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.
Emma Perrier was deceived by an older man on the internet—a hoax that turned into an unbelievable love story.
Emma Perrier spent the summer of 2015 mending a broken heart, after a recent breakup. By September, the restaurant manager had grown tired of watching The Notebook alone in her apartment in Twickenham, a leafy suburb southwest of London, and decided it was time to get back out there. Despite the horror stories she’d heard about online dating, Emma, 33, downloaded a matchmaking app called Zoosk. The second “o” in the Zoosk logo looks like a diamond engagement ring, which suggested that its 38 million members were seeking more than the one-night stands offered by apps like Tinder.
She snapped the three selfies the app required to “verify her identity.” Emma, who is from a volcanic city near the French Alps, not far from the source of Perrier mineral water, is petite, and brunette. She found it difficult to meet men, especially as she avoided pubs and nightclubs, and worked such long hours at a coffee shop in the city’s financial district that she met only stockbrokers, who were mostly looking for cappuccinos, not love.
Three families of fallen servicemembers received next-day UPS letters from President Trump after a turbulent week in which Trump falsely claimed he had called “virtually all” of the families.
The Trump administration is scrambling to defend the president’s characterization of his communications with grieving military families, including rush-delivering letters from the president to the families of servicemembers killed months ago. Donald Trump falsely claimed this week that he had called “virtually” all fallen servicemembers’ families since his time in office.
Timothy Eckels Sr. hadn’t heard anything from President Trump since his son Timothy Eckels Jr. was killed after a collision involving the USS John S. McCain on August 21. But then, on October 20, two days into the controversy over the president’s handling of a condolence call with an American soldier’s widow, Eckels Sr. received a United Parcel Service package dated October 18 with a letter from the White House.
The staggering scope of the country’s infrastructure initiative—and what it means for the international order
The Pakistani town of Gwadar was until recently filled with the dust-colored cinderblock houses of about 50,000 fishermen. Ringed by cliffs, desert, and the Arabian Sea, it was at the forgotten edge of the earth. Now it’s one centerpiece of China’s “Belt and Road” initiative, and the town has transformed as a result. Gwadar is experiencing a storm of construction: a brand-new container port, new hotels, and 1,800 miles of superhighway and high-speed railway to connect it to China’s landlocked western provinces. China and Pakistan aspire to turn Gwadar into a new Dubai, making it a city that will ultimately house 2 million people.
China is quickly growing into the world’s most extensive commercial empire. By way of comparison, after World War II, the Marshall Plan provided the equivalent of $800 billion in reconstruction funds to Europe (if calculated as a percentage of today’s GDP). In the decades after the war the United States was also the world’s largest trading nation, and its largest bilateral lender to others.
DeepMind’s new self-taught Go-playing program is making moves that other players describe as “alien” and “from an alternate dimension.”
It was a tense summer day in 1835 Japan. The country’s reigning Go player, Honinbo Jowa, took his seat across a board from a 25-year-old prodigy by the name of Akaboshi Intetsu. Both men had spent their lives mastering the two-player strategy game that’s long been popular in East Asia. Their face-off, that day, was high-stakes: Honinbo and Akaboshi represented two Go houses fighting for power, and the rivalry between the two camps had lately exploded into accusations of foul play.
Little did they know that the match—now remembered by Go historians as the “blood-vomiting game”—would last for several grueling days. Or that it would lead to a grisly end.
Early on, the young Akaboshi took a lead. But then, according to lore, “ghosts” appeared and showed Honinbo three crucial moves. His comeback was so overwhelming that, as the story goes, his junior opponent keeled over and began coughing up blood. Weeks later, Akaboshi was found dead. Historians have speculated that he might have had an undiagnosed respiratory disease.
Rumors are swirling over what took place in the final hours before four U.S. servicemen died—but a clear picture of what actually took place is only beginning to emerge.
On October 4, a small group of U.S. troops were preparing to leave a meeting with community leaders near the small town of Tongo Tongo in Niger. They were close to the Malian border, traveling in unarmored pick-up trucks with limited weaponry and a few dozen of their Nigerien counterparts. Then they were ambushed.
