Debate: An MP, two economists and a business leader asked if Europe has learned from the economic crisis during an Oxford style debate Wednesday evening.
“We all know what needs to be done. We should just do it.” Thus Yves Nosbusch, chief economist with BGL BNP Paribas rounded off his contribution to a debate on “The economic crisis: have we learned the right lessons?” Those speaking against were not convinced. One spoke of a missed opportunity to create a kinder, gentler economy. The other talked of smaller firms being squeezed as big business has thrived.
This debate followed the format of the nearly 200 year old Oxford Union from the UK, one of the oldest debating societies in the world. Four speakers had three separate opportunities to present their arguments and respond to criticism during the hour-long discussion.
“The three main lessons have been acted upon,” argued Nosbusch. He thinks governments and regulators have made banks more resilient, they have new tools to stop future crises spinning out of control, and they know that tough, early action is most effective.
Dr. Jean-Pierre Zigrand, associate professor of finance at the London School of Economics agreed: “before the crisis we thought that if each bank was healthy then the system would be OK.” He said that now we know better than ever how banks work together and how small events can be amplified into a crisis. “The sub-prime issue was only the equivalent of a 2% fall in the US stock market,” he pointed out, but yet it nearly caused total system failure.
“The rules are tougher but the incentives for taking excessive risks are still there,” protested Franz Fayot, a LSAP member of the Chamber of Deputies. He also railed against “ill suited” budgetary austerity and the “corrosive effect” of growing inequality. “Individualist values are stronger than ever when we should be worried about society as a whole,” he said.
“Cheaper credit is fuelling consumption and the stock market, not long term investment in the productive economy,” said Nicolas Henckes, the general secretary of the Union of Luxembourg Enterprises. He thinks smaller businesses were still struggling to receive adequate funding largely due to “exaggerated regulations” restricting banks’ ability to lend.
Nosbusch denied that banks were unwilling or unable to lend in Luxembourg, saying that a lack of confidence was holding firms back from seeking new loans.
As for inequality, Zigrand argued that it has fallen since 2008.
A vote was taken before and after the lively discussion. Beforehand, 76% opposed the idea that we have learned the right lessons from the crisis.
Afterwards, 75% remained unconvinced.
This was the first Oxford Union style debate to be held in Luxembourg and more are planned by the PaperJam Club. At the next, in April, the motion in question will be whether “Luxembourg is better off under the new coalition.” Already down to speak are Étienne Schneider and François Bausch, government ministers and leaders of the LSAP and Green parties.