The opening forum at the political celebrity and policy wonk packed Aspen Ideas Festival which opened yesterday was titled “The Financial Crisis: Will It Lead to America’s Decline?” and featured historian Niall Ferguson, US News & World Report owner and real estate mogul Mort Zuckerman, and presidential adviser David Gergen.
The discussion was interesting on a number of fronts — mostly because Zuckerman, who is normally someone who has been making a strong case for more substantial infrastructure investment in the US (and to his credit, he did raise this in this session) and Ferguson decided to use their time in the Aspen sun to fear-monger about deficits and fiscal responsibility.
Ferguson argues that fiscal reform and austerity are the path America must take to reinvent itself, if it can. Zuckerman too hammered on the big spending of recent years, particularly the ineffectiveness of the stimulus when it came to infrastructure and job creation.
I agree with Ferguson that America’s spending on two power-sapping wars is one of the major drivers of America’s political and economic weakness today, but his policy prescriptions could move America right back where it was in 1937 — when the US cut back its economic stimulus during the Depression thus deepening and lengthening America’s economic mess then.
Gergen didn’t call on me — though you’ll see me continue to put my hand up in the video above. But if he had, I would have asked “1937??”
Even center-right economists Kenneth Rogoff and Carmen Reinhardt, both fiscal conservatives, fear that the US should not cut back spending too much at the moment.
As Niall Ferguson was racing out — mouthing from the stage to Pom and Fiji Water entrepreneur Lynda Resnick that he just couldn’t do dinner with her and Barbra Streisand that night — to get to London to give a talk at St. Paul’s Cathedral titled “‘Men, Money and Morality: How Can Trust in Banking Be Restored”, I asked him whether he had any concern about a 1937 redux.
He responded by emphasizing that he wouldn’t make “near term cuts.” Fair enough.
But that point needs a lot more punctuation and Fergusonesque emphasis at a forum like this where many need to hear about what the consequences of a collapse in demand are for American workers and the American middle class.
If the government doesn’t create that demand when private households are deleveraging, firms are holding back investment, and Europe is posturing itself as a global deflationary ball and chain around global growth, then America is heading back into recession.
That should have been a view represented more squarely — and debated — at the Aspen Ideas Festival which is sponsored jointly by the Aspen Institute and The Atlantic.
I should add that this ideas festival is an amazing experience — eclectic participants, high quality debate and discussion. I’ll be speaking on the “soft power” panel this morning along with Harvard scholar Joseph Nye and former US AID Administrator Henrietta Fore.
— Steve Clemons