About this transcript: This is a full AI-generated transcript of DEBATE - Unresolved: America's Economic Outlook from Open to Debate, published June 6, 2026. The transcript contains 17,973 words with timestamps and was generated using Whisper AI.
"larger space than we normally have that some of you are first timers I just want to share with you our mission and our goal very briefly is to raise the level of public discourse and provide a forum in which ideas can clash and people can argue with each other and disagree but do so with respect..."
[00:00:00] John Donvan: larger space than we normally have that some of you are first timers I just want to share with you our mission and our goal very briefly is to raise the level of public discourse and provide a forum in which ideas can clash and people can argue with each other and disagree but do so with respect and civility and in a way that actually perhaps makes you think about things in a way that you haven't before because you haven't heard the argument before we're delighted to be in the symphony space and we're going to be presenting a symphony a an orchestrated medley of harmonious discord so stop me with this metaphor please this is a different kind of format than we normally do and again this is for those who are new normally we have a single resolution we have two teams that have prepared for an hour-long clash with each other where they try to prove and disprove that single resolution over the course of the evening this format that we call unresolved is meant to allow for the fact that actually it's really hard to get five economists to agree on anything or even two so what we're doing is we're working through three different resolutions that look at the economy at the moment that we're in particularly this moment in 2018 in the second year of the Trump administration when some of the policies that are taking place and we work through three resolutions and on each of those resolutions the debaters get to which declare at that point which side that they're going to argue so you'll see that happen in real time we're actually not sure ourselves with total clarity which side is which side each of them is going to take in the course of the evening we want to know how you and also we don't take audience questions in this format as well it's all going to happen on the stage but you are involved in a different way we want to know what your opinions are on the three resolutions as you arrive here tonight we're going to ask you to vote again after you've heard all of the arguments and to see if you've changed your minds but the way that we would like to register your votes is to have you go to use your smartphones so that means you have to have a smartphone to make this work there is a Wi-Fi in the building it'll come up on the screen sharp guest if you go up there and then navigate to the URL iq2us.org/vote and this will be open for a while by the way you'll have some time once the debate begins to complete this process it doesn't have to happen right now but again you'll see you'll be given prompts to vote yes or no there's no undecided yes or no to each of the three resolutions the GOP tax reform bill will improve our outlook for growth the second one deregulation is driving the booming economy the third one the stock market is too high so you can work on that as we begin the evening i also want to mention that intelligence squared us lives on far beyond this evening as a podcast and as a radio broadcast heard on public radio stations across the country we're live streaming now on a variety of platforms including our own website this will live on as a podcast and also as a video you can click and watch on youtube and again on other sites and on channels like newsy and we're also have an app where you can see on that's available to the apple store and the andrew stored apple play and and roku so for that reason i just want to explain that although we do about an hour and a half here the podcast is about an hour and i'm going to have to go through and i'm going to have to do a little bit that that that smooth over the things that are edited so you'll watch me sort of making a radio broadcast in in in in real time and i apologize to those folks who will be confused when i say things like i'm john donvan and i'll be right back but i don't actually go anywhere i stay here and i just keep talking and i also have to tell you again and again and again that my name is john donvan uh so it is it just is uh every now and then i'm going to need to ask for your applause to help set the mood i do want this is not like a presidential debate we do encourage you giving voice to how you feel about things you're hearing on the stage in a positive way feel free please and please do applaud to points that you like we want the uh listening audience a year from now who listens to this podcast to know that you are here and that these debaters were actually playing to try to persuade you so be here be present uh we just don't want to want it to get negative so uh no booing and hissing please um if you don't like a point um you can be silent or perhaps uh uh a sarcastic snicker something like that you know a sardonic chuckle would would you get the idea so um but keep it positive and every now and then when i ask for you to applaud spontaneously i'd appreciate it if you could be on spontaneous and applaud anyway um so i'm going to go to this this is where i live through the course of the evening i hope that you'll continue voting and um i'm going to now actually launch the uh the part that we record and turn into a podcast uh starting now and i'd appreciate it if you could help me out with some of that spontaneous applause we just talked about and so we get to see what it's like now that some of the economic promises that a candidate named donald trump made are actually being kept now that he is president he promised there would be tax reform and now we have tax reform he promised that regulations would be cut and regulations are being cut uh when it comes to trade policy we are not sure yet where that is going but what is the upshot who is feeling great and who is not feeling great and who might yet feel great well in all of this we think we have the makings of a debate and so that's what we are going to do i'm john donvan this is intelligence squared us and the name of this debate is unresolved america's economic outlook for this one we are using the format that we uh call unresolved in which five debaters uh each superbly qualified but ready to disagree with the other will argue independently in other words there are no teams in this debate uh and not on just one resolution but on a series of them so please let's welcome to the stage our esteemed debaters first jason firman hi jason jillian chet all right all right stephen moore all right dembisa moyo all right and simon johnson and i'd like to start with a little chat with our debaters starting with jason firman jason welcome back to intelligence squared us uh you spent eight years uh in the obama administration you are one of his chief economic advisors uh in fact chairman of the council of economic advisors you're now at the harvard kennedy school uh senior fellow at the peterson institute for international economics uh jason just a little bit of a little flashback uh for for just a second when you look back at the obama administration we're just curious what policy economic policy you think will be most influential in defining his legacy um i think the affordable care act wasn't just about
[00:07:31] Speaker 2: health insurance it was a really important step in a large fraction of the u.s economy which will be felt
[00:07:37] John Donvan: in years and decades to come okay thanks very much and i want to turn to jillian tett jillian you have been writing about the global economy for more than two decades including at the financial times where currently uh you are u.s managing editor you're a best-selling author your most recent book the silo effect which looks at the global economy through the lens of cultural anthropology which sounds fascinating also fascinating whether everybody here knows it or not uh you were the person who famously interviewed president trump uh when he declared that he was ready to go unilaterally against north korea if he had to big big headline at the time but when it comes to the economy uh jillian if we're to make reference in this debate here to the president's core economic
[00:08:20] Speaker 3: philosophy do we even know exactly what that is well nothing quite as dramatic as finding pyongyang on a map but um i'd say probably make american real estate great again i think we've heard that before exactly and create lots of jobs for trump supporters all right and stephen moore uh welcome back to
[00:08:39] John Donvan: intelligence squared you're a senior fellow at the heritage foundation you advise president trump during his campaign uh you are also one of the architects of the gop tax reform that we're going to be talking about um and in recent months you've been uh critical of the mainstream media uh steven in how it's covered president trump in a nutshell what do you say think that commentators are getting wrong about the
[00:09:00] Speaker 4: president i think that the main um fallacy of donald trump in terms of the coverage and i think a lot of public perception about trump is um my advice is look what he does and don't listen to what he says because i think his actions speak louder than words i'm one of these people who would love to take his thumbs away so he couldn't tweet so much uh but look i mean his actions i think were are
[00:09:25] John Donvan: important and not his words okay thank you stephen moore and dambisa moyo a global economist another best-selling author we have a lot of them on the panel tonight currently you're serving on the board of barclays bank barrick gold and chevron you have a book coming out edge of chaos why democracy is failing to deliver economic growth and how to deliver it it's coming out in april uh in one sentence just
[00:09:47] Speaker 5: a preview what's the new book about so my book offers 10 radical reforms that's 10 radical reforms to meaningfully change democracy liberal democracy so that we can actually generate sustainable long-term
[00:09:59] John Donvan: economic growth in a more equitable fashion thank you very much tambisa moya and finally simon johnson again welcome back you're a professor at the mit sloan school of management simon a senior fellow also at the peterson institute former chief economist of the international monetary fund your book uh white house burning the founding fathers our national debt and why it matters to you simon in a sentence why does the national debt matter to me because john great civilizations have
[00:10:27] Speaker 6: been brought down by issuing too much debt in an incautious manner let's not do that okay might be the
[00:10:32] John Donvan: topic that comes up tonight ladies and gentlemen one more time our panel of debaters i have to pick up something that fell the one thing i said to myself tonight was don't let these cards fall down and then they did okay uh to remind you so again of how this is going to work um we're going to be working through a series of resolutions three of them one at a time and on each of these motions the debaters will be asked to state their position in the moment yes or no they each have 90 seconds after they make that declaration to tell you why they stand on that position and if they hit the time limit they're going to hear this sound so that means when you hear that you have to stop talking the first speaker will be chosen at random and after that in each round the order will go clockwise so um the reason i didn't want to drop these is this is how we're going to choose random uh we have these very very nice cards made up with each of your faces on them and i just want to ask somebody from the front row to come up and shuffle for me thank you first have we ever met no okay okay so this you've just established the speaking order for the night i'm just going to pick from the first one and then the second one as we go forward 2018 uh begins with a new world of taxation thanks to the just past tax reform whose detractors call it a gift to the rich whose supporters see it as the starting point for a new era of spreading prosperity well which is it our first resolution the gop tax reform bill now law will improve our outlook for growth our first debater is simon johnson on this resolution the gop tax reform bill will improve our outlook for growth do you declare yes or no no you have 90 seconds to make your
