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.
The special counsel indicted the Russian nationals and three Russian entities for allegedly interfering in the 2016 presidential election, the Department of Justice announced Friday.
On Friday, February 16, Deputy Attorney General Rod Rosentein announced that the special counsel, Robert Mueller, had indicted 13 Russian nationals and three Russian entities on charges that including conspiracy to defraud the United States, conspiracy to commit wire fraud and bank fraud, and aggravated identity theft. This is the full text of that indictment.
Students have mourned and rallied the public after the massacre at Marjory Stoneman Douglas High that left 17 dead.
Something was different about the mass shooting this week in Parkland, Florida, in which 14 students and three adults were killed.
It was not only the death toll. The mass murder at Marjory Stoneman Douglas High became the deadliest high-school shooting in American history (edging out Columbine, which killed 13 in 1999).
What made Parkland different were the people who stepped forward to describe it. High-school students—the survivors of the calamity themselves—became the voice of the tragedy. Tweets that were widely reported as coming from the students expressed grief for the victims, pushed against false reports, and demanded accountability.
Outrage mobs are chipping away at democracy, one meaningless debate at a time.
The mob was unusually vociferous, even for Twitter. After the California-born ice skater Mirai Nagasu became the first American woman to land a triple axel at the Olympics, the New York Times writer Bari Weiss commented “Immigrants: They get the job done.”
What followed that innocuous tweet was one of the sillier, manufactured controversies I have ever seen on Twitter. Twitter’s socially conscious denizens probably only realized they should be outraged at Weiss after they saw other people being outraged, as is so often the case. Outside of Twitter, some of Weiss’s Times colleagues were also offended by the tweet—and even hurt by it. The critics’objection was that Nagasu isn’t herself an immigrant, but rather the child of immigrants, and so calling her one was an example of “perpetual othering.”
Tech analysts are prone to predicting utopia or dystopia. They’re worse at imagining the side effects of a firm's success.
The U.S economy is in the midst of a wrenching technological transformation that is fundamentally changing the way people sleep, work, eat, shop, love, read, and interact.
At least, that’s one interpretation.
A second story of this age of technological transformation says that it’s mostly a facade—that the last 30 years have been a productivity bust and little has changed in everyday life, aside from the way everyone reads and watches videos. People wanted flying cars and got Netflix binges instead.
Let’s call these the Disrupt Story and the Dud Story of technology. When a new company, app, or platform emerges, it’s common for analysts to divide into camps—Disrupt vs. Dud—with some yelping that the new thing will change everything and others yawning with the expectation that traditionalism will win out.
The Harvard law professor Lawrence Lessig discusses how Aaron Swartz's death shaped his own life's work.
Before he started working with Aaron Swartz, the Harvard law professor Lawrence Lessig built his professional life around internet law and copyright policy. In the early 2000s, Lessig was at the top of his academic field, then working at Stanford. As an undergraduate student, Swartz, who had met Lessig at a computer conference when he was just 14, convinced the professor to radically change his career path.
The two developed a mentorship and partnership that would lead them to take on the complex goals of making information more accessible and demanding greater transparency from political institutions. Swartz became known for his involvement in Creative Commons and Reddit, and for his alleged attempt to make information from the academic-research site JSTOR free for public viewing. And then, in January of 2013, Swartz committed suicide. Lessig is still reeling from the loss.
The clear goal of the special counsel is to speak to the American public about the seriousness of Russian interference.
With yet another blockbuster indictment (why is it always on a Friday afternoon?), Special Counsel Robert Mueller has, once again, upended Washington. And this time, it is possible that his efforts may have a wider effect outside the Beltway.
For those following the matter, there has been little doubt that Russian citizens attempted to interfere with the American presidential election. The American intelligence agencies publicized that conclusion more than a year ago in a report issued in January 2017, and it has stood by the analysis whenever it has been questioned. But some in the country have doubted the assertion—asking for evidence of interference that was not forthcoming.
