Folks of a certain age, who watched ABC’s Wide World of Sports, will remember the phrase “the agony of defeat.”
Well, that’s what Richard Epstein and I endured Tuesday night at the Intelligence Squared debate in New York City.
We were battling against two Keynesians, Mark Zandi and Cecilia Rouse, in hopes of convincing the audience to reject the proposition that “Congress should pass Obama’s jobs plan.”
The good news is that only 16 percent of the audience were on our side before the debate, and we managed to push that number up to 22 percent.
The bad news, however, is that 45 percent of the audience began the night agreeing with the Keynesian position and that number rose to 69 percent.
Cornelius Vanderbilt is rumored to have said, “the people be damned.” I’m tempted to stamp my feet and say the same thing, but I already did plenty of whining in a recent post, so I guess I’ll just have to suck it up and admit I somehow should have been more persuasive.
Here is some of what Elizabeth Weingarten wrote in her report for Slate.
The audience at last night’s Slate/Intelligence Squared U.S. live debate at NYU’s Skirball Center vehemently agreed with the president: After the conclusion of the debate, 69 percent voted forthe motion “Congress should pass Obama’s jobs bill—piece by piece”; 22 percent voted against the motion; and 9 percent were undecided. …NYU law professor Richard Epstein and Cato Institute senior fellow Dan Mitchell endured hisses and boos, while chief economist of Moody’s Analytics Mark Zandi and Princeton University economics professor Cecilia Rouse won laughter and applause as they took the president’s side. …Mitchell and Epstein began the debate strongly, especially when Mitchell engaged the audience in a clever “quiz” to show that the American Jobs Plan is simply a repeat of failed economic policy. “Let’s divide this room in half,” he began. “Let’s borrow all the money out of the pockets of the people on this side of the room and give it to the people on this side of the room. Now here’s the quiz. Raise your hand if you think there’s more money in the room.” The audience chuckled. This stimulus, he explained, is simply a redistribution of national income. “Our goal should be not to redistribute national income; we want to increase national income,” Mitchell said. “We want a bigger pie so everyone can get a bigger slice; that’s what economic growth is all about.”But soon, Mitchell and Epstein seemed to fall from grace. …After the debate, Donvan reflected on Mitchell’s debate strategy. “Dan Mitchell’s willingness to play the ogre, as he put it, read fun and bold, but I think it didn’t help sell the side,” he said. He even thought Mitchell and Epstein “presented a more comprehensive argument” than the other team. But it “was also the view from 30,000 feet, and less satisfying for an audience asking for a jobs solution right now.” …When I asked Mitchell why he lost after the debate, he told me it was because he was forced to play the villain. “The challenge of defending free markets and limited government is that you’re telling people there’s no Santa Claus,” Mitchell said. “Everyone likes to think that there’s some magic wand the government can wave, and especially if you’re in a position where you can be pigeonholed as somehow defending the interest of the wealthy, it makes it even harder.”
I’m not sure how I should feel about being described as an ogre, but I suppose it’s good that the moderator basically said that Richard and I presented a better argument.
In other words, maybe I should put the blame on the denizens of New York City!
But that’s no excuse. If we’re going to save America from becoming another Greece, we better figure out how to educate people who have been lured into thinking government is Santa Claus.
At some point, the people from Intelligence Squared will post a video of the debate. In the meantime, you can watch this video of me debunking Keynesian economics and this video eviscerating Obama’s faux stimulus.
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_My first thought as to why your TEAM lost was that your ally was a tad confrontrational with the audience. I agreed with your ally 100% but trying to persuade a hostile audience with statements like “dream on” will not cut it. I think you did a great job of making your point by including Bush and Obama for creating many of our problems.
I also agree with others that without background knowledge of real economics, many of your words and most of your ally’s words were lost on the audience.
The last reason why I think you guys lost was that you were offering tough love. Your opponents offered a beautiful illusion to a group of people that are not ready for the truth. Treat liberals like folks that are not ready for AA.