[00:12:33] Speaker 6: argument john i think the way to think about this tax cut i think the word reform is somewhat overused in this context this tax cut is focused on old capital there's two kinds of capital in in this economy there's new capital there's new investment that's what builds companies that's what builds jobs i'm a professor of entrepreneurship at mit that's i work with entrepreneurs all the time they are unimpressed by this tax cut gary cone who is a senior economic advisor to uh donald trump spoke to a group recently a group like this and asked them how many actually group this kind of numbers group of ceos asked them how many of them are going to increase their investment and create new jobs as a result of the tax cut very few of them raised their hand and he was shocked but the reason is this gop republican tax cut is focused on old capital if you own a building for example a large building with a lot of apartments in new york city should you be so lucky then you're going to do very well from this tax cut that's old capital that's capital that's already in place the new capital the capital that builds companies the capital the support that we get for research and development that is not going up i think that's going to get actually squeezed when you take the entire tax picture and when you consider john all of the issues here including the distributional impact including the incentives to ordinary working people to go to college to get more education to invest in themselves in order to participate with new capital as partners in economic growth this tax reform at best is a zero i think it could be somewhat negative if you own a building around the corner or down by central park congratulations we thank you and you can applaud that
[00:14:12] John Donvan: and i just want to point out simon was simon was great at that he was within one second of bringing on that tone so so well done we move on to jason firman uh jason firman on the resolution the gop tax reform bill will improve our outlook for growth you declare yes or no um john i declare no
[00:14:29] Speaker 2: let me get out of the way this tax cut's going to shovel 200 billion dollars into the economy this year that will help the economy this year by a small amount and a transitory amount what it won't do is improve our outlook for long-run growth simon got to the very core reason for that it's a windfall for investments people have already made it's not very much of an incentive for new investments the united states already had a very high corporate tax rate but also had a lot of loopholes and that meant that the effective corporate tax rate wasn't actually very high in fact under this bill the tax rate on research and development will go up and so we're going to have less innovation and less research in addition to that this tax bill will balloon the deficit the deficit next year will be more than a trillion dollars it will stay more than a trillion dollars going forward we've had large deficits before when fighting wars in very deep recessions we have never ever had a deficit anything like this as a share of the economy in peace time so whatever benefits you get from the rate reductions will be more than outweighed by the deficit reduction the last thing i'd say is this isn't just my judgment this is the judgment of the fomc which hasn't changed its long-run outlook none of the major investors have a survey of 42 economists zero of them said it would have a large impact on long-run growth because they all understood it's a benefit for old capital that will swell the deficit and cost us in terms of research
[00:16:03] John Donvan: okay again another perfect finish the motion the resolution the gop tax reform bill will improve our outlook for growth jillian ted how do you declare
[00:16:14] Speaker 3: well i'm going to declare yes partly because i want to make this debate a bit more interesting um but also because we so appreciate that um but also because i'd like to shift the perspective as it happens if you look at the long run i share many of the concerns that jason and simon have raised i think many aspects of the tax bill are not desirable it is indeed very slanted towards as simon says making american real estate great again particularly in new york however i would also like to say that in the short term there are benefits coming down this year i do think it has helped to ignite animal spirits and as someone who did indeed train as a cultural anthropologist not an economist as somebody who's in the in the information game and spends a lot of time as a journalist overseeing a newspaper looking at sentiment i actually think that sentiment matters a lot this has helped to ignite animal spirits it has also helped to create a sense of optimism and there's also a sense of narrative around what's going on with the economy there hasn't been a sense of clear-cut narrative for a long time so for all those reasons i do actually think that in the short to medium term it's going to live already delivering a boost however i do share the concerns that they have echoed about the long term so that's a kind of qualified yes at least to inject a bit more debate and dynamism into this debate and i'm sure the next speaker will have a thorough yes
[00:17:47] John Donvan: thank you julian ted that next speaker is steven moore steven on the resolution the gop tax reform bill will improve
[00:17:58] Speaker 4: our outlook for growth are you yes or no i'm going to say no no i'm only kidding i'm only kidding i helped write the bill so of course i'm a yes um look i think that uh that giant sucking sound you're hearing um is the united states is sucking capital from the rest of the world i agree with these two gentlemen that capital is the name of the game uh whoever has the most capital wins we have made dramatic improvements in our um global competitive situation when we started writing this bill two years ago the whole idea was how do we make american businesses more competitive i do believe that our highest in the world corporate tax rate was one of the dumbest things in the world it was a it was a head start program for all the countries that we compete with we've fixed that big time we've gone from the highest statutory tax rate in the world to below the average that's going to bring a lot of jobs and factories back to the united states uh we did the repatriation so countries can bring companies can bring we don't know how much one or two trillion dollars back to the united states that's a huge benefit uh in terms of money being invested here in america rather than being invested in india or china or mexico or other countries um the we also reduced the small business tax rate so right now as of prior to january 1st the highest tax rate on small businesses was 40 percent it's now down to 30 percent there's an old saying when you tax something you get less of it when you tax something less you get more of it we're going to see a lot more jobs we're going to see a lot more investment um and i think that confidence that you talked about which i agree with that optimism is in no small part a result of this tax bill thank you stephen moore
[00:19:42] John Donvan: dambi samoyo on the resolution the gop tax reform bill will improve our outlook for growth yes or no
[00:19:48] Speaker 5: i'm going to go with no um the of course one of the problems with being the last speaker is that a lot of the comments have been made but perhaps let me just underscore what i think is a lot of smoke and mirrors with short-term focus which is driven really by a political cycle that actually rewards and encourages people to focus on the short term if you focus on the short term as a household or as a corporate you are missing the broader point the future generations are going to grab are grappling or will grapple with a tremendous suite of challenges many of them we're fully aware of what i'd like to do very quickly is just list for you and i'm sure in a little bit later i'll be able to go in great detail some of the challenges that we're facing today technology and the jobless underclass the risks of income inequality widening the fact that demographics are growing at rapid clip around the world we have 8 billion people will be 11 billion people by 2100 and we don't know how to manage that population issues around natural resource scarcity concerns around debt which we which we alluded to earlier it's burdensome and it's not it's not helping us in long in long term in terms of how we generate long-term economic growth and then finally the fact that productivity has declined in many of the most developed countries around the world it's these suites of this suite of problems that are continuing to be going to be able to brag on long-term economic growth and if you believe that a short-term tax is going to actually solve these problems or or actually meaningfully turn things around you're sadly mistaken
[00:21:20] John Donvan: thank you and now we talk now we talk for 10 minutes and it's much more free form and we're going to go a little bit more into depth on the things we are just hearing about some interesting phrases coming up ballooning the deficit i really like to ignite animal spirits um we talked we heard about smoke and mirrors um what i want to do is we have um three nos and two yeses and i think an interesting thing about this format is that all of the people who are saying no are not actually saying no for precisely the same reasons and the yeses are not yeses for the same reason so that allows for a little bit more nuance in this conversation but a thing that i kept hearing about was the long-term versus short-term impact of this and uh jason firman you you talked about the deficit being uh ballooned and i didn't think that steven moore responded to that and i kind of like steven to for you to respond to the concern that many of your co-panelists raised that not in the not too distant future uh there's going to be hell to pay for this tax plan can you take that on and again i in the interest of getting everybody in
[00:22:22] Speaker 4: sure ought to be kind of uh as turst as you can so i'm of the view and i don't know if donald trump agrees with this but the growth is everything that growth sells all the problems and the very problems that you're talking about it may not um solve every problem you're talking about but if you have faster economic growth the growth and prosperity it makes all these problems easier to solve and the deficit is is you know exhibit a on this um the forecast when donald trump entered office was we continue to have weak economic growth as we did for the last 10 years it was 1.8 growth forecast we went to donald trump and said donald if we get 1.8 growth for the next 10 or 20 years we're screwed we have we can't we're america we can't live with 1.8 we've got to get it up to three to four percent um i believe we're going to do that with this bill i think we can get we already have had three percent growth and the debt as a share of our economy does not go up every year it goes down every year if we can get to three to three and a half percent growth and that's that would be my kind of response to this issue that you both raised back
