Munk Debates | Krugman, Rosenberg / Summers, Bremner debate in Toronto
As usual the pro and con is somewhat artificial but the opportunity to hear these heavyweights in person is well worthwhile.
The resolution: Be it resolved North America faces a Japan-style era of economic stagnation.
First reaction; all four managed to get through the entire two hours withought mentioning the U word – unemployment
We heard the usual economist words such as, demand, growth and lack of both.
Only David Rosenberg, who incidentally despite being Canadian, is the only one of the four that I did not know, made the pragmatic point that there is only a de-leveraging effect from US consumers and there is nothing in the works to change that.
Bremner who was introduced by Summers as someone who raised his first 100 million before he could tie a tie, fell into the trap of being an Ameriphobe. No matter the opposition point his response is that America is great, has always been great and always will be. His denigration of Japan, as Summers, was simply a clear miss on what Japan represents.
They made the predictable comments about Japanese insularity but failed to note the Japanese bubble / collapse in 1989 was an asset bubble of enormous proportions, that was Japanese made. It was 100 million people responsible for the up an down of that bubble. Furthermore those people owned the problem an lived with it. There was no foreign influence nor intervention, and are doing just fine since.
The American bubble in the 2000’s was global, and the result was instant contraction on US average people’s ability buy things. The first clue to the US bubble was a French mutual fund collapsing.
Krugman is pragmatic in that the US government shows no signs of embracing dialogue. Summers counters that America is all powerful and will always pull through.
I longed for Niall Ferguson to leap onto the stage to remind people that the true conundrum lies in a reducing employed base that is de-leveraging while massive deployment of jobs takes place permanently to cheaper locations (not US – think China, Vietnam, Thailand etc)
To me this is the final conundrum that neither Summers nor Krugman address.
A fascinating insight to some of the leading thinkers in North America, yet they confirm my long held view that America lives in an opaque bubble that prevents it seeing what is happening beyond its shores.
For me the pro’s won convincingly despite Summers astounding public persona and Krugmans lack thereof.
A brilliant evening!