Panel Discussion with: Krugman, Sachs, Phelps, Soros
Just wanted to let everyone know about a presentation that aired on Cspan’s Book TV. It is a 2 hour panel discussion titles: Global Economy: Crisis Without End. It was held 2/17/12. Click hereto bring up the show.
What I found most interesting was the different perspectives between Krugman and Sachs. I’m not sure, but I don’t think either realized they were talking about the “crisis” from 2 different perspectives which leads to 2 different answers to what needs to be done. Thus, they come across as if the other is wrong, when in my opinion, they are both correct. Krugman says we need to do more now. Yes we do. Sach’s says we need to take the long view and start changing the direction we are going, namely calling for higher revenue raising by the government to be spent on the nation’s infrastructure, and he did not just mean physical infrastructure. I guess you would say he was calling for the government folks to get real about raising capital and then doing capital expenditures. Not exactly the thinking I would have expected from Sach’s considering his start in economic life: Shock Therapy.
Maybe I was just seeing the difference in Keynes vs Neoclassic Econ meets Bono? So as much as Sach’s appears to be calling for the correct long term solution, I don’t trust him as the one to lead the charge.
It was a very good discussion and there is more there than what I have keyed on.
I didmn’t read the transcript so I have nothing useful to say. But my uninformed guess is that Sachs has a huge ego. It isn’t as if Krugman didn’t argue for higher taxes and public investment for decades. I think that Sachs didn’t discuss the short term, because Krugman did so very publicly before he did. So he can say he agrees (which is not tolerable) or change the topic.
As sumarized in one sentence by Krugman (whose ego isn’t tiny either) Sachs said Krugman was wrong so he argued that we should not stimulate but rather invest more in infrastructure and education (while laying off teachers because the Federal Government isn’t stimulating).
Notably, Krugman does not have any particular enthusiasm for deficit spending. He would support a balanced budget spending increase right now if it were big enough (here he differs from people who stress the desirability of more Treasury securities — he is giving straight up Hicks ni a liquidity trapwhere the balanced budget multiplier = 1 not 1/(1-s) and it is better to raise G and T by 1/(1-s) than just raise G by 1 (because he thinks public debt crowds out private invesment when the economy is not in a liquidity trap).
I don’t know what I am talking about, but I’m sure they agree and just won’t admit it.
Just for edification, I did not find a transcript at the site of the link. The link will bring up the discussion for you to watch.