[00:23:25] Speaker 2: can you respond back to that sure first of all we have to understand the sources of our growth the primary source of our slower growth than we had in the past is demography in the 1980s the baby boom generation was going through their prime working years starting in 2008 the first baby boomers turned 62 and started to retire as they became eligible for social security if we were able to reproduce the same exact productivity growth that we had under president reagan under today's demography we would have a 1.7 percent growth rate thinking you can have a three or four percent growth rate is a ludicrous fantasy if a company did that it would go bankrupt and out of business the united states is a big strong able to borrow quite a lot but i wouldn't want to test the proposition of what it would be like based on the second thing i'd say is to say that this tax cut pays for itself is to make a statement that has zero support in the economics profession it's akin to saying let me stop you and let julian
[00:24:25] Speaker 3: respond as a yes do you dispute that point no i was going to say one thing about the other way to get around a big rapid growth is to have lots of migration if you don't have lots of babies you can have lots of migration and that pop that policy is not exactly on the table right now um especially if you come from
[00:24:40] Speaker 5: as whole countries like i do oh i'm sorry i meant house but thank you for the abbreviation because
[00:24:47] Speaker 3: now we can stay on the radio exactly um i had one point to make about the debt which is the other aspect about debt that people just are not talking about at the moment is that the only reason why debt has been moderately manageable recently is because interest rates have been incredibly low if you believe that there is going to be growth of the sort that you're arguing there's going to be then interest rates will almost certainly go up and if interest rates go up if they go from 1.8 to 3 say you're basically looking at a doubling of the annual cost of the servicing that debt anyone in the room who's got credit card debt or mortgages knows how it works and so there's a fundamental intellectual contradiction if you think that there's going to be great growth rates go up and then the cost of servicing that debt gets harder and harder simon johnson so just to develop that point animal
[00:25:43] Speaker 6: spirits jillian rightly emphasizes come in two forms one is let's invest and we may see that in stock prices there's also animal spirits in the bond market so what does the bond market say the bond market is worried about inflation for exactly these reasons when the bond market worries about inflation interest rates go up and that's pressure on on steve i hope you're right steven because then we're all going to but i fear you're up against the same economic realities the same constraints as we've all been up against and by the way the uh obama administration broke three percent in fact broke four percent growth for at least two quarters i think in 2014 quarterly growth tells you nothing the long-run growth that's what we're talking about is exactly as jason said is driven by demographics and the budget is going to
[00:26:20] John Donvan: matter the debt is eventually going to catch up with us tambisa moyo you made the point that the the set of real problems are way larger and much more complicated than a tax cut can address have you heard anything from the people on the other side of this resolution tonight who have made a persuasive case to the
[00:26:38] Speaker 5: contrary not at all um and i think just picking up on the demographic um point just to underscore how difficult and how challenging this is in the u.s context we need to think about not just the quantity of people in the workforce but also the quality of the people in the workforce you don't have to believe me go and look at the oecd pisa statistics this is a survey that the oecd which is a club of wealthy advanced countries around the world um that basically looks at how these countries are forecasted to grow over long periods of time they have an annual survey the pisa survey that looks at how people young people perform in mathematics in science and in reading the united states 10 years ago was in the top three today it's ranked in nearly number 30 around the world this is not an investment this has not been an investment particularly in minority groups who will be the majority in this country in by 2050 by some estimates and you cannot have a country long term that is expected to be successful just because you have a short-term tax cut when you have under invested in a population that you expect
[00:27:47] John Donvan: is going to contribute to long-term economic learning your point then to stephen moore stephen again stephen does this tax cut actually do something to ameliorate the challenges that that
[00:28:01] Speaker 4: dunby says just speaking about well which challenge are you talking about i mean in particular the the applause line just then um i am of the belief that we are at the beginning of a productivity revolution you know that we could see the greatest period of press you know productivity in history i mean we're seeing an automation we're seeing it in uh in robotics uh and and that is part of the i think the explanation about how you get the higher growth uh i think you're going to see you know dramatic rates of increase in in productivity productivity is related to capital investment now of course we need more human capital investment no question about it and the other point i would make and and this is where i you know probably disagree with donald trump we we look we can have an increase in our labor force there's seven million americans who would be and should be working but aren't working because we've seen a decline in our labor force participation we've got to find ways to drive those people back into the workforce but also i mean you hinted at this we have an opportunity now to attract the best and the brightest and the smartest people from all over the world to the united states donald trump i think quite correctly wants to to move us towards a merit-based immigration system where we can get you know the people who have the highest skills highest talents the people have excellence and whatever it is that gives us a great advantage to achieve this high rate of growth let me bring jason in and then jillian to finish this section i mean first of all i i think it all right you can wait let him
[00:29:30] John Donvan: have his moment yeah i i i stepped on uh steven's applause sorry on on dombeza's point i mean how you're
[00:29:36] Speaker 2: going to address an issue like preschool where the united states is 22nd out of those oecd rich countries behind some less than rich fully rich countries like mexico and chile that have gotten into the club without having adequate resources it's not something um we can do i want to get back to the animal spirits question because that's going to come up in this session i'll bet the next one as well um animal spirits first of all they're not self-sustaining they can help you for a bit but then if they're not justified by real activity they can send you crashing back down they're a little bit dangerous second of all i'm not so sure how much of them we do have in the united states john i don't know what you invest in maybe you invested in u.s equities over the last year if you did you did pretty well in the u.s stock market you would have done even better in the uk stock market the german stock market the french stock market the canadian stock market the japanese stock market u.s growth this year came in faster than anyone expected which is a great thing came in four tenths higher than what the imf was projecting germany france the uk canada japan they all came in six tenths eight tenths 1.1 higher so you've seen a lot more animal spirits in the global economy to say it's all due to a tax cut here in the united
[00:30:52] John Donvan: states i think is thank you i want you to circle it back to that tax question and i'm going to give the
[00:30:56] Speaker 3: last word on this section to jillian tech i just want to come to this issue of animal spirits again because i have in define it for us what you mean by that it basically means how you feel and if you get excited you want to rush out and buy a new car a new jacuzzi whatever else start investing that kind of stuff and i have great respect for economists and their wonderful models and all their numbers and all their data but at the end of the day most of us live economics through not just our wallet but through stories and i strongly believe that one reason why the democrats lost the last election was they had no clear-cut story trump for better or worse had a story that he could tweet out if you like and i do think when i talk to business leaders today that what is going on in their minds is a story about american growth coming back onto the radar screen when i talk to you know households when i talk to people you know who are not grown-up economists sitting in debates like this there's a sense that actually the story is changing and you might disagree with that you might say the data doesn't back that up you might say they're going to be disappointed but right now if you look not just at the stock market if you look at polls of consumer confidence and corporate confidence it has ridden dramatically and that is a story that really matters thank you julian ted and that is a wrap on this
[00:32:16] John Donvan: resolution the gop tax reform bill will improve our outlook for growth the resolution now is this deregulation is driving the booming economy i'm going back to the deck of cards jillian ted will be leading off this section okay well let me um let me do the formal okay declare yourself jillian ted on the resolution deregulation is driving the booming economy do you
[00:32:45] Speaker 3: declare yes or no no i would declare no because i think it's one factor that has fed into that story but certainly not the only one and not necessarily the major one i have sat in the commerce department i've seen the flashy plans the statistics being you know tossed around about how many rules they're going to rip up left right and center the first point i'd make is that actually for the most part these rules are being certainly ripped up some of them but it's a very small proportion of the overall total and when i talk to companies and ask them are you actually seeing practical changes yet i don't think it's dramatic as of yet but i think the other thing that's very important is that yes the regulation is important because there was a creeping sense under the last few years that excessive regulation was trying to if you like dampen down growth but if you talk to companies about which regulations they really care about the picture is so mixed right now that i certainly don't see that as a major factor driving investment plans or at least not compared to the other elements which are contributing to the optimism thank you jillian ted we move on now to steven moore steven moore
[00:33:59] John Donvan: on the question deregulation is driving the booming economy are you yes or no well i'm an emphatic
[00:34:04] Speaker 4: yes um i think that when you ask the question why did we hit this inflection point and i don't think there's any question as we look back there was an inflection point in the economy and it was november 7 2016. and you saw what happened to the stock market the stock market rose 700 points the day after the election and and the and it's you know boom ever since we've we've ratcheted up growth from two to three percent i think we can get four four percent this year um and and that didn't happen by accident i think it it happened um because of partly because of the anticipation of this tax cut but i think an even bigger factor was that um as my buddy larry kudlow likes to say on november 7 2016 the war against business was over in washington and that is um a good example of that is what trump has done with regulations and it isn't even so much the uh pullback of regulations um because there haven't been that many regulations have been pulled back but some important ones it's more that it trump has just slammed the brakes on the regulatory process in a very very um efficient and productive way and that has um i think unleashed a lot of um uh uh activity by businesses in terms of their capital spending in terms of their hiring and so on uh look regulation can strangle businesses and it was excessive under obama um this is a president who is if you ask me one you know one word about donald trump he is pro-business he's pro-american business he wants to make us number one pulling back on those regulations will uh will be another factor that has a very positive impact on our future growth in this
