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.
Angela Merkel has served formal notice that she will lead the German wandering away from the American alliance.
Seven years after the end of the Second World War, on the 10th of March 1952, the governments of the United States, the United Kingdom, France, and the newly established Federal Republic of Germany received an astounding note from the Soviet Union.
The Soviet Union offered to withdraw the troops that then occupied eastern Germany and to end its rule over the occupied zone. Germany would be reunited under a constitution that allowed the country freedom to choose its own social system. Germany would even be allowed to rebuild its military, and all Germans except those convicted of war crimes would regain their political rights. In return, the Allied troops in western Germany would also be withdrawn—and reunited Germany would be forbidden to join the new NATO alliance.
She lived with us for 56 years. She raised me and my siblings without pay. I was 11, a typical American kid, before I realized who she was.
The ashes filled a black plastic box about the size of a toaster. It weighed three and a half pounds. I put it in a canvas tote bag and packed it in my suitcase this past July for the transpacific flight to Manila. From there I would travel by car to a rural village. When I arrived, I would hand over all that was left of the woman who had spent 56 years as a slave in my family’s household.
A new study finds that people today who eat and exercise the same amount as people 20 years ago are still fatter.
There’s a meme aimed at Millennial catharsis called “Old Economy Steve.” It’s a series of pictures of a late-70s teenager, who presumably is now a middle-aged man, that mocks some of the messages Millennials say they hear from older generations—and shows why they’re deeply janky. Old Economy Steve graduates and gets a job right away. Old Economy Steve “worked his way through college” because tuition was $400. And so forth.
We can now add another one to that list: Old Economy Steve ate at McDonald’s almost every day, and he still somehow had a 32-inch waist.
A study published recently in the journal Obesity Research & Clinical Practice found that it’s harder for adults today to maintain the same weight as those 20 to 30 years ago did, even at the same levels of food intake and exercise.
In his new book, Ben Sasse has identified the right project for America: rehabilitating a shared moral language.
In just two short years, Senator Ben Sasse has gone from Capitol Hill newbie to digital president puncher, tweeting about Donald Trump’s affairs and the Midwestern dumpster fires he found more appealing than 2016’s Oval Office contenders.
Yet, on his breaks from Twitter, Sasse managed to craft a serious new book, The Vanishing American Adult. It advances a thesis that’s at once out of place at this political moment and almost too on-the-nose for the Trump years: He believes Americans have lost their sense of personal integrity and discipline. For the country to deal with the troubles ahead—including automation, political disengagement, and the rise of nativist, huckster politicians, he says—people must recover their sense of virtue. The republic depends on it.
As Republicans in Congress try to fend off the flurry of scandals, they are haunted by a question: Is this as good as it’s going to get?
The speaker of the House strode to his lectern on a recent Thursday to confront another totally normal day on Capitol Hill: health care, tax reform, a president under investigation, rumblings of impeachment.
“Morning, everybody!” Paul Ryan chirped. “Busy week!”
It was indeed: Less than a day had passed since the appointment of a special prosecutor to investigate Russia’s involvement in the presidential campaign; just a few hours since President Trump angrily tweeted that the investigation was “the single greatest witch hunt of a politician in American history!”; and only minutes since the Russia-linked former national-security adviser, Michael Flynn, had begun defying congressional subpoenas. A few days prior, the president had been accused of revealing sensitive intelligence information to the Russian foreign minister.
The condition has long been considered untreatable. Experts can spot it in a child as young as 3 or 4. But a new clinical approach offers hope.
This is a good day, Samantha tells me: 10 on a scale of 10. We’re sitting in a conference room at the San Marcos Treatment Center, just south of Austin, Texas, a space that has witnessed countless difficult conversations between troubled children, their worried parents, and clinical therapists. But today promises unalloyed joy. Samantha’s mother is visiting from Idaho, as she does every six weeks, which means lunch off campus and an excursion to Target. The girl needs supplies: new jeans, yoga pants, nail polish.
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At 11, Samantha is just over 5 feet tall and has wavy black hair and a steady gaze. She flashes a smile when I ask about her favorite subject (history), and grimaces when I ask about her least favorite (math). She seems poised and cheerful, a normal preteen. But when we steer into uncomfortable territory—the events that led her to this juvenile-treatment facility nearly 2,000 miles from her family—Samantha hesitates and looks down at her hands. “I wanted the whole world to myself,” she says. “So I made a whole entire book about how to hurt people.”
