I was really hoping Larry Summers could help me understand the fiscal cliff.
I’m no economist. I never studied economics in any serious way, so it’s not second nature. Complicated economic situations that are often described in 30 words at the top of news stories aren’t my cup of tea. It’s not a fear of numbers (arithmophobia, it turns out, is actually a thing), but simply a lack of expertise.
I suspect I’m not alone. The daily media’s crash course in financials can’t possibly do much to spread economic literacy. That’s not an admission of ignorance. We hope that someone, somewhere, will spell it all out. I bet there are more than a few reporters, none specialists in economics, but many of whom are required to write about it, who feel the same way.
With all that in mind, I sat down Thursday night—beside an economist friend, of course—to watch Larry Summers speak to an audience at Ottawa’s Chateau Laurier about the U.S. election and the fiscal cliff we’re hearing so much about these days. With any luck, I’d learn something.
Summers, of course, is Bill Clinton’s Treasury Secretary and a former Obama economic adviser. You can make certain assumptions about a man of his stature. A guy who’s lived such an intensely public life will probably be a convincing public speaker. He’ll speak with substance.
As it happened, he was all of that. He spoke deliberately, confidently, and without notes. His pacing was vaguely reminiscent of Barack Obama’s—slowly, surely, he built his case—though his presence and delivery, not to mention his rhetoric, weren’t nearly as soaring. Summers held the audience, helped by a fawning introduction by TD Canada Trust CEO Tim Hockey and an audience primed to listen to him so soon after Obama’s re-election.
Summers came to speak about how his countrymen could, and should, avoid an economic catastrophe that would harm GDP growth, job creation, and just about anything else happy in America. He announced his prescription as if it were the obvious remedy; basically the only real choice among very few bad choices. In short, he said, politicians should:
- Broaden the tax base, which would raise more revenue;
- Contain the growth rate of healthcare costs, which would limit expenditures.
Summers said he’s seen indications from both Republicans and Democrats in Congress that both of those outcomes are achievable: House of Representatives Speaker John Boehner says he’s open to raising more revenue so long as tax rates don’t rise, a trick pulled off by closing tax loopholes. Summers says if Obamacare is implemented correctly, it could reduce costs and, importantly, create jobs.
It wasn’t exactly inspiring, and it didn’t herald a new kind of politics that Obama’s re-election would ignite. But, during a question-and-answer period following his address, Summers did comment on the significance of a second Obama term. Canada2020 chair Don Newman wondered whether the election really changed anything in America. After all, the Democrats retained control of the White House and Senate, while the Republicans maintained control of the House. Summers’ nuanced response suggested Newman’s calculation missed the point. “Something happened in 2008,” when Obama won, he said. “This election would either confirm or reverse that. And it was confirmed.”
That “something,” of course, included the monumental election of a black man whose ideas appealed not only to a wide cross-section of American voters, but very powerfully to young voters, women, Hispanic and Black Americans. Those constituencies turned out again, and proved Obama’s election, and everything he delivered over four years, was no accident.
That last bit, the political stuff, I soaked in. The economic analysis, well, it came easier than I would have guessed. A guy like Larry Summers, who’s somewhat removed from the thrust and parry of partisan swashbuckling, is able to deliver that. But as I walked out of the hotel and down the street, chatting with my economist friend who did his best not to confuse me, I wondered how many people on the street really understood this metaphorical cliff everyone keeps talking about—even among those who do politics for a living.
How many people could walk into a room, listen to Summers, and come out with a reasonable assessment of his expertise?
I don’t know for sure, but based on conversations about economics with friends and family over the years, I’d guess the number is pretty low, or at least not very high. It had me thinking a lot about a broader definition of literacy. If economic literacy were part of that broader definition, I don’t know how many people could reasonably call themselves literate.
Given that we’re all standing on the edge of a fiscal cliff, it’s scary how little we know about what’s going on around us.