But oh, what a debacle. They couldn't agree what they meant by "fiscal cohort", except that it wasn't quite the same as "generation". And each of them seemed to have a different idea about how debt transferred down the generations actually would be paid off. Roughly, they divided themselves into two groups plus fence-sitters:
- those (Baker, Krugman) who argue that as the debt transferred down the generations is owned by members of those generations, paying that debt off through higher taxation simply moves money around among people already alive: future generations inherit both the debt and its repayment, so the net effect in aggregate is zero and there is no overall burden on future generations
- those (Rowe, Williamson) who argue that debt-funding consumption by previous generations effectively withdraws funds from future generations, reducing their ability to consume. This group generally did concede that debt-funded investment should benefit future generations leaving them with no burden, but they were adamant that debt-funding consumption (e.g. pensions for the elderly) would effectively leave future generations poorer.
I am not going to debate any of this myself. I'm firmly on the fence with Delong, Smith and Wren-Lewis. For what it's worth, I think whether or not public debt proves to be a burden on future generations depends on the actions of politicians, not economists.
However, the purpose of this post is to share my amusement at the surreal nature of this debate with my readers.
Enter the Seven
Here they are, with their respective straplines (well, my interpretation of them, anyway).
1. Dean "Doc" Baker "This is my show!"
2. Nick "Sneezy" Rowe "If I go on about this for long enough,
eventually you'll agree with me"
3. Brad "Happy" Delong "We all agree, really"
4. Paul "Grumpy" Krugman "Sigh. It's all distributional, you idiots"
5. Noah "Dopey" Smith "I don't know. But I can do math"
("Dopey" may be a bit unfair to Noah. Nick says he's smart. And he can do math. Which I struggle with.)
6. Simon "Bashful" Wren-Lewis "It doesn't matter, at the moment" (balanced budget stimulus edition)
7. Stephen "Sleepy"Williamson "It doesn't matter. Er, wait, yes it does" (Ricardian Equivalence edition)
I feel we could submit this debate to the public vote, X-factor style. Vote for your favourite by number in the comments!