Austerians have had their worst week since the last time GDP numbers came out for a country that's tried austerity.
But this time is, well, different. It's not "just" that southern Europe is stuck in a depression and Britain is stuck in a no-growth trap. It's that the very intellectual foundations of austerity are unraveling. In other words, economists are finding out that austerity doesn't work in practice or in theory.
What a difference an Excel coding error makes.
Austerity has been a policy in search of a justification ever since it began in 2010. Back then, policymakers decided it was time for policy to go back to "normal" even though the economy hadn't, because deficits just felt too big. The only thing they needed was a theory telling them why what they were doing made sense. Of course, this wasn't easy when unemployment was still high, and interest rates couldn't go any lower. Alberto Alesina and Silvia Ardagna took the first stab at it, arguing that reducing deficits would increase confidence and growth in the short-run. But this had the defect of being demonstrably untrue (in addition to being based off a naïve reading of the data). Countries that tried to aggressively cut their deficits amidst their slumps didn't recover; they fell into even deeper slumps.
Enter Carmen Reinhart and Ken Rogoff. They gave austerity a new raison d'être by shifting the debate from the short-to-the-long-run. Reinhart and Rogoff acknowledged austerity would hurt today, but said it would help tomorrow -- if it keeps governments from racking up debt of 90 percent of GDP, at which point growth supposedly slows dramatically. Now, this result was never more than just a correlation -- slow growth more likely causes high debt than the reverse -- but that didn't stop policymakers from imputing totemic significance to it. That is, it became a "fact" that everybody who mattered knew was true.
Except it wasn't. Reinhart and Rogoff goofed. They accidentally excluded some data in one case, and used some wrong data in another; the former because of an Excel snafu. If you correct for these very basic errors, their correlation gets even weaker, and the growth tipping point at 90 percent of GDP disappears. In other words, there's no there there anymore.
Austerity is back to being a policy without a justification. Not only that, but, as Paul Krugman points out, Reinhart and Rogoff's spreadsheet misadventure has been a kind of the-austerians-have-no-clothes moment. It's been enough that even some rather unusual suspects have turned against cutting deficits now. For one, Stanford professor John Taylor claims L'affaire Excel is why the G20, the birthplace of the global austerity movement in 2010, was more muted on fiscal targets recently.
The discovery of errors in the Reinhart-Rogoff paper on the growth-debt nexus is already impacting policy. A participant in last Friday's G20 meetings told me that the error was a factor in the decision to omit specific deficit or debt-to-GDP targets in the G20 communique.
The UK and almost all of Europe have erred in terms of believing that austerity, fiscal austerity in the short term, is the way to produce real growth. It is not. You've got to spend money.Bond investors want growth much like equity investors, and to the extent that too much austerity leads to recession or stagnation then credit spreads widen out -- even if a country can print its own currency and write its own checks. In the long term it is important to be fiscal and austere. It is important to have a relatively average or low rate of debt to GDP. The question in terms of the long term and the short term is how quickly to do it.
Growth vigilantes are the new bond vigilantes. Gross thinks the boom, not the slump, is the time for austerity -- which sounds an awful lot like you-know-who.
The austerity fever has even broken in Europe. At least a bit. Now, eurocrats can't say that austerity has been anything other than the best of all economic policies, but they can loosen the fiscal noose. And that's what they might be doing, by giving countries more time and latitude to hit their deficit targets. Here's how European Commission president José Manuel Barroso framed the issue on Monday:
While [austerity] is fundamentally right, I think it has reached its limits in many aspects. A policy to be successful not only has to be properly designed. It has to have the minimum of political and social support.
That's not much, but it's still much better than the growth-through-austerity plan Eurogroup president Jeroen Dijsselbloem was peddling on ... Saturday.
Now, Reinhart and Rogoff's Excel imbroglio hasn't exactly set off a new Keynesian moment. Governments aren't going to suddenly take advantage of zero interest rates to start spending more to put people back to work. Stimulus is still a four-letter word. Indeed, the euro zone, Britain, and, to a lesser extent, the United States, are still focussed on reducing deficits above all else. But there's a greater recognition that trying to cut deficits isn't enough to cut debt burdens. You need growth too. In other words, people are remembering that there's a denominator in the debt-to-GDP ratio.
But austerity doesn't just have a math problem. It has an image problem too. Just a week ago, Reinhart and Rogoff's work was the one commandment of austerity: Thou shall not run up debt in excess of 90 percent of GDP. Wisdom didn't get more conventional. What did this matter? Well, as Keynes famously observed, it's better for reputation to fail conventionally than to succeed unconventionally. In other words, elites were happy to pursue obviously failed policies as long as they were the right failed policies.
But now austerity doesn't look so conventional. It looks like the punchline of a bad joke about Excel destroying the global economy. Maybe, just maybe, that will be enough to free us from some defunct economics.
