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How should we fix the economy? -- Part 2

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Voting Style: Open Point System: 7 Point
Started: 3/10/2014 Category: Economics
Updated: 7 years ago Status: Post Voting Period
Viewed: 1,173 times Debate No: 48776
Debate Rounds (3)
Comments (9)
Votes (2)




I want JohnMaynardKeynes and I have a complete debate because our last one wasn't too great.

We are going to build on our last debate but should restate our policy positions here.

Round 1: State your platform, no explanation.
Round 2: Explain your positions.
Round 3: Rebuttals

Here is my platform:

1. Eliminate all personal income taxes, corporate income taxes, payroll taxes, estate taxes, and taxes on capital gains, dividends, and interest.
2. Impose tariffs on imports.
3. Legalize all drugs.
4. Tax those drugs.
5. Eliminate all federal regulations.
6. Repeal ObamaCare.
7. Abolish Social Security, Medicare, and Medicaid.
8. Part-time Congress.
9. Abolish the Federal Reserve and bring back the gold standard.
10. Abolish the Departments of Education, Interior, Housing and Urban Development, Commerce, Energy, and the Environmental Protection Agency.
11. Expand oil subsidies.
12. Abolish welfare.
13. End unemployment insurance.
14. Abolish the minimum wage.


Hello, again, Bob. I'm looking forward once again to debating these issues with you.

With that said, I'm not the biggest fan of the format that you have devised, since I don't place much clout in policy positions without explanations, but I agreed to it, so here we go:

-Raise the minimum wage to $15 per hour
-Extend unemployment insurance until the economy reaches full employment (about 5%)
-Eliminate the sequester
-Cut the military budget, and use the proceeds to fund the stimulus that I'm about to suggest.
-Pass a (larger) stimulus, and focus on extending state aid and unemployment insurance, green energy, science and technology, infrastructure, and education.
-Enact a carbon tax on polluters
-Raise taxes on the top 2 percent of income earners
-Eliminate oil subsidies, and various tax loopholes for corporations and investors (e.g., carried interest), as well as the tax preference for capital gains
-Re-regulate the banks, including but not limited to Glass-Steaggall, regulations on derivatives, etc.
-Add a public option to the health care bill
-Forgive all student loan debt and fully subsidize public universities, establishing a positive right to education.

That's all for now. Best of luck, Bob.
Debate Round No. 1


1. Taxes are too high and are stifling business owners and preventing them from expanding. I want to provide them certainty by not stealing their wealth.
2. Free trade destroys jobs and we want to raise revenue somehow.
3. You should be able to do what you want with your own body.
4. We need revenue.
5. Regulations and red tape are preventing businesses from expanding.
6. The ACA is killing jobs. The CBO said it would kill 2.5 million jobs.
7. They're bankrupt.
8. I want members of Congress to go back and live under the laws that they create.
9. Inflation disproportionately hurts the poor.
10. They're inefficient and the private sector and do better.
11. We need to be energy independent and lower energy prices.
12. Welfare creates a culture of dependency.
13. It disincentivizes people from seeking employment.
14. It kills jobs and bans people from finding entry-level positions. Most minimum wage workers are teenagers.


I suppose I'll replicate your style, and go through my positions one by one.

Position 1: Raise the minimum wage to $15 per hour
First, we know that the vast majority of minimum wage workers are not teenagers, but breadwinners. The CBO report placed teenagers at 12% of those who would be benefitting from a higher minimum wage of $10.10 (1). Using that same figure, $10.10, we now from the Economy Policy Institute that 85.5% of those 21.3 million workers -- 16.4% of the workforce -- are above age 20 (2)(3). Moreover, we know from the CBO that 60% of the benefits would go to workers earning less than three times the poverty level and would lift about a million people out of poverty.

But you may be wondering: why $15 an hour? Here's the reason: $10.10 is simply adjusting for inflation, but is not nearly enough for these low-wage workers to sustain a living. While productivity has nearly doubled since 1980, median hourly wages have flatlined, and we've seen them fall amid the recession. At this point, they're rising at slower rates than they did prior to the crisis.

Indeed, a higher minimum wage would mean some job losses: that's inevitable. However, not only do we know for a fact that workers have been much more productive than they've been given credit for -- and thus it would actually be a good investment on behalf of business owners -- but as even the CBO points out, this policy would generate a stimulus, as these workers consume with their new incomes. The net positive effect would, undoubtedly, offset any negative impact from raising the minimum wage.