[00:35:40] John Donvan: country thank you steven moore dumbisa moyo on the resolution deregulation is driving the booming economy do you declare yes or no
[00:35:52] Speaker 5: i declare yes um but not emphatically um and this is going back to what we talked about a moment ago um this is to me once again smoke and mirrors we were promised a group of policy changes um which actually swept donald trump into the presidency we were promised infrastructure reform we were promised tax reform um including repatriation by corporates um at a discounted rate we were promised health care reform and on the back of that we have basically seen the market um decide that the the promises of deregulation were going to be so aggressive that they were going to support at least in the short-term economic growth the truth of the matter is as i mentioned earlier these are band-aid solutions um we have not yet heard much in terms of infrastructure and just to put a finer point on it japan just to remind you the candidate trump promised aiming for a trillion dollars um of spend um the congress with certainly the republicans were saying that they only wanted 600 billion i just want to remind you that japan had multiples of that in terms of infrastructure spend and it did not translate into economic growth we have not even yet heard anything about that infrastructure promise today a lot of people are hanging around saying monetary policy is loose we're still seeing um lots of promises in terms of fiscal policy and the path of deregulation and that to me is not founded on a solid ground i believe that the deregulation is the promise it's not yet actually happened and therefore i believe that deregulation will be ultimately the downfall of this economy thank you dan visa mayo
[00:37:40] John Donvan: simon johnson deregulation is driving the booming economy are you yes or no
[00:37:45] Speaker 6: no i agree with stephen that there has been an inflection point in this economy recently it was in early 2009 when the obama administration turned the corner with a great deal of help from the federal reserve and we pulled out of the greatest recession we had the you're reading into my 90 seconds we had the greatest recession since the 1930s we pulled out of it the stock market came back if president obama had a fault it was he didn't talk about the stock market enough that was the greatest recovery you've ever seen in your lifetimes that was the most the most consecutive quarters of job growth you have seen anyone has ever seen in american history that was the inflection point and in the midst how did they make that recovery happen they did a lot of things but i tell you one of the things to do with it is they fixed finance yes they regulated finance they took a hard look at consumer protection and the way people have been ripped off they looked at systemic risk and the way that some of our very good friends in this city had got too big to fail and they tried to grapple with that they regulated finance in a way that did not destroy or disrupt that long-lasting boom so it's not deregulation driving growth today it's the responsible moderate regulation of finance along with sensible short-term and reasonable but not sufficient perhaps long-term growth measures that's given us this opportunity that president trump and his advisors are now about to squander thank you thank you simon
[00:39:13] Speaker 2: johnson jason firman deregulation driving the booming economy do you declare yes or no i declare no i was going to establish my credibility by criticizing president obama simon already made one one of the criticisms he was terrible about tweeting about his stock market record even though the year after his re-election the stock market went up more than it did under president trump there were precisely zero tweets from president obama in that year not something president trump could say another thing is if he was at war on american business he did a very bad job as measured by the stock market valuations as measured by the longest consecutive job growth that we've seen in our country if you want to tout up what's happened under deregulation under this administration you have two choices of sources that i'm aware of one is the white house did a report that documented the total cost reduction from all their regulations they said it was 570 million dollars that's 0.003 percent of gdp it's a white house number i divided by two the american action forum is a conservative think tank they said 378 million that's 0.002 percent of gdp i'd also divide that number the last thing i'd say is the key to a successful economy is not to be pro-business it's to be pro-market and being pro-market often means regulating businesses having anti-trust having competition having rules so that people can play fair compete in a way that's good for the economy not just for their shareholders thank you thank you jason
[00:41:00] John Donvan: firman one thing that's a little bit unclear to me as we have three no's and two yeses on the motion deregulation is driving the booming economy are you all saying that you don't think there's actually been any significant deregulation undertaken yet any meaningful way i'll go first to you steven morgue you said you made the point not much yet but to some degree just i'll just mention one you know that i think has
[00:41:25] Speaker 4: had a is going to have a very positive impact on the economy and that is something uh that the um federal communications commission um uh did about two months ago which was the rollback of what's called the net neutrality rules now that by some estimates is that's by some estimates uh and it gets to simon's point about you know um more capital investment um there's good indications that we could see four or five six billion dollars of new infrastructure spending by verizon at and t and other uh companies as a result of that one deregulation so if you want to see the real world effects of of a deregulation that's one i'll just mention one other one is the coal you know uh everybody said the coal industry is dead in america donald trump is lying to the american people when he says he can bring that up uh bring that back to life um through easing some of the uh of the epa regulations under obama the coal industry is back big time we've seen something like 50 000 increase in coal jobs we've seen um a 12 increase in coal production in the united states the last year that doesn't sound like a dying industry and that industry is back in part because of deregulation simon johnson yeah the the the change
[00:42:41] Speaker 6: in net neutrality stick by your guns up there the the change in net neutrality which which is a huge deal and which i which i think is is is no way near as favorable to the economy as as as steven said it's not deregulation that's changing the nature regulation to favor some very big incumbent players so to redistribution that that's that's the theme of the policies here the tax changes we've just been talking about are a redistribution four-fifths of all the tax changes cuts will end up going to the top one percent net neutrality being abolished is the equivalent in communication policy space of exactly the same thing redistribution towards the top end towards people who are already rich that's not deregulation
[00:43:28] Speaker 2: jason let me talk about one deregulatory action that i think actually has helped the stock market there's a chance it would have a minuscule positive for growth but it's a terrible idea that's something called the conflict of interest rule or the fiduciary rule which it used to be that a retirement broker could give you advice based on kickbacks they were getting rather than your own self-interest obama made a rule against that that's a practice that costs middle class families 17 billion dollars a year our rule is going to end up costing would have ended up costing um the brokerage is probably about 1.5 billion dollars a year so for middle class families this rule was a really good idea but by delaying and potentially gutting that rule the trump administration will take money from the middle class give money to corporations you might see the stock market go up you might see some tiny help to growth but people are going to be much worse off as a result of that and that's why no regulation is based on just looking at the cost side you balance the costs and the benefits and things like this are enormously
[00:44:35] Speaker 5: on the beneficial side thank you so i think it would be crazy if anyone here said that the idea of no regulation at all is a great equilibrium and i think no one here is saying that this is we're talking basically a balancing act as someone who spent a great deal of my life in the financial industry i would like to defend it a little bit um please don't boo and heckle yet and the point is i think governments have gotten away with a narrative that is not completely accurate governments asked the banks and the financial institutions to help support the housing for all policy in the united states which has been supported by both republicans and democrats alike over many many decades this is idea that americans should be entitled to have access to basically own their home sounds like a great goal the fundamental problem was that at a time when the economy was growing we knew real wages were on the decline we knew that the debt which today in every single class government debt corporate debt household debt credit card debt auto loan debt student loan debt is over a trillion dollars we knew this was going to be a problem and yet the government encouraged the banks by making promises and i'm not saying the banks were not culpable through derivative markets etc but they did ask the financial institutions to make loans and to provide lending support to come to people simon is shaking his head emphatically i sit on the board of a bank i know what was going on we were asked to essentially lend to cut to people that you would not lend to ordinarily to help support a public policy initiative which is not one that i would say was a bad idea but the bottom line is we have to take responsibility for what government the choices that governments make and so i think it's really i think this whole issue of deregulation yes should there be regulation absolutely companies are not in the business of going out of business that is not a good initiative and yet we have banks that have gone out of business because they did make loans to people and to into sectors where they was that were subprime it was never the initiative or the goal of those institutions to do something that would
[00:46:58] John Donvan: actually um ultimately cause them their life i want to i want to let i i i know the screens are uh getting wonky i just want to say pay no attention to the man behind the curtain please i'm sorry if it's a little bit distracting but they're going they're working on it in the back right now they might keep
