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Larry Summers, contaminated by D. E. Shaw

Mr. Summers, who taught economics and public policy at Harvard while advising Shaw, also met with investors in the United States, as well as in the cash-rich Middle East and Asia. He spoke at industry conferences, mixing with officials from public pension funds, endowments and other large institutions with many billions of dollars to invest.

While at D. E. Shaw, Larry Summers also peered into the inner workings of the $2 trillion hedge fund industry, which the Obama administration is now relying on to buy billions of dollars of worrisome assets from the nation's beleaguered banks.

Some of his critics worry that such ties raise questions about whether the government's ever-changing effort to bolster the financial industry will benefit Wall Street in general, and hedge funds in particular, at the expense of taxpayers.

"This is what might be called contamination," said Andrew Sabl, an associate professor of public policy at the University of California, Los Angeles. "Did Summers spend so much time with the hedge fund, or its investors, sovereign wealth funds and so on, that he started to think like them?"

We shall suppose that a creature, possessed of reason, but unacquainted with human nature, deliberates with himself what rules of justice or property would best promote public interest, and establish peace and security among mankind: His most obvious thought would be, to assign the largest possessions to the most extensive virtue, and give every one the power of doing good, proportioned to his inclination. In a perfect theocracy, where a being, infinitely intelligent, governs by particular volitions, this rule would certainly have place, and might serve to the wisest purposes: But were mankind to execute such a law; so great is the uncertainty of merit, both from its natural obscurity, and from the self-conceit of each individual, that no determinate rule of conduct would ever result from it; and the total dissolution of society must be the immediate consequence.

Fanatics may suppose, that dominion is founded on grace, and that saints alone inherit the earth; but the civil magistrate very justly puts these sublime theorists on the same footing with common robbers, and teaches them by the severest discipline, that a rule, which, in speculation, may seem the most advantageous to society, may yet be found, in practice, totally pernicious and destructive.

--David Hume, Enquiry Concerning the Principles of Morals, Section III, Part II


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