Position 2: Extend unemployment insurance.
There is no evidence that, amid a demand crisis as we now find ourselves in, that unemployment insurance is a job killer. In fact, it has an extremely high multiplier effect -- that is, dollars tend to change hands and stimulate the economy. But why? Well, if you're out of work, this is virtually your only source of income, and you have to consume in order to survive.

Make no mistake, I do not want people to live off unemployment insurance, and certainly there is a point in which we would want to draw a line as to how far these benefits extend. However, we are nowhere even close to the point at which people would have an incentive to collect benefits, rather than look for employment. Simply put, it gives people the time to look for a job that suits their skills, to perhaps seek training so that they can acquire a higher paying job -- which largely results from structural unemployment, when their skills are outdated -- and to survive in their interim. Moreover, failing to extend unemployment insurance, as the U.S. Congress has just done, leaves 1.6 million people in truly dire straits. Not only that, but how will they be able to participate in the economy without any source of llivelihood?

Position 3: Eliminate the sequester
Indeed, some of these cuts were rolled back in the Ryan-Murray budget, but the big winner of that deal was the Pentagon. The fact of the matter is, this is not a time for austerity, so with any cut we run the risk of destroying jobs. If you want to reduce the federal deficit, there are several other ways that we can do that -- eliminate deductions, cut the Pentagon (which is a bit different than cutting elsewhere, which I'll address later), address health care costs, improve the employment outlook, etc. -- that are far and away more efficient and less destructive than a $1.2 trillion, across-the-board nightmare that was designed to be a timebomb.

Position 4: Cut the military budget
This position is a tad difficult to explain as a stand-alone, but for now, I'll do myself the disservice of explaining it by itself. Indeed, austerity right now is a poor choice, largely because the economy is still depressed, wages and prices are sticky, and interest rates are in the zero lower bound. However, we must acknowledge where most of the gains over the recent years went. Who benefitted, for instance, from the U.S. Government funding the Iraq and Afghanistan wars on a credit card? Defense contractors. In fact, we spend more on national defense than the next twelve countries combined. We could easily remanuever funding for the Pentagon and direct it elsewhere. And, yes, that may mean some job losses in the short run. However, the multiplier effect for defense is much lower than, say, the multiplier effect for unemployment insurance and education. Therefore, so long as the funds are spent elsewhere, we'll experience a net economic gain which will more than offset the job losses.

Position 5: Fund a stimulus
If I were thinking ahead, I would have combined cutting the military budget, raising taxes, and funding a stimulus, but obviously I was not. So my apologies to the readers for this confusion.

Ultimately, the chief problem that we face is lack of demand, propelled by an outgap resulted from a subprime spillover. Even business surveys attest to this fact, with the most common primary problem faced by businesses cited as lack of sales, not overregulation or overtaxation. To this end, espeically in light of what Krugman and others have written about the stimulus package being about three times smaller than it should ahve been, I believe we need a larger stimulus to offset the loss of consumption from the Great Recession, that will address the fact that state aid has been cut, putting teacher's out of work, that 1.6 million people lost their unemployment insurance, that the U.S. is lagging in terms of STEM jobs, science, technology, and early-childhood education, and infrastructure. Acknowledge that this stimulus will work toward both investment and consumption, directly employing people and putting money into the hands of people who will actually spend, ensuring both short-term and long-term economic health.

Position 6: Enact a Carbon Tax on Polluters
To be candid, we know that the Exxons of the world -- significant recipients of government subsidies -- will not crash and burn from a carbon tax. In fact, most studies demosntrate that these companies could and would absorb it (4). At the same time, the gain from this tax would be negligible. It's simply a way of the government levelling the playing field, promoting a green economy that we'll ultimately need with the looming threat of anthropogenic climate change, and in the process, generating revenue to fund green technology et al. and work toward repairing the economy in its current state.

Positions 7 and 8: Raise taxes, including deductions, and and eliminate oil subsidies
We know from the data that tax rates are near historic lows, and exceptionally affluent individuals such as Mitt Romeny were able to pay 14% on millions of dollars in income, whereas a poor family would pay a sales tax on everything they earn, for they consume with the entirety of their income. This is largely because of a tax preference for capital gains, relative to ordinary income, which I find to be exceptionally unfair and to benefit people not who work exceptionally hard for their earnings, but who are affluent enough to invest billions of dollars with little effort. The same goes for unwarranted deductions such as the carried interest loophole, and billions of dollars in subsidies to the already well-off oil industry, many of whom are capable of lobbying politicians to maintain their breaks. These are the real welfare queens.