Should you drink more coffee? Should you take melatonin? Can you train yourself to need less sleep? A physician’s guide to sleep in a stressful age.
During residency, Iworked hospital shifts that could last 36 hours, without sleep, often without breaks of more than a few minutes. Even writing this now, it sounds to me like I’m bragging or laying claim to some fortitude of character. I can’t think of another type of self-injury that might be similarly lauded, except maybe binge drinking. Technically the shifts were 30 hours, the mandatory limit imposed by the Accreditation Council for Graduate Medical Education, but we stayed longer because people kept getting sick. Being a doctor is supposed to be about putting other people’s needs before your own. Our job was to power through.
The shifts usually felt shorter than they were, because they were so hectic. There was always a new patient in the emergency room who needed to be admitted, or a staff member on the eighth floor (which was full of late-stage terminally ill people) who needed me to fill out a death certificate. Sleep deprivation manifested as bouts of anger and despair mixed in with some euphoria, along with other sensations I’ve not had before or since. I remember once sitting with the family of a patient in critical condition, discussing an advance directive—the terms defining what the patient would want done were his heart to stop, which seemed likely to happen at any minute. Would he want to have chest compressions, electrical shocks, a breathing tube? In the middle of this, I had to look straight down at the chart in my lap, because I was laughing. This was the least funny scenario possible. I was experiencing a physical reaction unrelated to anything I knew to be happening in my mind. There is a type of seizure, called a gelastic seizure, during which the seizing person appears to be laughing—but I don’t think that was it. I think it was plain old delirium. It was mortifying, though no one seemed to notice.
In the next two months, Congress will have to raise the debt ceiling and pass a budget. GOP leaders don’t know how they’re going to do either of them.
There’s nothing that united Republicans more tightly during the Obama years than their shared criticism of all the debt that racked up under the president’s watch. They raised political hell every time Democrats needed to raise the debt ceiling, and in 2011 they brought the country to the brink of default by insisting on spending and reforms in exchange for their votes.
This year, however, it’s all on them.
Trump administration officials told lawmakers this week that the Treasury Department would need authority to issue more debt earlier than expected this year, urging Congress to act before its traditional summer recess begins in August. Republican leaders initially believed they would have until the fall before the Treasury Department exhausted the “extraordinary measures” it undertakes to buy more time, but Trump’s budget director, Mick Mulvaney, testified that tax receipts have come in slower that expected.
Facing reported financial problems and allegations of abuse, the once-bankable star now seems stuck in franchise hell with no obvious exit.
When Johnny Depp sailed onscreen in 2003’s Pirates of the Caribbean: The Curse of the Black Pearl as Captain Jack Sparrow (to this day, a memorable superhero entrance), it was his first-ever appearance in a summer blockbuster. He’d been in surprise wintertime hits (Edward Scissorhands, Sleepy Hollow), well-regarded Oscar players (Donnie Brasco, Chocolat), and, of course, many a cult classic (Fear and Loathing in Las Vegas, Ed Wood). But the idea of Depp headlining a big-budget, mainstream franchise film was alarming enough to Disney’s then-studio head Michael Eisner that he protested, on seeing early footage, that Depp was “ruining the movie!”
Fourteen years later, Disney is serving up a fifth Pirates of the Caribbean, this time subtitled Dead Men Tell No Tales, budgeted at a cool $230 million. Since bursting into international superstardom with the first Pirates, Depp has become increasingly reliant on mega-budgeted action films and broad comedies. At the same time, his public profile has collapsed after his now ex-wife Amber Heard accused him of domestic violence during their divorce, and stories emerged of the mega-budgeted lifestyle that had somehow mired Depp in deep financial trouble despite his movie earnings.
For a number of reasons, natural and human, people have abandoned many places around the world.
For a number of reasons, natural and human, people have evacuated or otherwise abandoned many places around the world—large and small, old and new. Gathering images of deserted areas into a single photo essay, one can get a sense of what the world might look like if humans were to suddenly vanish from the planet. Collected here are recent scenes from abandoned construction projects, industrial disaster zones, blighted urban neighborhoods, towns where residents left to escape violence or natural disasters, derelict Olympic venues, ghost towns, and more. Updated onMay 28, 2017.