The Economy Links Debate: Pay Up, Uncle Sam

The next in my four-part series on Economics covers the economy link debate for the coming season, roughly will social services for people living in poverty help or hurt the US Economy?

Right up front, let me admit that I can't possibly cover every meaningful economics debate you are going to have this year, even as a novice. As the year progresses, smart negatives will find specific, nuanced stories of how affs ruin the economy, and affirmatives will develop specfic, nuanced link turn stories of how they save it. That being said, many debates this year will center around two negative link stories, so we'll start with the generics.

This year's topic calls on affirmatives to increase social services, which in most cases means increaed federal spending. The federal goverment as we know it needs to spend money to function, but for the past 10 years the federal government's debts (via spending) have grown faster than their ability to repay them (via taxes and other revenue), a situation we call a budget defecit.

If you or I want to spend money that we don't yet have, we have many different options. Depending on the situation we could take out a loan from a bank, borrow from family or friends, seek investor capital, or use a credit card. But when the federal government wants to spend more than it makes, it can't just reach for its American Express card. The government uses a more technical system called a Treasury Bill. Roughly, a treasury bill is a government I.O.U. given to an investor in exchange for cash up front. Treasury bills are usually very low interest loans, but they are useful because they are highly likely to be repaid. Uncle Sam is good for it.

The fact that Uncle Sam is good for it means that many investors are attracted to "buy" government debt, including businesses and governments in other nations. These foreign investors form a symbiotic relationship with our government for now. But there is some worry that if the federal government stretched its budget too far, it would scare these foreign investors off. If Uncle Sam suddenly doesn't seem so reliable, you might stop investing in new treasury bills or worse, try to "dump" them for less than you paid. The government would not be able to finance its current committments and would have to either raise taxes or make cuts to spending that is already promised. This would be disastrous for the US Economy.

So if you are a negative team, you might argue that there is an invisible threshold of spending that triggers this collapse, and that the aff's new spending pushes us over it. This is a popular story (often the first disad that new debaters learn) but it has some serious problems to overcome. The most glaring is that the government has just spent on the order of a Trillion Dollars in attempt to prevent an economic depression - if that didn't trigger an economic collapse, then a few billion here and there for social services shouldn't matter, should it? Coming up with answers to basic objectives like these are an important step for negatives that want to win on spending disads.

Though the behavior of government has a major effect on the economy, it is not the only economic factor worth considering. The majority of "the economy," after all, is made up by businesses. Though the decisions made by your local grocery store won't bring widespread success or ruin on their own, the aggregate behavior of the larger business community matters. Are businesses investing in new equipment, entering in new markets, and hiring more people? This is usually the key sign of economic success. Businesses only take these risks if they are likely to see a return on their investment. Debaters generally phrase the likelyhood of businesses to take risk on new investments as business confidence.

So, if you owned a business, what could the government do to make you less confident? That list will be different for different businesses, but "take away my market" would surely be high on the list for all of them. For example, if I made money by providing broadband internet access to individuals, I might not like it if the government started providing my product to people for free. Even if the government targets people who wouldn't otherwise be able to afford my services, the notion that net access is something you should get "for free" instead of paying your local cable company is surely detrimental to my long-term business model. This is the kind of policy that might make me reconsider hiring a bunch of people to lay new cable lines.

Regulation is another common point of contention between business and government. Right now, health insurance companies base their pricing model off of denying people with pre-existing conditions. If the government told all insurance companies that they had to cover anyone who wanted coverage, they might not like that.

Lucky for the aff, almost anything that hurts one business (or one type of business) helps another. Broadband companies might not be enthused if people got free broadband, but Google and Amazon would love it if a few million more people showed up on the internet tomorrow. Health insurance companies might not want to compete with the government to provide health care, but I can think of a few major companies that might like it if their employees had easier access to cheap healthcare. And the businesses that would have the largest effect on the US economy are not always the same ones that lobby the hardest to congress.

In addition to the tit-for-tat answers to the popular negative link scenarios, strategic affirmatives will come up with independent ways that their plan helps the economy. This year, many of those stories will revolve around the "hidden costs" of poverty. For example, even though many in the United States don't have adequate health care coverage, they still do occasionally show up at a hospital needing life-saving treatments. In fact, their lack of insurance makes them less likely to visit a doctor regularly and more likely to end up in the emergency room, where they receive expensive treatments for which they are unable to pay. There is some debate over exactly how large this problem is, but widespread health insurance would save costs, and might be a net positive for the economy.

These are the tools to get started, I look forward to writing a follow-up later in the season explaining all the new tricky link scenarios debaters have managed to craft.

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.