Position 9: Re-regulation
We know that the financial crisis of 2008, along with the crisises of the 1800s, 1929, 2007 and 1986 were largely a function of deregulation. A significant move in this direction was Bill Clinton's Commodities Futures Modernization Act, which repealed the Glass-Steaggall Act, a 1933 law that separated commerical and investment banks and prevented bankers from taking on too much leverage, in the process becoming de facto casinos. Without skipping a beat, just that happened in the years leading up to the crisis of 2007: banks overleveraged into subprime mortgages, which culminated not only in huge losses for them and a giant taxpayer bailout, but a spillover effect into several other sectors of the economy. That's the reason we're having this debate, actually.

Position 10: Public Option
A key problem with the Affordable Care Act is that it doesn't do much to introduce competition into the health insurance market, which is needed if you want to maintain the private model. As a result, large insurance companies can operate as de-facto cartels and artificially raise their prices beyond what they ought to be (though they're declerating nevertheless). Adding a public option would improve quality and reduce health care costs, thus reducing future deficits and covering people unable to access health insurance after many GOP governors refused to expand their Medicaid systems.

Position 11: Student Loan Debt and Universal Education
$1.2 trillion in student loan debt is frankly unacceptable, and burdens an entire generation of students to indentured servitude. Private sector debt deflation is part and parcel of why the economy is so bad right now, actually. Private debt precludes participation in the economy, and weakens future prospects for consumption.

Universal education is an initiative taken on by many European countries -- e.g., Norway -- many of whom have made great strides toward eliminating childhood poverty as a result. At a time when jobs in STEM and others fields are increasingly important, I find it critially important to ensure that education is acknowledged as a public good. That mentality, in my view, will pay dividends in the long term.

Debate Round No. 2


All I see from you is more and more government, more and more taxes, more and more regulations, more and more spending. You don't understand capitalism and wealth formation. Wealth is created in the private sector. Businesses are crushed by overregulation and ObamaCare and are shedding jobs because of it. We need the private sector to create jobs and the public sector needs to get out of the way for that to happen.


Well, I'm advocating for the same level of government we had leading up to WWII, where a conjunction of New Deal spending and the military buildup allowed us to escape the Great Depression. Indeed, I'm advocating higher taxes, but bear in mind that we had tax rates from 70 to 91% from 1945 to 1980, and yet we saw the golden age of U.S. history. Income inequality saw its root, in fact, with the onset of Reagan's trickle-down orthodoxy, which in many ways continued throughout the yeas following his presidency until today. To illustrate the point, average federal tax rates today are near historic lows, and there has already been significant deregulation of the financial sector. Not ony did the US prosper with higher tax rates, but it did so with higher inflation -- in fact, inflation was about 4 percent in Ronald Reagan's second term, but is now down to 1.6%, which is below the Fed's expectations -- tigher regulation, and more significant public investments. As I pointed out earlier, businesses are suffering from lack of demand, not lack of productive capacity, and survey after survey has demonstrated this (1).

As for the Affordable Care Act, you mentioned that it will cost 2.5 million jobs. This is untrue, however. The CBO report you're referring to said that people would voluntarily reduce their hours worked because they no longer need to rely on their employer for health insurance. The reduction in hours worked would amount to a figure equivalent to 2 million jobs, but 2 million jobs will not be lost.

I agree with you that the private sector needs to create jobs. However, you're acting as though the private and public sector are in direct competition with one another, and the public sector is so evil that it ought not exist at all, or should exist only insofar as it is inconsequential to our lives. That's where the crux of our disagreement lies. I believe in free markets and self-interest, along with the profit motive. I believe in capitalism. But I want the government to act as a referre so that subprime can't happen. The problem with TARP was not that the government stepped in, but that it had to in order to prevent a severe moral hazard -- the collapse of the global economy. It's an issue of privatizing profits and socializing losses, and save for nationalizing the banks -- which I'm not quite ready to support, though Paul Krugman has suggested it in the past -- the only other viable option that we have is regulating them in such a way that they can't go overboard.