[00:47:15] Speaker 3: them off or bring them up again jillian tat yeah i just want to make a general point before simon and dambisa start having a sort of private argument about banking rules and the problem is this that regulation is fantastically complex and in the weeds and deregulation is also fantastically complex in the weeds and the reality is we don't really know exactly what is going on let alone what the net cumulative economic effect is going to be and we won't know for a long time because you know i've learned to treat the trump administration as being something like an agatha christie novel or film in that you know whenever you get a commotion in a kitchen you start looking for a body in the library and what the president's doing with his tweets is the ultimate weapon of mass distraction it really is you know the journalists start scurrying into the kitchen and forget about the body in the library and right now you know in the last week or two pro publica just did a great piece about this looking at all the things that have happened in the last week while we've been distracted by the s-hole comment um and when it comes to deregulation things are happening in the weeds or not happening in the weeds the one thing that's very clear though and this is a cost that no one's talking about is that as we start ripping up rules as we start talking about ripping up rules for businesses the climate just got a bit more uncertain and confusing and whether it's you're trying to work out and that's never good that's never good no whether you're looking at what's happened what the new rules are for m a i mean yes on the one hand they're having um ripping up net neutrality what about at&t where where are we going with all of that for many businesses on the ground what's happening is uncertain
[00:49:00] Speaker 4: let's stephen more respond to that so look i think there's a narrative that's gone on um by people who like some of the people at this table who when when donald trump was running for election said that if donald trump is elected he will cause a financial crisis in the world uh you know we could have a second great depression um and every policy that trump wants to do is against growth and so on and of course exactly the opposite has happened you know we've seen this for the stock market is up 42 percent since november 7 2016 that's six and a half trillion dollars increase in wealth we've seen a growth rate you know simon i mean you guys talk about the growth rate under obama yes we recover from a from the recession it was the worst recovery since the great depression we were three trillion dollars below what we would have had if we had had a reagan style recovery so it was an anemic recovery that's the reason i think hillary lost the election and now we have this booming economy in every every single statistic i would challenge any of you to show any statistic that isn't positive right now with respect to the economy and now liberals have to come up with some kind of alternative narrative as to why the policies they said were going to fail have been such a success let me go to jason and i'll
[00:50:13] Speaker 2: come to you jason jason firman if you were if you were doing a clinical trial for medicine you wouldn't just give it to one patient and look at them you'd compare them to how the others were doing this is the second time you brought up the stock market but the stock market has done better in most every other country in the world than it has in the united states over the past year the stock market did better in many years under president obama than it's done in the last year and you know you go on about this um anemic recovery ignoring the fact that the demography was completely different so the working age population was growing at two percent a year under president reagan zero percent a year under president obama who by the way we went through a massive financial crisis so you need to find some other argument for how trump has made things better than they've made them in canada the uk well the uk is growing less than us but the stock market is better japan france just once that germany can
[00:51:12] Speaker 4: i give all these other can i answer that question the united states is the hub of the world economy when we get it right the rest of the world starts to get it right there's no it's the same thing that happened it's the same thing that happened in the 1980s i mean when reagan rebuilt the american economy the rest of the world got their act together and we had a 25-year period of the greatest
[00:51:30] Speaker 2: period of prosperity in the history of the world but steve our growth rate was actually higher than all the other advanced most of the other advanced economies from 2012 through 2016. this past year it's been
[00:51:40] Speaker 4: lower than most of the other advanced we haven't heard the economy grew up 1.6 percent in barack obama's last year in office it was declining the economy wasn't growing faster it was decelerating and now it's accelerating and how do you how do you i want to bring in simon who hasn't spoken in a while then
[00:51:57] Speaker 6: denby says simon europe george w bush had some good years too the best way the best way to get growth is to deregulate your financial sector jillian knows all about this she's she and her her colleagues cover this around the world all the time do you regulate finance let the banks do what they want let them take more risk let them have less equity on their balance sheet let them go crazy and they did go crazy then we said not no fault of yours they did go crazy in 2003 2005 2007 were they aided and abetted by the government yeah sure they were but that's deregulation that's that's what it meant to deregulate and by the way the clinton administration was involved in that also from the 1990s don't get too smug out there okay but if you pump up your economy if you juice your economy with this if you juice your economy with fiscal stimulus i read the wall street journal and yes i do read the editorial page sometimes um if you but what it tells me if i if i juice my economy if i run up the debt if i get the financial sector fired up i will get short-term growth and then what happened stephen what happened what does the wall street journal say will happen they say that you will have a downturn they say you'll have a crash now if stephen moore is willing to say here today and for the record that as long as the stock market goes up everything is good and trump is doing fine and as soon as the stock market turns down we have to reevaluate i'll take that i'll walk away very happy this evening because you know what prices go up
[00:53:12] Speaker 4: prices go down that's a fair point and i'm not here to save the stock market and i don't think i mean simon i agree with you i don't think donald trump should you know judge his record by the stock market because you're right the stock market is a roller coaster let's save the stock market because we're
[00:53:28] John Donvan: going to talk about that in a couple of minutes um and i don't want to talk it out too much but demisa
[00:53:31] Speaker 5: you know i don't want to eat into too much time because actually i was preparing myself to go to battle um against simon but actually i think we actually largely agree which is that excessive deregulation is not an equilibrium that you want to seek um and that the governments were in many ways complicit aided and abetted um the financial crisis um i do think some regulation is required and it's important but i again and we're speaking to a smart audience here don't listen to us go and lift the lid and see what is actually going on in the bank balance sheets go and look and see what the governments are doing to really understand the situation a lot of what is on bank balance sheets even to this day are massive loans that were made to government in in municipalities and to local authorities in education in particularly in europe by the way house did they finance their big welfare and social programs it was because the banks were through license to trade regular and regulation were forced to make loans that actually they knew were not going to long term be sustainable so we are we are talking
[00:54:34] John Donvan: a lot about financial regulation and deregulation but there was environmental also came up very briefly in the mention of coal i just want to throw that into the conversation as well because i think people have a very tangible sense of what that is jason firman uh is is uh president trump's program to the degree that there is one of deregulation of environmental uh rules uh driving the economic boom first of all if you look at the energy sector
[00:54:58] Speaker 2: the biggest factor there is prices so the price of oil is up 40 percent with that employment in the oil industry investment in the oil industry is up those go up and down um together if you look at the shift from coal to natural gas a lot of that was reflected in relative price changes um in those two that is an example where i do think there are you could have deregulation that is a very small plus for the economy and a very large minus for society as a whole and that's why when you do regulation you don't do cost analysis um you do cost benefit and there are ways to put a price tag on that what there are ways to put a price tag well there are absolutely you can put a the companies are very good at putting a price tag on what it's doing to them and you can do things like a ton of carbon we have a national academy of sciences blessed methodology for figuring out each ton does about 40 of damage and present value and then you weigh what's the cost of dealing with carbon versus what's the cost of this and by the way the cost of dealing with carbon is a lot lower if you do it today with notice than if you wait 10 or 20 years and do it without notice it's a lot cheaper to not build a new coal-fired power plant than to build one and then 10 years later be told you can't use it anymore
[00:56:16] Speaker 3: julian ted if you want it you have the final word oh wow um well this will be a segue into the trade debate because the point i'd make is that if you're looking at the cost of environmental regulation or deregulation it's worth putting that into an international environment because one of the great ironies right now is even as the us deregulates um or goes backwards in some ways on the environmental side countries like china are moving forward and you know essentially eating america's lunch at things like solar panel technology um so it has to be seen within a much wider context than just the us economy and if donald trump really does want to make america great again maybe he should be looking at the competitive aspect of making america green again too and that is a wrap on this resolution deregulation
[00:57:03] John Donvan: is driving the booming economy we'll be right back um i have to do one of my welcome back so it would be great if you could do a little round of applause and uh and welcome back to our debate tonight we have five panelists debating several different resolutions the theme in all of them is unresolved america's economic outlook a reminder we are now halfway through this intelligence squared u.s debate and we are now moving on to this resolution the stock market is too high the first person to take on this issue is dambisa moyo dambisa moyo on the resolution the stock market is too high do you declare yes or no i declare
[00:57:45] Speaker 5: yes um some of the arguments have already been made the underlying growth prospects which should support corporate activity and long-term investment are getting much weaker over time but perhaps the most important indicator that the stock market in my to my mind is um overvalued or is certainly um run it run over skis is the fact that the dividend to retained earnings ratio which is the ratio of how much money corporates are giving back to their shareholders versus what they're retaining for more investment has been over a hundred percent in virtually every sector um over to over 2017. this means that our ceos the very same um ceos who are at the helm of many of the america's greatest corporations do not believe that there's a long-term uh prospect for investment that is actually going to generate uh returns above the cost of capital so in that respect um i am concerned that the stock market has been um has gone much further than it should have the risk reward in many of the uh stocks is now actually deteriorating and more than that i would say um we do know that a lot of the support has come from uh from uh low interest rates uh loose monetary policy and to the extent that we are expecting what the market is expecting a pricing in three rate hikes this year um and if that means there'll be a drain on liquidity in the system i think that we'll start to see a quite a significant correction thank you dumby samuel