Economics: learned a lot about the company dough

One of the important skills to gain this year to be successful in debate, especially at the novice level, is a firm grasp of economics. That sentence is going to scare the crap out of some of you. Don't let it. Economics isn't numbers and spreadsheets and TPS reports, at least not at the outset. Economics is the decisions you make every day, the story behind the objects you interact with on a daily basis.

Consider, if you will, a backpack. You probably have one, what would you say it is worth? What value does your backpack posses?

There are obviously lots of ways to answer this question. We could look at a backpack's ability to hold and organize things, we could look at all the work it took to assemble the backpack from raw materials, we could just ask you what it's worth, etc. One particularly useful way to measure value is price. When you went to a store and paid 50 dollars for your backpack, you sent a clear signal that that backpack was worth $50 to you at that place and time.

Price is a useful measure of value in that it can be easily recorded and compared. We can measure the value not just of your backpack, but of every backpack sold in the United States this year. Add in all the other clothing, food, televisions, cars, orange peelers, all the consumer products that are sold in the US. Plus all the services people pay for: mechanics, gardeners, lawyers. Plus all the items that businesses invest in to provide these goods and serviecs: sewing machines, delivery trucks, orange peeler molds. Plus all the stuff that the government buys: fighter jets, roads, $120 ashtrays. Add all that up, and you've got a measure of all the value produced in the US this year, a measure of the value of the US Economy at large.

This particular measure is so important that we give it a name: GDP, or Gross Domestic Product. GDP is a high-level metric for the state of the economy, not so much in the actual number, but in what direction it is moving. Is our GDP from this year higher than it was last year? If it is, that means that our economy is growing, and growth has been the goal of the US economy since it's inception. It may sound strange for an economy to "have a goal," but not every economic theory holds that growth is good or even possible. But in the United States, the mainstream economic theory (capitalism) maintains that growth is good.

So why should the economy grow? Well, a growing economy means businesses need to hire more people to produce more goods, which means more jobs. Growth frees up capital; if you have some extra cash laying around, you can loan it to me, and I can hopefully use it to get even more money for the both of us. Growth means that we can afford to spend money on items outside our basic survival needs and improve the collective standard of living.

It's also important to look at what happens when the economy runs in reverse. Long periods of no-growth (flat GDP, a recession) or negative-growth (falling GDP, a depression) correlate with massive unemployment, increased poverty, lowered standard of living, and worse. For instance, There's a general consensus among historians that the great depression contributed to the outbreak of World War II, which claimed millions of lives.

So, what makes the economy grow? Or, if the economy is growing, what makes it stop? Well, a lot of stuff. The beast that we call "The US Economy" represents millions of people and businesses making billions of economic decisions every day. It's impossible to say things like "X caused the recession" without vastly over-simplifying beyond comprehension. However, the study of economics gives us a variety of tools to look at macro- and micro-level behavior and make conclusions about the past and predictions about the future.

You'll be introduced to many of those tools in this guide and in your debate career as a whole. For right now, though, I'd like to introduce a principle that is at the bottom of many of them, something you need to understand before you really "get" anything else in economics: the principle of Supply and Demand.

Think back on your backpack, on the moment that you put your $50 on the table in exchange for a new bag. Two conditions had to be met for this transaction to happen: you had to want a backpack (demand) and the store had to have one for sale (supply). Of course price also factors into this transaciton, IE you had to want this backpack enough to spend $50 dollars on it and the store had to be willing to part with this backpack for $50 dollars.

So what if one of these conditions changes? Let's say that tomorrow there's a global shortage of ripstop nylon. Suddenly the backpack manufacturer is going to have to charge the store much more for that backpack to make a profit, so in turn the store prices it at $100. But you aren't going to spend more than $50 on a backpack, so the transaction never happens. Lower supply of ripstop nylon with the same demand raises the price. You can imagine a similar interaction if demand moves. A new trendy (high-demand) backpack can be sold at a higher price, but if schools everywhere ban backpacks (cutting off demand), stores will have to cut their prices to keep selling backpacks.

Now, It's easy for me to show in the abstract that high supply/low demand means low prices and low supply/high demand meand high prices, but in the real world it's not always so simple, especially when we get to the macroeconomic (large) scale. A common argument amongst economists is the chicken/egg question of whether the government should focus on supply or demand when trying to coax a hurting economy into growth.

Another important consequence of the supply/demand principle is that a mismatch of supply and demand creates incentives. Return to our nylon shortage. Right now the store is losing out on your business (and, perhaps, the business of others in a similar situation) because their backpacks are too expensive. This demand-without-supply creates an incentive. If someone discovered a new, cheaper method of manufacturing nylon, they could sell a backpack for half the price. Their $50 backpacks would be flying off the shelves while the $100 backpacks collect dust. One of the foundational tenets of modern economics is that people, in general, respond to incentives.