Monday night's Munk Debates saw two sides debating the resolution that "North America faces a Japan-style era of high unemployment and slow growth."
Debating in favour of this were Paul Krugman and David Rosenberg. Laurence Summers and Ian Bremmer—the wittiest of the bunch—were opposed.
While the opposition technically won the debate—they convinced the 20% that were undecided to join their side—the majority of the capacity crowd, 55% remained pessimistic about North America's prospects.
There were two items that I took away from the event:
The first is that economic questions require non-economic answers. The debaters cited politics, education, creativity, and basic values in defence of their respective positions. Krugman, for instance, suggested that the problem of slow growth lies not with economists, but with the political system through which political policies must be enacted. American politics is simply too intractable and polarized to fix its own problems. Arguing that North America will be fine, Ian Bremmer referred again and again to hallmarks of American strength—a solid education system, strong demographic trends, philanthropy, and a culture of openness and entrepreneurship. The debates confirmed that economics is a hotly contested social science, rather than a discipline of strict math leading to clear answers.
The second is a noticeable reluctance to answer some of the deeper questions which arise in discussing our current economic situation. The two most famous speakers—Krugman and Summers—were united in their view that there was an administrative, and relatively minor, fix which would solve our woes. The big question of the night belonged to David Rosenberg. He asked: "One person's debt is another's asset: what do you do with all that debt?" In other words, what is a just response?
This question remained unanswered all evening, likely because there are no easy answers. Do we, as Rosenberg suggested—jokingly, I assume—need a jubilee? "Read your Old Testament, people!" he said. Well, the banks in North America have already received their jubilee care of the taxpayer, and it's unlikely that citizens are going to receive a similar dispensation. Even if they did, would that be just? No, it would be rewarding foolish and greedy behaviour. What about printing more money and increasing stimulus? Also unjust, because while it might reduce the weight of debt, it subsequently punishes those who lived frugally and invested wisely during the crazed orgy of unreal growth. The worth of their savings will diminish at the same level as the worth of others' debt, while either their own or their children's taxes will rise. Money is supposed to represent real value. If it's printed to pay for others' indiscretions, it might serve to fix an economy—might—but it undermines the very basis of our economy: trust.
The answer is that all of us will suffer in one of two ways. We'll either suffer the economic consequences that come as a result of the frugal living (which will keep demand—and growth—low) that is required to slowly emerge from the weight of debt we find ourselves crushed under, or we'll suffer the indignity of policies which will be inherently unjust to those who practiced economic virtue. The latter might make our economy better, it might not; but it will certainly make us—as citizens—worse.
