The Munk Debates Podcast - Munk Members-Only Pod: Episode 10

Episode Date: March 12, 2021

This is a sample of the Munk Members-Only Podcast. The program provides listeners with a focused, half-hour masterclass on the big issues, events and trends driving news and current events. The show features Janice Gross Stein, the founding director of the Munk School of Global Affairs and bestselling author, in conversation with Rudyard Griffiths, Chair and moderator of the Munk Debates. This week's Munk Members Podcast focuses on three big issues in the news: America's massive $1.9 trillion dollar stimulus is stoking inflation fears and igniting a debate about the economic utility of direct cash payments of hundreds of millions of people; has the British Monarchy finally passed its sell by date in a world grappling with racial justice, inequality and elite privilege?; and as Italy announces a third national lockdown for Easter to try and stem the surge of new variants of COVID-19, should other countries that have been similarly slow to vaccinate follow suit? We debate it all.If you like what the Munk Debates is all about consider becoming a Supporting Member.  To access the full length episode consider becoming a Munk Member. Membership is free. Simply log on to www.munkdebates.com/membership to register. Under your membership profile page you will find a link to listen to the full length editions of Munk Members Podcast. If you like what the Munk Debates is all about consider becoming a Supporting Member. For as little as $9.99 monthly you receive unlimited access to our 10+ year library of great debates in HD video, a free Munk Debates book, monthly newsletter, ticketing privileges at our live and online events and a charitable tax receipt (for Canadian residents). To explore you Munk Membership options visit www.munkdebates.com/membership. This podcast is a project of the Munk Debates, a Canadian charitable organization dedicated to fostering civil and substantive public dialogue. More information at www.munkdebates.com.Become a Munk Donor ($50 annually) to get 72-hour advanced access to the full length editions of Friday Focus and Munk Dialogues. Go to www.munkdebates.com to sign up. Hosted on Acast. See acast.com/privacy for more information.

Hi, Monk podcast listeners. The following is a sample of the Monk members-only podcast. To access the full-length edition of this episode and all of our regular Monk members-only podcasts, go to our website, www.com, and register for membership. Membership is free, and it's available for you right now at www. Monk Debates.com. Hope you enjoy the program. Hello, Monk members, and welcome to this, our regular Monk members podcast. This is our weekly program where we delve into three big stories in the news that we think are shaping our world and that we think could benefit from some additional analysis and consideration. As our guide in these conversations, we're exceedingly fortunate to have Janice Gross Stein.

She's the founding director, the Monk School of Global Affairs, an internationally renowned scholar of international relations, bestselling author, and just a really terrific person. and to get some fresh insights and takes on contemporary events. Janice, really enjoying doing this program. We're getting some great emails from our listeners out there. Keep them coming. Podcast at monkdebates.com. Janice, again, thanks for being on the program.

Just a pleasure, and great to hear from listeners who are asking terrific questions. And correcting us. You got what was it the shower curtain wrong last week? I've made more than a few ears. but I thought I thought that was a fun one. We confused which corporate scandal involved what shower curtain. No, we got the price wrong.

It was worse than that. We mixed up Bev Oda's $18 glass of orange juice with the thousands of dollars that the Enron curtain cost. Excellent. Janice, our first topic this week has to be the $1.9 trillion stimulus that President Joe Biden announced on Thursday. That stimulus is going to see amongst a variety of outlays checks going to hundreds of millions of Americans, I think upwards of $1,400 per individual if your income is under $150,000. So literally tens of millions of Americans getting these checks by the end of the month. I want your take, not on the economics of this, we can get into that,

but on the political science of sending money directly. to individuals. Why are governments doing this? Is it purely motivated by politics by getting cash to voters? That's certainly popular with elected officials. Or is there a bigger rationale for why we should think about the value of transferring money directly to people and not institutions? Let's have your take on that.

