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.
Even when a dentist kills an adored lion, and everyone is furious, there’s loftier righteousness to be had.
Now is the point in the story of Cecil the lion—amid non-stop news coverage and passionate social-media advocacy—when people get tired of hearing about Cecil the lion. Even if they hesitate to say it.
But Cecil fatigue is only going to get worse. On Friday morning, Zimbabwe’s environment minister, Oppah Muchinguri, called for the extradition of the man who killed him, the Minnesota dentist Walter Palmer. Muchinguri would like Palmer to be “held accountable for his illegal action”—paying a reported $50,000 to kill Cecil with an arrow after luring him away from protected land. And she’s far from alone in demanding accountability. This week, the Internet has served as a bastion of judgment and vigilante justice—just like usual, except that this was a perfect storm directed at a single person. It might be called an outrage singularity.
Writing used to be a solitary profession. How did it become so interminably social?
Whether we’re behind the podium or awaiting our turn, numbing our bottoms on the chill of metal foldout chairs or trying to work some life into our terror-stricken tongues, we introverts feel the pain of the public performance. This is because there are requirements to being a writer. Other than being a writer, I mean. Firstly, there’s the need to become part of the writing “community”, which compels every writer who craves self respect and success to attend community events, help to organize them, buzz over them, and—despite blitzed nerves and staggering bowels—present and perform at them. We get through it. We bully ourselves into it. We dose ourselves with beta blockers. We drink. We become our own worst enemies for a night of validation and participation.
Forget credit hours—in a quest to cut costs, universities are simply asking students to prove their mastery of a subject.
MANCHESTER, Mich.—Had Daniella Kippnick followed in the footsteps of the hundreds of millions of students who have earned university degrees in the past millennium, she might be slumping in a lecture hall somewhere while a professor droned. But Kippnick has no course lectures. She has no courses to attend at all. No classroom, no college quad, no grades. Her university has no deadlines or tenure-track professors.
Instead, Kippnick makes her way through different subject matters on the way to a bachelor’s in accounting. When she feels she’s mastered a certain subject, she takes a test at home, where a proctor watches her from afar by monitoring her computer and watching her over a video feed. If she proves she’s competent—by getting the equivalent of a B—she passes and moves on to the next subject.
The Wall Street Journal’s eyebrow-raising story of how the presidential candidate and her husband accepted cash from UBS without any regard for the appearance of impropriety that it created.
The Swiss bank UBS is one of the biggest, most powerful financial institutions in the world. As secretary of state, Hillary Clinton intervened to help it out with the IRS. And after that, the Swiss bank paid Bill Clinton $1.5 million for speaking gigs. TheWall Street Journal reported all that and more Thursday in an article that highlights huge conflicts of interest that the Clintons have created in the recent past.
The piece begins by detailing how Clinton helped the global bank.
“A few weeks after Hillary Clinton was sworn in as secretary of state in early 2009, she was summoned to Geneva by her Swiss counterpart to discuss an urgent matter. The Internal Revenue Service was suing UBS AG to get the identities of Americans with secret accounts,” the newspaper reports. “If the case proceeded, Switzerland’s largest bank would face an impossible choice: Violate Swiss secrecy laws by handing over the names, or refuse and face criminal charges in U.S. federal court. Within months, Mrs. Clinton announced a tentative legal settlement—an unusual intervention by the top U.S. diplomat. UBS ultimately turned over information on 4,450 accounts, a fraction of the 52,000 sought by the IRS.”
The Vermont senator’s revolutionary zeal has met its moment.
There’s no way this man could be president, right? Just look at him: rumpled and scowling, bald pate topped by an entropic nimbus of white hair. Just listen to him: ranting, in his gravelly Brooklyn accent, about socialism. Socialism!
And yet here we are: In the biggest surprise of the race for the Democratic presidential nomination, this thoroughly implausible man, Bernie Sanders, is a sensation.
He is drawing enormous crowds—11,000 in Phoenix, 8,000 in Dallas, 2,500 in Council Bluffs, Iowa—the largest turnout of any candidate from any party in the first-to-vote primary state. He has raised $15 million in mostly small donations, to Hillary Clinton’s $45 million—and unlike her, he did it without holding a single fundraiser. Shocking the political establishment, it is Sanders—not Martin O’Malley, the fresh-faced former two-term governor of Maryland; not Joe Biden, the sitting vice president—to whom discontented Democratic voters looking for an alternative to Clinton have turned.