For removing the minimum wage, I always try to give an example of an unpaid internship with a master of some skill where it is a priviledge just to work with the guy. Why would the master pay someone to slow him down, heck maybe you should be paying him and treating him as a teacher. Of course this is with the hopes of a better pay off down the road for the intern/student. The other side even admitted that missing a job would hurt your down stream results.
For taking money from the rich and the CBO numbers I usually win these debates by bringing up simple human nature instead of the numbers argument. Would a certain percentage of the population work a little less if taxes went up 6% on them? Of course the honest answer would be yes and that less taxes would result from this so the CBO numbers would automatically be wrong simply due to EXPECTED human nature, we are not robots.
The lady in red who asked what the fire truck solution was from your side of the debate, for someone that is about to run out of unemployement benefits, felt like her question was not answered. I would have said family, church and of course the last resort would be government BUT the following regulation changes would maximize the number of people getting jobs so there would be some pain but it would be far less than continuing down the path of limitless unemployement and it would begin to work instantly. It is also not the governments job to take care of people, that is your job and your community’s job. Expect hissing with that last little bit hehe.
I really enjoyed your side of the debate. The high point for the other side was to quibble over who came out with the 8% figure and what their title was at the time. I
My first thought as to why your TEAM lost was that your ally was a tad confrontrational with the audience. I agreed with your ally 100% but trying to persuade a hostile audience with statements like “dream on” will not cut it. I think you did a great job of making your point by including Bush and Obama for creating many of our problems.
I also agree with others that without background knowledge of real economics, many of your words and most of your ally’s words were lost on the audience.
The last reason why I think you guys lost was that you were offering tough love. Your opponents offered a beautiful illusion to a group of people that are not ready for the truth. Treat liberals like folks that are not ready for AA.
For removing the minimum wage, I always try to give an example of an unpaid internship with a master of some skill where it is a priviledge just to work with the guy. Why would the master pay someone to slow him down, heck maybe you should be paying him and treating him as a teacher. Of course this is with the hopes of a better pay off down the road for the intern/student. The other side even admitted that missing a job would hurt your down stream results.
For taking money from the rich and the CBO numbers I usually win these debates by bringing up simple human nature instead of the numbers argument. Would a certain percentage of the population work a little less if taxes went up 6% on them? Of course the honest answer would be yes and that less taxes would result from this so the CBO numbers would automatically be wrong simply due to EXPECTED human nature, we are not robots.
The lady in red who asked what the fire truck solution was from your side of the debate, for someone that is about to run out of unemployement benefits, felt like her question was not answered. I would have said family, church and of course the last resort would be government BUT the following regulation changes would maximize the number of people getting jobs so there would be some pain but it would be far less than continuing down the path of limitless unemployement and it would begin to work instantly. It is also not the governments job to take care of people, that is your job and your community’s job. Expect hissing with that last little bit hehe.
I really enjoyed your side of the debate. The high point for the other side was to quibble over who came out with the 8% figure and what their title was at the time. I
Hey Dan,
Keep up the good fight. You’re doing a great job. I can imagine that was hard to endure, but when I read the Slate article they audience member admitted as much that you won, he just didn’t like the answer so choose to believe the Keynesians:
“He even thought Mitchell and Epstein “presented a more comprehensive argument” than the other team. But it “was also the view from 30,000 feet, and less satisfying for an audience asking for a jobs solution right now.”
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Here’s the link
FWIW, I think you and Professor Epstein had the more persuasive arguments. That said, it’s difficult persuading someone that his or her preconceived notions are wrong, regardless of how compelling your reasoning is. I posted some thoughts about the debate on my website, American Rattlesnake
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“In theory, how is this different from issuing treasuries (which, presumably, businesses would buy with their cash) and lowering taxes (tax credits for everyone)?” It isn’t much different, though fiscal stimulus proponents seem to like to tie tax credits to purchases, e.g. a new car or house. I used the example of cash-holding businesses because fiscal stimulus proponents often use this example, e.g. http://tinyurl.com/3b22msr
The point is that in Dan Mitchell’s video, he suggests that Keynesianism just takes money out of one pocket and puts it in another, to no net effect. But what if it takes it out of non-spenders’ pockets and puts it in spenders’ pockets?
