Econ Uniqueness: 13.84 Trilion Dollars in a Thousand Words

I've been meaning for some time now to follow up on my intro to economics article with some more concrete advice concerning the economy debate on the coming high school topic. The poverty topic is basically an economics topic at heart, so there are many possible arguments to address. As an attempt at organization, I'll break down the debate into three relevant questions:

  1. Will the US Economy continue to grow in the status quo?

  2. Are social services for persons living in poverty good or bad for the economy?

  3. Is US economic growth good or bad?

Astute readers might identify these topics as "Uniqueness," "Link," and "Impact" or "Inherency," "Solvency," and "Harms" depending on which side of the debate we are starting from.

So I'll start with Will the US Economy continue to grow in the status quo? This is the general form of the Econ uniqueness question, but since this topic happens in 2009 it might be more accurate to ask "Will the US Economy Recover?" It's not really growing now, after all.

I assume that you know that the economy is doing poorly right now, but if you are an average highschooler (or even a well above-average high-schooler) you might not know much of the reasons as to why, or how we got where we are. And, like just about every aspect of our multitrillion dollar economy, this is a matter of some debate.

Let's start with the symptoms: Housing prices were too high (called a price bubble), major investment banks had way too much capital tied up in housing-related investments including "sub-prime loans" to risky borrowers, and prices for food and oil were skyrocketing. In late 2007 it all began to unravel. Banks began to take losses from bad loans and investments, other banks became more reluctant to loan money, and a combination of harder-to-find credit, falling house prices, and high food/energy costs caused consumers to spend much less. Less consumer spending means businesses can't sell as many products and must cut back on employees/investment, which means businesses that sell to those businesses must make cuts, and so on. Instead of growing, our economy begins to contract.

Whew. Quite a horror story. Of course, that explanation leaves some questions out, (why were housing prices too high? why were banks playing with so much risk? etc.) but these questions are hard to answer so soon in the recession. attempting to do so quickly devolves into partisan narratives - democrats blame too little regulation, republicans blame too much goverment interference - that is not particularly relevant to debaters.

In response to this malaise, the federal government has done the following: bought up $700 billion worth of bank stock and "toxic assets" (colloquially, "The Bailout"), Lowered federal interest rates, gave some loans to banks so that they could buy other banks, Spent a bunch of money on tax cuts/umemployment benefits/social welfare programs/infrastructure projects ("The Stimulus"), Taken over the world's largets car maker, and more. These policies are massive, complicated, and techinical, but they share a few goals - Prevent major institutions from failing, provide a safety net for those most hurt by the recession, and put money in the hands of consumers so they can spend it and reverse the economic contraction cycle. In general, the government is attempting to stir up demand to prevent businesses from further contracting supply.

I know that the preceeding wall of text is a lot to take in, but it all boils down to a simple question: did it work? In other words, is the economy going to rebound or is it going to get worse? In most economics debates on this resolution, you are going to want to argue one or the other. And as it turns out, there are plenty of analysts willing to offer their opinion on the matter. Finding cards that say the economy will or won't recover is just about the easiest assignment you could give someone these days.

Of course, like all things in life, 90% of those cards will be crap. Why? Well, say I was an editor at a major newspaper and I gave you the assignment "write a column on whether the economy will recover." That's a pretty tall order - you have to seem smart and bold, but you have to cover your ass in case you get the prediction wrong. Nobody wants to be wrong in print. You are probably going to do any of the following:

  • Write a "good news, bad news" article, and never actually take a strong position on the subject

  • If you do take a position, you'll pepper your article with caveats like "the economy will recover as long as consumers don't get scared again and stop spending again"

  • Instead of doing the massive amount of research necessary to fully answer this question, you'll cherry-pick a few statistics that support your point.

Finding a card without any of these problems will be hard enough, but you'll also need something that takes account of the most recently-available economic data, is from (or quotes) an author that is actually qualified to talk about the economy, and answers the most popular arguments from the other side.

Of course, I'm describing a holy grail card, and I'm sure that many debates this year will be won on "good enough." Regardless, this should get you thinking about the ways that you can be one step ahead of the economics uniqueness debate.

Another complicating factor (last one, I promise) is that if the economy doesn't start showing signs of improvement over the next year or so, the government will probably do more. In fact, it might even do something that includes increasing social services for persons living in poverty. Smart debaters will be carrying good cards not only for the basic uniqueness questions, but on all sorts of "link uniqueness" - will the government spend more money soon? Will the businesses get additional help? Will the poor get additional services? Will interest rates go up or down? The list goes on and on. This coming debate topic will allow plenty of room for smart, strategic, well-prepared debaters to get a leg up on economics.

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