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I’m glad I found myself in Toronto this evening, because tonight’s Munk Debate was illuminating and enjoyable. The motion was that “North America faces a Japan-style era of high unemployment and slow growth”; Paul Krugman was arguing for it, while Larry Summers was arguing against.

Krugman found himself with the home-team advantage through being paired with Canadian economist David Rosenberg; Summers had strong rhetorical backup from Eurasia Group’s Ian Bremmer. But at heart, this was Krugman vs Summers, which is an inspired match-up: especially in election season, one of the most important criteria for any debate is that it not cleave easily and obviously along party-political lines. That way people just end up voting their party and rehearsing tired party-political talking points.

This debate, because it took place within a basically Keynesian, leftist worldview, was very interesting. Both Krugman and Summers spent a lot of time saying that they agreed with each other — with one big difference. They both quoted Keynes as diagnosing “magneto trouble” — the engine of the economy is broken, and it needs to be fixed. Summers has faith that, in Churchill’s phrase, “Americans can always be counted on to do the right thing, after they have exhausted all other possibilities” — the right thing, here, being to fix the magneto with expansionary fiscal and monetary policy. Krugman, by contrast, sees political gridlock as far as the eye can see, and says that it doesn’t matter how innovative or philanthropic or demographically attractive the U.S. is — if you don’t fix the magneto, the car won’t start, and America’s magneto ain’t gonna get fixed any time soon.

Economically speaking, the Nobel laureate largely had the better of the technocrat. We’re already four years from the beginning of the U.S. recession, and we’ve certainly been going nowhere over that time — the question isn’t whether the economy is lost, so much as whether there’s something which can help it back onto its feet in the next few years. As Rosenberg said, if you look at employment, or the stock market, or median income, or house prices, all of them are back to where they were years ago. Things might improve in the future, but they sure aren’t healthy right now. And Japan is proof that economies can stagnate more or less indefinitely — it’s now, as Krugman pointed out, 19 years into its “lost decade”.

And Summers made a couple of surprising rhetorical missteps, for someone who cut his teeth on debate teams. At the very beginning he praised the debate’s sponsors, Peter and Melanie Munk, holding them up as an example of how North American philanthropists help to keep the continent vibrant. But the gesture rang a little hollow, coming as it did from a man who was being paid extremely handsomely to turn up and do the bidding of the Munks’ charitable foundation. Summers is many things, but he’s hardly top of the list of people in need of large philanthropic donations.

Summers also tried to defend inequality, at least in part, by saying that “suppose the United States had 30 more people like Steve Jobs” — that, he said, would be a good thing even as it increased inequality. “So we do need to recognize that a component of this inequality is the other side of successful entrepreneurship; that is surely something we want to encourage.” This might have been received better had Summers not earlier praised America, while pointing to Bremmer, as “the only country in the world where you can raise your first $100 million before you buy your first suit and tie”.

Bremmer is undoubtedly a rich and successful entrepreneur — and one who never wears a tie, to boot — but he’s making money entirely from the 0.1%, and at heart Eurasia Group’s business model is one which does better as the ultra-rich get richer. In the context of a debate about how to rescue the economy for the other 99% of us, it doesn’t much help to point to One Percenters like Jobs and Bremmer who have managed to do well for themselves in an otherwise stagnant economy.

For his part, Bremmer had one theme, and he was sticking to it: the U.S. might be in a mess, but it has stronger fundamentals than other regions, especially Europe and Japan. But Bremmer never explained how being not-as-bad-as-Europe was going to help drag the U.S. out of its current slump, especially when, as Krugman pointed out, every single country to successfully recover from a financial crisis has done so by means of exports.

But here’s the thing: Summers really is a formidable debater. He met Krugman’s gridlock argument head-on, saying that Barack Obama’s legislative achievements in 2009-10 were greater than those in any two year period since 1965-66, or possibly even 1933-34. And in his concluding remarks, he declared that “things are never as bad as you think they are when things are bad”, adding optimistically — and accurately — that in politics, “the transition from inconceivable to inevitable can be very rapid”. Summers’s optimistic sentiment went down well with the well-heeled Toronto crowd: people who are wealthy and healthy and happy, like the Munk Debate audience, tend to be attracted to arguments saying that there’s no need to feel guilty or fearful.

And so, in the end, host Rudyard Griffiths declared a “technical victory” for Summers and Bremmer. They didn’t win a majority of the votes — in fact, they were beaten by Krugman and Rosenberg, 45% to 55%. But Krugman and Rosenberg started the debate with 55% support, while Summers and Bremmer started with just 25%: basically, the undecideds all plumped for Summers over Krugman.

As for me, I entered the debate torn, and I exited it that way as well. There’s something very un-American about doom-mongering, and it’s fair to say that any given economist, at any given point in time, is more likely to be wrong than right. In order for Krugman to be right, he has to be right — right in his analysis, and right in forecasting what the macroeconomic implications of that analysis might be. But the Krugman-Rosenberg teams couldn’t even agree on the analysis: while Krugman was convinced that a bunch of borrowing and spending would fix what ails the economy, Rosenberg was convinced that we’re at the beginning of a massive deleveraging and that you can’t fix an over-indebted economy by piling even more debt onto it.

Krugman is certainly outside the economic consensus, and while that doesn’t mean he’s wrong, it’s certainly prima facie reason to be skeptical about his analysis. Besides, Krugman’s been so pessimistic for so long, now, that it’s almost impossible to imagine what kind of evidence could get him to change his mind and declare that we’re not headed for a lost decade after all. Summers, by contrast, doesn’t think in forecasts so much as in probability distributions — a much less constricting way of thinking.

So, do I think that North America faces a Japan-style era of high unemployment and slow growth? I’ll agree with Summers and Krugman on this one: yes, it does. Will it manage to do what’s necessary to avoid that fate? That’s something no one can know with any certainty. But life’s certainly a lot easier if you believe that it will.

(Photo: Sandler via Central Image Agency)