Harvard professor Ken Rogoff has not had a good week (Reuters)
For an economist, the five most terrifying words in the English language are: I can't replicate your results. But for economists Carmen Reinhart and Ken Rogoff of Harvard, there are seven even more terrifying ones: I think you made an Excel error.
Listen, mistakes happen. Especially with Excel. But hopefully they don't happen in papers that provide the intellectual edifice for an economic experiment -- austerity -- that has kept millions out of work. Well, too late. As Mike Konczal of the Roosevelt Institute reported, Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst, have found serious problems with Reinhart and Rogoff's austerity-justifying work. That work, which shows that countries with public debt of 90 percent of GDP or more tend to grow slower, omitted data for five of its 19 countries, and used the wrong data for another. The former was, embarrassingly enough, due to an Excel misadventure, and the latter an unrelated issue. If you use all of the (right) numbers, it turns out growth does slow when debt is high, but not nearly as much as Reinhart and Rogoff -- hereafter, R-R -- claimed.
In other words, there is no evidence for anything resembling a growth tipping point when debt hits 90 percent of GDP.
This is the academic's version of the dream where you're naked in public. Except it's not a dream. It's the mortifying reality for R-R, who have admitted that they forgot to drag their Excel formula down five more cells. But it's worse than mortifying for everybody else. It's been a catastrophe. Not that R-R made a pretty galling mistake; rather, that such a flawed paper gave the intellectual ballast to an idea that has failed everywhere it's been tried the past few years. Now, policymakers would have pursued austerity regardless, but R-R gave them a reason (and seemingly a bright red 90 percent of GDP line) to do so sooner. If too much debt is associated with too little growth, then there's no time to lose for slashing deficits.
Those are important words: "associated with". As I pointed out before, the best argument against taking R-R as austerity's gospel truth was it was just a correlation. Of course a ratio tends to increase more when its denominator increases less. That's how fractions work. But it doesn't prove that the rising ratio causes the stagnating denominator. If anything, the causality runs the other way -- lower growth tends to cause higher debt, as tax revenue falls and safety-net spending rises during a slump. Indeed, as you can see below, Arindrajit Dube of the University of Massachusetts, Amherst, found that debt-to-GDP predicts past GDP growth much better than future GDP growth. In other words, higher debt doesn't cause lower growth as much as lower growth causes higher debt.
Of course, this hasn't stopped deficit hawks from touting R-R's work as proof that we must tackle the long-term debt and we must tackle it now. Including, sometimes, R-R themselves. Now, in their paper, R-R are careful to say the relationship between higher debt and lower growth is just that: a relationship. In fact, that's been their defense: they never said it was anything more than a correlation, and that correlation still holds after correcting for all their mistakes, albeit not as strongly.
That's true ... if you only look at what they said in their paper, and ignore what they said about their paper. For example, here's what they said in Bloomberg View back in July 2011:
Our empirical research on the history of financial crises and the relationship between growth and public liabilities supports the view that current debt trajectories are a risk to long-term growth and stability, with many advanced economies already reaching or exceeding the important marker of 90 percent of GDP....
The biggest risk is that debt will accumulate until the overhang weighs on growth....
Those who remain unconvinced that rising debt levels pose a risk to growth should ask themselves why, historically, levels of debt of more than 90 percent of GDP are relatively rare and those exceeding 120 percent are extremely rare (see attached chart 2 for U.S. public debt since 1790). Is it because generations of politicians failed to realize that they could have kept spending without risk? Or, more likely, is it because at some point, even advanced economies hit a ceiling where the pressure of rising borrowing costs forces policy makers to increase tax rates and cut government spending, sometimes precipitously, and sometimes in conjunction with inflation and financial repression (which is also a tax)?
To be fair, R-R do say that they only found that higher debt and lower growth are "associated" and that there's no "bright red line" (even if policymakers interpret it that way) at 90 percent. But they also make it quite clear that they think their correlation is more than just a correlation. They think higher debt causes lower growth, and, after a little throat-clearing, they're not too shy about saying so.
In a series of academic papers with Carmen Reinhart - including, most recently, joint work with Vincent Reinhart ("Debt Overhangs: Past and Present") - we find that very high debt levels of 90% of GDP are a long-term secular drag on economic growth that often lasts for two decades or more....
Of course, there is two-way feedback between debt and growth, but normal recessions last only a year and cannot explain a two-decade period of malaise. The drag on growth is more likely to come from the eventual need for the government to raise taxes, as well as from lower investment spending. So, yes, government spending provides a short-term boost, but there is a trade-off with long-run secular decline.
It's the same pattern: a few caveats, and then a semi-speculative overselling of their results. But their biggest overselling didn't come in the media. It came behind closed doors -- in Congress. Tim Fernholz of Quartz flagged the following passage from Senator Tom Coburn's recent book about the time R-R briefed members of Congress in April 2011, a few months before the debt ceiling debacle:
Johnny Isakson, a Republican from Georgia and always a gentleman, stood up to ask his question: "Do we need to act this year? Is it better to act quickly?"