By the time the more than 30-minute assault was over, three U.S. troops were confirmed dead and two more were gravely injured. Another, Sergeant La David Johnson, was missing and his body would not be recovered for another two days. French aircraft, called in for back-up, circled overhead as fire was exchanged below. They later helped to evacuate survivors.
This account, based on public statements from the Trump administration, interviews with U.S. Africa Command officials; former State Department and intelligence officials; and the man who almost served as the senior director for Africa on the National Security Council, along with additional reporting from other news outlets like CNN and The Washington Post, suggests a direct link between the fatal ambush and the absence of a clear strategy or perhaps even a cursory understanding of U.S. operations in Africa by the Trump administration.
What I learned from attending a town-hall meeting and listening to students’ concerns
Sometimes it takes a group of young people to set you straight.
For months now, I’ve been reading about college students who’ve been seeking “safe spaces.” They’ve often been met by derision—even the highest ranked Urban Dictionary definition is mired in sarcasm, describing them as having “pillows” and “soothing music” that “allows them to recover from the trauma... of exposure to ideas that conflict with their leftist professors.”
I also had some mid-life skepticism about teenage hyperbole, that is, until I attended a town hall meeting at Duke University (my alma mater) earlier this month. The “community conversation,” as it was called, had been hastily convened to discuss the rash of racist and homophobic incidents on campus. Listening to those students—and watching their expressions—I realized that what’s been happening at Duke is serious, and no amount of sarcasm can disguise the pain and anger on campus, or cover up the real dangers lurking there.
In Season 2, the terrific NBC sitcom continues to explore ethics without sacrificing complexity or humor.
Last month, the NBC sitcom The Good Place returned for its second year after a first season that was widely praised as “surreal and high-concept” and “ambitious and uniquely satisfying.” In the two-part pilot, the show introduced a woman named Eleanor (Kristen Bell) who dies and finds herself in a non-denominational heaven by mistake—and who decides to learn how to become a better person in order to earnher spot in the afterlife. With that premise, The Good Place revealed what would eventually become the show’s most important theme: ethics. To avoid being sent to The Bad Place, Eleanor enlists her assigned “soul mate,” a former professor of moral philosophy named Chidi (William Jackson Harper), to teach her how to change her selfish ways.
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
The foundation of Donald Trump’s presidency is the negation of Barack Obama’s legacy.
It is insufficient to statethe obvious of Donald Trump: that he is a white man who would not be president were it not for this fact. With one immediate exception, Trump’s predecessors made their way to high office through the passive power of whiteness—that bloody heirloom which cannot ensure mastery of all events but can conjure a tailwind for most of them. Land theft and human plunder cleared the grounds for Trump’s forefathers and barred others from it. Once upon the field, these men became soldiers, statesmen, and scholars; held court in Paris; presided at Princeton; advanced into the Wilderness and then into the White House. Their individual triumphs made this exclusive party seem above America’s founding sins, and it was forgotten that the former was in fact bound to the latter, that all their victories had transpired on cleared grounds. No such elegant detachment can be attributed to Donald Trump—a president who, more than any other, has made the awful inheritance explicit.
This useless accessory has one job—which it fails at.
Is there a pillow as useless as the U-shaped travel neck pillow? There is not. This half-ovate, toilet-seat cover-esque object reigns as King of Travel Accessories, while failing miserably at its intended sole use. It is a scourge for reasons that I will outline in this essay and of which, by the end, I will convince you without question.
This past summer, I had occasion to travel by plane with such a pillow—memory foam in a pleasant maroon—and did so thoughtlessly, stuffing it into my carry-on as if it were my passport, or a book to ignore while watching, God willing, episodes of Sex and the City on the tiny television. When it came time to attempt sleep I, like many of my fellow passengers, dutifully placed the U-shaped pillow on my shoulders. As my neck protruded an uncomfortable distance from the seat back, I let my head fall to my left. No good. I let my head fall to my right. No good. I scrunched the pillow up, so it was more like a tiny, oddly-shaped normal pillow, but the damn thing kept bouncing back to U-shape, which, by design, has a hole in it, so that was definitely no good.