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09/20/2024 | News release | Distributed by Public on 09/21/2024 05:02

Larry Summers, Former U.S. Treasury Secretary, Helps Launch Questrom School Institute at BU

Larry Summers, Former U.S. Treasury Secretary, Helps Launch Questrom School Institute at BU

Ravi K. Mehrotra Institute for Business, Markets, & Society will study the role of business in "lasting prosperity" and "solving global challenges"

Former US treasury secretary Larry Summers (left) was interviewed by Harvard Business Review's Curt Nickish (Questrom'13), capping inaugural events for the Questrom School of Business Ravi K. Mehrotra Institute.

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Larry Summers, Former U.S. Treasury Secretary, Helps Launch Questrom School Institute at BU

Ravi K. Mehrotra Institute for Business, Markets, & Society will study the role of business in "lasting prosperity" and "solving global challenges"

September 20, 2024
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An overdue defense of capitalism-paired with a better understanding of what responsible businesses owe society-make a new Boston University institute devoted to those causes essential, former US Treasury Secretary Lawrence Summers said at the institute's formal launch.

The Questrom School of Business Ravi K. Mehrotra Institute for Business, Markets, & Society also strums a familial chord for Summers, whose mother pioneered the academic study of business and society interactions, he told an interviewer before the launch dinner audience on September 19 at BU's Center for Computing & Data Sciences.

"My mother, who died at the age of 98 just a year ago, was a Wharton [School] professor," Summers, a former president of Harvard, told Harvard Business Review senior editor Curt Nickish (Questrom'13). "The thing she was most proud of was inaugurating business and public policy courses in the early '80s," in the belief that businesses needed to understand sentiments in the broader society. The goal of the Mehrotra Institute, Summers said, is "actually very personal for me."

The Summers interview capped a daylong celebration that included a public conversation between Ravi Mehrotra, founder and executive chairman of the Foresight Group, and Susan Fournier, Allen Questrom Professor and Dean; a ceremony dedicating the institute, led by BU President Melissa L. Gilliam; a lunch hosted by Marcel Rindisbacher, Mehrotra Institute director and Questrom's inaugural Ravi K. Mehrotra Professor of Business, Finance; and a panel discussion among businesspeople, academics, and policymakers about corporate obligations to people beyond their shareholders.

BU President Melissa Gilliam says the new Institute's mission dovetails with Questom's leadership in business scholarship.

Mehrotra, who attended the launch dinner, endowed his namesake institute, which raised more than $50 million from him and other donors. Its mission statement is to "help others understand and appreciate the role business and markets do, can, and should play in creating lasting prosperity, advancing societal goals, and solving global challenges." The institute will have about a dozen affiliated faculty, who will conduct research, participate in public discussions (including a global crowdsourcing platform), and redesign some Questrom courses. Fellowships will be awarded to business leaders and other institutions' scholars.

At the launch dinner, Summers, an economist, declared, "I do think the case for capitalism, the case for business, hasn't been made with sufficient rigor." He cited countries such as the Koreas-the prosperous, capitalist South and the impoverished, centrally planned North. "Natural experiments point fairly strongly toward a market-oriented economy," he said.

I do think the case for capitalism, the case for business, hasn't been made with sufficient rigor.
Lawrence Summers

Treasury secretary under President Bill Clinton, Summers did not play unreserved cheerleader for laissez faire at the dinner. His voice rose most emphatically in arguing that responsible CEOs consider the systemic effects of their actions, rather than just their own business interests. He paraphrased a refrain he's heard from executives who damn teachers unions and involve themselves in starting charter schools:

"We hired the best teachers away from the public schools. …And we screened [student applicants]. If they weren't doing their homework, if they weren't sticking with it, if their parents weren't showing up, we kicked 'em out. And we had 400 kids in our kindergarten, and we only had 162 kids in our fifth grade, but you know what? Between our kindergarten and our fifth grade, our kids showed three times as much achievement growth as the kids in the public schools! And so we're really geniuses.

"And it doesn't occur to them that every single bit of what they did…was done at the expense of somebody else," Summers said. "They took the good teachers out of the public schools and put them in their school. They took the best kids; they didn't keep the [struggling] kids. Every single bit of it was winning the zero-sum game. And if, when business leaders thought about the good they were doing, they applied some discipline of system-wide analysis, rather than just my story, it would lead them to be more ultimately moral and successful actors."

Summers also offered takes on current events, including the upcoming presidential election and what he sees when looking at the economic policies of Vice President Kamala Harris and former president Donald Trump.

While disagreeing with Democrats' and Harris's push for "excessive" stimulus spending, a federal anti-gouging law, and massive debt relief for groups from students to medical patients, "There is no comparison in terms of the risks to the economy" if Donald Trump wins, he said. The Republican's proposed tariffs "are much higher than Smoot-Hawley [the import levies that deepened the Great Depression]," would trigger inflation, and make US exports less competitive, while his proposed mass deportation of undocumented immigrants, "beyond whatever its moral consequences are, is a prescription for labor shortages and substantial wage inflation."

In her remarks, Gilliam told the dinner audience that the Mehrotra Institute's mission "is an ambitious one, and I believe that is why it belongs so perfectly here at Boston University and the Questrom School." Mehrotra has said he chose Questrom because of the school's "innovative curriculum, distinguished faculty, the diverse and global perspective it offers to students, and above all, its strategic location in Boston, the world's most innovative finance, legal, and technology hub."

Mehrotra has another BU connection: his Terrier grandsons, Samridh Seth (CAS'23), Utkarsh Seth (ENG'26), and Yash Seth (CAS'26).

Fournier told BU Today that the institute aspires to lead in studying the role of business in a global economy.

"If business schools are to deliver on their missions, we need to confront the realities of public perception of business and the competitive markets in which they operate, especially among young adults," she said. "This negativity-the simplified and overarching assumption that business leaders are inherently bad actors in competitive markets that always fail-manifests in suboptimal policies and regulations, ignores the complexities and trade-offs required in the complex web of stakeholder relations in which businesses operate, and cancels business as a value-creating partner in the ecosystem that attempts to resolve societal grand challenges. 

If business schools are to deliver on their missions, we need to confront the realities of public perception of business and the competitive markets in which they operate, especially among young adults
Susan Fournier

"We have much work to do as academic institutions of business, and the Mehrotra Institute is positioned to realize and harness the potential of business and markets to affect positive change around the globe. Larry Summers' fireside chat today is a great example of bringing diverse opinions to the table."

Mehrotra's Foresight Group is a London- and Dubai-based global shipping, drilling, and private equity firm with a commitment to environmental, social, and governance (ESG). Its investment arm weighs companies' comportment with United Nations sustainability goals on climate change and other environmental concerns, in addition to financial considerations. It also runs a foundation to train underprivileged students to work both in merchant marines and on drilling rigs.

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