[00:59:21] John Donvan: the stock market is too high simon johnson do you declare yes or no i say no i i'm an immigrant to
[00:59:28] Speaker 6: this country i see a couple of the immigrants on the panel with me and i how many people in the audience here are immigrants were not born in the united states can you do a round of applause people can hear you well i i see i see about a quarter of that about a quarter of our hands go up what an incredible country what an incredible country they can bring people here they can give them opportunity they can put them to work and they can have them pay tax that that's a combination that that matters here no one else in the world can do this no one else in the world has been able to do this in the past not like this and no one no what no other country in the world will be able to do it in the future what is the stock market the stock market is the value of the profits the future profits expected profits of all the companies that are based in your country it's based though that the fundamental value of of that is you it's you as consumers it's you as it's as you as producers it's you as workers it's you as families now we may disagree for example stephen and i about exactly what it would take to get growth higher and and that's a fantastic debate and and i'm from a country that bright itself on his democracy this democracy is a lot better than the one i came from we have the discussions we work things out we have the problems now i happen to think that the policies of this president if i may use a technical term as he kind of term he likes to use i think his policies are rubbish it doesn't matter we're having the discussion we will work it out we will be a greater country a bigger country with more profits and eventually that drives stock prices eventually not commenting on short-term stock prices ever we will get there after this president
[01:01:02] John Donvan: thank you simon johnson stock market is too high jason firman do you declare yes or no
[01:01:09] Speaker 2: i'm going to declare no for exactly the opposite reason that simon declared no both grounded in the same equation which is the stock market is the present discounted value of corporate profits corporate profits are the fraction of gdp that goes to corporations that fraction has risen a lot in the last 15 years i would expect that fraction to rise more still things like the corporate tax cut that that we've seen will raise that fraction so without any increase in gdp at all just a larger fraction about 30 percent more than historically going to corporate profits justifies a higher stock valuation the second thing that justifies a higher stock valuation is the denominator in that equation which is the discount rate that's taking things from the future moving them back to the present the way you do that as you look at what your alternatives are and your alternatives right now are bonds which have an even lower rate of return and so when you're taking those things to the future you're comparing how you could do in the bond market to how you could do in the stock market all of a sudden it makes that little extra return look attractive justifying a high valuation as well the flip side of this high valuation though is a low expected return in the stock market going forward it costs us about 27 dollars for each dollar of future earnings that we're generating that's an underlying rate of return closer to three or four than the eight percent we've gotten historically in the stock market thank
[01:02:45] John Donvan: you jason firman jillian tett the stock market is too high yes or no um well just to get some more
[01:02:53] Speaker 3: debate i would say yes um because one reason why the kind of numbers that jason's been talking about makes sense is if you believe that interest rates are going to stay low for a long long time as i said before if you think you're going to have growth then it's hard to keep arguing indefinitely that interest rates will always stay low and if you think that interest rates are going to stay low then you have to believe that central banks will keep pumping up the global economy by keeping policy super loose for a very very long time asset prices of all sorts around the world have been elevated by an incredible tsunami of liquidity from central banks i mean around 10 trillion dollars have gone into the global economy or the financial system under some measures and that is a lot of money so i think that sooner or later central banks will be forced to start reining that in when that happens i think people will be shocked i think we've been living with this impression of calm for a long time which has been partly pumped up by what central banks are doing and i think that as interest rates do go up then stock markets will start to look a lot less attractive and if you want to find a sign of just how much spare liquidity is floating around and as jason says just how hard it is to find places to put your money if you're worried about stocks just take note of the fact that right now my 14 year old daughter has friends in her class who are busy buying bitcoin because such is a main mania if you're a teenage boy bitcoin is big right now and that to me is a sign of a frothy financial world thank you julian tett
[01:04:36] John Donvan: the stock market is too high steven moore do you declare yes or no well i'm going to say a non-emphatic
[01:04:42] Speaker 4: no um first of all let me say i can hardly improve on what you said simon i agreed with virtually every word you said except the stuff about rubbish and trump but other than that no look i think you you put it very well you invest in the stock market because you're investing in america you have optimism about that about this great country and and i think simon put it so well as an immigrant um so i have no idea what's going to happen with the stock market next week or next month or even a year from now i don't have a clue um but i do know that the long-term rate of return on the stock market for the last 120 years is seven percent real how many of you in this room are under the age of 40 a lot my single piece of advice most important advice i can give how many of you under 30 the most important advice i can give you is start investing in the u.s stock market right now right now if you want to become a millionaire pension millionaire invest 10 or 15 of every paycheck you earn in the stock market and you will get rich the stock market it fluctuates it's a roller coaster but his long-term trend is up and that trend will continue but the only the final point i want to make about this is it's a point that simon made earlier which i think is true donald trump ultimately will not be judged by voters in terms of what happened to the stock market he will be judged as to whether he can improve the real economy for people in those states like pennsylvania and ohio and wisconsin and west virginia and kentucky people that frankly didn't feel recovery under obama and if if trump is to be a success he's got to bring hope and economic development to those areas thank you stephen moore
[01:06:26] John Donvan: let's discuss i'm interested in the last point you just made stephen moore and i want to bring it to jason firman that you you do not feel that president trump will be judged by how folks do in
[01:06:34] Speaker 2: the stock market jason firman you agree with that absolutely um about half of the country is not invested in the stock market at all directly or indirectly i agree with steve's financial advice i'd make it a globally diversified portfolio and i don't just say that um for the points i made earlier i would have said that a year ago um as well what people care about our jobs and wages and wage growth right now um is real wage growth about 0.4 that's slowed from the real wage growth that we had had in on the last four years of the obama administration unless that real wage growth picks up it's um you know not going to be very pretty for a lot of people in this economy we heard a
[01:07:15] John Donvan: lot in all of your comments about the role played by interest rates and how they've been low for a long time jillian tat you made the argument that you think people kind of think that's normal because it's been going on for such a long time um but outgoing uh fed chair janet yellen uh said that uh the weakness in 2017 inflation ratings are not going to be permanent so should we be worried about inflation in 2018 dambisa moyo and should we be worried about interest rates as a result of that
[01:07:45] Speaker 5: you said jillian first so i don't know if you wanted you said jillian oh i was i was citing jillian
[01:07:51] John Donvan: oh right but um why don't you go to this and then we'll bring it to jillian you can just cite the
[01:07:55] Speaker 3: financial times instead of yeah i mean one of my goals tonight is to persuade simon stop citing the
[01:08:00] John Donvan: wall street journal read the empty answer and then i'll bring it back to you jane
[01:08:04] Speaker 5: so um we are already seeing inflation in some places the uk has already seen an impact an uptick in inflation um there's a reason the market is pricing in potentially three rate hikes this year people are concerned about a reduction in supply of labor supply of of other inputs into manufacturing and to into businesses so i do think we are going to see inflation there's a lot of reports swirling around certainly in my email box of where the inflation has been hiding um and where where actually we might see an uptick in that i mean the truth of the matter is i believe we are we are on borrowed time um if you look historically at booms and busts certainly through the 20th century um on average and i'm sure my colleagues here will will correct me um the sort of trough to uh growth is around a six year cycle we're now as far as i'm concerned eight years into this um you know the stock market has in the past been supported by the baby boomers who were doing exactly what steven suggested they were invested those are now in retirement they're now taking their money out of the stock market there's lots of evidence of that moving it into bonds um but more fundamentally i think that the inflation picture um and the risk of inflation um does mean that we have a a series of rate hikes not just in the united states but i think um the the prospects of interest rate hikes um and inflation around the world will mean that there's um there's sort of a setup for a more challenging economic picture
[01:09:31] Speaker 3: jillian your take on that same question um well i'd agree with what dambisa says um to my mind you know if you want to believe that inflation is going to be low forever and rates are going to be low forever you have to basically believe that this time it's different and that technology and computers and this magical little device here called an iphone or smartphone has somehow ushered in a world of enormous intermediation where all the prices will keep falling online and that will have an impact in the real world and um maybe that's true maybe we're all going to have the uberization of our economy maybe we're all going to end up you know competing in the labor force with everyone else across the planet because of internet maybe we'll all find ways to go shopping very cleverly and price compare for everything online and that will keep suppressing prices forever um but if you believe that it's very hard to keep you know painting a picture of a permanently booming economy where everyone feels that their job's secure and they have a lot of confidence as well so there's a kind of intellectual contradiction in what's going on and i come back to this core point somehow very stealthily very quietly central banks have slipped an extra 10 trillion dollars into the global financial system and almost no one's noticed they've done it so slowly and so gently over so many years that we've kind of got used to this kind of new normal and they've essentially taken a patient that was addicted to heroin i.e private sector credit all those subprime mortgages and wean them off that by giving it morphine instead and eventually that is going to have to come to an end and withdrawal is never nice