During the multi-country press tour for Mission Impossible: Rogue Nation, not even Jon Stewart has dared ask Tom Cruise about Scientology.
During the media blitz for Mission Impossible: Rogue Nation over the past two weeks, Tom Cruise has seemingly been everywhere. In London, he participated in a live interview at the British Film Institute with the presenter Alex Zane, the movie’s director, Christopher McQuarrie, and a handful of his fellow cast members. In New York, he faced off with Jimmy Fallon in a lip-sync battle on The Tonight Show and attended the Monday night premiere in Times Square. And, on Tuesday afternoon, the actor recorded an appearance on The Daily Show With Jon Stewart, where he discussed his exercise regimen, the importance of a healthy diet, and how he still has all his own hair at 53.
Stewart, who during his career has won two Peabody Awards for public service and the Orwell Award for “distinguished contribution to honesty and clarity in public language,” represented the most challenging interviewer Cruise has faced on the tour, during a challenging year for the actor. In April, HBO broadcast Alex Gibney’s documentary Going Clear, a film based on the book of the same title by Lawrence Wright exploring the Church of Scientology, of which Cruise is a high-profile member. The movie alleges, among other things, that the actor personally profited from slave labor (church members who were paid 40 cents an hour to outfit the star’s airplane hangar and motorcycle), and that his former girlfriend, the actress Nazanin Boniadi, was punished by the Church by being forced to do menial work after telling a friend about her relationship troubles with Cruise. For Cruise “not to address the allegations of abuse,” Gibney said in January, “seems to me palpably irresponsible.” But in The Daily Show interview, as with all of Cruise’s other appearances, Scientology wasn’t mentioned.
An attack on an American-funded military group epitomizes the Obama Administration’s logistical and strategic failures in the war-torn country.
Last week, the U.S. finally received some good news in Syria:.After months of prevarication, Turkey announced that the American military could launch airstrikes against Islamic State positions in Syria from its base in Incirlik. The development signaled that Turkey, a regional power, had at last agreed to join the fight against ISIS.
The announcement provided a dose of optimism in a conflict that has, in the last four years, killed over 200,000 and displaced millions more. Days later, however, the positive momentum screeched to a halt. Earlier this week, fighters from the al-Nusra Front, an Islamist group aligned with al-Qaeda, reportedly captured the commander of Division 30, a Syrian militia that receives U.S. funding and logistical support, in the countryside north of Aleppo. On Friday, the offensive escalated: Al-Nusra fighters attacked Division 30 headquarters, killing five and capturing others. According to Agence France Presse, the purpose of the attack was to obtain sophisticated weapons provided by the Americans.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
Some say the so-called sharing economy has gotten away from its central premise—sharing.
This past March, in an up-and-coming neighborhood of Portland, Maine, a group of residents rented a warehouse and opened a tool-lending library. The idea was to give locals access to everyday but expensive garage, kitchen, and landscaping tools—such as chainsaws, lawnmowers, wheelbarrows, a giant cider press, and soap molds—to save unnecessary expense as well as clutter in closets and tool sheds.
The residents had been inspired by similar tool-lending libraries across the country—in Columbus, Ohio; in Seattle, Washington; in Portland, Oregon. The ethos made sense to the Mainers. “We all have day jobs working to make a more sustainable world,” says Hazel Onsrud, one of the Maine Tool Library’s founders, who works in renewable energy. “I do not want to buy all of that stuff.”
A controversial treatment shows promise, especially for victims of trauma.
It’s straight out of a cartoon about hypnosis: A black-cloaked charlatan swings a pendulum in front of a patient, who dutifully watches and ping-pongs his eyes in turn. (This might be chased with the intonation, “You are getting sleeeeeepy...”)
Unlike most stereotypical images of mind alteration—“Psychiatric help, 5 cents” anyone?—this one is real. An obscure type of therapy known as EMDR, or Eye Movement Desensitization and Reprocessing, is gaining ground as a potential treatment for people who have experienced severe forms of trauma.
Here’s the idea: The person is told to focus on the troubling image or negative thought while simultaneously moving his or her eyes back and forth. To prompt this, the therapist might move his fingers from side to side, or he might use a tapping or waving of a wand. The patient is told to let her mind go blank and notice whatever sensations might come to mind. These steps are repeated throughout the session.