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SAIS Review 24.2 (2004) 185-189



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The Treasurer's New Clothes

In An Uncertain World: Tough Choices from Wall Street to Washington, by Robert E. Rubin and Jacob Weisberg (New York: Random House, 2003). 448 pages. $35.00

No sooner had Robert Rubin been sworn in as Clinton's second Secretary of the Treasury than he found himself staring down the barrel of a full-blown economic crisis in Mexico. Mexico had just about depleted its foreign reserves trying to prop up the peso, which at the time was pegged to the dollar. As doubts about the government's ability to repay its loans grew, investors became unwilling to hold Mexican debt or pesos, and Mexico, effectively cut off from international lending, reached the brink of default. The first in what would be a running theme of his four-year tenure, Rubin spearheaded a massive, highly unpopular and risky intervention, to the tune of $20 billion (plus another $17.8 billion from the IMF).

This crisis and others like it—Thailand and South Korea in 1997, Indonesia and Russia in 1998, Brazil in 1999—serve to define the concentric personal, political and world philosophies of the man. In his professional life, Rubin places great store in "probabilistic decision-making," which sounds scientific but turns out to be a commonsensical weighing of the expected benefits of a course of action against the anticipated costs of its failure. This way of thinking requires a comprehensive consideration of alternative payoffs and a healthy appreciation for relative likelihoods. Since no outcome can be ascertained—hence the book's title—the Secretary believes in the inherent goodness of options, and this broadly characterizes his political approach: he is a master at seeing all sides to an issue and presenting a balanced, well-informed basis for decision. Rubin's worldview is likewise defined by inter-connections: economic growth, poverty reduction and security are different dimensions of the same problem. Whether one agrees with it or not, Rubin's strong underlying belief in the comparative advantage of nations, its corollary in free trade, and its explicit link to Third World economic development is both consistent and refreshing in this election year.

Holistic worldview aside, the anatomical focus on economic crises in the memoir, whether actually representative of his term or just a narrative device (they occupy four entire chapters and portions of others), does leave the author open to his successor Paul O'Neill's label of "chief of the fire department," [End Page 185] or at least to that impression. This would be unfortunate, if not unfair, as the book offers up great insights into the political awakening of a Wall Street arbitrageur and the inner workings of foreign economic policy-making in the White House and at Treasury. With respect to the former, Rubin's practical suggestions for entering public life should be required reading for any mid-career professional who has ever wondered how to go about attaining a position of influence and power in that sector. With respect to the latter, Rubin's understated account of how he breathed life into Clinton's far-sighted proposal for a National Economic Council (NEC), modeled after the President's National Security Council for coordinating foreign policy, provides a revealing glimpse into why that institution was widely viewed as successful.

Beyond his approach to decision-making, Rubin had the knack for assembling world-class talent, an international economic response "Dream Team" in the author's words. Team members were as noteworthy for their individual caliber as for their highly collaborative way of working, a fact that has much to do with other qualities of Rubin's that shine through the text. First, he appears not only to tolerate but actively to court dissent. One anecdote shows Rubin urging an apologetic Goldman Sachs colleague, by all means, to keep disagreeing with him in future. Second, once all the options have been assessed and probabilities dutifully assigned, Rubin adopts a very healthy perspective on even the most momentous decisions. In the long run, he reasons, no one will remember, and...

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