"Absolutely," Rogoff said. "Not acting moves the risk closer," he explained, because every year of not acting adds another year of debt accumulation. "You have very few levers at this point," he warned us.
Reinhart echoed Conrad's point and explained that countries rarely pass the 90 percent debt-to-GDP tipping point precisely because it is dangerous to let that much debt accumulate. She said, "If it is not risky to hit the 90 percent threshold, we would expect a higher incidence."
R-R whisper "correlation" to other economists, but say "causation" to everyone else. Now, they don't always say it outright -- at least not at first. Rather, they say "this isn't definitely causation ... but come on, what else could it be?" That's been more than enough for the austerians who have been desperate for any kind of justification to forget about unemployment and worry about debt instead.
The boring reality is the relationship between public debt and growth isn't clear. As Justin Fox of Harvard Business Review points out, there simply isn't enough data. Some countries run up big debts fighting wars, and then grow fine. Some countries run up big debts fighting financial crises, and then grow slowly as the private sector deleverages. Some countries run up big debts as a matter of course, and then grow slowly as rising rates crowd out private investment. And even the few data points we do have don't always tell us all that much. Indeed, as Paul Krugman points out, it shouldn't surprise us that the U.S. has averaged negative growth during its high debt years, because most of those years came during the World War II demobilization. In other words, it's impossible to say anything dispositive about debt and growth more broadly.
But that hasn't stopped R-R from trying. This kind of overhyping is why Joe Weisenthal called them "the most dangerous economists in the world" back in 2011. And it's a far more damning error than anything they did with Excel.
Boosting your ego won’t make you feel better. Instead, try talking to yourself like you would your best friend.
In 1986, California state assemblyman John Vasconcellos came up with what he believed could be “a vaccine for major social ills” like teen pregnancy and drug abuse: a special task-force to promote self-esteem among Californians. The effort folded three years later, and was widely considered not to have accomplished much.
To Kristin Neff, a psychology professor at the University of Texas, that’s not surprising. Though self-esteem continues to reverberate as a pop-psych cure-all, the quest for inflated egos, in her view, is misguided and largely pointless.
There’s nothing wrong with being confident, to answer Demi Lovato’s question. The trouble is how we try to achieve high self-regard. Often, it’s by undermining others or comparing our achievements to those around us. That’s not just unsustainable, Neff argues, it can also lead to narcissism or depressive bouts during hard times.
The candidate has exposed the tension between democracy and liberal values—just like the Arab Spring did.
When I was living in the Middle East, politics always felt existential, in a way that I suppose I could never fully understand. After all, I could always leave (as my relatives in Egypt were fond of reminding me). But it was easy enough to sense it. Here, in the era of Arab revolt, elections really had consequences. Politics wasn’t about policy; it was about a battle over the very meaning and purpose of the nation-state. These were the things that mattered more than anything else, in part because they were impossible to measure or quantify.
The primary divide in most Arab countries was between Islamists and non-Islamists. The latter, especially those of a more secular bent, feared that Islamist rule, however “democratic” it might be, would alter the nature of their countries beyond recognition. It wouldn’t just affect their governments or their laws, but how they lived, what they wore, and how they raised their sons and daughters.
Who has jumped on the bandwagon? Who’s sticking with #NeverTrump? And who hasn’t made up their mind yet? A continually updated inventory
How do you solve a problem like The Donald? For Republicans and conservatives, the time for hoping Trump would simply burn himself out, collapse, and go away is over. With the exits of Ted Cruz and John Kasich, the entertainer is now the presumptive GOP nominee.
That poses a dilemma for the Republican official or conservative opinionmaker who doesn’t like Trump, disagrees with his policies, and/or thinks he will harm GOP and the conservative movement. Swallow hard and back Trump? Try to coalesce around a third-party candidate? Sit out the election and risk allowing Hillary Clinton to win the presidency, or even back her rather than risk letting Trump win?
As the chaotic and failed attempts to stop Trump over the 10 months have shown, there’s no obviously right choice. But which choice are people making? Here’s a list of some major figures and where they stand on Trump—right now. We’ll keep it updated as other important people take stances, or as these ones change their views about Trump.
The Nebraska senator wrote a widely discussed open letter condemning Clinton and Trump. The spirit is right, but the substance is thin.
Kudos to Nebraska Senator Ben Sasse for reaffirming in a widely discussed “open letter” that he won’t support Donald Trump. I just wish the letter weren’t so self-righteously dumb.
Sasse, often mentioned as a potential third-party candidate, addresses his missive to the “majority of America” that believes that “both leading presidential candidates are dishonest.” He goes onto declare that neither Trump nor Hillary are “honorable people” nor “healthy leader[s],” whatever that means.
That’s an ironic way to begin a letter that later denounces “character attacks.” It’s true that many voters doubt Clinton’s trustworthiness. But Sasse offers no evidence that Clinton has been particularly dishonest in this campaign and the nonpartisan institutions that evaluate politicians’ veracity suggest the opposite. The fact-checking website Politifact rates 49 percent of Clinton’s statements “true” and 29 percent “false.” That’s substantially better than Marco Rubio (36 percent true, 42 percent false) and Ted Cruz (25 percent true, 64 percent false), neither of whom Sasse would call dishonest, let alone dishonorable or unhealthy. And it’s in a different solar system from Donald Trump, whose ratio as judged by Politifact is a mind-boggling 9 percent true to 76 percent false.
