Well, at least in my inexpert opinion. The final statements indicated a lot of agreement between Ross Levine and Joe Stiglitz. Yet you can distinguish between the two when each makes their most colorful or most forceful statements:
Again and again, the regulatory authorities (1) were acutely aware of problems, (2) had ample power to fix the problems, and (3) chose not to.
If products like CDSs are sold as insurance products, then they should be subject to insurance regulation, ensuring that there is adequate capital to fulfill their promises; if they are gambling products, then they should be subject to gambling laws and regulated and taxed as such.
Although both agree on the need for financial regulation, their core instincts are very different.
Levine doesn’t think any one financial product is inherently good or bad; he thinks the challenge is to get the regulators to do the job that they previously punted on.
Stiglitz thinks the main danger is in the financial products created by the destructive financial wizardsand has a lot of faith in regulators to crack down on them. (“Gambling products”? makes you wonder if Indian reservations are going to take over from Wall Street.)
The Economist is going to announce the winner in a few hours, but we already know: Stiglitz is getting 57% of the votes to Levine’s 43%. I think the voters are getting it wrong.