A new survey suggests the logistics of going to services can be the biggest barrier to participation—and Americans’ faith in religious institutions is declining.
The standard narrative of American religious decline goes something like this: A few hundred years ago, European and American intellectuals began doubting the validity of God as an explanatory mechanism for natural life. As science became a more widely accepted method for investigating and understanding the physical world, religion became a less viable way of thinking—not just about medicine and mechanics, but also culture and politics and economics and every other sphere of public life. As the United States became more secular, people slowly began drifting away from faith.
Of course, this tale is not just reductive—it’s arguably inaccurate, in that it seems to capture neither the reasons nor the reality behind contemporary American belief. For one thing, the U.S. is still overwhelmingly religious, despite years of predictions about religion’s demise. A significant number of people who don’t identify with any particular faith group still say they believe in God, and roughly 40 percent pray daily or weekly. While there have been changes in this kind of private belief and practice, the most significant shift has been in the way people publicly practice their faith: Americans, and particularly young Americans, are less likely to attend services or identify with a religious group than they have at any time in recent memory.
We’ve been flying around the country for the last three years, visiting dozens of towns that are reinventing themselves after some kind of big economic or demographic change. I have also, in a way, matched those flights stroke by stroke in America’s public swimming pools. On our first day on the ground in any town, I search for a public pool. I started swimming around the country as a way to maintain some sense of normal in my physical activity after all that flying. And then I came to appreciate it as another window into the culture and spirit of the towns we visited. I wish Ryan Lochte could share some of my experience.
Like much of America—and I’m betting most of the many hundreds of kids I have seen swimming in pools around the nation, too—I was glued to the Olympic swimming events. Katie Ledecky, Maya DiRado, Michael Phelps, truth-teller Lilly King. And then, enter Ryan Lochte.
A hotly contested, supposedly ancient manuscript suggests Christ was married. But believing its origin story—a real-life Da Vinci Code, involving a Harvard professor, a onetime Florida pornographer, and an escape from East Germany—requires a big leap of faith.
On a humid afternoon this past November, I pulled off Interstate 75 into a stretch of Florida pine forest tangled with runaway vines. My GPS was homing in on the house of a man I thought might hold the master key to one of the strangest scholarly mysteries in recent decades: a 1,300-year-old scrap of papyrus that bore the phrase “Jesus said to them, My wife.” The fragment, written in the ancient language of Coptic, had set off shock waves when an eminent Harvard historian of early Christianity, Karen L. King, presented it in September 2012 at a conference in Rome.
Never before had an ancient manuscript alluded to Jesus’s being married. The papyrus’s lines were incomplete, but they seemed to describe a dialogue between Jesus and the apostles over whether his “wife”—possibly Mary Magdalene—was “worthy” of discipleship. Its main point, King argued, was that “women who are wives and mothers can be Jesus’s disciples.” She thought the passage likely figured into ancient debates over whether “marriage or celibacy [was] the ideal mode of Christian life” and, ultimately, whether a person could be both sexual and holy.
Chain restaurants, which for so long used their decorations to celebrate America’s past, are now focusing on a (clutter-free) future.
T.G.I. Friday’s is losing its flair. In place of the casual-dining restaurant’s traditional, signature look—a little bit Antiques Roadshow, a little bit Hoarders—the chain announced earlier this year that it would be adopting a new, modernized aesthetic: blond wood, clean lines, bright-but-soft lighting. In appearance, decidedly sleek; in vibe, decidedly Upscale Cafeteria.
In that, Fridays’ is going to be looking a lot like … Applebee’s, which recently announced a similar update to its front-of-the-house situation. And Chili’s. And Ruby Tuesday. And Olive Garden. And also like fast-food chains, which are, like their up-market competitors, embracing the strategically pared-down style that you might call “high meh-dern”: McDonald’s recently unveiled a series of new “design concepts” for its stores, all of them replacing the chain’s signature primary-colored formica with, yep ... blond wood, clean lines, and bright-but-soft lighting. Burger King has been giving its restaurants similar facelifts. So has Wendy’s. And Arby’s. And KFC. And Taco Bell.
Polling within the margin of error among African Americans, the Republican tries new outreach—but his approach seems doomed to failure.
Although Donald Trump has long claimed to “have a great relationship with the blacks,” the polls tell a different story, with Trump frequently polling in the single digits among black voters. Over the last few days, the Republican nominee has added a new passage to his stump speech, reaching out to the African American community.
Our government has totally failed our African American friends, our Hispanic friends and the people of our country. Period. The Democrats have failed completely in the inner cities. For those hurting the most who have been failed and failed by their politicians—year after year, failure after failure, worse numbers after worse numbers. Poverty. Rejection. Horrible education. No housing, no homes, no ownership. Crime at levels that nobody has seen. You can go to war zones in countries that we are fighting and it's safer than living in some of our inner cities that are run by the Democrats. And I ask you this, I ask you this—crime, all of the problems—to the African Americans, who I employ so many, so many people, to the Hispanics, tremendous people: What the hell do you have to lose? Give me a chance. I'll straighten it out. I'll straighten it out. What do you have to lose?