[01:11:27] Speaker 6: simon johnson i liked it better when jillian was talking about agatha christie i thought that was much much much more upbeat and the murder is in the library and so on look the central banks saved the day let's please i understand that forgetting history is an american pastime i get that please it's not that long ago when we were we were seated in order terms like this discussing and debating how the world was about to end in the fall of 2008 because of the financial crisis because the ways in which big banks and a lot of other people had got over leveraged and the whole house of cards was coming crashing down central banks saved the day now did they provide an enormous amount of monetary stimulus yes did they break every single record multiple times of course do we now have many questions about how we withdraw this yes have the central banks behaved with extraordinary responsibility to this point and with a great deal of caution these are very serious people and full disclosure most of them got their phd's at mit so you know we need to we need to diversify that um but they've been extremely careful they've done a good job there are many risks ahead prices go up prices go down that you know stephen and i are absolutely agreeing on that there are risks and i don't think anyone at the back should take from this discussion any idea that stock prices would ever under any circumstances go up in some linear fashion at any particular rate we have volatilities we have risks
[01:12:44] Speaker 3: you should read the financial times thank you jason firman yeah i mean i think jillian is exactly right
[01:12:52] Speaker 2: that if you want to answer this question of if the stock market is overvalued or not what you want to know is where interest rates are going to be five years from now if the 10-year treasury is five or six percent five years from now i'm going to be wrong and i think that's a distinct possibility if they're more like three or four um i'll probably rewrite and i think that's a little bit more likely to decide between the two of those you have to ask do you think central banks are all powerful creating reality or do you think they're being handed a reality and accepting it i think the model for interest rates is a little bit more the second than the first if you look interest rates were falling from the early 1980s steadily through 2007 this isn't some new function of monetary stimulus this is an underlying decline in the equilibrium interest rate worldwide a combination of people saving more partly because of inequality investing less partly because of lack of competition the driving down the rate of return i think the central banks for the most part have just been accepting that reality and there's quite a good chance that that'll be persistent part of why i think that is economists don't have a very good track record at predicting on interest rates have always always always predicted too large an increase they've always come in below what was expected um for 40 years now and i think it's more likely that will happen than the opposite i'm not positive though so jillian could even more do you like in on this so uh you all
[01:14:23] Speaker 4: probably think i'm a know-it-all so i'll tell you that i've been wrong on the inflation and the interest rate story for the last six or seven years when you guys came into office i predicted there would be inflation a result of this monetary action and it didn't happen so i was completely wrong on that story and um you know i've told i talked to financial groups all the time i've always you've said the last six or seven years you know the one prediction i can make with certainty is the interest rates are going up they're not going down but i've been wrong every year because they just keep going down lower and lower um don't be too hard on yourself it's a common mistake well right um so just a couple couple quick points on this i it gets to your point about do you believe that technology can keep you know lowering prices and i do believe the two powerful forces in the universe right now economically are international trade and technology and those are the factors that have really led to stable prices which is a very good thing the other point i would make is here we're fretting about gee do you think the you know inflation will great will go from two percent to 2.5 percent or 2.5 percent to 2.75 percent i mean how many of you are old enough to remember uh you know 14 inflation under under uh you know carter and 20 mortgage interest rates um we're not in that kind of environment anymore i don't think it's coming back the two areas where i care a lot and worry most about inflation our education and healthcare the two industries that have had runaway inflation and the two industries
[01:15:47] John Donvan: that are run by government i have one final question one final question for someone on the panel i think i heard from you simon johnson that your argument against the motion that the stock market is too high was a sort of general core optimism about america and that ultimately it might be a little bit high now and might pull back a little bit but it's going to go and go and go and go and grow and someday whether it's not really justified today 25 000 26 000 which it passed uh today is going to be justified i i'm wondering if anybody thinks that's naive or do you all buy into simon's argument that the stock market really can't be too high because this is a great country and a great economy
[01:16:29] Speaker 5: i'm going to risk it especially since i'm an immigrant um i'm risking getting carried out here so i feel like some of my colleagues are actually being a little bit schizophrenic because in the earlier conversation they expressed a lot of concern about long-term economic growth in this country and if you think about the three key ingredients for economic growth capital how much money you have labor which we alluded to earlier the quality and the quantity of the labor force as well as productivity it would seem to me that there's a lot of scope and reason for concern in terms of capital we've talked about debts and deficits in terms of the labor market we've talked about not only the reduction in terms of the workforce but i mentioned to you earlier the oecd piece of statistics around the quality especially in a world where immigration is becoming much tighter and by world i mean u.s and then finally this question of productivity which i again mentioned earlier is really if you look at many um economic reports this is the largest contributor to economic growth um of the three we don't know why but productivity has been declining quite considerably um even though we've seen significant um significant advances with the advent of technology so to me i'm not here to say this is the end of america and it's not it's never going to ever recover but i think it's a little bit um naive to be so optimistic that the stock market will continue to go up and i'm not saying that there's you know i understand that there is volatility as we move from one place to another but i do think that um then it requires a lot of caveats because i do think that america is in a very precarious and different um position than it has been um in the last several
[01:18:09] John Donvan: decades okay i'm going to do a one minute extension to let simon respond i just want to clarify that when i was talking today as we took the stage the dow jones industrial average broke a new all-time record crossing 26 000 pulled back a little bit but that's the trend that we're in simon johnson to respond to denby some oil and then we're gonna wrap john and i thank you for letting me
[01:18:26] Speaker 6: clarify this because it's very easy to get misquoted on this my view is that discussions of short short short term immediate prospects for stock prices are absolutely fascinating i can sit and listen to them all day they are totally meaningless prices go up prices go down we don't know we don't know what's going to happen any more than you do good luck out there okay but but there is a very serious issue which denby said we're starting to get at and i hope we can explore in the remaining section which is the long term and the long term is about the country and the long term is about people now it's a bit or even importantly about the distribution between people and across people that's the point that jason made and you know jason steven and i may have different views on that fine but do you believe in america as a place for people to have families to get educated to be innovative to build companies to pass money onto and and wealth and ideas onto their children if you believe in that then you're believing in the companies of america by the way not all of them unfortunately in the stock market we get too fixated on the ones already listed we should fixate much more on the new businesses that are being created and have not yet been created or don't get created because something gets in the way but do does enterprise prosper in a way that that prosperity is shared with everyone across america including steven said people who have forgotten people who are in places or types of places that have been forgotten of late that that's the agenda and i i hear that as the shared agenda tonight across this panel and with your applause you can make it shared across the room and i'm going to call that a wrap
[01:19:55] John Donvan: on discussion of this resolution the resolution the stock market is too high uh now we want to know how you voted uh now we want to know how you were persuaded uh by going to see wow let me do that again now we're going to ask you to vote for the second time to see whether or not you were persuaded by the arguments you heard here tonight if you can again go to your smartphones and again to the url the pattern will be the same and the three questions will be the same you can vote yes or no the questions again remember the first one the gop tax reform bill will improve our outlook for growth the second one deregulation is driving the booming economy the third one the stock market is too high and while we're doing that um simon just alluded to this we've added a little a very brief uh coda section in which we just want to hear from each of these economists who were by the way just terrific in and how respectful and civil and informative you were uh we really appreciated it in fact even stephen the fact that uh that that you told us repeatedly how wrong you were uh was very refreshing and and much appreciated and that sort of candor is so now can we take the gloves off yeah that's in the spirit of what we do but i just want to thank them for for what they brought here tonight um but you each come from a different from different places from different professional backgrounds from different ideological persuasion so as we finish up this evening of debate i just want to put a question to each of you it's not necessarily debatable although maybe we'll see where it goes but i want to ask you and i'm going to start go to the last of the cards uh i'm going to start with stephen moore the question i want to ask all of you is what is the biggest challenge facing the economy in 2018 you know i i think that's a
[01:21:44] Speaker 4: tough question but i'm going to go with um i'm very worried that we're making the same kinds of mistake in the housing market that we made in 2006 and 2007 and 2008 um fannie mae and freddie mac which i think were at the center of the of the crisis but providing 100 guarantees on mortgages with one two three percent down payments um was a catastrophe and guess what ladies and general we learned nothing we learned nothing from the financial crisis fannie and freddie and other uh you know units like federal housing administration are doing the same thing and i worry that um we could see another housing uh panic and i i fervently hope that i'm wrong about that but um you know my housing policy should be i'm old-fashioned you know if we just had a policy 10 down payment there would there would never be