You know, a great question, Roger, and you're absolutely right that this stimulus bill, 1.9 trillion on top of another trillion that has gone into the U.S. economy in order to prevent the worst. That's a game changer. We haven't seen anything like this in the United States since the Depression. So why choose this strategy of putting money in the hands of individuals? This is a direct reaction to what Biden, to what Obama failed to. do after the global financial crisis. There is an example where the money went into institutions and bailouts. And let's leave aside the economic discussion for a minute, just talk about the politics. That had huge consequences in the United States. It is a big people lost their homes and they

saw banks being bailed out with federal money, with tax money, public money. That is a is a big part of the explanation for why President Trump was elected in 2016. There was a widespread sense among middle class voters, a famous group, the middle class, who said, government's not about me. It doesn't work for me. It works for big institutions who get a pass. I don't get a pass when I can't make my mortgage payments, but they get a pass when they make really bad decisions. They get bailed out. Coming out of that, it's clear that the Biden administration took away one big lesson. You transfer stimulus monies to individuals, not the institutions. This is probably the most important decision politically and for the safety network, the social safety network that we've seen

in the United States for close to 80 years. Well, let's talk about the the public policy of it, because what's interesting here is in the United States, families up to $150,000 of income per individual. So you could have a combined income, two wage earners in a family of $300,000 receiving these checks. So what strikes me as kind of odd here is I get, and I think you're absolutely right about the politics of this and the necessity to kind of push back against the perception of elite bailouts over public bailouts. But why not target this? Why not really say, okay, there are vulnerable people. There are millions of Americans living below the poverty line. Let's give them more money. Let's take them from 1,400, I don't know, up to 3,000.

What I worry about here, Janice, is that there's nothing politicians love more than giving voters cash. And if you look at the economic consequences of this, which I think they're pretty, blazze about because the politics of it is just so electric. It's so satisfying to be Chuck Schumer and Nancy Pelosi and sending those checks to all your constituents, you know, mission accomplished. But there's the risk of inflation. There's the massive expansion of money supply. There's the tanking of the U.S. dollar we've seen over the last number of months. There are first, second, and third order effects of this that could potentially last for years. So what's your take on the public policy of it? there certainly are second and third order effects, but to be fair here, Roger, there's second and

third order effects to anything that the government of the United States was going to do here. So what you didn't mention was this actually doesn't grow the size of government, which is something that the left of the Democratic Party would really like to have seen. This doesn't do this because it just transfers money to individuals. Secondly, probably the biggest risk that most of the developed world runs, if we think about macroeconomic policy for the next day, is deflation. And why is that? Because we're getting older and we're getting older faster. And the pandemic actually made that worse. The birth rate is down. Immigration is down. So the structural problem that we face is deflation, not inflation. And deflation, and deflation,

is what has condemned Japan to 30 years of underperformance. So if you're going to make a bet, it's probably better to bet against deflation rather than inflation. And start following the examples of Japan in terms of massive. Well, Japan does the exact same thing, Janice, and they've done it over the last decade. They've helicoptered money directly into their citizens. It's had no impact. I mean, you're right. Maybe it's staved off deflation, which would be catastrophic.

but it's really done nothing for inflation growth or economy is sclerotic. But they haven't suffered rather from this nightmare of inflation, which is what everybody's talking about with respect to the system. Third thing, and this really matters too, and it matters from a political perspective to come back here. The only way democratic system is really thrive and any kind of social safety net thrives is if the broad middle class is in support of it.

That's absolutely critical. If you target, which is your suggestion, if you target and there are a big chunk of this money, you're right that it's there are families with $300,000 who may get it. But a big chunk of this money is going to people who lost jobs, lost businesses, whose kids don't have enough to eat, who are struggling because their kids are out of online school, they can't cope with it. So a huge set of social problems here. but if you only target those, what we know from experience is the middle class,

some of them who voted for Trump exactly for these kinds of reasons, turn on the state, say, this is not for me, this is for somebody else. Well, and also people, people that look different than me that are brown and black and not white. Exactly. So Biden is really making a massive bet here. And boy, you have to applaud his courage to break through. that kind of polarization, recraft the way social assistance it's matched. You know, there's an interesting subtext here, Roger, that the responsible conservatives

have long argued that the best way to deliver social assistance is to put money in the pockets of individuals because they are deeply critical of the capacity of the state to deliver programs. this is a huge experiment in that, interestingly. So it crosses these traditional left-right lines. I mean, my two final points would be on that. They're just data points. One, the Swiss Investment Bank, UBS, surveyed Americans 18 to 35.

Half of them said that they would, sorry, of that group, fully half of the $1,400 would be put into GameStop, American movie theaters, you know, basically Wall Street bets. So from a public policy perspective, I think, wow, is that really an efficient allocation of society's resources? You've been listening to a sample of the Monk Members Only podcast. To access the rest of the episode, consider becoming a member. Membership is free and available at www.w monkdebates.com. Once you've joined as a member, go to your membership profile to access

the rest of this episode and all of our Monk members podcast. Thanks for listening.