Tuesday, November 15, 2011

Krugman and Summers: A Reading of the Munk Debate

What happens to the U.S. economy, as we all know, will affect Canada profoundly - which is no doubt why this Munk debate garnered so much attention here. The debate is repeated several times on BNN.

Krugman has the edge for me since he has always recognized that all economic theory is grounded in the political. Summers is a technocrat, and I simply don't trust technocratic economists whether they're on the left or the right. And despite what Don Gardner says in a tweet - that Summers is unconsciously channelling Future Babble, Gardner's book (a very large claim) - and despite the notion that Summers "doesn't think in forecasts so much as in probability distributions — a much less constricting way of thinking" - Summers' vision remains a rosy, U.S. excepeptionalist view of the future.

I agree with Summers, however, about the weakness of the analogy with Japan and that U.S. economic woes are different from either Europe's or Japan's and about the desirability of government stimulus spending, a position he shares with Krugman - something of course we should be doing in Canada as well. But his argument for U.S.'s uniqueness is based on yesterday's vision of economic America, a perspective that excludes the reality of a political descent, both internationally and domestically, that has been going on for at least 10 years and that has shaped - and continues to do so - economic policy and the real U.S. economy. This missing political dimension undermines Summers' pure economic argument in my judgement. And this is why I've called him a technocrat.

Krugman vs Summers: The debate | Felix Salmon
Paul Krugman, Lawrence Summers take their corners for Munk Debate - The Globe and Mail

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