Big Government is stifling the American spirit

27 Oct 2010

Why Now

There are two stories told about the economic crisis. First, it was caused by too much government with the wrong sorts of regulation, and the quicker we shrink the state back down and allow human ingenuity a free rein again, the quicker we'll be out of it. Or second, it was caused by the gradual exit of government from regulation of finance; Wall Street and the City act as a sinister lobby that thinks only of privatising gains and socialising losses; the sooner government gets back in control of the economy, the better for society as a whole.

The November mid-terms are very polarised around this question: is Obama a socialist (the critique from the free market right)? or has he sold out to Wall Street interests (the critique from the left)?

And in London, the huge government spending cuts and welfare reforms are dividing the country along the same line: Clegg and Cameron want to present their economic policy as not only imposed on them by the bond markets, but also right in principle. Free, self-reliant individuals with a safety net of social insurance will make the country prosperous and contented. The left thinks this is either naive or cynical: the best way to make people contented and productive is to make sure there are jobs, and cutting government spending in a recession is hardly a way of doing that. On the cynical view, the rich and powerful diverted the spotlight of the big bail-out they enjoyed first by hyping the parliamentary expenses scandal and then by shifting the blame for economic performance onto big government.

Intelligence Squared New York staged a debate this week pitting free-market guru Art Laffer - of napkin fame (watch the intro if you don't know what I'm talking about) - against "Doctor Doom" Nouriel Roubini; Phil Gramm (remember the old Reaganite plan to get balanced budgets by legislative requirement?) versus Laura Tyson, Bill Clinton's economic adviser. This is the panel to listen to if you need to discover which side you're on.

Speakers for the motion

Arthur Laffer

Founding member, Congressional Policy Advisory Board
Phil Gramm

Rebulican senator from Texas

Chair

John Donvan

Correspondent for ABC News

Speakers against the motion

Nouriel Roubini

Professor of economics and international business, Stern School of Business, New York University
Laura Tyson

S K and Angela Chan Professor of Global Management, Haas School of Business, University of California Berkeley