became the state’s governor. In 2008, he resigned due to his connections with an elite prostitution ring. Prior to his address, numerous media outlets noted what some framed as a contradiction in the disgraced former governor speaking at a center for ethics.

Safra Center Director Lawrence Lessig introduced Spitzer as “perhaps the most important living prosecutor of a wide range of corruption.”

“No one doubts that what Governor Spitzer did was wrong, to his family, to his state, to his supporters across the country, to himself. This much is serious and clear,” Lessig said. “Likewise, no one doubts that until the moment he was charged, Governor Spitzer inspired the best in our profession.”

Following the lecture, one audience member asked whether Spitzer would comment on whether the revelations leading to his resignation were exposed due to someone’s ulterior motives, but Spitzer refrained from commenting.

“I won’t respond to it, and it’s not material to why I resigned,” said Spitzer, answering the question.

“I resigned because it was the right thing to do. The actions were wrong, and why they were made public doesn’t relate to anything I did, and it doesn’t excuse it,” the 1984 graduate from Harvard Law School added.

The lecture was one of several in a series on institutional corruption that Lessig launched this year.

Spitzer’s daughter, Elyssa A.L. Spitzer ’12, is a Crimson news editor.

—Staff writer Danielle J. Kolin can be reached at dkolin@fas.harvard.edu.

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Harvard Kennedy SchoolEconomics