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.
An etiquette update: Brevity is the highest virtue.
I recently cut the amount of time I spent on email by almost half, and I think a lot of people could do the same.
I’m sure my approach has made some people hate me, because I come off curt. But if everyone thought about email in the same way, what I’m suggesting wouldn’t be rude. Here are the basic guidelines that are working for me and, so, I propose for all of the world to adopt immediately:
Best? Cheers? Thanks?
None of the above. You can write your name if it feels too naked or abrupt not to have something down there. But it shouldn’t, and it wouldn’t if it were the norm.
Don’t waste time considering if “Dear,” or “Hey” or “[name]!” is appropriate. Just get right into it. Write the recipient’s name if you must. But most people already know their names. Like they already know your name.
Despite prohibitions on American companies doing business in Cuba, the Trump Organization appears to have made a couple forays onto the island.
The candidate of “law and order” sure seems to play fast and loose with the rules when it concerns himself.
Despite longstanding prohibitions on Americans doing business with Cuba, installed as part of the decades-long embargo on that country, the Trump Organization seems to have been quietly, and according to two reports illegally, conducting business on the island for some time.
In July, BusinessWeek’s Jesse Drucker and Stephen Wicary reported on the Trump Organization’s forays into golf-course planning in Cuba. While travel to Cuba has opened up recently, travel is still restricted to a few categories, of which golf is not one. Drucker and Wicary report:
Trump Organization executives and advisers traveled to Havana in late 2012 or early 2013, according to two people familiar with the discussions that took place in Cuba and who spoke on condition of anonymity. Among the company’s more important visitors to Cuba have been Larry Glick, Trump’s executive vice president for strategic development, who oversees golf, and Edward Russo, Trump’s environmental consultant for golf.
CHICAGO—It was Nordstrom’s anniversary sale, and Marnie couldn’t help herself. She ran to the shoe display, and, with a swooping bear hug, grabbed up an entire row of gemstone-hued Nikes.
Marnie is a self-identified hoarder, and she was here as part of an intervention of sorts. As she compulsively shopped, looking on were a group of other hoarders and psychologists.
Within seconds, Marnie had laced up a navy-blue pair of sneakers. A sales clerk wandered over. “Can I help you?” she asked, suspiciously.
The shopping expedition took place during the annual conference of the International OCD Foundation this July. Hoarding is one of the many manifestations of Obsessive-Compulsive Disorder, a mental illness that forces its sufferers to perform specific rituals or think disturbing thoughts repeatedly. In the case of hoarding, it’s the uncontrollable desire to acquire and keep things.
After Donald Trump became the Republican nominee, he was asked on Fox News about his views on NATO and other American alliances. He gave his familiar “they’re freeloaders” answer:
The fact is we are protecting so many countries that are not paying for the protection. When a country isn’t paying us and these are countries in some cases in most cases that have the ability to pay, and they are not paying because nobody is asking….
We’re protecting all of these countries. They have an agreement to reimburse us and pay us and they are not doing it and if they are not going to do that. We have to seriously rethink at least those countries. It’s very unfair.
In a unique, home-spun experiment, researchers found that centripetal force could help people pass kidney stones—before they become a serious health-care cost.
East Lansing, Michigan, becomes a ghost town during spring break. Families head south, often to the theme parks in Orlando. A week later, the Midwesterners return sunburned and bereft of disposable income, and, urological surgeon David Wartinger noticed, some also come home with fewer kidney stones.
Wartinger is a professor emeritus at Michigan State, where he has dealt for decades with the scourge of kidney stones, which affect around one in 10 people at some point in life. Most are small, and they pass through us without issue. But many linger in our kidneys and grow, sending hundreds of thousands of people to emergency rooms and costing around $3.8 billion every year in treatment and extraction. The pain of passing a larger stone is often compared to child birth.
My colleague Ta-Nehisi spoke last night with French journalist Iris Deroeux about his time living in Paris and more broadly about race in France compared to the U.S.:
One of audience members of that Facebook Live session was Kaylee Robinson, who wrote in to email@example.com to share her experience living in South Korea as a black woman and the cultural ignorance surrounding her race in the rural school she taught at. (If you’ve ever been a black expat yourself and would like to share your experience living abroad, please drop us a note.) Here’s Kaylee:
I lived and worked in South Korea for three years, and it was the most fascinating and frustrating experience of my life. I taught myself basic Korean and familiarized myself with Korean culture and traditions. While I was prepared in theory to immerse myself in the culture, I was unprepared for the daily racial and cultural microaggressions that came with being the first Black person that my students and colleagues had come in contact with. For example, after the initial Skype interview, my extremely friendly co-teacher casually mentioned how I was much nicer than she had expected. In fact, I was nothing like the angry Black drug dealers and criminals that she had seen on TV.
