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.
For those who didn't go to prestigious schools, don't come from money, and aren't interested in sports and booze—it's near impossible to gain access to the best paying jobs.
As income inequality in the U.S. strikes historic highs, many people are starting to feel that the American dream is either dead or out of reach. Only 64 percent of Americans still believe that it’s possible to go from rags to riches, and, in another poll, 63 percent said they did not believe their children would be better off than they were. These days, the idea that anyone who works hard can become wealthy is at best a tough sell.
Along with the Nancy Drew series, almost all of the thrillers in the popular teenage franchise were produced by ghostwriters, thanks to a business model that proved to be prescient.
In the opening pages of a recent installment of the children’s book series The Hardy Boys, black smoke drifts though the ruined suburb of Bayport. The town's residents, dressed in tatters and smeared with ash, stumble past the local pharmacy and diner. Shards of glass litter the sidewalk. “Unreal,” says the mystery-solving teenager Joe Hardy—and he's right. Joe and his brother Frank are on a film set, and the people staggering through the scene are actors dressed as zombies. But as is always the case with Hardy Boysbooks, something still isn’t quite right: This time, malfunctioning sets nearly kill several actors, and the brothers find themselves in the middle of yet another mystery.
Reforms were slow to take hold in Cincinnati, but when they did, they drove down crime while also reducing arrests.
CINCINNATI—Citizens were throwing stones and beer bottles at police officers in front of City Hall, and Maris Herold didn’t understand what they wanted.
She was a police officer herself, and knew that her department had made some missteps. Most recently, an officer gunned down a 19-year-old unarmed black man, Timothy Thomas—the fifteenth black man to die at the hands of police in five years.
But, Herold knew, the police were investigating the incident. They were listening to the community. They were working 12-hour shifts to protect the city from looting and fires, though the disturbance would soon turn into the worst riots in the U.S. in a decade.
“I was like, ‘We’re doing everything right, obviously the police officers made mistakes and we’re trying to get to the bottom of it,’” she told me recently. Herold, who joined the police force after a career in social work, couldn’t understand what more the police could do to make amends with the community.
There are two types of people in the world: those with hundreds of unread messages, and those who can’t relax until their inboxes are cleared out.
For some, it’s a spider. For others, it’s an unexpected run-in with an ex. But for me, discomfort is a dot with a number in it: 1,328 unread-message notifications? I just can’t fathom how anyone lives like that.
How is it that some people remain calm as unread messages trickle into their inboxes and then roost there unattended, while others can’t sit still knowing that there are bolded-black emails and red-dotted Slack messages? I may operate toward the extreme end of compulsive notification-eliminators, but surveys suggest I’m not alone: One 2012 study found that 70 percent of work emails were attended to within six seconds of their arrival.
This has led me to a theory that there are two types of emailers in the world: Those who can comfortably ignore unread notifications, and those who feel the need to take action immediately.
The plight of non-tenured professors is widely known, but what about the impact they have on the students they’re hired to instruct?
Imagine meeting your English professor by the trunk of her car for office hours, where she doles out information like a taco vendor in a food truck. Or getting an e-mail error message when you write your former biology professor asking for a recommendation because she is no longer employed at the same college. Or attending an afternoon lecture in which your anthropology professor seems a little distracted because he doesn’t have enough money for bus fare. This is an increasingly widespread reality of college education.
Many students—and parents who foot the bills—may assume that all college professors are adequately compensated professionals with a distinct arrangement in which they have a job for life. In actuality those are just tenured professors, who represent less than a quarter of all college faculty. Odds are that students will be taught by professors with less job security and lower pay than those tenured employees, which research shows results in diminished services for students.
What it’s like to watch a komodo dragon get dissected
Try to imagine how hard it would be to skin a Komodo dragon.
It is harder than that.
The problem is that the giant lizard’s hide is not just tough and leathery, but also reinforced. Many of the scales contain a small nugget of bone, called an osteoderm, which together form a kind of pointillist body armor. Sawing through these is tough on both arms and blades.
I’m at the Royal Veterinary College, about 20 kilometers outside of central London, watching four biologists put their shoulders into the task. A Komodo dragon, which recently died in London Zoo for unexplained reasons, lies on a steel gurney in front of them. Their task, over the next three days, is to dissect it and measure all of its muscles. So, first, the skin must come off.
New research confirms what they say about nice guys.
Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.
Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.
Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?
Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team?—it’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?
We're all going to die and we all know it. This can be both a burden and a blessing.
In the heart of every parent lives the tightly coiled nightmare that his child will die. It might spring at logical times—when a toddler runs into the street, say—or it might sneak up in quieter moments. The fear is a helpful evolutionary motivation for parents to protect their children, but it's haunting nonetheless.
The ancient Stoic philosopher Epictetus advised parents to indulge that fear. “What harm is it, just when you are kissing your little child, to say: Tomorrow you will die?”he wrote in his Discourses.
Some might say Epictetus was an asshole. William Irvine thinks he was on to something.
“The Stoics had the insight that the prospect of death can actually make our lives much happier than they would otherwise be,” he says. “You’re supposed to allow yourself to have a flickering thought that someday you’re going to die, and someday the people you love are going to die. I’ve tried it, and it’s incredibly powerful. Well, I am a 21st-century practicing Stoic.”
Getting experienced educators to work in the highest-need schools requires more than bonus pay.
Standing in front of my eighth-grade class, my heart palpitated to near-panic-attack speed as I watched second hand of the clock. Please bell—ring early, I prayed. It was my second day of teaching, and some of my middle-school male students were putting me to the test.
In a span of three minutes, the group in room 204 had morphed from contained to out of control. Two boys were shooting dice in the back of the room, and as I instructed them to put their crumpled dollar bills away, several others took off their shoes and began tossing them around like footballs. Before I could react, one boy broke into my supply closet. He snatched handfuls of No. 2 pencils and highlighters and sprinted out of the room, slamming the door behind him.
In any case, people have probably heard the phrase in reference to something gone awry at work or in life. In either setting, when the shit does hit the fan, people will tend to look to the most competent person in the room to take over.
And too bad for that person. A new paper by a team of researchers from Duke University, University of Georgia, and University of Colorado looks at not only how extremely competent people are treated by their co-workers and peers, but how those people feel when, at crucial moments, everyone turns to them. They find that responsible employees are not terribly pleased about this dynamic either.