Also, you speak of government inefficiency, which is why you want to literally eliminate every department except for the Pentagon. I find that proposal highly unlikely to ever occur. I don't have the figures offhand as to how many jobs that would cost, but the figure would be stratospheric. You would literally increase the unemployment rate by several percentage points just by shrinking govenrment, and the consumption gap would increase still further. Is your intention for the private sector to land planes, inspect meat, make roads, etc.? Or are you in the "state's rights" campaign? Ultimately, I think this proposal is highly destructive, and there is no evidence that gutting the federal government in order to finance more tax cuts -- when rates are already lower than they've been in quite some time -- will generate a net benefit.

You also mentioned abolishing Social Security, Medicare, and Medicaid because they're bankrupt. The problem is, they are not. Indeed, health care costs are rising, but we can still afford to pay for these programs. We should be looking for ways -- e..g, a public option -- to lower health care costs to make these programs solvent. The reason they're so poorly off right now is George W. Bush's passage of Medicare Part D, which purchased prescription drugs at retail rather than wholesale prices and prevented the federal government from negotiating drug prices, as it does for Medicaid.

As for Social Security, according to the trustees of the program, it's fully solvent until 2037. Indeed there are issues with it, since people are living longer, more people are unemployed today and perhaps long-term unemployed, and some people may be retiring earlier because they've been long-term unemployed for quite some time. But the problem with Social Security is that the current system which funds it is fundamentally regressive. You pay a tax on your first $113,700 and that's it. So if you earn less than that, that tax targets all of your income. If you make significantly more, the tax only targets a small percentage of your income. And let's not forget the disparity in the tax code between capital gains and ordinary income, as well as the fact that Mitt Romney and Donald Trump are receiving Social Security benefits. Granted, I'm not the biggest fan of means testing Social Security, but lifting the income cap and means testing the program are far superior to abolishing it all together. That's simply giving up without trying.

You mentioned legalizing and taxing drugs. I'm all for that, actually, and believe regulating hard drugs -- I take it you're not for regulation, but perhaps would accept state regulations? -- is more efficient at preventing calamity than throwing people in jail who are suffering with addiction. So we largely agree on this issue, though I want to generate the bulk of federal revenue elsewhere than from excise taxes on drugs, espeically since the taxes are ipso facto regressive.

You mention free trade as a job killer, also. This may actually be an area where where I may be to the right of you in that I actually am, by and large, pro-globalization. By all accounts, though NAFTA wasn't what we wanted it to be, it was by no means a massive job killer. In fact, the impact of globalization has been largely overestimated. Indeed, free trade encourages competition and thus may lead to outsourcing and lower wages. However, the impact of discouraging free trade are far worse. For instance, tariffs are a regressive tax paid largely by poor and middle-income Americans, and imposing tariffs in the US would lead to tariffs abroad and thus discourage trade on a larger scale. We live in an economy where there is an increasing amount of exports of intermediary goods. So we would be, in effect, discouraging other countries from purchasing US goods and thus destroy jobs here, not to mention we would see higher prices of consumer goods here. At the same time, the low-wage-argument has largely been debunked. Companies do not flock to low wage areas by and of themselves, for productivity tends to reflect wage levels -- that is, higher wages tend to reflect or encourage higher productivity -- and we need to factor in relative demand, as well.

My question in response to your position on trade is why you oppose regulations on a large scale, but support tariffs and trade restrictions. Are tariffs not a form of regulation?

A part-time Congress is an interesting idea, but I don't see how that bears on the economy. How will reducing the amount of time legislators work -- especially at a time when the Congres is largely seen as a do-nothing Congress, and thus it needs to work more than it has -- improve the economy? I just don't see the link.

You advocate for a gold standard, but the gold standard was a large cause of the Great Depression. Implementing the gold standard now would cause a massive deflationary drive that would squelch wage growth. Inflation right now is at 1.6 percent, below expectations, and the Fed has already tapered its QE3 asset purchases by $10 bllion per month. So deflation, not inflation, is the threat right now. We actually had moderate inflation after WWII and in the late Reagan years, and it's good in moderate levels because it eats away at nominally denominated debt, whereas deflation increases debt burdens.

You mention welfare creating a "culture of dependency." Yet you advocate for increasing oil subisidies. Why are oil subsidies not a form of welfare to you? Why is it that only money going to poor people is conducive to a "culture of dependency?" Moreover, welfare was largely cutted in the 90s by Clinton and a Gingrich-led Congress -- capped at two years, harsh work requirements, states can impose family caps, etc. Do you really think the problem right now is that people are not looking for work because of welfare? At a time when there are three unemployed people for every job vacancy, I don't think you have your finger on the correct problem.