I taught in rural South Korea, about 1.5 hours from Seoul at a very small elementary school of about 70 students. My first day teaching the second graders highlighted how important my role was as a Black American English teacher. My class consisted of ten adorable, wonderfully excited students who were very curious about me and English class in general. One student came up to me and rubbed my hand and then looked at his hand: “Kaylee-teacher, brown no come off?” He thought my brown skin color was the result of a marker and was surprised that it didn’t come off. A million emotions and thoughts ran through my mind at the moment, some of which I was ashamed of when I remembered that this comment was from a 7-year-old child.
That same first month of teaching, a colleague asked if I had a gun back home because he thought all Black people did. My 5th and 6th graders didn’t understand my natural hair and touched it without asking. And virtually all of my students refused to believe I was American and must be from somewhere in Africa because to them Americans were only blonde and blue-eyed. Parents were frightened to speak to me simply because of what they had seen on TV shows and in movies. And in a small town, every time I walked out of my apartment building I was stared at incessantly. With such an onslaught of questions about my race and culture, I felt my Blackness being chipped away bit by bit, everyday.
Conservatives have put families and communities at the center of their conception of a better America—but they’re notably absent from the Republican nominee’s account.
Again and again at Monday night’s debate, Hillary Clinton attacked Donald Trump’s record in business. She accused him of caring only about himself. Again and again, he pleaded guilty.
When Clinton quoted Trump as cheering for a housing crisis, Trump responded, “That’s called business.” When Clinton accused Trump of not paying taxes, Trump answered, “That makes me smart.” When Clinton attacked Trump for declaring bankruptcy to avoid paying the people he owed, Trump replied, “I take advantage of the laws of the nation because I’m running a company.” Clinton set out to paint Trump as selfish and unethical. Trump basically conceded the charge.
Commentators are declaring Trump’s answers a tactical mistake. But they’re more than that. They show how unmoored he is from conservatism’s conception of America.
All the nominee had to do at the first debate was appear polite and reasonable for 90 minutes. He failed.
HEMPSTEAD, N.Y.—Before this week’s first presidential debate, it was common for Donald Trump’s television surrogates to predict it would echo the sole 1980 encounter between Jimmy Carter and Ronald Reagan.
It turned out, to borrow from another famous debate moment, Donald Trump was no Ronald Reagan.
On the surface, the analogy appeared reasonable. Like Hillary Clinton today, Carter in 1980 bet most of his chips on personally disqualifying Reagan. Carter painted his opponent as unqualified, ill-informed, extreme, and dangerous—an aging entertainer who might trigger a nuclear war through ignorance and belligerence.
For months, enough voters feared Carter might be right to keep him close in the polls, despite enormous dissatisfaction with his job performance. But when Reagan in the debate presented himself as composed, reasonable, and genial (swatting away even accurate Carter recitations of his most outrageous earlier statements with a jaunty “There you go again”) the doubts softened, Carter’s support crumbled, and the Gipper rolled to a landslide.
A new study looks at rates of lethal violence across a thousand species to better understand the evolutionary origins of humanity’s own inhumanity.
Which mammal is most likely to be murdered by its own kind? It’s certainly not humans—not even close. Nor is it a top predator like the grey wolf or lion, although those at least are #11 and #9 in the league table of murdery mammals. No, according to a study led by José María Gómez from the University of Granada, the top spot goes to… the meerkat. These endearing black-masked creatures might be famous for their cooperative ways, but they kill each other at a rate that makes man’s inhumanity to man look meek. Almost one in five meerkats, mostly youngsters, lose their lives at the paws and jaws of their peers.
Gómez’s study is the first thorough survey of violence in the mammal world, collating data on more than a thousand species. It clearly shows that we humans are not alone in our capacity to kill each other. Our closest relatives, the chimpanzees, have been known to wage brutal war, but even apparently peaceful creatures take each other’s lives. When ranked according to their rates of lethal violence, ground squirrels, wild horses, gazelle, and deer all feature in the top 50. So do long-tailed chinchillas, which kill each other more frequently than tigers and bears do.