“For example, if large businesses are sitting on cash, can the government borrow it and dish it out in the form of tax credits for people who buy homes and american cars?”
That doesn’t make any sense to me. What is the benefit to the large businesses? Are they going to make interest on this borrowing? In theory, how is this different from issuing treasuries (which, presumably, businesses would buy with their cash) and lowering taxes (tax credits for everyone)?
Why involve the government at all? Let the large businesses loan their money to people who buy homes and cars. Simply lower tax, and you don’t even have to pass the money through a government bureaucracy.
Dan,
It was an excellent debate, and I thought you and Richard Epstein won. But that is, I think, because we already share set of unspoken premises that were not shared with the majority of the audience. And that gap is why they were not convinced.
For example, your demonstration about redistribution makes sense to me. But to the audience, you left out some details. So, if you take the money from one half of the audience and give it to the other, sure, there isn’t more money. But the unspoken assumption of the audience is that the money is taken from people who aren’t spending it and being given to people who will spend it. That whole marginal propensity to save that another commenter referred to. And this, coupled with another assumption held by the audience that spending, rather than investment (savings) creates jobs, makes your exercise cute but unconvincing.
So I think those two need to be addressed better.
Here are my 2 cents on why I think you lost the debate – there was not enough emphasis put on the effect that our massive debt is having on the future economic picture. Although it was discussed that the cost of this stimulus was “paid for” and that any tax increases are very bad for a recovery, in my humble opinion any tax increases should go toward paying down the debt, not authorizing new spending. After the recent downgrade, a friend of mine sent me an email to put the debt into perspective:
• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• New debt: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $ 38,500,000,000
Let’s remove 8 zeros and pretend it’s a household budget:
• Annual family income: $21,700.
• Money the family spent: $38,200.
• New debt on the the home equity line of credit: $16,500.
• Outstanding balance on the mortgage: $142,710.
• Total budget cuts: $385.
There appears to be no end in sight for the spending. The new stimulus is akin to our family borrowing another $5,000 and going to the casino to raise more money.
[…] A minor oversight, though, in a blistering indictment of Keynesian economics. Heck, Prof. Meltzer should have taken my place at the NYC debate on stimulus. I suspect, however, that the crowd would have been reached the wrong conclusion even if the ghosts of Milton Friedman and Friedrich Hayek has been resuscitated for the event (yes, I’m still sulking). […]
“America’s advantage over the rest of the world has been more collectivism than other nations”. Now that looks like a realistic assessment.
More than a little surprised that this event would be taken so seriously and personally by any of the participants. Oh, as a person hoping to be informed, certainly appreciate being taken seriously. But the premise of either we believe in the power of the lone individual conquering all vs this is a mess, we must all work together to solve it…well…you folks have other terms for these things…this seems to be a never ending debate. As your standard operating citizen, frankly…I tire of the ‘isms. Like I know what they really mean? Further, like I care? I’m sick of the excuses made in the name of or in opposition to one ridiculous Ideology after another. They are all built on foundations of clay. Screw ’em all. How about just some basic pragmatism? See problem. Fix problem. Now, we can either sit back and pick some hero to strap on whatever metaphorical six gun he wants…and go whip hell out of the dragon…or we can do what the USA does so well, that is makes this Nation one of the most startling successes in all of human history. It’s called working together. See for example: Revolutionary War, Civil War Union side and the mother of them all, WWII. Those are clear and evident examples of the force, energy, velocity and shear get-this-done we are capable of. Splitting ourselves up in to one fictitious dichotomy or other is obscene. All hail the grey area the zone of synthesis…and then MOVE. Once we get this herd of cats pointed in same direction…we just might move somewhere. Honestly, sitting here in stasis, beating our heads against each other instead of beating them against a problem, this is an improvement? What a joke.