The Good Wife, which ends its seven-season run on Sunday, made use of its costumes in a way few shows have—giving them things to say about feminism and class and the complex interplay between the two.
The Good Wife begins with a pair of suits. Two people, a man and a woman, walk down a long hallway, each clad in that classic costume of conformity. The woman’s suit is gray-and-black wool houndstooth, slightly boxy in cut, clasped with mother-of-pearl buttons; the man’s is black, with just a hint of white sleeve peeking out from under the arm. The faces in that first scene remain just out of frame; the suits’ fabrics swish and bunch, their folds and shadows exaggerated by the harsh lighting of a cavernous hall.
Quickly, we learn that the faceless couple is Alicia and Peter Florrick, and that they’re on their way to the press conference in which he will announce his resignation as Cook County’s State’s Attorney, confess his repeated infidelity to his wife, and otherwise engage in the time-honored yet quintessentially modern ritual of the performative political apology. Alicia will stand beside him while he does all that, stoic and sad and exhausted, the rigidity of her pencil skirt and woolen jacket seeming to help her stay upright as the callous cameras flash. And then, abruptly, in the next scene—six months after the first one, the show informs us—we see her again. She is no longer pale. She is wearing a pantsuit instead of a skirt, and a jacket that is, unlike the first, perfectly tailored to her form. She is wearing stilettos. Actually, she is running in them.
Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.
Since 2013,the Federal Reserve Board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Meet the Bernie Sanders supporters who say they won’t switch allegiances, no matter what happens in the general election.
Loyal fans of Bernie Sanders have a difficult decision to make. If Hillary Clinton faces off against Donald Trump in the 2016 presidential election, legions of Sanders supporters will have to decide whether to switch allegiances or stand by Bernie until the bitter end.
At least some supporters of the Vermont senator insist they won’t vote for Clinton, no matter what. Many view the former secretary of state with her deep ties to the Democratic establishment as the polar opposite of Sanders and his rallying cry of political revolution. Throwing their weight behind her White House bid would feel like a betrayal of everything they believe.
These voters express unwavering dedication to Sanders on social media, deploying hashtags like NeverClinton and NeverHillary, and circulating petitions like www.wontvotehillary.com, which asks visitors to promise “under no circumstances will I vote for Hillary Clinton.” It’s garnered more than 56,500 signatures so far. Many feel alienated by the Democratic Party. They may want unity, but not if it means a stamp of approval for a political status quo they believe is fundamentally flawed and needs to be fixed.
The president was responding to a question on the presumptive GOP presidential nominee.
President Obama sharpened his criticism of Donald Trump, the presumptive Republican presidential nominee, saying GOP voters have to decide whether the New York mogul “speaks for them and represents their values.”
“We are in serious times; this is a really serious job,” Obama said at a news conference Friday. “This is not entertainment. This is not a reality show.”
His remarks come as Trump won the Republican presidential primary in Indiana on Tuesday, prompting Ted Cruz, the U.S. senator from Texas who was his main rival in the race, to suspend his campaign. A day later, John Kasich, the Ohio governor, also dropped out, leaving the field clear for Trump—and prompting a major debate within the GOP on their presumptive standard-bearer.
New data plumbs more than 4,000 stories for insights into life’s random surprises.
What I learned writing a feature about coincidences is that a coincidence is in the eye of the beholder. Or rather, the mind of the beholder.
Not just any random unlikely event will do; it has to be something that you notice, and that carries a whiff of meaning beyond the surface level—something that will activate the pattern-noticing mechanism in your brain and set off the “something’s going on here” siren. Once you notice a coincidence, you may write it off as just chance, or you may have a lingering suspicion that it happened for a deeper reason, that it was “meant to be.”
There’s not a lot of great data out there on what kinds of coincidences happen to people, mostly because the stories are often so singular as to be hard to quantify. But David Spiegelhalter, the Winton professor for the public understanding of risk at the University of Cambridge, collects coincidence stories, and after I interviewed him for my story, the text analytics firm Quid started working with him to do some analysis of those stories, and has now shared the initial results with me.
The presumptive GOP nominee has declined to condemn vicious attacks on journalists.
You might’ve thought after the media firestorm that engulfed Donald Trump in February when he failed to vocally denounce the endorsement of white supremacists like David Duke to CNN’s Jake Tapper, Trump would’ve learned a lesson. That lesson being, of course, that presidential candidates should unequivocally denounce bigotry and hate, even when spewed by supporters.
But on Wednesday night, it happened again. This time instead of white supremacists, it was anti-Semites, and instead of Jake Tapper, it was Wolf Blitzer. Blitzer asked Trump if he had a “message” for his “fans” who had spewed a tidal wave of anti-Semitic comments at Julia Ioffe, a journalist who had written an article about Trump’s wife Melania that appeared in GQ last week.