North America’s Lost Decade?: The Munk Debate on the Economy

By Paul Krugman, David Rosenberg, Lawrence Summers and Ian Bremmer

As stock markets gyrate, Europe lurches from crisis to crisis, and recovery in the United States slows, the future of the North American economy is more uncertain than ever. Can individual entrepreneurship, corporate innovation, and governments create a new era of sustained economic growth? Or, will the ongoing financial crisis, political dysfunction in the United States, and the rise of emerging nations erode living standards in North America for the long term?

In this edition of the Munk Debates -- Canada's premier international debate series -- Nobel Prize-winning economist Paul Krugman and former Chief Economist at the Bank of America-Merrill Lynch David Rosenberg square off against former director of President Obama’s National Economic Council Lawrence Summers and bestselling author Ian Bremmer to tackle the resolution: Be it resolved North America faces a Japan-style era of high unemployment and slow growth.

This riveting debate features four of the world's most renowned economists discussing the single most important issue facing all North Americans in a lively, engaging forum. The economy is a concern that demands our immediate attention and this enlightening and hugely important debate is a must-read for all of us.

• Language: English
• Publisher: House of Anansi Press
• Release date: Feb 4, 2012
• ISBN: 9781770892019

Book preview

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NORTH AMERICA’S

LOST DECADE?

_______________

PAUL KRUGMAN AND DAVID ROSENBERG

VS. LAWRENCE SUMMERS AND IAN BREMNER

_______________

THE MUNK DEBATE ON THE NORTH AMERICAN ECONOMY

EDITED BY RUDYARD GRIFFITHS AND PATRICK LUCIANI

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Copyright © 2012 Aurea Foundation

Paul Krugman in Conversation, by Brian Milner. Copyright © 2011, Globe and Mail

Lawrence Summers in Conversation, by Brian Milner. Copyright © 2011, Globe and Mail

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LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION

North America’s lost decade? : the Munk debate on the North American economy /

Rudyard Griffiths and Patrick Luciani, editors.

(The Munk debates)

Based on the "Be it resolved North America faces a Japan-style

era of high unemployment and slow growth",

Munk Debate held on Nov. 14, 2011.

eISBN 978-1-77089-201-9

1. North America — Economic conditions. 2. United States — Economic conditions — 2009-.

3. United States — Economic conditions — 2001–2009. I. Griffiths, Rudyard II. Luciani, Patrick III. Series: Munk debates

HC95.N659 2011     330.97’00541     C2011-907741-8

Library of Congress Control Number: 2011943046

Cover design: Alysia Shewchuk

Transcription: Rondi Adamson

Cover photograph: Getty Images

We acknowledge for their financial support of our publishing program the Canada Council for the Arts, the Ontario Arts Council, and the Government of Canada through the Canada Book Fund.

INTRODUCTION BY PETER MUNK

The United States and the world are still suffering the consequences of the financial crises that started in late 2008. With slow economic recovery, high unemployment, collapsing equity and real estate prices, a growing national debt, and a politically divided Congress, the United States is struggling to find the right policies to get its economy back on track. And even though Canada has managed to avoid the worst of the financial crisis, if the United States doesn’t get it right, we will all be in for a difficult time.

That was the background to the eighth semi-annual Munk Debate held at Roy Thomson Hall in Toronto on November 14, 2011, before an audience of 2,700 with many thousands more following online. The resolution that night was Be it resolved North America faces a Japan-style era of high unemployment and slow growth. Is the same fate awaiting the United States as it grapples with a similar crisis that threatens to bring down its economy? Or will America’s creativity, ingenuity, and free markets rally to find solutions to overcome the worst financial and economic crisis since the Great Depression?

America’s challenge is made more difficult as the European experiment, with its common currency, comes under tremendous stress as member countries struggle to get their debt levels under control. And whatever one thinks of the Occupy Movement and its bizarre mixture of social, political, and economic messages, it has one complaint in common with the Tea Party movement: something has to be done to restrain the risk-taking and excesses of the financial sector so that it doesn’t bring the real economy down with it. As with Japan, both the eurozone and the United States have accumulated massive public debt as a result of bailouts and fiscal stimuli while revenues have declined. What makes matters more concerning is that the United States has never had a recovery without the help of a surge in the real estate market, but a strong recovery in housing doesn’t seem likely any time soon.

Four exceptional thinkers were selected to debate these crucial issues. Arguing for the resolution was Nobel laureate Paul Krugman and economist and investment strategist David Rosenberg.

Anyone who keeps up with the American political scene and economy knows the work of Paul Krugman. Not only does he write a highly influential New York Times column, but he is also Professor of Economics at Princeton University. For his scholarship he was awarded the Nobel Prize in Economics in 2008. Dr. Krugman is a bestselling author of a number of acclaimed books and an acknowledged expert and observer of the Japanese economy. Paul Krugman reminds us that the situation in the United States is far worse than that of Japan in the early 1990s, and he doesn’t see a solution as long as there is a deadlock between the Republicans and Democrats on economic policy. He also makes the argument that following a financial crisis — at least since WWII — countries have only recovered by running large trade surpluses, an option not open to the United States.

Debating with Dr. Krugman is Canadian David Rosenberg, Chief Economist and Strategist of the Toronto-based wealth management firm Gluskin Sheff and Associates. David also served as Chief North American Economist at Bank of America Merrill Lynch. An exceptional analyst, he is one of only a handful of economists who predicted the slow pace of the post-crisis recovery and the stark reversal in stock valuations. Mr. Rosenberg is right to remind us that massive fiscal stimulus in the United States won’t be effective in getting the economy to grow in the face of a massive consumer de-leveraging of private debt.

Arguing against the resolution were Lawrence Summers and Ian Bremmer who believe that North America’s economy and institutions are flexible enough to weather the current storm. Lawrence Summers came to this debate with a sterling reputation as an economic scholar and public servant, and I am personally gratified that he accepted our invitation to participate. He is also a respected economic theorist who served as President of Harvard University, Chief Economist at the World Bank, and as Secretary of the Treasury of the United States under President Bill Clinton. More recently, he served as director of President Obama’s National Economic Council.

Dr. Summers holds the opposing view that the housing collapse and the drop in the stock market in Japan during the 1990s were much