On October 3rd, the same night Barack Obama and Mitt Romney were clashing in their first debate, two equally polarized men met in New York City’s Kaufmann Concert Hall to discuss the future of economics, both here and abroad.
Joe Stiglitz
Arguing that America is heading toward another recession and that parts of Europe, namely Spain and Greece, are effectively already in a depression, Nobel Prize-winning economist Joseph Stiglitz represented the liberal perspective. Political scientist Ian Bremmer, founder and president of Eurasia Group, offered his equally pessimistic conservative position, pushing back against Stiglitz’s assertion that narrowing inequalities of wealth and investing in domestic infrastructure and technological research will lift the country out of its economic slump.
Ian Bremmer
The debate, part of 92Y’s Campaign for the American Conversation series and moderated by Robin Harding, U.S. Economics Editor for The Financial Times, covered topics ranging from campaign finance reform and the stranglehold private interests have on Congress to America’s position in a rapidly changing global economic landscape.
How did we get into this mess?
Unsurprisingly, Stiglitz and Bremmer traced the country’s economic troubles back to the policies of George W. Bush, in Stiglitz’s case, and Obama, in Bremmer’s. Stiglitz specifically pointed to the Iraq War and Bush’s tax cuts for the wealthy, while Bremmer said that Obama’s “exponentially” expanded use of drone strikes and continued problems in the financial sector do not “redound to American credibility on free markets around the world.”
The men agreed that the deficit needs to be addressed, but neither sees it as a pressing issue for the next president. Despite the U.S.’s decline in GDP growth relative to other countries, Bremmer argued that the country “is in a better position on the deficit today, in terms of other countries’ perceptions, than it was in 2007,” which is the most important factor in our ability to borrow. Stiglitz pointed out that “the United States, right now, can borrow at a negative real interest rate,” has been “underinvested, especially for the last decade,” and now has “a backlog of very high-return investments in the public sector.”
How do we get out of it?
Stiglitz contended that the economic recovery can be achieved with additional stimulus. Specifically, he’d like to see another fiscal stimulus, like the one enacted shortly after Obama took office, rather than monetary efforts like quantitative easing, which he said create “false hope.”
Ultimately, Stiglitz sees a stagnant job market and extremely depressed wages as the core symptoms that must be addressed. Ignoring those issues will continue the current “vicious circle” that has been keeping the economy weak and which “exacerbates the depth of the downturn.”
Bremmer sees hope for growth in “the energy revolution, which is overwhelmingly in the United States” and in renewed foreign investment, as where investors perceive risk moves to “the emerging market world and other places outside the United States.”
Bremmer warns that the country “cannot afford to get China wrong” because “the relationship is structurally deteriorating.” That said, the two powers still have an “immense need for each other” when it comes to their economic interests, Bremmer said.
