A Cup of Tea, and the Economy

Teaconomics is a forum where students share their views of current economic happenings in a relaxed setting over afternoon tea. After seeing a flyer, I decided to see what the hype was about. Following a Friday philosophy discussion section in which the professor argued that there is no truth, I was pleased that certainty still seemed to exist in the realm of economics.

One of the club’s officers began by positing that despite the moral rights and wrongs surrounding the bailout plan, a modern economy cannot function without fluid capital markets, and insisted that this bailout is a necessary evil. As the skeptical philosopher, I questioned whether this was actually the real economic truth. I was, however, put to ease a bit when the tea master filled the teapot with leaves and ‘awakened’ them by rinsing with hot water—Pu-erh brewed gongfu style. “When you’re in a room full of economically opposed individuals during a recession, it’s good to have a teapot to calm us, huh?” I joked to a friend sitting beside me.

In contrast to the numerous groups on campus that espouse a certain set of beliefs, Teaconomics is full of people with different opinions and often opposing views. It can be easily gleaned from the group that there are many club members who espouse libertarian ideologies. However, democratic socialists are just as present.

A self-proclaimed libertarian seemed to echo my previous concerns that the “truth” the president spoke of might not be as well defined as she had hoped. He asked, with an incredulous tone, whether we should give the people who caused this situation more power. He argued that, as a capitalistic country, we have to let the market fix itself.

Before a clamorous discussion could erupt, my friend leapt out of his chair, citing a recent article in which Princeton economist and Nobel laureate Paul Krugman argued that not only do we desperately need a stimulus package now, but we should probably increase this stimulus by at least 50 percent so as to have greater financial impact.

Another member soon challenged him, declaring that bubbles and easy money caused the current crisis. The Fed inflated money supply all through the ’90s, and wasteful projects like the Community Reinvestment Act forced us to spend well beyond our means. Surely, the solution is not to do more of the same while putting us in even larger deficit, she argued.

An eager-looking first-year took a stand, advocating for deficit spending and explaining that the short-term problems are so great that we must put long-term consequences aside. Stimulus packages, he argued, are the only things that have ever ended recessions and depressions.

A club officer disagreed. Sounding a bit more measured than some of the other hot-headed speakers, he stated, that in the past, we’ve had the luxury of being able to inflate our way out of economic downturns. But in America’s current fiscal situation it would be irresponsible, pushing our deficit to a 1, 2, or maybe even 3-trillion dollar range. A deficit on this level would be a burden on ourselves and our children, and it is not worth the ultimate long-term pain to try to find a cheap short-term fix to get us out of our current crisis.

Effective solutions can only be found by first identifying causes. So it is with the financial crisis. If we want to fix the financial crisis, we must first identify the underlying problems. With a mess this big, there is plenty of blame to go around. Big banks, Big Brother, the Fed, Freddie Mac, Republicans, Democrats, deregulation, overregulation, globalization, procrastination. All seem to have their own axe to grind. Experts have cited everyone from home buyers to Wall Street, mortgage brokers to Alan Greenspan. Placing the blame on a particular group or individual will get us nowhere. Only with a calm state of mind and an unbiased and comprehensive analysis of the causes of the crisis can we start to clean up this mess.

I cast a casual glance around the room. The group seemed to be divided along libertarian and progressive leanings, with quite a few people somewhere in between. While undergraduate students seemed to dominate the group, graduate students were certainly not lacking from the scene. Some were peacefully savoring tea, while others had trouble maintaining their calmness. When a club officer was asked why they chose to combine a love of tea with a love of economics, she explained that tea ceremonies in Asia have traditionally centered on the fusion of tea with calmness. It was no accident that the first tea master, Murata Shuko, was also a Zen priest, she said. Not getting too worked up about our own opinions but instead letting our rational side construct a logical and convincing argument was one of Teaconomics’ main goals. The first half of my day had been pretty frantic, but as I savored the Pu-erh and sank deeper into the conversation over the afternoon tea, I found my peace amidst this unconventional Columbia niche.

The author is a Columbia College first-year.