[01:22:33] Speaker 5: another housing crisis again um so i'm i'm kind of going to go against my profession uh as an economist and say i think that the biggest risk we have is geopolitics um i have to say it's become a veritable jack-in-the-box every day you wake up god knows what's happening in particular from the united states and this has to do with every aspect of public policy in terms of really i don't know where we're going in terms of education policy in terms of um health care policy but also more generally i mean this is the leading economy of the world in terms of gdp but also in terms of really ideology certainly in the post-washington consensus world and until china emerged and we do look from around the world where 90 percent of the world's population lives looks to the united states to be a beacon um in terms of showing us the right path for not just economic success but political um success also and my concern right now is that there's been a lot of credibility lost um i think there's a lot of um skepticism around the democratic process um there's far too much short-termism um really pandering and courting and catering to short-term uh interests to try and garner votes with little consideration for the long term which we've already talked about here um so i will just say that the geopolitical environment um really i say geopolitical but i really mean from the leader from the leading nation in the world the united states is of deep concern to me and i think of many people around the world and do you see that echoed in other
[01:24:09] John Donvan: countries do you do you see the do you see this tendency echoed in other countries or yes absolutely so i've been
[01:24:16] Speaker 5: very fortunate i've traveled to over 80 countries around the world i think even places like china a lot of people talk about china china is the second largest economy in the world in gdp terms but in per capita income terms you know some rankings put it at number 100 um you know worse than many countries in south america and africa and places in asia they've got enormous issues that they have they're grappling with um and we need guidance we need guidance and environment we need r d we need innovation those things cannot come from places where people are just trying to eke out the living they come from places where there's ability to flex your mental muscles and to have the opportunities to to you know collaborate and and to debate and unfortunately um i think i liked um this idea of the distraction that jillian touched on i think that we are too distracted right now with trivialities and what is at stake is enormous i think it's actually human progress sermon johnson
[01:25:15] Speaker 6: i'm not sure the last time you had the opportunity to visit the perhaps greatest icon of american democracy i'm speaking of course about the statue of liberty in in new york harbor the last time i was there not too long ago it did not say on the inscription send us your well-to-do people who already well educated and from nicely run democracies you know what this country is about because you either came to this country or your parents came to this country or your grandparents came to your country or someone who you remember and reference and speak about came to this country and you know what it wasn't easy for them it was hard work and they were not necessarily always welcomed although there have been moments when immigrants were more welcome there have also been moments when it was more difficult or as difficult for irish people or italian people or jewish people to come to the united states the greatest danger of my greatest fear for for next year john and going forward is that we will go massively into an anti-immigrant phase immigrants help move this country forward immigrants more immigration will help in a done in a responsible way will help get you to the growth targets that stephen rightly dangles before you if you turn against immigrants and there is a proposal on the table supported by president trump from two republican senators to cut legal immigration from a million to half a million if you do that your growth targets stephen are going to disappear like sand through your fingers jason firman the best line the best line john naturally comes from that other icon of american culture the musical hamilton i think i've got this right immigrants we get the job done that's right
[01:27:12] Speaker 2: and jason firman that reminds me of a panel i was on with a german ceo that creates a lot of jobs in america has a lot of plants in america he said he was having a really hard time dealing with regulation in america had to hire several more people to navigate all of the way we're applying our immigration rules now and because of that he was creating less jobs in america so if you can still vote on the regulation one factor that one um into your vote i have um my my concerns like denbeza and and uh simon's are about the long term i'm less concerned about 2018 than just about any year in the last decade um in part that's because if something bad happens it won't be my fault um but it's also because we're going to have hundreds of billions of dollars moving into the economy we have a certain amount of momentum we have a certain amount of global momentum but if you ask me to actually answer the question of what i'm worried about in 2018 um it's the lack of fear that i have and so many others have the price of risk right now is very low expectations are very high if those get disappointed there's a some chance of a wily coyote moment where you look down and there's nothing beneath you and you keep going down um that's not my prediction for the year but if it happens you can say i put a 30 chance on it and told you here um tonight and if it does i think it'll happen in jillian's way it'll happen not with three or four rate hikes from the fed which is fine and we can handle it would happen with a much more dramatic revaluation of interest rates across the board something that governments businesses and private investors aren't fully prepared to handle thank you jason
[01:28:57] Speaker 3: and jillian tett well i would echo much of what jason and simon the others have all said but i'd like to basically finish by going back to where i started which is with pyongyang because we now know that president donald trump knows where pyongyang is on a map he might even be able to spell it but pyongyang stands for this incredible geopolitical risk which is rising right now i was very struck because i was reading a book about a year ago about the preparations the u.s had made for nuclear war back in the 1950s or 60s called red mountain it's a fabulous book if any any you want to read it i remember reading it and thinking well this isn't a very well-timed book is it and now you look at that and you think about how the discussion has changed in just a year in terms of the threats to the geopolitical order you look at the magnitude and the number of threats if you start thinking about the type of cyber security threats and think for just a minute what would happen if suddenly the internet was switched off for a week if you think about the fact well we all live at the moment assuming the internet is going to be connected as a single global whole and in fact if you look at what's happening in the weeds is going into the splinter net where different regions are increasingly taking different approaches towards it and try and imagine what that will mean in the future if you look at things like the fact that bridgewater big hedge fund calculates that proportion of the vote in the west that's gone to populist candidates has jumped up from about seven percent in 2010 to 35 percent in 2017 and the only time that swing has ever been seen before was just before world war ii when you look at all of those different issues it's very clear to me right now that hopefully none of them will come to bite this year but i suspect that if anything is going to derail this sunny economic picture over the next year it's not going to be about economics and it's not going to be something that anyone's going to predict with an economic model so read the ft
[01:31:10] John Donvan: thank you all of you for sharing those insights those of you who are again our regulars um thanks for coming and i want to thank the newcomers for joining us too and i wanted to let them know this about intelligence squared us we are a non-profit organization we we produce this event and we put it out to the world through the podcast for free they get used in schools uh they travel over the literally around the globe i meet people constantly in this country and a few times overseas who love what we're doing and what they say is i really appreciate the fact that there can be a rational conversation in the middle of argument that's that's the that's our special sauce and the gift we put out there but we can't do oh thank you um i i i'm sorry but that was a commercial because uh because i want to ask those of you who uh who uh can do it uh and and large and small donations make a huge difference to us what regardless um if you can go to our uh website you can make a donation iq2us.org or now that you all have your phones in your hand uh you can text the word debate to seven nine seven nine seven nine and you'll get a prompt to make a contribution so that's debate to seven nine seven nine seven nine i want to let you know that this debate was our winter season premiere right now we think it's the only one we're doing in this unresolved format the rest of the season will be in our more classic format which is a very different kind of experience uh later this season we'll be taking on uh topics that include uh the what what the what bitcoin means what it stands for its importance is it going to rise or fall we're going to take a look at net neutrality which came up tonight but we're going to look at it in depth uh in march we'll be going overseas for the first time in partnership with the german marshall fund we'll be at the annual brussels forum and be debate debating humanitarian intervention you can uh follow all of these again through the live stream and follow up afterwards uh by looking for our podcast next month to celebrate valentine's day we're doing a change of pace for us uh we are doing our first uh ever intelidating uh debate and um the motion is swipe left dating apps have killed romance um and our we're we're going to have a conversation first with daniel jones who is the editor of the new york times modern love column and then following that the debate with wnyc's manu samarodi and sociologist eric klinenberg they'll be arguing for the motion against them defending uh teledating match.com's helen fisher and ok cupids tom jocks they will be taking the other side that's going to be february 6th at the sheen center tickets for that will be available online so we would love to see you there and again text the word debate to 797979 we'd appreciate it okay we've asked you to vote two times both before you heard the arguments again afterwards uh to see what uh arguments ultimately you found most persuasive so we want to check in on those numbers on the first uh resolution that we looked at the gop tax reform reform i'm sorry the gop tax reform bill will improve our outlook for growth uh the side arguing against swung over the most people by 15 it was 37 22 then it was 63 78 that was a net swing of 15 to the no side the gop tax form bill will improve our outlook for growth the resolution deregulation is driving the booming economy the first vote it was 27 were yes and 16 73 were no in the second vote it was 16 were yes and 84 were no it was an 11 point swing to the no side and finally the stock market is too high the first vote was 35 people of percent of you saying yes and 65 percent no but in the second vote it was a 50 50 split 50 50 which means that swing went towards the yes side that you all here this feel the stock market is too high so let's worry listen i want to i want to thank all of you for taking part in this thanks for this panel i'm john donvan from intelligence squared u.s we'll see you next time
[01:35:35] Speaker ?: you you you you you