Bad holidays with a spouse can start to feel like a broken promise.
Many people hate swampy, sticky August, but to some, it’s an especially bitter time. A new working paper finds that, in addition to March, August is the month in which divorce filings peak.
For the paper, the University of Washington’s Brian Serafini and Julie Brines analyzed the 15 most recent years of divorce filings in Washington, a state whose records make it easy to collect divorce data. Here’s what they found:
Divorce Filings by Month
These results are yet to be peer reviewed, but they are buffeted by some nation-wide, anecdotal evidence. Online searches for “divorce” and “child custody” surge early in the year, peaking in March, they point out.
Two decades ago, Osama bin Laden officially launched al-Qaeda’s struggle against the United States. Neither side has won.
Exactly two decades ago, on August 23, 1996, Osama bin Laden declared war on the United States. At the time, few people paid much attention. But it was the start of what’s now the Twenty Years’ War between the United States and al-Qaeda—a conflict that both sides have ultimately lost.
During the 1980s, bin Laden fought alongside the mujahideen in Afghanistan against the Soviet Union. After the Soviets withdrew, he went home to Saudi Arabia, then moved to Sudan before being expelled and returning to Afghanistan in 1996 to live under Taliban protection. Within a few months of his arrival, he issued a 30-page fatwa, “Declaration of War Against the Americans Occupying the Land of the Two Holy Places,” which was published in a London-based newspaper, Al-Quds Al-Arabi, and faxed to supporters around the world. It was bin Laden’s first public call for a global jihad against the United States. In a rambling text, bin Laden opined on Islamic history, celebrated recent attacks against U.S. forces in Lebanon and Somalia, and recounted a multitude of grievances against the United States, Israel, and their allies. “The people of Islam had suffered from aggression, iniquity and injustice imposed on them by the Jewish-Christian alliance and their collaborators,” he wrote.
Intensely emotional and uncompromising, the singer’s long-awaited new album meditates on the passage of time.
Frank Ocean is still thinking about forever. One of his two new albums is called Endless, even though its songs all seem to end too soon. The more significant release, called either Blonde or Blond depending on where you acquire it, repeatedly laments nights, season, and years that can never be retrieved. The first time his unadorned vocals appear on that album, Ocean sings, “We'll let you guys prophesy / We gon' see the future first.” The line comes across as a challenge to get on his level and unhitch from the present—a necessary step before accessing the deep pleasures of his uncompromising new music.
Ocean’s obsession with time has been well-documented by now. His 2011 debut had the self-explanatory title Nostalgia, Ultra and his 2012 breakout, Channel Orange, was inspired by a teenage summer that, he said, seemed “orange.” He’s like the memory machine in Pixar’s Inside Out, processing the past into gemlike objects that can be sorted by visual cue and emotional essence. The blonds and blondes of Blond(e) are, on one level of interpretation, ex-boyfriends and ex-girlfriends. He references car models—Acuras, Ferraris, X6s—as shorthand for life phases. And on the luminous new track “Ivy,” he describes a callous breakup but keeps saying that when he thinks about the relationship, “the feeling still deep down is good.” Good: one simple word explains and colors all the complexity he’s sung about elsewhere in the song.
The Republican nominee is pledging to follow an approach that resembles President Obama's.
Donald Trump is stepping back from one of the main themes of his presidential campaign: a promise to crack down on illegal immigration. He is now pledging to pursue an immigration policy that resembles President Obama’s.
On Monday night, Trump said in an interview on Fox News that “the first thing we’re going to do if and when I win is we’re going to get rid of all of the ‘bad ones.’” As for the immigrant population as a whole, “we’re going to go through the process,” Trump said, adding, “What people don’t know is that Obama got tremendous numbers of people out of the country. Bush, the same thing. Lots of people were brought out of the country with the existing laws. Well, I’m going to do the same thing.”
Entering its third season, the ’80s-set AMC show portrays the tech world with nuanced, character-driven narratives that its rivals lack.
When dramatizing the world of technology and the history of invention, perhaps the hardest thing to portray is the act of creation itself—the colliding of inspiration and circumstance that leads to great ideas (and, of course, to terrible ones). AMC’s drama series Halt and Catch Fire has handled that challenge effortlessly, while proving itself as one of TV’s most elegantly crafted shows. Currently entering its third season, Halt continues to be a terrific accounting of the miraculous, human ways the tech world stumbled into its biggest advancements—even if it’s disguised as a low-key workplace drama. Most importantly, Halt knows that the best way to sell viewers on its characters’ lofty ideas is by making you care about them long before they succeed.