One of the big spectacles at Freedom Fest was the showdown between Stephen Moore and Paul Krugman that took place this morning. Moore founded the Club for Growth and was formerly on the editorial board of the Wall Street Journal. The former chief economist at the Heritage Foundation was billed as the “supply-sider.” On the other side of the debate was Krugman — New York Times columnist, professor of economics at Princeton, and Nobel prize winner. He was billed as the “Keynesian.”
The topic was “What happened to the American Dream?” or “How can we best restore the American Dream?”
I have to give some props to Krugman for showing up, as he had to know this was going to be a tough crowd. And this panel was one of the best I’ve seen at a conference — it was thoughtful and did not get hostile at all, while both Moore and Krugman addressed each other’s points. I wish we had more of this and less grandstanding at our center-right conclaves.
Since this was an hour-long debate, I’ll sum up some of the most interesting exchanges between the two economists. It didn’t take long before each was urging the moderator to pull up one of their charts. Charts really add some gravitas to the discussion. As they say on the streets, sh!t got real when the charts started coming out.
Moore pointed out that everything done by the Obama administration has thwarted recovery from the economic disaster of 2007-8. But to be fair, he included Bush along with examples of Obama’s mistakes: cash for clunkers, stimulus, bailouts, and tax increases, for starters. He said that Reagan also inherited a bad economy but did the right things for a much faster turnaround. Moore said that we have 8 million fewer jobs under Obama than we would have had if Obama had taken Reagan-esque action.
Krugman countered by saying that Reagan had a different kind of economic crisis than Obama had and added that there is a strong correlation between government spending and growth. (Well, yeah, when the government is spending money to prop up the economy, there is some growth. The question is: at what cost does that come? Government dependency for one.)
Another topic that was discussed was Obamacare. Krugman argued Obamacare has brought down the cost of healthcare. (The whole room laughed at that howler.) He said that Obamacare is performing better than anticipated, with costs at 20% less than projected.
Moore responded that the two areas that have seen the largest increases over the years in cost are healthcare and education, both of which are under growing government control and regulation. And Krugman responded that healthcare is more expensive in the U.S. than it is anywhere else, presumably in places with total government control, and that government does a better job of administering healthcare than the private sector. (That garnered some groans from the audience.)
And I think Moore topped Krugman when he pointed out the case with Lasik. Lasik is not covered by insurance — it is totally a private economic transaction between doctor and patient — and the cost of Lasik surgery has dropped significantly over the years. I would add that we see the same thing with cosmetic surgery (not that I would know anything about that kind of thing). Cosmetic surgery is not covered by insurance and there are numerous businesses that offer competitive pricing on certain procedures, so I hear. There are far more businesses that offer all kinds of rejuvenation goodies now than were around 10 years ago. There’s a reason for that: No government or insurance along with competition.
The final topic of interest was a debate over minimum wage law. Does it cause structural unemployment? Krugman said there was no evidence that raising the minimum wage costs jobs. Moore took another approach and pointed out that the people who are most hurt are teenagers who do not have low-wage jobs anymore. Labor force participation is falling among those under 30. He said he has two teenagers and he loved then very much but he would not pay them $12 an hour to work. Moore also mentioned only 4% of Americans earn minimum wage.
All in all this was a very interesting discussion. Of course I was not convinced by anything Krugman had to say but I did think it was a good-faith conversation on a variety of topics. If this shows up on video somewhere I urge you to watch — it is well worth your time.