I addressed the minimum wage earlier and demonstrated why the net effect is largely positive. I'd go through it again, but I'm running low on character space. You have not addressed the arguments I made or data I cited, either.

The last thing I'll comment on is oil subisides, not as a matter of welfare, but as a matter of energy indepdence. The truth of the matter is, economies of scale are already on the side of the oil companies. Oil subsidies are not holding down gas prices -- gas prices fluctuate with global demand, which is on the rise with the industrialization of China and India. So if you want energy independence, as I do, the key is green energy, which has the added bonuse of reducing climate change, which you have not addressed.

Thanks for another interesting debate!


Debate Round No. 3
9 comments have been posted on this debate. Showing 1 through 9 records.
Posted by Finalfan 7 years ago
I vote for a Global redesign. A designed based off of ethical standards agreed upon by all! One where we illuminate the shadows in which the decay goes unseen! Where no child lives in fear of starvation or abuse!A system that has ALL of our best interests at heart! We do not need laws only structure! If we continue to make changes a tweaks to our existing global economy.. You will always be left with the same problems. The real cause of this is that WE do not care! Our empathy has sever limitations and our compassion exists on a narrow plane of self absorption! Bottom line.. Fight as you will to control what has already been poisoned at its core! But you and I know that whatever needs to change is obvious to all of us!
Posted by JohnMaynardKeynes 7 years ago
I suppose I'll have to finish reading through his General Theory. I really appreciate the information. I felt as though I had a pretty good understanding on Keynes, but I never actually saw him address some of these issues that are relevant today -- e.g., minimum wage. I see it as a way of spurring demand -- and, honestly, I didn't think he supported tax cuts in any way, though I can understand demand-side cuts -- but I'll have to go back and check.
Posted by Topkek 7 years ago
-Raise the minimum wage to $15 per hour

You are advocating for a living wage. Keynes only simply wanted a minimum wage that would ensure full employment. He never advocated for a tying of the minimum wage to inflation (called indexing) or productivity either.

-Cut the military budget

I'm not 100% sure if Keynes believed in reducing unemployment through military expenditure or simply through drafting, but I'm sure he would not advocate for reduced spending on the military.

-Enact a carbon tax on polluters
-Raise taxes on the top 2 percent of income earners

Keynes's counter-cyclical fiscal policy believed in lower taxes during the "bad times".

I understand that you fit better with the New Keynesian school, who have diverted significantly from their namesake's ideas, but I don't think you should name yourself after the man himself and posit policies he would not agree with.
Posted by Wylted 7 years ago
I'd like to be more familiar with economics myself. I know I could care less about tax rates. I'm more concerned with government spending. I pretty much agree with conservatives on where spending cuts should happen. I also agree with liberals about where spending cuts should happen. Good luck to both of you guys on future debates.
Posted by JohnMaynardKeynes 7 years ago
I agree with you there, and there certainly are areas where Keynes and I disagree. Keynes said that tax cuts have no multiplier effect whatsoever, for instance. I may even agree with conservatives that they have a slight effect, but it's not as large as the consumption multiplier.

But my main concern is where the policies I stated in this debate conflicted with Keynes's writings.
Posted by Wylted 7 years ago
I don't think you have to be a clone of Keynes, to respect be influenced by his work.
Posted by JohnMaynardKeynes 7 years ago
@Topkek: I'd love to know which of my policies Keynes would oppose. But if you wouldn't mind, please let me know after the conclusion of the debate.

The only thing I have suggested -- in the last debate mind you -- that Keynes may have opposed is higher inflation expectations, since he was highly skeptical of monetary stimulus. Everything else he would have supported, to my knowledge.
Posted by Topkek 7 years ago
Why is the guy naming himself after JMK proposing policies that Keynes himself would oppose?
Posted by Wylted 7 years ago

I'm glad to see, you're willing to challenge yourself. This time around.
2 votes have been placed for this debate. Showing 1 through 2 records.
Vote Placed by Finalfan 7 years ago
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Total points awarded:04 
Reasons for voting decision: Cons solutions were articulated better . While many of pro's idea's would not hold up well under the current economic design! Con had a few that could and might be implicated! Con was less aggressive (or defensive) giving him conduct
Vote Placed by Wylted 7 years ago
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Reasons for voting decision: Con's premises were a lot stronger and well supported. I can tell pro is getting better with these economic debates and would suggest he dive into and debate each specific policy he supports individually. After he debates each policy individually, he'll be able to elaborate on them better and put up a better fight.

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