Now the evidence has been laid out in painful detail by the special counsel. If any significant fraction of what is alleged in the latest indictment is true (and we should, of course, remind ourselves that an indictment is just an allegation—not proof), then this tale is a stunning condemnation of Russian activity. A Russian organization with hundreds of employees and a budget of millions of dollars is said to have systematically engaged in an effort (code named “Project Lakhta”) to undermine the integrity of the election and, perhaps more importantly, to have attempted to influence the election to benefit then-candidate Donald Trump. Among the allegations, the Russians:
The director Ryan Coogler's addition to the Marvel pantheon is a superb genre film—and quite a bit more.
Note: Although this review avoids plot spoilers, it does discuss the thematic elements of the film at some length.
After an animated introduction to the fictional African kingdom of Wakanda, Black Panther opens in Oakland in 1992. This may seem an odd choice, but it is in fact quite apt. The film’s director, Ryan Coogler, got his start in the city, having been born there in 1986. His filmmaking career has its roots there, too, as it was the setting for his debut feature, Fruitvale Station.
A bunch of schoolboys (a fictionalized young Coogler perhaps among them) play pickup hoops on a court with a milk-crate basket. But in the tall apartment building above them two black radicals are plotting a robbery. There’s a knock on the door and one of the men looks through the peephole: “Two Grace Jones–lookin’ chicks—with spears!” I won’t recount the rest of the scene, except to note that the commingling of two very different iterations of the term “Black Panther”—the comic-book hero and the revolutionary organization, ironically established just months apart in 1966—is in no way accidental, and it will inform everything that follows.
Like it or not, the middle class became global citizens through consumerism—and they did so at the mall.
“Okay, we’ll see you in two-and-a-half hours,” the clerk tells me, taking the iPhone from my hand. I’m at the Apple Store, availing myself of a cheap smartphone battery replacement, an offer the company made after taking heat for deliberately slowing down devices. A test run by a young woman typing at a feverish, unnatural pace on an iPad confirms that mine desperately needed the swap. As she typed, I panicked. What will I do in the mall for so long, and without a phone? How far the mall has fallen that I rack my brain for something to do here.
The Apple Store captures everything I don’t like about today’s mall. A trip here is never easy—the place is packed and chaotic, even on weekdays. It runs by its own private logic, cashier and help desks replaced by roving youths in seasonally changing, colored T-shirts holding iPads, directing traffic.
The company’s unusual offer—to give employees up to $5,000 for leaving—may actually be a way to get them to stay longer.
On Monday, Amazon reportedly began a series of rare layoffs at its headquarters in Seattle, cutting several hundred corporate employees. But this week, something quite different is happening at the company’s warehouses and customer-service centers across the country: Amazon will politely ask its “associates”—full-time and part-time hourly employees—if they’d prefer to quit. And if they do, Amazon will pay them as much as $5,000 for walking out the door.
Officially called “The Offer,” this proposition is, according to Amazon, a way to encourage unhappy employees to move on. “We believe staying somewhere you don’t want to be isn’t healthy for our employees or for the company,” Ashley Robinson, an Amazon spokesperson, wrote to me in an email. The amount full-time employees get offered ranges from $2,000 to $5,000, and depends on how long they have been at the company; if they take the money, they agree to never work for Amazon again. (The idea for all this originated at Zappos, the online shoe retailer that Amazon bought in 2009.)
Leggings and yoga gear are common sights at practice rinks. But in competition, gender-coded costumes still prevail.
Last weekend, one of the buzzier stories out of the Olympic ladies’ figure skating short program competition was one you might call … surprisingly surprising. The French figure skater Maé-Bérénice Méité made headlines: for the fact that she skated to a Beyoncé medley, and even more so, for the fact that she did it in pants.
More accurately, she did it in a bedazzled black unitard, but that didn’t stop news outlets and viewers on Twitter from pointing out Méité’s eye-catching, subtly subversive pants. “This French figure skater may not have won a medal, but her pants took people's choice,” raved Yahoo! News, and AOL named Méité’s bodysuit to its list of “most dazzling figure skating outfits” of these Olympic Games.