Folks, realize it! America crossed the event horizon in 2008. Now it is headed for the rocks like many ships before it. So America is now closer to the rocks than the turning radius of its electorate.
Prepare yourselves for European level punitive taxes on the productive and VAT or something equivalent on the poor.
I don’t know which form the crisis will come in, just as I don’t know where the first bubble will form in a pot of water to which heat is applied. But the crisis will come, just as sure as the pot will boil. Free lunches and macroeconomic gimmicks that attempt to achieve prosperity by flattening the effort-reward curve are doomed to fail like attempts to circumvent the principle of conservation of energy – they only result in even higher levels of entropy – an irreversible process. Governments (i.e. the collective) are resorting to the very leveraging they so much derided the financial sector for, in order to further forestall the reality of decreasing incentives to produce and distort reality into another, even bigger bubble.
So when the crisis comes to America there will be panic. In that environment, the poor will acquiesce to VAT (or something like it) and the rich will get punitive taxes (what are they going to do anyway, they’re a minority).
As I said, I don’t know in which form the crisis will come, but my best guess is when borrowing costs for collective debt (i.e US bonds) start rising.
So the path to Francification is sealed. And for many people that has actually been THE dream: A slower French like decline growing at 1%, drowned in a world that is growing at 4-5%.
The few smart people in the BRIC countries must be watching in amusement and bewilderment the Western world commit suicide.
I saw and enjoyed the debate. I’m a California liberal/Independent and Obama supporter. I found your arguments quite persuasive. You were logical and you struck the perfect tone.
If you haven’t seen these already Dan, you will find them quite amusing and entertaining, and perhaps even quite familiar given your debate experience…
“Fear the Boom and Bust: A Hayek vs. Keynes Rap Anthem”:
“Fight of the Century: Keynes vs. Hayek Round 2:”
You’re “Keynesian Econ is Wrong” video is nice, but it doesn’t seem complete. In reference to around the 3 minute mark, why can’t the government borrow from entities with a high propensity to save, and distribute it to those with a high propensity to spend? For example, if large businesses are sitting on cash, can the government borrow it and dish it out in the form of tax credits for people who buy homes and american cars? Wouldn’t that “prime the pump?”
Murray Rothbard gave an excellent answer to the rhetorical question posed at the conclusion of both videos, asking why politicians continue to implement failing Keynesian stimulus packages:
The outcome of the debate in favour of Keynesianism and against free market economics can be replicated across the U.S. and around the world and bodes ill for the future.
In calling for job creation now, Keynesians ignore von Mises’s argument in The Clash of Group Interests that short-term intervention ultimately fails, that long-term planning is better and more prosperous in the long run.
Instead, their plan, as Bastiat criticised in The Law is to make sure they get their ‘fair’ share of the redistributionist bounty.
One wonders about the ultimate success of unseating President Obama and with what sort of incentives the Republican challenger must tempt the voters.
This was in a state that voted for Hillary. And on a venue that has been pushing a socialist agenda for years. The only folks that still listen to NPR are the folks that turn on specifically for the comedy of Cartalk, the homily of Lake Woebegon, or the lib/progs. Little “r” republicans and true conservaties quit listening years ago. Not even a selection on the car radio push button any more.
I’m amazed that you got through that without physicial damage.
Good job Dan. Don’t feel bad. When you posted the link to the webpage for the debate I saw the vote there and knew that you were going to have an uphill battle. The audience for NPR tends to be very progressive. My guess is that Epstein went over their heads and that yeah, you may have come off as…insensitive? I haven’t listened to the debate yet but I can’t wait to. I’ll be sure to yell at it whenever your opponents are saying something stupid.
Getting booed in the visitors stadium is like getting a standing ovation at home.